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Predicting price shifts gives you good odds: 50-50. And everybody with half a brain knew the tech wreck was coming. When even Louis Rukeyser starts using the phrase 'tulip bubble,' you know it's time to get out. The point is, lots of people make predictions, and even if they are frequently right, it doesn't do to bet on them unless you have hedged the other way, to protect yourself. The very next prediction could be the wrong one that causes a massive blow-up, because people tend to bet more and more on someone who seems to be getting it "right," and because they discount the frequency and severity of unlikely outcomes. In other words, it's human nature to want to avoid thinking about the possibility of total wipeout, by placing faith in others. So we imagine someone else has a better clue than we do, because the idea that chance and luck governs the game is existential terror at its worst. Faith gives us a sense of control by proxy.
I say, don't put your trust in gurus, as if they knew more than you do, because they don't-- they are all looking at the same massive wad of data, regurgitating it to their audience, reinforcing their personal brand, selling their image as "authorities." When the tide turns, they can go down fast, and many have done over the last several decades.They are not in control of the future, and are subject to the whims of chance and randomness, just as we all are. There is no certainty in this world, but hedging will give the illusion of more control, at least.
Great Post! I tried to give you rep points but I maxed out my quota. Sorry. But thanks, again, for the great post.
For many who bought in the past 3-4 years, particularly in bubble markets, many will be financially better off to walk away from their mortgage obligations. Morals have nothing to do with this. It is wrong to welch on a debt and even with bankruptcy or foreclosure some borrowers are better off walking away when they have negative equity in their homes. This will only get worse as prices continue to decline over the next 12 months.
Should I default on my car loan because the car lost value the minute I drove it off the lot?
Should I default on credit card payments because the stuff that was acquired is not worth what was paid?
Or maybe, I should set fire to my house and let insurance pay for it? After all, I spent my "hard earned money" on premiums and am entitled to a decent ROI.
And while I am at it, I think I might just take a bad tumble on that waste can, next to the copier, at the office and let Workman's Comp pay for the break, that I so deserve, cause my employer does not pay me what I am worth.
Should I default on my car loan because the car lost value the minute I drove it off the lot?
Should I default on credit card payments because the stuff that was acquired is not worth what was paid?
Or maybe, I should set fire to my house and let insurance pay for it? After all, I spent my "hard earned money" on premiums and am entitled to a decent ROI.
And while I am at it, I think I might just take a bad tumble on that waste can, next to the copier, at the office and let Workman's Comp pay for the break, that I so deserve, cause my employer does not pay me what I am worth.
you're missing the point. why should the government help some and not others? more importantly, why should they help those who were reckless with their purchases and not those who lived within their means?
I understand. I own my home and car, free and clear. I have no debt. I have no children in the school system. I pay taxes.
I use credit cards for everything I buy and pay them off when the bill comes due. I understand the meaning of "doing without" because I cannot afford to pay for what I want, when I want it. I thought there were consequences for poor judgement.
Should I default on my car loan because the car lost value the minute I drove it off the lot?
Should I default on credit card payments because the stuff that was acquired is not worth what was paid?
Or maybe, I should set fire to my house and let insurance pay for it? After all, I spent my "hard earned money" on premiums and am entitled to a decent ROI.
And while I am at it, I think I might just take a bad tumble on that waste can, next to the copier, at the office and let Workman's Comp pay for the break, that I so deserve, cause my employer does not pay me what I am worth.
Are you aware that defaulting on a contractual obligation and fraud are two completely different things? Next you're going to compare a default with murder.
Should I default on my car loan because the car lost value the minute I drove it off the lot?
Should I default on credit card payments because the stuff that was acquired is not worth what was paid?
Or maybe, I should set fire to my house and let insurance pay for it? After all, I spent my "hard earned money" on premiums and am entitled to a decent ROI.
And while I am at it, I think I might just take a bad tumble on that waste can, next to the copier, at the office and let Workman's Comp pay for the break, that I so deserve, cause my employer does not pay me what I am worth.
Middle-aged mom, you do see the irony in this latest piece of Peter Schiff's that you linked to? It sounds like you are writing him off as an idiot for giving advice like this, when in fact he has written an ironic piece about how ineffectual the bailout is for those of us with our finances in order. Have I got that wrong? It's just you seem so outraged by what he is saying (as am I - but not at HIM, at what is going on), and I can't tell whether you posted this to discredit him, or because you can see what he is saying is true?
Just look at these comments: "To bolster your bargaining position it will help to be able to claim poverty. As a result, if you have any savings, spend it soon, before they call. Buy a bigger TV, a new wardrobe, or better yet, take a vacation. After the hardship of spending all of your refi cash, you probably deserve it. If you have any guilt just remember, Washington argues that consumer spending is the best way to stimulate the economy. Living beyond your means is a patriotic duty."
and: "Unfortunately, this boon will not extend to those foolish individuals who either made large down payments or resisted the temptation of cashing out equity. The large amount of home equity built up by these suckers, I mean homeowners, means that in the case of default foreclosure remains a financially attractive option. As a result, these loans will be much less likely to be turned over to the government. "
While the above is funny in the way it is written, it is also completely outrageous to me that the government has chosen to do this. I am totally with you in being outraged by what is going on here - those who make poor and greedy finacial decisions are being rewarded by the government with principal forgiveness, etc while those of us who have actually been sensible are punished.
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he may be right, regardless of morals
