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Old 03-08-2010, 12:37 PM
 
Location: NJ
17,579 posts, read 39,747,775 times
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I put the blame 50/50 between the banks and the people buying the houses. I think if you hooked up the banks and the buyers to a lie detector they both would have known that they couldn't afford the mortgage in most cases. They both chose to ignore that for their own reasons.
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Old 03-08-2010, 03:31 PM
 
8,468 posts, read 13,642,920 times
Reputation: 7538
Quote:
Originally Posted by aneftp View Post
When will the housing madness end? Instead of going by simple economics. If you can't afford the home, just foreclose on the property.

Instead we have way to many government gimmicks (housing credit, forgiving of 1099 debt from short sales etc).

Now I've seen it all (short of just principal mortgage reduction, which is what most liberals/socialists really want).

Short-Sale Program Will Pay Homeowners to Sell at a Loss - NYTimes.com

So lets see here what this program will do:
1. Encourage even more distressed properties onto the market
2. Still forgive short sellers debt owed on their 1099 forms
3. Give banks/investors money for approving bad investments/lending to people who they shouldn't have
4. Give people who should have never purchased a home in the first place what is essentially rental assistance to move (this is after more short sellers haven't even paid their mortgages for months trying to negogiate with banks)

Simply crazy ultra liberal policies.

Let the free market dictate the housing market collapse. We would be over the housing crisis by now. Instead the government is letting the housing market do a slow bleed.
It's always funny to listen to the right-wingers. They go on and on about how great the free market is, how the government should stay out of it, and how the market regulates itself just fine. You'd think a group of people who have so much faith in capitalism would understand the dangers of massive economic shocks. Let's say the government suspends its "socialist" policies. All the people who can't afford to keep there homes go into foreclosure. The market gets flooded with more homes, dragging down the value of everyone else's home. The last thing people would want to do is go out and spend. Businesses see this sudden and widespread drop in demand and respond by cutting back on production and cutting costs even further. In other words, more layoffs. So now you have even more people out of work, more people who can't afford to pay their mortgages, and the cycle repeats. But hey, it's just simple economics, right? Letting the economy spiral into a tailspin, that's better than letting "ultra liberal socialists" try to minimize the damage. Pretty scary how people who believe so strongly in capitalism don't understand the concept of economic shocks.
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Old 03-08-2010, 05:07 PM
 
Location: Lowcountry
764 posts, read 1,439,302 times
Reputation: 416
Quote:
Originally Posted by DennyCrane View Post
It's always funny to listen to the right-wingers. They go on and on about how great the free market is, how the government should stay out of it, and how the market regulates itself just fine. You'd think a group of people who have so much faith in capitalism would understand the dangers of massive economic shocks. Let's say the government suspends its "socialist" policies. All the people who can't afford to keep there homes go into foreclosure. The market gets flooded with more homes, dragging down the value of everyone else's home. The last thing people would want to do is go out and spend. Businesses see this sudden and widespread drop in demand and respond by cutting back on production and cutting costs even further. In other words, more layoffs. So now you have even more people out of work, more people who can't afford to pay their mortgages, and the cycle repeats. But hey, it's just simple economics, right? Letting the economy spiral into a tailspin, that's better than letting "ultra liberal socialists" try to minimize the damage. Pretty scary how people who believe so strongly in capitalism don't understand the concept of economic shocks.
Actually it is still simple economics....

The opposite occurred during the boom years - the government got involved where it shouldn't have and look what happened.

Sometimes you have to destroy the village in order to save it....
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Old 03-08-2010, 05:26 PM
 
48,516 posts, read 83,890,268 times
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Does this mean that Geithners plan promise a year ago as the seocnd priorty to save home owners is dead?Pay the buggers offf to get them out?More change it looks like.
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Old 03-08-2010, 06:09 PM
 
355 posts, read 1,306,753 times
Reputation: 344
Quote:
Originally Posted by DennyCrane View Post
It's always funny to listen to the right-wingers. They go on and on about how great the free market is, how the government should stay out of it, and how the market regulates itself just fine. You'd think a group of people who have so much faith in capitalism would understand the dangers of massive economic shocks. Let's say the government suspends its "socialist" policies. All the people who can't afford to keep there homes go into foreclosure. The market gets flooded with more homes, dragging down the value of everyone else's home. The last thing people would want to do is go out and spend. Businesses see this sudden and widespread drop in demand and respond by cutting back on production and cutting costs even further. In other words, more layoffs. So now you have even more people out of work, more people who can't afford to pay their mortgages, and the cycle repeats. But hey, it's just simple economics, right? Letting the economy spiral into a tailspin, that's better than letting "ultra liberal socialists" try to minimize the damage. Pretty scary how people who believe so strongly in capitalism don't understand the concept of economic shocks.
Yes, because multiple decades of a slow, downward spiral of painful deleveraging is far better than a few years of economic disaster and the subsequent recovery. We're in for the long, LOOOOOOOOOOOOOOONG haul, folks. Japan's lost (double) decade has got nothing on us.

Sure, according to Bernanke we're not repeating their errors because "we caught it early and made the aggressive adjustments to correct the problems". Yes, instead of 20+ years of a slow drop in values to ~25% of peak, we'll spread it over 3 decades (or more)...
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Old 03-09-2010, 08:34 AM
 
8,186 posts, read 11,902,987 times
Reputation: 17952
Quote:
Originally Posted by DMenscha View Post
Well while we're at it, lets make sure that the mortgage interest deduction is abolished and the ability to deduct property taxes is taken away as well.
Excellent post! But I am sure it went right over the heads of everyone frothing at the mouth about socialistic government policies affecting a free market. They have no problem with this aspect of "socialism" though. My tax dollars are helping them pay their mortgage and at the same time propping up housing prices. Do away with the mortgage interest deduction and the value of their houses falls by about 30%.

I don't hear these people clammering to have the government reduce their own little government rebate program. But God forbid the government offers incentives to other people. That's socialism!!!!
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Old 03-09-2010, 09:39 AM
 
8,468 posts, read 13,642,920 times
Reputation: 7538
Quote:
Originally Posted by Flat2MT View Post
Actually it is still simple economics....

The opposite occurred during the boom years - the government got involved where it shouldn't have and look what happened.

Sometimes you have to destroy the village in order to save it....
False. Government involvement was reduced during the boom years. It started in 1999 when the financial services industry successfully lobbied Congress to do away with Glass-Steagull and enabled banks to start gambling with the deposits of you and me. As the decade progressed, regulatory safeguards meant to protect the health of the financial system were slowly done away with. There's a simple reason you can't trust the banking industry to self-regulate. Because banks, like any business, are only concerned about themselves. They don't care about the system as a whole.

Quote:
Originally Posted by Delron View Post
Yes, because multiple decades of a slow, downward spiral of painful deleveraging is far better than a few years of economic disaster and the subsequent recovery. We're in for the long, LOOOOOOOOOOOOOOONG haul, folks. Japan's lost (double) decade has got nothing on us.

Sure, according to Bernanke we're not repeating their errors because "we caught it early and made the aggressive adjustments to correct the problems". Yes, instead of 20+ years of a slow drop in values to ~25% of peak, we'll spread it over 3 decades (or more)...
There's no question that the economy has to undergo a major correction. Home prices were ridiculously inflated and, one way or the other, they have to come back down. As bad as it would be to have a lost decade like Japan did, that's still better than a sudden collapse. At least we'd all have time to adjust. Think about if you were in an industry that just disappeared overnight. You can't easily transfer your skills to another field so you have nowhere to go. Now imagine instead that your industry was slowly dying off. Sure it would stink, but at least you'd have time to go back to school, acquire new skills, and change careers.

Quote:
Originally Posted by MadManofBethesda View Post
Excellent post! But I am sure it went right over the heads of everyone frothing at the mouth about socialistic government policies affecting a free market. They have no problem with this aspect of "socialism" though. My tax dollars are helping them pay their mortgage and at the same time propping up housing prices. Do away with the mortgage interest deduction and the value of their houses falls by about 30%.

I don't hear these people clammering to have the government reduce their own little government rebate program. But God forbid the government offers incentives to other people. That's socialism!!!!
Yeah, they don't complain when it benefits them. I know a number of conservatives who condemn the idea of unemployment benefits. But when they lost their jobs, they were first in line to get those same benefits. Hypocrites.
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Old 03-09-2010, 10:49 AM
 
Location: Lowcountry
764 posts, read 1,439,302 times
Reputation: 416
Quote:
Originally Posted by DennyCrane View Post
False. Government involvement was reduced during the boom years. It started in 1999 when the financial services industry successfully lobbied Congress to do away with Glass-Steagull and enabled banks to start gambling with the deposits of you and me. As the decade progressed, regulatory safeguards meant to protect the health of the financial system were slowly done away with. There's a simple reason you can't trust the banking industry to self-regulate. Because banks, like any business, are only concerned about themselves. They don't care about the system as a whole.
So the everyone-deserves-to-own-their-own-home (even though you don't have the wherewithall) policy under the Clinton administration doesn't count as the government interfering with the free market system?

If we can't trust the banking industry to self-regulate, then when they get in over their heads, why does the govt bail them (and others) out?
Big boys rules should have applied - I'd rather have a couple of years of pain than 30+ years.

Get rid of the mortgage deduction - I'm all for it. I never figured how paying $1 in interest to get .30 cents back as a tax write off was a
'good' deal anyways...
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Old 03-09-2010, 10:57 AM
 
Location: Illinois
718 posts, read 1,803,494 times
Reputation: 973
Do you remember when ALL consumer interest paid was a write off on your taxes? You could write off not only the car you bought that year, but the items you charged to your credit card or paid directly to the store for that new refrigerator. They took it away and with it went some incentive, then, to purchase something. When the government interferes, it is never with the intent to benefit the general public. It is to benefit the politicians making the decisions. As far as the incentive to walk away. You cannot do it if you have a home equity line of credit.....that bank is going to want it's money. When you have used your home as a bank you ultimately must pay the piper.
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Old 03-09-2010, 11:27 AM
 
3,576 posts, read 6,062,435 times
Reputation: 1432
Quote:
Originally Posted by DMenscha View Post
Well while we're at it, lets make sure that the mortgage interest deduction is abolished and the ability to deduct property taxes is taken away as well.
Actually this happens to the vast majority of people already. It's called the AMT (Alternative Min. Tax). A tax intended for the wealthy hits around 20-30 million americans each year.

Essentially the AMT disallows property tax deduction AND disallows state income deduction AND disallows exemptions (like kids etc).

It's probably one of the worst Democratic taxes on the "wealthy" that has completely backfired and affected middle class Americans.

Why? Because those idiots purposely did not index the AMT for inflation. They keep on coming up with "patches" each year but people like my friend with 4 kids making $80K a year in New Jersey get hit with this. He can't write off his property taxes, state income taxes.
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