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I don't think the administration should be worried very much about a bunch of Bobby got a bigger piece of cake than I did! whiners. What's necessary is to get credit markets back in gear and functioning smoothly. Everything runs on credit. If that process doesn't get put back on track, there will be significant impacts on such things as production and employment, and rather a great many other things depend on those.
Sag - I would think you would be among the first to notice that the credit system has been pushed beyond the limit and is falling apart. Too much money to be ever paid back has been borrowed because the underlying wealth creation has been relocated to another economy. Borrowing money with the expectation of paying it back is one thing but borrowing without any intent of making a repayment is fraud. Many of our citizens as well as our government have committed the later. Eventually the piper has to be paid and we cannot do it. Now or in the future.
I don't think the administration should be worried very much about a bunch of Bobby got a bigger piece of cake than I did! whiners. What's necessary is to get credit markets back in gear and functioning smoothly. Everything runs on credit. If that process doesn't get put back on track, there will be significant impacts on such things as production and employment, and rather a great many other things depend on those.
Disagree with you here, I think the Bobby got a bigger piece of cake than I did crowd will have a bit of say in the next election.
I have found that nothing makes folks angrier than perceived inequity, and this has the potential of playing out very ugly in the election discussions.
This society and economy are based on inequity and most of the folks seem to like it. Based on the comments on this board, even the folks on short end of the equity stick are not angry but seem to be blaming themselves for the inequity.
I am angry and I do not blame myself. I blame a rigged system that rewards the haves and have mores at the expense of the have little and have nothings.
This society and economy are based on inequity and most of the folks seem to like it. Based on the comments on this board, even the folks on short end of the equity stick are not angry but seem to be blaming themselves for the inequity.
I am angry and I do not blame myself. I blame a rigged system that rewards the haves and have mores at the expense of the have little and have nothings.
Kind of just proved my point there with your last statement.
Sad mess. Thank the lenders. Most people have a very "average" understanding of mortgages. Two years ago, a borrower needed only to stay in the new house for three years; sell the house, take the equity, and move on. Then lenders got greedy; wasn't enough to lure mostly qualified buyers who could get a decent rate. Lenders thought, "I bet that family of 7 with $50k annual income would like to own a house too." These people aren't overfinanced in $750k houses, that's the exception. More like $200k-$300k houses, at least here in Maryland, which is the worst possible thing that could happen. Lenders regularly pressure appraisers to inflate home values so the lender can say to the buyer, "It's worth $250k and you're getting it for $200k! You'll have instant equity! We must get you into that home!" So you're doing good for your family and sign on the dotted line; you have equity, which means options and flexibility. When you apply for a refi, however, the new appraisal isn't $250k, it's $210k, and what you thought was 80% LTV is now 95% LTV. Well, then refinance, you say! You can't. It was a stretch to get you into this house. Sell the house, you say! No one's going to buy it for a price that will pay $15k-$20k closing costs and realtor commissions; you won't be able to convey clear title. You don't have enough to hire an attorney to sue the lender/appraiser for inflating the appraisal. You may have enough to file bankruptcy. The fun starts when your neighbors list their homes for sale; the comps in the neighborhood (including your overfinanced home) have dropped their home values. Now your neighbors are in the same boat. The process works its way down the block like a flu or the common cold. Suddenly, the victims are not just that low-income family who wanted something a little better for the kids. Thank God the administration did something (too little, too late, too many restrictions). Again, thank the lenders.
As NewToCA stated earlier, there are clearly two issues to be discussed here, even though I tend to look at these two issues as being unrelated to the two she proposed.
1.) Living Beyond One's Means: Greatday is a perfect example of someone who has a McMansion but can afford it. More power to her. However, If we were to head to her cul-de-sac and investigate the tax returns of others in her subdivision to compare their unadjusted gross income to the price they negotiated to purchase their home, we'll likely find other cases of folks living in these McMansions who are barely keeping their head above water financially and literally living "paycheck to paycheck" indefinitely. This is the perfect case of "keeping up with the Jones's" gone a step too far. It used to be that someone would try to look as materialistically "successful" as possible while still balancing their checkbooks. If you couldn't afford something, you'd buy something a step down and dress it up to make it look more prominent. Now American society has the mentality of "If Suzie Q. just bought an Audi A6, I'll rush out to upstage her with an Audi A8 using my credit even though I know in advance I'll be unable to make the monthly payments after a year. I'll just make the payments as long as I can and pray for someone to help me." There's a reason why the average household has thousands in credit card debt and a negative savings balance. People are trying more dilligently than ever to compete with one another to see who can accumulate the most junk in their garages. If they honestly CAN afford to live such a lifestyle (as GreatDay and a few others seem to be able to), then more power to them. However, if a future credit crisis occurs in which our government proposes a bailout for those who KNEW they were living a caviar lifestyle on a Wal-Mart budget, then I hope it doesn't pass Congress and these people lose everything they have as a "wake-up call" to Americans to STOP LIVING BEYOND THEIR MEANS! My old high school hall monitor drove a Jaguar. Either she's the best compensated hall monitor in history, or she's in debt up to her eyeballs.
2.) Being Lured Into The Fray: Not everyone is an aspiring CPA/CIA, as I am. You can't honestly expect everyone to have thorough knowledge of finance, or more specifically the mortgage industry, and a shrewd, greedy sub-prime lender knows this and will capitalize upon that ignorance to mold people into making stupid financial decisions. After all, there's a reason why just about every financial advisor I know drives a Navigator and lives in a McMansion, and it likely isn't because they're the most honest people. Many will steer their clients towards high-risk ventures (that offer more profit for them as their advisor) as opposed to more stable, low-yielding ventures that won't be as lucrative. The same logic applies to the mortgage industry. Some sub-prime lenders saw "Joe Nobody" who made $40,000 as a factory worker and threw out so much sophisticated jargon that they fooled these people into believing they could afford the unattainable. One can argue that the borrowers "should have known," but have you taken a look at the intellect of our nation at-large as of late? Do you honest expect people who drool while watching American Idol and shoveling pork rinds into their mouths to be articulate enough to know the implications some of these financial terms may have upon their futures? Yes, some of these borrowers SHOULD have exerted the effort to research more heavily before signing on the dotted line, but on the same token some of these sub-prime lenders ought to be flayed publicly for knowingly taking advantage of peoples' ignorance. This would be no different from me, a serpent, knowingly deceiving people by telling them to take a bit from the forbidden fruit.
I have sympathy for those in #2. For the materialistic jerks in #1, I'd rather see them shivering on the streets to get a REALITY CHECK before any future bailouts occur to help them keep their homes.
Last edited by SteelCityRising; 01-16-2008 at 07:25 PM..
Reason: Text Formatting
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There's a reason why the average household has thousands in credit card debt and a negative savings balance. People are trying more dilligently than ever to compete with one another to see who can accumulate the most junk in their garages. If they honestly CAN afford to live such a lifestyle (as GreatDay and a few others seem to be able to), then more power to them. 
However, if a future credit crisis occurs in which our government proposes a bailout for those who KNEW they were living a caviar lifestyle on a Wal-Mart budget, then I hope it doesn't pass Congress and these people lose everything they have as a "wake-up call" to Americans to STOP LIVING BEYOND THEIR MEANS! My old high school hall monitor drove a Jaguar. Either she's the best compensated hall monitor in history, or she's in debt up to her eyeballs. 
