HBB Remedies For Getting The Nation Back On Its Feet
Readers suggested a topic on housing bubble solutions. “On this July 4 weekend - how do we declare economic independence from the housing and credit mess that some very unpatriotic business and gov’t leaders got us into? HBB remedies for getting the nation back on its feet.”
One posted, “We need a crash course in America to not only teach people to read write and speak English, (eliminate functional illiteracy) but also mandatory financial education courses to graduate high school AND college.”
“If we as Americans knew how to do 8th grade math and use a calculator, there would not have been a housing bubble…IMO.”
A reply, “The more educated the populace, the more unhappy that they will be with their inevitable fate. Do you really want a lot of disgruntled Ph.Ds working checkout or cleaning bathrooms? These are the jobs of the future in this country. Awareness will only breed discontent. Education will just exacerbate the bad feelings. Have a good 4th.”
Another, “I’m not so sure. Most people are greedy and lazy. I’d also suspect that the majority of people who participated in the bubble were frustrated lower-class people who really wanted that Hummer but didn’t want to work for it. No math will convince them that they don’t deserve what they think is the jet-set Hollywood lifestyle…”
And another, “They knew 8th grade math well enough to calculate all the riches they would sock away after they flipped the McStuccoBox in Queen Creek onto a Greater Fool…”
One suggested, “How about some stories where people are doing well with real estate where they showed some commonsense and aren’t drowning in debt?”
A reply, “A good portion of the folks who aren’t drowning in debt do not have the perspective that they are doing well.”
“For instance, my in-laws purchased their suburban Atlanta home 30+ years ago. It’s gone up in value (not much - it’s hasn’t kept pace with inflation) and they only pay small yearly property tax and insurance bills for housing. So, based on my perspective, they’re doing very well.”
“However, they do not view their fate the same way. They talk about all the value they have lost in their home since 2005 - something they view as real lost money.”
“They also focus on the appreciation other areas of Atlanta have experienced relative to theirs. Had they purchased the same value home in Midtown Atlanta back in the late 70s, their home would be worth triple what their current home is worth.”
“Their case is not unique. I hear from many long-time owners with loads of equity about all the money they have ‘lost’ since the crash. It seems to me that they only people who are happy with the crash is people who have been renting since 2005.”
One added, “My dad is the same way - huge house, bought cheaply in late 70s, paid off years agot, intends to put on the market this month. He is adamant about not taking less than $400,000 for it. The man could take $300,000 and it’d STILL be an enormous win-win for him, but he can’t see that.”
Another observed, “I know a guy at the gym with a long face he is always talking about the $100,000 dollars he has lost on his house just this last year. Has owned the the house for over 15 yrs!”
One had this, “We seem to be doing better than the people my husband works with. All of them do a lot of driving since they do onsite technical support. Some days my husband sits at home and does research or studies. Other days he drives 300 or 400 miles. He gets 35 miles per gallon. Most of his coworkers drive trucks or SUVs.”
“Also we owe very little on the house, mainly from necessary repairs such as a roof. They are either renting expensive places or bought in the last couple of years.”
The Mansfield News Journal. “Even folks in the Optimist Club are having a tough time toeing an upbeat line these days. They use words such as ‘terrified,’ ‘disgusted’ and ’scary’ to describe what one calls ‘this mess’ we Americans find ourselves in. Happy birthday, America? This year, we’re not so sure.”
“‘There are so many things you have to do to survive now,’ says Larue Lawson of Forest Park, Ill. ‘It used to be just clothes on your back, food on the table and a roof over your head. Now, it’s everything. I wish it was just simpler.’”
“Lawson, mind you, is all of 16 years old.”
“Some of the gloom and doom may simply reflect a society that demands more and expects to have it yesterday, but in many cases there’s nothing imaginary about the problems.”
“Stay-at-home-mom Heather Hammack grapples with tough decisions daily about how to spend her family’s dwindling income in the face of rising food costs.”
“‘We used to have more money than we knew what to do with. Now, I have to decide: Do I pay the electric this week? Do I pay for gas? Do I get groceries?’ says Hammack, 24, who lives with her boyfriend, a window installer, and their 5-year-old son in a rented home in rural Rowlesburg, W.Va. ‘You can’t get ahead. You can’t save money. You can’t buy a house. It just stinks.’”
“Allison Alvin condemns an ‘out of style’ values system, in which even kids have cell phones, credit card debt is out of control and families purchase four-bedroom homes they can’t afford instead of the two-bedroom ones they could.”
“‘I’m mad at us … all of my fellow Americans. Maybe a little hardship would be good for us,’ says Alvin, who at 36 has a job as a freight exporter in Cincinnati, a husband with a factory job, two healthy children, her own home and four cars, all paid off.”
“At the same time, she acknowledges feeling that ‘things are getting worse.’ ‘When you’re my age, you feel like you should be improving - more financially stable, instead of hand-to-mouth. It doesn’t matter that we’re better off than (others). It still hurts. It’s still painful.’”
“At 82, Ruth Townsend has experienced her share of downturns - in her own life and that of the country. She suffered a stroke years ago that left her in a wheelchair, and lives now in an assisted-living facility in Orlando, Fla. Townsend recalls World War II and having to ration almost everything: sugar, leather shoes, tires, gas.”
“‘You made do with the little you had because you had to. You shopped in the same stores over and over because you HAD to. We had coupon books and stamps to figure out what we could have,’ Townsend says. Americans have gotten so used to ‘things,’ she says, ‘that we can’t take it when we hit a bad patch.’”
The Press Enterprise. “Beverlee Williams had what she thought was a carefully crafted plan for retirement. But she saw that shatter with the Inland housing market.”
“Upon retiring in 2001, Williams, 63 and a former city planner, paid off the mortgage on the modest single-story house she has owned in Riverside more than half her life and got it ready to sell to supplement her small pension and Social Security.”
“But the house fell out of escrow a year ago, and she said she waited too long to put it back on the market. Her house had lost about $125,000 in value.”
“Williams said the loss of equity means she probably will have to abandon plans to lower her living costs by moving to Arizona and buying an annuity to help offset the rising prices of gas, food and utilities.”
“‘We are looking at a generation approaching retirement that has taken a very hard hit. They counted on the equity in their homes and it is not going to be there,’ said Dean Baker, co-director at the Center for Economic Policy and Research, a nonpartisan think tank in Washington, D.C.”
“Chuck Cox, 65, said since he retired from the construction industry in 2006, he has seen about $175,000 of equity vanish from the four-bedroom house that he and his wife Cindy, a retired school principal on disability, own in the Del Rosa area of San Bernardino.”
“Cox said the house was appraised at $400,000 in January 2007, when he refinanced it to pay off all their other debt, including a car and credit cards, in preparation for retirement. He also remodeled, updating the kitchen and installing a new furnace and air conditioner to appeal to prospective buyers.”
“In retrospect, Cox wishes he had not refinanced. He said he has learned that the ultra-low interest rate he has been paying on his new mortgage is just a fraction of the actual interest he is being charged, and which has increased the debt on his home from $182,000 to $200,000 while the home’s value has shrunk to about $225,000.”
“In the summer of 2007, the couple traveled to Arizona and Montana to shop for a less-expensive house they wanted to buy after selling the one in San Bernardino. But by the time they returned to Southern California, Cox said, ‘home prices were starting to fall and falling fast.’ Before their house could be sold, he said, there was no chance they could make enough profit to move.”
“So, the couple sought a reverse mortgage that would eliminate their need to make a monthly house payment and make it easier for them to cope on their Social Security and savings. But they were short $50,000 in equity they needed to qualify for the mortgage.”
“Cox said although he suffers from chronic leukemia that makes him fatigued, he needs to put off retirement and find work.”
“Some people like Larry Gage with large real estate investments have decided to wait for some improvement.”
“Gage, 65, a real estate agent, said two years ago he was easing into retirement because he thought he no longer needed to work. He had bought about 22 homes, most in southwestern Riverside County.”
“Gage’s plan was to put in renters and sell a house occasionally to finance his retirement, because he expected the property would appreciate. He said that now the houses would sell for less than he paid and he doesn’t plan to retire for another four to five years, in which time he hopes for the housing market to begin to rebound.”
needs to put off retirement and find work.”
No sht.
Lots of my coworkers who are in their 60s are now looking at 65+ and that doesn’t count the ones that are already 70+ who say year after year… maybe next year.
You just have to marvel.
What exactly did they do with 40 years of income?
I mean I understand life throws some curveballs, and bad things happen to some of them but all of them? That’s really impossible to believe.
Right, this UHS comes out of the biggest boom in CA history and rolls it all into 22 cash-flow negative houses! Now he’s underwater and the plan is to see if the market turns around.
At some point it has to be recognized that these people were gambling and treated as such. IMO, that is the only way we are going to learn anything form this mess and move on. And denying the facts won’t do anyone any good.
“Gage, 65, a real estate agent, said two years ago he was easing into retirement because he thought he no longer needed to work. He had bought about 22 homes, most in southwestern Riverside County.”
YOU FOOL! Now that all the artificial value created from housing is being destroyed, people are realizing that the rentier economy that was being built in this country was a total illusion. The next years are going to be extremely hard because most Americans have hit the wall–they can’t get any more money to spend, either through wages, houses, credit cards, or anything else.
Do the following to survive the depression–post them on your refrigerator:
1. Get and keep a job.
2. Rent so you can be mobile for your job.
3. Save at least 25% of your after-tax income. Do not touch the stock market until the dividend yield of the S&P 500 reaches 4% (it is 2.4% now).
4. Eliminate debt unless you could pay it off if you lost your job.
Keep the popcorn popping,
Red Baron
Um, Red, honey?
If you have anything new to add to this discussion, please do so. If not, you’re really getting tedious.
Seriously.
Your audience has (long ago,) exceeded your analytic pretensions. Time to get a new catch phrase, okay?
Thanks.
“…At some point it has to be recognized that these people were gambling and treated as such…”
Not to be snarky here…but what where his other options…the market…gold and other metals don’t produce income…
I say this because I had the same strategy…which worked well for me…however, buying 22 SFR’s wasn’t the brightest idea and he should have known better…but I consider Real Estate a safer and better investment than anything Wall Street has to offer…
What were the options?
So perhaps income production is NOT possible? Did this ever occur to these genius purveyors of the wannabe rentier class?
Why is the production of rentier income such a big assumption into your retirement goals anyway? Have you studied no economic history? Heck, have you studied no Jane Austen?
Interesting set of posts.
While it’s possible you were being facitious, FSPP, but did you really think that anyone from the older half of the Baby Boom generation did anything other than live the high life? Their Me-Generation, Me-First approach to life has gone on for four decades now. (I maintain that this Hedonist Generation was born from 1938 to 1954 or so, NOT from 1946-1964). The mindset of those born in the late 1950s/early 1960s differs markedly from that of those born in the 1940s. Their formative years were dissimilar in many ways.
Ben - can you explain the acronym *UHS* for me? What does it stand for?
Red Baron - why 4% on the dividend? Is that a historical given, or part of a mathematical formula?
mrincomestream - It’s good to hear when real estate works for someone. I’m going the stock market route, despite the higher volatility. I like having liquid assets. For me, the move IS risk-averse in that it allows me to be nimble as conditions warrant. I can’t live well without flexibility and change. (Tho I can live w/o Obama who represents neither).
The 4% dividend yield for the S&P 500 is roughly the historical average. Stock prices have been so inflated for so long that few people can remember what good value really is.
Like with houses, just because stock prices are down 20+% from their peak does not mean they are good value.
Keep the popcorn popping,
Red Baron
“…Why is the production of rentier income such a big assumption into your retirement goals anyway?…”
It probably has something to do with watching a special on PBS eons ago about a 53 year old secretary living on the street after years of investing in the market and her pension being destroyed by Corporate raiders (I’m paraphrasing but you get the picture)…I understand the liquid argument and in some ways I agree…I also invest in the market…but the Multi-Family’s for me are bread and butter…I can think of no safer investment if one knows the numbers and buys correctly…Investing 101…buy what you know…
“The mindset of those born in the late 1950s/early 1960s differs markedly from that of those born in the 1940s. Their formative years were dissimilar in many ways.”
Boy, I’ll say. I’m born in ‘57 and currently live in a very small community that’s increasing composed of retiring 60’s protest era relics. I can’t relate anymore.
UHS means Used House Salesperson.
“The mindset of those born in the late 1950s/early 1960s differs markedly from that of those born in the 1940s. Their formative years were dissimilar in many ways.”
yep I was born in 1960 and have been toiling all my life in the backwash of the older boomers…. so I sold my house in 2006 just before they all figured out they were screwed. You see they ALL told me the plan was to sell CA RE for millions and retire to Las vegas , Prescott, etc.
I figured this time I pull out of their backwash before they can swamp me again with their hugh numbers and me first plans.
And I guess plenty of people my age were drinking the koolaid as well.
Funny, isn’t it?
Just eight months ago sub-prime was “contained”, the stock market was fine, housing was an “investment” and driving a big SUV was cool.
Ben, you haven’t posted a SoUtah story lately so I haven’t posted the conversation I had with a developer.
What do you call a 1800 home (Callina Tinta) development ($600,000.00-$8+ million homes were planned) with many lots stepped in and some infrastructer on sections complete (sewer, electric) surrounding a Jack Nicklaus designed 18 hole golf course (unfinished)?
If it’s in Hurricane, Utah you call it shut down until further notice and you take off the website promoting it and pray that the “market will come back and we will get this finished someday”.
The County was planning on about $9 million in impact fees on this beast.
i just checked the Riverside County property tax record rolls and it shows Larry Gage owns 19 properties, most purchased new from builders 2003 through 2006. all except one were in Lake Elsinore and Corona—ouch!
It would be really interesting to check out his original loan applications to see if indicated that he was going to be the owner occupant on more than one of these homes.
“no longer needed to work. He had bought about 22 homes, most in southwestern Riverside Count”
From where I sit, maintaining 22 homes for rental and resales purposes seem like a hell of a lot of work!!
It’s the “live for today” thing. And a lot of us didn’t expect to reach 30. Then we forgot to make plans.
Thirty?!?
Was this the bomb and MAD (mutually assured destruction)?
Should I sympathize? Will you pay for the laundry once my tears bedew my laced handkerchieves out of my feelings for you?
Or should I invoke the (possibly apocryphal) banker who on the brink of the Cuban Missile Crisis is said to have said, “Buy everything you can on margin. In the worst case, it won’t matter, and in the best case, we will be rich.”?
Vietnam. Some ot over it-we did-but a lot didn’t. I see a lot my age that don’t appear to have grown up.
As a country, over the last 30 years or so, we started a fascination with the rich - what it was to be like them, what would I do if I had the money - the result was financial manias; stockmarkets, commodities, real estate, and now bio-fuels.
It is a valid question that you ask. People in their normal course of life were supposed to save and enjoy life within their means, but greed got the best of america. And here we are: living beyond our means (not all of us) wanting to have some before Joe & Jane next door does. We have become a “show-off” and “me-too” nation without properly understanding the consequences or the how it could be possible.
I think it is a great opportunity for teaching today’s kids from toddlers to teens some very important life lessons. This deflation will shape the social landscape for years to come. All in the hope that someday it will be riches for everybody again!
Sorry, this is a buncha BS. Gag me with a rubber d*ldo.
Read some 19th century American history. It was EXACTLY the same. Greed, panic, greed, panic.
Buncha hoo-ey this. Back in my day, it was all sunshine and dancing white ponies.
Yeah, right! Eat me, eat me raw.
“Buncha hoo-ey this. Back in my day, it was all sunshine and dancing white ponies.”
My dad was born in 1924. He used to tell me not to listen to folks who talked about the “good old days”. They weren’t that good, he said, and things were actually getting better all the time.
But, then, he’s dead now. Who knows what he’d say about the current economic mess.
…as above.. Same story different day. You can read ancient Greek, or Egyptian tablets on Greedy politicians, fools,and money. The grass looks greener on the other side because you have to walk through bull fertilizer.
Also: “The more educated the populace, the more unhappy that they will be with their inevitable fate.”
Every revolution has been started from the educated upper middle class with time and money to spend. The rich don’t want change,and the poor are too busy trying to keep food in their mouth,and a roof over their head.
The more educated the less happy? Not with the Danes.
They are the happiest in the world, according to polls, stats, and themselves. They are the most educated, it is paid for and they know it growing up, they have full and complete health care, and what were the other things.
Oh yea, they just think americans strive so darn much. And they are happy as is. They don’t need the next buxom blonde to satisfy them, nor a f150 or things. They do however take great vacations, and their 6 weeks is paid for OFF. So, they come visit and marvel at how much we try to be the next aerosmith,donaldtrump,and britney.
Have you seen the women in Denmark? As Toki from Dethklok would say… woweee. That certainly explains Denmark’s happy men.
There is pretty much just Danes in Denmark. Makes it a little easier to manage just one culture. In my business (agriculture) we have hosted foreign exchange students from Denmark (and other European counties as well) over the years. The Danes are nice, well informed and well educated people but so very socially isolated.
Ask the Danes about their taxes, or about how much it costs to buy technical books and blue jeans. I work with a Dane, and he’s always shipping stuff home to his parents and sisters because it’s cheaper to buy stuff in the States and ship it across the ocean than it is to buy it in Denmark.
I HAVE a great plan and like Yossarian of “Catch-22″ fame, I plan to Live Forever or Die in the Attempt
Hey, life Does throw curves, and was on recovery path, when co reduced pay by _35%. so it has been scrapping and working 3 jobs and one business just to catch up again. Now if everything would hold out for a few yrs… OH YEah, aint goin to happen. So, what next?
Frugal is the buzzword for several yrs.
Card games anyone?
No, but a lot of your peers expect everyone younger than they to live a hell of longer than Age 30 to pay for your generation’s hedonism.
I wonder what Franklin Delano Roosevelt would think of the self-absorbed, hands-out generation that he was instrumental in producing.
“I wonder what Franklin Delano Roosevelt would think of the self-absorbed, hands-out generation that he was instrumental in producing.”
I was thinking LBJ myself!
yo! I’m pushin’ 60 and I was a protest generation kid. guess what? I still am. no kid but I live as an outsider. don’t buy this consumer culture.. I lived by my ideals all these years and I saved my money. i worked for no corporations cause i don’t trust ‘em. I never wore a suit and tie. hey i had to make some compromises and my biggest lesson in life is learn to walk in other peoples shoes. that helps alot. I didn’t trust no plastic people and believe me they abound through all the generations that followed. there is so much conformity now that it’s a blessing I don’t watch no tv and live by my own rules. i bought land and i am building my retirement home, all in cash. That is a solar energy, geothermal dump about 800 sq ft. and that is not in no podunk berg. I’m an hour away from the Apple. I saved my money and bought nothing that wasn’t essential. Believe me I got no answers for no one only don’t trust the corporations and we should get together and have that evolution we talked about 40 years ago. vote out the corrupt Congress. I’m a new deal democrat and we sure could use a new deal again. This one we’d make power plants that run on sun. make trains that bullet along. Lastly, don’t think all protest generation people sold out cause they didn’t.
many of us never fell for the consumer culture one iota. I haven’t watched tv in 20 years. that helps. yeah i get the blues.
“What exactly did they do with 40 years of income?”
Hey, give ‘em a break…granite countertops and Hummers are awfully expensive!
Speaking of expensive things, I’m surprised nobody has mentioned all these iphones and crap which are “must have’s”. Ever checked out some of the charges for using these things? I was in an AT&T store getting a battery for my very old phone, and they wanted to interest me in a new contract (I’m month to month) by offering some spectacular price on any smart phone, blah blah blaaaahhhh…
I asked how much to operate the thing (fully loaded GPS, download this, upload that, text here, there, everywhere, send this, create that, whatever), and the “packages” were something like $50 and up, which was in addition to my current bill!!! Yeah f***ing right, give me the battery and I’ll see you @ssholes down the road!
Anyway, I see a drop off in this sort of discretionary spending. This is absolutely unnecessary waste except for the busiest businesspeople who really need it and can afford it.
In our rural community, the local Californicator bigshot entrepreneur in his “Hummer” (as he always made sure to mention–not just his truck) has been strangely absent of late. I suspect he’s busy selling off his ATVs, the wife’s baubles and holding garage sales to maintain his Stoly habit.
And so it goes. Yes, kiddies, it’s a Schadenfreude Summer.
> Do you really want a lot of disgruntled Ph.Ds working checkout or cleaning bathrooms?
Sure, if they have degrees in something like Gender Studies, Art History or “Surf Studies and Technology”
“Some people like Larry Gage with large real estate investments have decided to wait for some improvement.”
Yup… It’s the new black. The latest and greatest NARscum lie. Good times are right around the corner, brighter days are coming.
Is any here besides me anticipating a prolonged credit contraction with interest rates at 8% or better? Of course the corporatists love the artificially low fed rate and the understated rate of inflation and the coincident devaluation of the dollar but it’s come real clear to me that the well has run dry. They’ve robbed everyone blind and the larcenous corporatist crowd has emptied pension plans and laid it on the tax payer shoulder. And considering the corporatists and their wealthy elite minions pay far less taxes than we do, what do they care? Rape, rob and pillage. It’s the corporatist way.
My sister and BIL invested the money from the sale of his mother’s home in Marin in a REIT. And worse yet BIL decided to invest the money from his 401k in the REIT too. It stopped paying dividends recently. They haven’t faced that the money is gone yet.
The money is gone. And it ain’t coming back.
RIP.
Sigh, it gets worse. She has power of attorney over my Mom’s affairs now. She’s thinking of selling my Mom’s houses and investing the money. It ain’t gonna happen.
Ouch. Is mom alive and living in house?
Mom is alive but no longer able to care for herself, her cat or her affairs. I got the half dead kitty and she got my Mom. I got the better end of the deal.
“Is there any besides me anticipating a prolonged credit contraction with interest rates at 8% or better?”
I am, but the higher interest rates will probably come after the election. Lots of things are going to come after the election, few of them good (unless you have cash).
To make next year fully rhyme with 1974, which looks as if it is trying to do, we need a prolonged political scandal like Watergate.
There are far worse criminal acts committed the last 7 years but none will be prosecuted as the DOJ got politicized with the appointment of intellectual midgets from Regent University.
“You’re doing a heckuva job, Brownie!”
The new (Rep) midgets just replaced the previous (Dem)midgets.
Speaking of dems/repubs, stock up, Iran is next.
Speaking of finance, the long bond might be next.
Don’t cry for me, government paychecks.
Iran WILL likely be next if Obama wins the presidency. I think Israel may very well be justified in taking out Tehran’s nuke facilities if its allies (such as the USA via Obama) turn their backs on them.
You know, I wouldn’t like it much if a foreign nation told me that among it’s chief goals is to wipe the USA off the face of the Earth.
“I wouldn’t like it much if a foreign nation told me that among it’s chief goals is to wipe the USA off the face of the Earth.”
That was never said by Ahmenajad. What he did say, and it was questionable due to translation from Farsi, “we will wipe Israel off the map”.
Your attempt at revising history is very poor.
In any event, kind of a distinction without a difference. At least it certainly would feel that way to me, if I was looking down the barrel of someone else’s gun. But I’m funny like that.
No, exeter, it is not. And it’s not usually, either. If I don’t know what the hell I’m talking about, I’ll usually say so. Life is much easier when you admit your own ignorance. You should try it sometime yourself.
BTW, why the feeble attempt to change the gist of Iran’s message? Because you’re fearful of the growing public recognition that should Obama win the presidency, it’s likely that the problems in the Middle East will escalate considerably?
Israel and USA is a distinction without a difference? You’ve gone off the rails completely.
No edueman…. Ahmenajad never made that statement and you know it. Duck, weave, conflate and distort all you want. You are wrong. Save your self while I still extend the olive branch.
Love the 7 year clock. Ah the ‘good old days’ before 2001, when the DotCom meltdown and President Clinton constantly warning Americans of Saddam’s WMD and terrorist ties:
freedomagenda.com/iraq/wmd_quotes.html
Those were the days!
From what I read, it’s currently a game of chicken. There’s enough fear (even if those in the know aren’t saying so) of banks failing on a large scale as it is, due to the massive amount of debt already in default. Raise rates, that many more homes plunge further in value, millions more mortgages underwater, CC debt gets squeezed harder, etc, etc. There’s got to be definite worries of a complete collapse of the financial system.
So I think they’re afraid to raising rates, but at some point I don’t see how it can be avoided. The elections are one reason they may be holding off, the next wave of Alt-A resets may be another. Or maybe it’s just deer-in-the-headlights fear.
Long term rates are not controlled by the FED. They are determined at the auctions for long term bonds. Right now, I can’t believe anybody would bid at 4% for 10 year bonds.
There is a strange paradox that when too much money is in circulation it sometimes causes rates to go down since in bad situations there are too few good investments and it chases “high” quality like US bonds. This must be one of those cases because nobody can believe the inflation figures. Either that or they expect a big downturn and locking in 4% now is a steal.
I agree that the Fed is out of bullets, they can’t push rates down any further but they could push them up. That’s what I was getting at.
“Right now, I can’t believe anybody would bid at 4% for 10 year bonds.”
Must be fear ? Lack of safe alternatives ?
Bzzzt! I’m sorry, that answer’s incorrect.
I think the fed may start to push rates up a bit starting right before the election - they don’t want to be seen as messing with the election, so no move until the fall at the earliest.
Problem is, you arent going to get your 8% until we get some banks going truly BK - no bail out, nada and out of their ashes comes the bank of combotechie or whatever, manned by people who understand risk. The fed doesnt have the cojones to jack rates up until inflation puts a gun to their heads (food riots, etc.). No, its going to take a bank industry-wide reset where risk gets respected and we’re a ways off from that. Moreover, all the other central banks are depreciating their currencies at various rates to keep trade going - gotta keep those people working.
Gold and silver will continue to kick your dollar’s ass for at least some time to come. You’re playing checkers in a chess world.
I’m reading these retirement posts.
Traditional retirement planning schemes always suggested having a paid-off house, so that your property taxes and insurance were costs you could reasonably estimate against your SS/pension/investment income.
Traditional advice was that necessary upgrades…new roof, water heater…be done while still working so it could be paid from income, not savings.
When you calculated your net worth, you didn’t count your house if you were living in it.
All of these people in their 60s spent their working lives hearing this advice…
It’s one thing for folks in their 20s or 30s to make lousy choices, and have to start over..but these aging boomers lived thru the late 70s slump, the 87 crash, the dot. com crash…what were they thinking.
Seriously, they are old enough to know better.
When even the elderly act like fools..
One thing that was going around was that being concerned about money matters was crass and uncool. Spending money, yeah. You’d try to talk to them about it and they’d wave you off, I’m not into that. My brothers were like that because my dad was a money guy, saving and investing from his earliest working years at the end of the depression. One brother, a math major, actually told me he didn’t care about all that, it was boring etc.
So guess who ended up supporting two laid-off fiftysomething guys, their kids and grandkids for 10+ years? You got it.
Why did you do it?
I know, I know, it’s all for the children. I’ve heard that before. You should’ve let them hurt while picking up the kid’s schooling, etc.
The kids are never going to learn a lesson when uncle always rides to the rescue.
Who me? I was 1280 miles away supporting myself!
It was good old dad.
My uncle did the same thing with his kids, he worked hard while the kids played, then ended up supporting them, still is, even though he’s dead (inheritance).
Thanks, Losty. I wasn’t very clear.
People who don’t care about money need to get good govt jobs where the pension and auto savings is all taken care of for them. However, I knew a retired officer with a good commission plus SS who still managed to make a mess of his finances. A bank teller, a nice Morman girl, straightened it out for him and became his bookkeeper. Thereafter he was able to live like a maharajah here in MT in those days.
I was hoping it was her parents instead of her.
“One thing that was going around was that being concerned about money matters was crass and uncool”
In my family it is low class to talk about money.
One time my sister tried to hurt my feelings by telling me to just go look at my portfolio. Bitch.
My brother says he has one sister who thinks she doesn’t have enough money (me) and one sister who thinks she has too much. I panic, and the mean sister bought two condos for cash. She told my brother that I have my money in T-bills like it’s something bad. Like living off interest is low life.
Exactly.
Thinking in any form is “bad” and “uncool” today in post-mind America.
Thing about money is very bad since it means you are not a “player” - it is far better to spend all your money on spinners for your Hummer than to save for you or your kids future in today’s screwed up culture.
Me, me, me. Let me complete that statement. I wanna go first.
When even the elderly act like fools … you waggle a finger in their direction, and go, “HAAAAAAH HAAAAAAH”.
they are old enough to know better
So cry, baby cry!
At some point, maybe 12:30 PM on some future Thursday, the Secretary of the Treasury announces that the USA can no longer service its deebt. Force majeure. Matial law over the weekend. Banks closed Monday. Welcome to the new money.
Deebt = deep, scary debt.
Do I get a day off work?
ROTFL!!
Yes you do, but it will be an unpaid day.
OF 51
Look it up on the Gov website.
…also mandatory financial education courses to graduate high school AND college.
Who determines the curriculum?
Lesson #1: A house will be your biggest and best investment.
Don’t forget to teach “Debt is Wealth.”
“How do we declare economic independence from the housing and credit mess that some very unpatriotic business and gov’t leaders got us into? HBB remedies for getting the nation back on its feet.”
By learning to use only one word: Look those unpatriotic business and gov’t leaders straight in the eyes, and say as loud as you can, “BULLSHIT!”
The Fed Chairman needs to raise to rates and stop this BS.
Whatever. Ain’t happenin’.
Suck it up, big boy! This crash is going to long and epic.
I agree. Bring Paul Volker back and defend the dollar. Stop printing more money and try to get through the pain as soon as possbible.
I’m in.
Er…right after I get my stimulus pack.
Right, be sure to save it for something to do on that day off.
Ways of solving the problems facing America today .
(1) Let the housing market crash ,and let the losses fall as they may .
(2) The builders should just stop building for a long time .
(3) This Country needs to start bringing back its manufacturing based and stop outsourcing jobs to slave labor countries . So any laws or tax breaks that further that objective should come into play .
(4) Spend tax dollars on creating jobs (such as public projects ) ,forget about tax dollars to save a crashing real estate mania market . Honor FDIC and other protected accounts and forget about the rest . Let the risk takers fall .
(5) Extend employment insurance during these times . Use some tax funds for
food and trailers for the families that can’t find employment ,but want to work .
(6) Send all the illegals back to where they came from . Also require that no hand-outs will be given to parties that don’t have a min. health insurance plan ,just like they require liability insurance to drive .
(7) Give some banks some tax payer funded long term loans to survive ,which have to be paid back . Forget about taking on bad paper and the only answer is for the banks to unload their REO’s at fire sale prices .
(8) Raise taxes on the upper 15% of the income earners . Take away the
500k tax free break on capital gain from real estate every three year and make the requirement of ownership for 10 years or more instead of 2 years .The middle class is tapped out and can’t afford any more tax increase ,so you have to get it from where it is available . I know this isn’t fair ,but during bad times it has to be done . Remember the rich /and upper middles classes use to pay 70% tax rates when I was younger ,so a little more than the current tax structure is do-able .
Also do away with some bogus tax deductions so that some of the people will pay more of their fair share .
(9) Raise taxes by adding some luxury taxes to some items ( hard for me to figure out which items yet ).
(10) Kick out all those useless ,corrupt , bought out ,members of Congress and the Senate and get a new set of problem solvers .
(11) Extend the time to retire or collect SOCIAL SECURITY to 70 years old (unless you can prove you have medical conditions that prevents you from retiring later ) .The powers also need to re-work the medical system into something that is more workable and
cost effective .
(12) Also let law enforcement and the legal system deals with the fraud and the evildoing during the mania ,and bring about the proper regulations to prevent this crime wave housing mania from ever happening again .
(13) Also ,work on improving our energy systems …before its to late .
Thats all for now ……….
Great post, HW. First post that I totally agree with in a long time. I intend to vote for the candidate that will implement as many of those points as possible.
“Understand this: things are now in motion that cannot be undone. I ride for Minas Tirith.”
-Gandalf, LOTR.
The “flipper” class pays very little taxes. They get those cap-gains exemptions, no tax on forgiven debt, and over-generous BK laws.
I think EVERYONE’s taxes should go up. I’m not opposed to a slightly progressive tax structure, but you should have the majority of Americans paying little or no taxes, as you have now. Everyone’s taxes need to go up, otherwise we no longer have a democracy. We have a mob stealing from the few percent of productive people.
Correction:
“but you CAN’T have the majority of Americans”
Also, watch out for the “luxury tax”. About 15 years ago, a luxury tax was put on Yachts. And you know what happened? The American yacht-making industry collapsed, putting skilled carpenters and craftsmen out of business.
Many hand-made luxuries provide a lot of jobs for a lot of people.
For example, read this:
http://query.nytimes.com/gst/fullpage.html?res=9F0CE5DC1230F930A35753C1A965958260
I wouldn’t try social engineering with a tax code.
I do feel that ALL tax deductions should be eliminated. No more deductions for children, mortgage interest, etc.
“I do feel that ALL tax deductions should be eliminated. No more deductions for children, mortgage interest, etc.”
AMEN!! Best idea I’ve heard this week.
Excellent! I agree strongly that ALL tax deductions should be scrapped…and at the corporate level, too.
I’m tired of the government trying to dictate our social and ethics codes via taxation. Tax breaks if you’re a welfare mama. Tax breaks if you’re married with kids. Tax breaks if you buy into Al Gore’s phony baloney. Tax breaks for college tuition as the government hands over more and more of my money to universities. Tax breaks for churches. Tax breaks throughout the criminal code and legal professions. Tax breaks for government officials on tacking a crap in the golden bathrooms with granite countertops.
The bullshit is endless. If we got rid of tax deductions, it’d go some ways toward lots more people understanding what the hell they’ve actually got fiscally-speaking.
“The bullshit is endless.”
Flat tax?
I agree with you. The reason I can say that and still call myself a fiscal conservative is that I DO NOT believe in deficit spending.
If you want absurdly low taxes, then decrease ALL government spending across the board. If you want a nanny-state with lots of entitlements, then tax appropriately.
The one thing about this country that drives me completely apesh*t is that we try to have it both ways. It’s simply not possible.
Well said, NSO. We differ quite a bit, but this is right on. If the govt is gonna do everything, it needs to be paid for with current taxes, not with the wages of those not yet born or on the backs of savers.
It’s one reason I support a hard money (I know FPSS, it’s not politically feasible…), it forces govt to get revenue first then spend, instead of manipulating the money supply for political whims.
I’m not paying a dime more in taxes until I start seeing a real return on my investment in this country. The infrastructure sucks, the schools suck, the air quality still sucks. I have two kids (whom I love dearly) I willingly pay child support for, provide medical insurance for and get no deduction for. My wife has been on a waiting list to get into a R.N. program at 5 different schools in the local area for a year now- Programs are all “impacted” but they don’t expand the classes at all-just put your name in the bucket and hope. Oh, but we really really need nurses…. I rent, so there is no tax break there. You want to increase taxes? Tax the Sh!t out of gas! Use the money to pay for the healthcare and benefits all these chronic welfare cases and illegals get for free. They all have plenty of money for their Escalades and Suburbans with the mega watt stereos and 22″ wheels! I’m tired of my money going to these “poor” people with 8 kids from 8 fathers, while I have to decide what to cut out of my budget every month.
Washington (and Sacramento) have done such a poor job of taking care of the real needs of this country that I am loathe to give them a dime more until they are as responsible with that money as I am with what little they leave me with each paycheck. The essay on Davy Crockett on Ron Pauls web site should be required reading for every American, just to show how far we have strayed from the Constitution.
Give the politicos more money….sheesh!
Sorry for the rant- maybe it was that trip to Boston this year that reignited my patriotism, but we are so far from what the founding fathers envisioned that it’s scary. The really sad thing is how relatively quickly it has happened.
They would never give the Government more money…….
Okay- rant off!!
I agree ,the majority of people are already taxed to much . I threw out that list above just to get a discussion going .There are a lot of bogus welfare programs that need to be
eliminated .I agree with you that you should be seeing something for the tax dollars they collect from you .
I’m just saying that in the next 7 years ,the times are going to be hard for many innocent people
,so money is going to be needed .If the tax money is spent in a constructive way, it will benefit us all ,(maybe jobs that re-build our crumbling systems ,roads ,bridges ,etc.)
There will be people starving during this downturn ,and I think that some help will be needed that will have to come from tax dollars . Keeping people from starving during a bad cycle makes more sense than funds going to keeping flippers in a home they obtained by fraud ,or bailing out the evil lenders .
Time for a total overhaul of where the tax money is directed .Should guys like Dodds be directing where 300 billion or more in tax funds should go ?
Also, if we as a Country are going to allow illegals in here ,at least we should require that they must have health insurance that they pay for .I’m just unclear on how it would be enforced . And yes ,I think the days should stop where we reward a unwed mother funds every time she has a
child and can’t remember where the father is ,or who the father is .
Can’t they use DNA to identify & tax those 8 “fathers”’s incomes to help support those citizens of the future? Why can’t we define the social impact of causing all those dependents and collect fines from these sexy virile a**holes for overpopulation & lack of family-type support? We sentence the mother to serve 18 years for carrying them for 9 months - I WANT JUSTICE!! (I have no kids, but I see alot of neglected ones)
Good quote.
I am also thinking that this is the “deep breath before the plunge… the board is set, and the pieces are moving…”
Sadly, I suspect those events will end about as well for us as they did for many of the people in Minas Tirith, just without Trolls and the Witch King.
Education - What gets taught is just as important as getting a degree. I don’t know what it is, but I know two financial guys with business/finance degrees and both are without an IRA or a 401k. One of these guys is in his mid 60’s, has a house in Lincoln, CA, which his new job is near Oakland. Like duh
So for education I think we should be stressing.
1) Pay off all debt,
2) Have an Emergency Fund with 3-6 months worth of cash,
3) Invest 15% of your gross, and
4) Strive to pay off your house early.
The bottom line is
Don’t spend more than you make!!!
I agree with your points as educational dogma for children. I just think that the last bit of advice (”Don’t spend more than you make!!!”) should apply to the Government policy makers as well, not just the little people.
Naw, that’s unAmerican: Don’t make more than you spend.
Make a cr@pload more than you spend. Just save it all.
Oh wait, I need to post this in the parallel universe not this one.
Save all you’d like to spend, then spend it all.
Spend nothing, make the other guy pick up the tab.
Spend everybody else’s money. If they don’t have any, print more.
Wait…this sounds familiar…
Spend everyone else’s money, and pick up the new printed one too.
Order everything and then bolt.
take a smuck’s money and run. that’s the new american way. there are suckers just wanted to holding the bag in every bubble hoping for a quick buck without the hard work.
I’ve met more people educated beyond their intelligence than I care to remember.
Mike
Hey, you dissin’ my tribe?
Wasn’t directed at anybody here.
I think for the most part we are all on the same page.
Mike
just a joke, mike
XOXOXOXO
Most folks that are edumacated are overwhelmed in the
commen sense department.
And those of us who are filled with common sense are good.
Then you have those who are unedumacated and thems is
taking the MSM’s word for everything.
(yes I know I misspelld) hehe
“A reply, “The more educated the populace, the more unhappy that they will be with their inevitable fate. Do you really want a lot of disgruntled Ph.Ds working checkout or cleaning bathrooms? These are the jobs of the future in this country. Awareness will only breed discontent. Education will just exacerbate the bad feelings.”
Too funny. I have a pudd’n'head and I worked doing both those jobs as well as assembly line work and construction while in HS and college. Total blue-collar upbringing which I never forget. I suspect many PhDs outside (tenure track) academia are currently underemployed.
Sorry - I’ve never bought into this “underemployed” idea.
The problem is that too many people in this country (including ALL academes/PhDs I’ve ever met) think that most work is beneath them. It’s no wonder they’re so unhappy. If they were less full of themselves, they might enjoy life more.
I’d like to see a topic on what do do over the next few years if you’re sitting on a pile of cash.
Suppose, for example, you had $5M in equities, bonds, and cash. What should you do now to make sure you hold on to it?
By the way:
BHO wants to tack payroll taxes onto cap gains and dividend income! The Wall Street Journal seems to be the only paper covering this:
http://online.wsj.com/article/SB121435112024101581.html
I think if BHO gets elected, Atlas will shrug. There will be nobody left in this country except unemployed real estate agents and Starbucks baristas. Everyone else will flee. Even France’s top rates won’t match BHOs. And they have nice, clean, nuclear electricity!
Get your money out of the US and fast! With an BHO in office with a veo proof congress you are looking at a Venezuela rerun. To wit, see the article America’s Berlin Wall in the June 12th Economist http://www.economist.com/finance/displaystory.cfm?story_id=11554721. The exit tax was buried by the demoKrats in the HEROES bill and passed by the house on May 18th…see H.R. 6081
Heroes Earnings Assistance and Relief Tax (HEART) Act of 2008
May 22, 2008…Offsets section.
Offsets
Individual expatriation. U.S. citizens and long-term U.S. residents are subject
to tax on their worldwide income. Under current law, taxpayers can avoid taxes
by renouncing their U.S. citizenship or terminating their residence. The Heart Act
would tighten current law rules to ensure that certain high net-worth taxpayers
cannot renounce their U.S. citizenship or terminate their U.S. residence in order
to avoid U.S. taxes. Under this provision, high net-worth individuals would be
treated as if they sold all of their property for its fair market value on the day
before such individual expatriates or their residency would be terminated. The
gain would be recognized to the extent that the aggregate gain recognized
exceeds $600,000 (which will be adjusted for cost of living in the future). The
proposal is generally effective for expatriations on or after the date of enactment.
The tax on covered gifts and bequests is effective for gifts and bequests received
on or after the date of enactment from expatriates whose expatriation date is on
or after the date of enactment.
Remember the inheritance tax reforms of 2000 “expire” automatically in 2010 if not renewed and go to the old amout and confiscatory rate. I am getting my lifeboat ready now…you should also.
Check it out!
Yeah, I saw that!
And don’t get me wrong, I’m no libertarian. I don’t mind taxes. I just think everyone should pay them. Everyone should feel the same “pain”. They may make different choices come election day.
I’m hoping that there will be some countries that won’t cooperate with the US when they try to confiscate the $$ of ex citizens.
Maybe it’s time to move to Israel, esp. since there will be no love lost between Israel and an America under BHO.
Atlas shrugged when incredibly greedy rip-off artists succeeded in perverting the message of libertarianism to carpet bomb the American economy while enriching themselves.
Rich ain’t the same thing as in the robust home grown mfg. days of Ayn Rand’s books. We need to wake up from that pollyanna dream, and start the harder work of crafting an economic policy that rewards innovation and long-term business health (which our corrupt sense of deregulation sure as hell has not) and punishes the kind of crazed, crackheaded greed that ultimately kills businesses (not to mentions takes billions, ok trillions, of American tax dolllars with it).
Transparency in banking would be nice for a start. With a tangy side dish of ‘get your money out of the Caymans or get your enterprise out of my country.’
And spare me the whine about the inheritance tax. I think Atlas would shrug even more at the thought of enabled, complaining heirs. Warren Buffett has it right on the money byt not willing his fortune to his children.
As he says, it’s time for the very rich to give back a lot for being lucky enough to live in a nation that has allowed them so much opportunity. Every hedge-fund billionaire who has built a fortune from pushing paper instead of investing in U.S. jobs and companies (like that mfg base we will surely need- thanks Housing Wizard) should be tapped like a maple tree until dizzy, IMHO.
There are a multitude of us non-Buffetts who studied hard, worked hard, conserved money and resources, spent untold hours at work while others partied, and gambled our fortunes and livelihoods on the possibility of making a successful capitalistic venture.
When we succeed where many others fail and most dare not tread, the estate tax serves to tell us what the American voter with no skin in the game values.
Even though we paid our freight (and taxes to the max) as we went, created jobs, abided by the law, and lived a conservative, no frills life, we must still ante up our earnings (a second time) to the liberal tax god who makes the decision about where the fruits of our labor are bestowed.
Not every modestly successful entrepreneur is a hedge fund giant or a Warren Buffett; in fact we will be trounced by your tax taking far more than people like them.
Rant off.
Would love to see the language you imply puts the inheritance tax issue on anyone but the extremely rich.
*I* never complained about the inheritance tax. To me, it’s the fairest tax of all. I see nothing wrong with a high inheritance tax.
Perfect example of a drone. Willing, nay happy, to live of others’ hard work.
“Everyone else will flee.”
Yeah, they’re already on their way to Canada:
http://www.canada.com/vancouversun/news/story.html?id=70879182-add8-4428-a987-d31986374747
I always have that option with Canadian citizenship and a house there. I just wish it wasn’t so damn cold.
Oh fer petesake, bho and mc C will say anything to get elected.
Stop worrying about what they say now, it is just going to be the same as it is now.
Holycrap.
This is what America needs, in zero’s humble view:
– MORE TRANSPARENCY –
Want to actually spend some money well on the housing market? Make the settlement documents and process much easier to understand. Loan cost statement forms are hit-you-over-the-head simple - and sources for information to help decode any mysteries are available via internet and at the local level. Loan settlement papers and costs MUST be available two weeks before settlement. Also, step up fraud enforcement and punishment. Yes, this kind of thing does cost money - but money spent to make loan/real-estate processes more transparent for people is money well-spent.
Also - credit card and any other extension of credit needs to have better disclosure of costs over time (how long will it take you to pay off your credit card making the minimum payment - what is the total cost of credit if you make minimum payment - this needs to be on statements). Also, some cap on fees and interest rates is needed - as well as the procedures for changing fees/rates needs to be fairer to consumers. Consumers also need more access to how their credit is evaluated by the ratings agencies.
Transparency needs to extend to the costs of our government at all levels. Also - the effectiveness of government at all levels needs to be better measured and quantified. From the federal level - accurate reporting of money supply, inflation, deficits, waste/fraud/accounting - down to how well local schools perform.
Bull**** stuff like reverse mortgages, condo-hotels, selling improper annuities to seniors — the government and our society needs to do a better job regualating and shaming these scams out of business. The same goes for scams of all kinds, including identity theft.
Finally - we need more transparency about medical costs - and we also need true catastrophic life insurance for people. It’s bull**** that you can’t easily find a way to insure your self against really expensive medical costs. I’d happily pay my first $10,000 of medical costs in any given year, as long as I could buy cheap-ish insurance for a couple hundred bucks a month beyond that.
I’m kind of blowing though this quickly - so please excuse the less-than-smooth writing here. I just think our government needs to do a better job making itself and companies more honest and open to consumers and citizens. If you take out the blatant and subtle dishonesty in so much of our economy - you’ll give everyone a better chance to succeed. I don’t want a handout - I just want to make things fair in America.
Disclosure is really critical. If there had been more disclosed up front then a lot of the idiocy would have been openly revealed as such earlier on. The truth was kept hidden, however briefly, with bogus assessments, fraudulent loans, and sucker sales. Even with all the wrong rules in place adding disclosures could have limited much of the craziness.
Lovely sentiment, but ain’t gonna happen. For every deeply ethical legislator in either house, there are probably 50 who are there for their own aggrandizement, their own benefit, their own enrichment/connections or some combination thereof.
Electors efforts are paid for by lobbyists, and labor to slip pork wherever and whenever possible to insure their popularity. Few have even a rudimentary grasp of economics, and I’ve a terror that those who do, subscribe to old Milton’s distortions.
The pluses I see all involve the ubiquitousness of the internet, the curiosity/critical evaluation of internet denizens, and some amazing new ideas from videos like Money is Debt, grasping the mechanisms of the Fed, understanding we’re stooges and pawns, and no one is going to alter this little arrangement voluntarily.
I’m not a fan of open warfare, and see the net as incubating technologies which circumvent and ultimately overcome the existing schemata. (GoldMoney, coppercards.com, and the like, squared)
Fair in America? Oh yeah, that’s the party line…..or should I say parties, as the distinctions between them are largely rhetorical, and should an actual agent of change appear, they’d kill him before s/he could damage their crooked, lucrative game.
Another internet special is being able - at least till ‘76 or so, to locate the owners of the Federal Reserve….. the largely European owners.
Apologies, but sometimes I just can’t help myself
Question… How can I tell if a property has a HELOC on it in California? Does the property tax amount reveal it? For example, the house I am renting was purchased by my landlord in ‘98 for $475k, property taxes on it last year was $8k. Does this mean he owes $800k on it? My rent is only $2,500 which would not cover that large of a loan! Thanks for the help!!
5 areas that U.S needs to fix to get out of this mess…
1. Fiscal
Small govt, Less Welfare, Less regulation, Smart and less taxation, Encourage long term investing not speculating.
2. Monetary
Get onto a Gold standard, Encourage savings not spending.
3. Immigration
People make the biggest difference to any organization / group. Kick the illegals out, limit the legal immigrants only to the smartest people in the world (quality not quantity)
4. Political
Limit lobbyists, change election fund raising rules. Don’t sell democracy.
5. Education
Encourage research in these math and science. Give loans only to students in these fields. We are producing too many effing realtors, lawyers and secretaries.
I’m on board. What political party is this? The Demopubs or the Republicrats will never endorse any of that!
I’ve always wondered who would fund a nonpartisan economic policymaking body — especially one that focuses on economic reality, not egghead theory - I do think blind adherence to schools of thought has done us more harm than good. (from “free” market fantasies of capitalists to the “share the wealth” delusions of communists). There has to be a better way… one that’s grown-up enough to recognize human nature.
> “free” market fantasies of capitalists
Huh? Isn’t free market capitalism the best way to go?
Exhibit A : U.S.A.
Any other system, would not work, simply because they are against human nature/greed.
It is the other stuff that needs vindication, not free market theory.
The American system is not a “free” market, in fact, such a market is a myth (like a communist govt that can distribute wealth according to need).
4. Political
Limit lobbyists, change election fund raising rules. Don’t sell democracy.
If you remove the underlying power, politicians will no longer have anything to sell and this becomes a moot point. “Democracy” (or more accurately, “government”) is only for sale if it’s worth something. When the power is sent back to the people and one person can only sell the portion relating to himself the pols lose what they sell to the highester bidder and the highest bidders are no longer interested in bidding.
#4 will be impossible to achieve without revolution, because those who could change the law benefit only if they don’t change it.
We have the best Congress money can buy.
When the bubbles stop blowing Americans are going to be shocked to discover that the average wage does not even come close to providing what they would call an average lifestyle. In fact, two average wages combined won’t provide the American family with standard concept of middle-class life.
I can’t imagine the outcome of this. Social unrest? Revolution? A police state? Maybe something more peaceful. Maybe people will band together again and start to unionize and demand a decent wage. Why, in this wealthy country, should somebody labor full time and not be able to afford food and a place to live?
In an amazing feat of propaganda the business world and the corporate media have convinced the average Joe and Jane that unionization is worthless. I hear this all the time from people making ten or fifteen bucks an hour. Unless of course you work for government, where your wages are paid by taxes. In that case unions are wonderful.
So what will happen when gas is $8 an hour, food is 50% more expensive than now, unemployment is up, credit cards are maxed, debt is crushing, house prices are still down and the mood is surly? Will we socialize? Will we end up under the Fascist boot? Personally, I don’t see many cheerful potential outcomes over the next few years.
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us,…”
Charles Dickens, A Tale of Two Cities
English novelist (1812 - 1870)
The core of our culture will be reevaluated in any case. Buying things that aren’t needed to impress people we don’t know using conjured money isn’t just unsustainable, it’s deeply unsatisfying. Capitalism has taken hold and is a fantastic machine, but what it does for society is open up possibilities. Society still needs direction, and there are any number of paths we could choose.
I commented on this on a few threads last week.
I agree with everything you said here. With the exception that gasoline will reach $7 or $8 a gallon. No way. The economy/commodities market will crash before that happens. Few people will be willing or able to fill gas tanks at $150-200 a fill-up. It won’t happen.
That aside, I maintain that one of the worst things that blindly happened in the USA to wreck the economy was the advent of the two income household. The result is a bloated, credit-laden disaster and kids running amok in absentia of parental guidance.
And that’s for those living in two income households. For those with just one income (about 30 percent of the population), many might as well live in a tent. A tent is about in line with what’s now affordable, due to the two-income households making everything out of reach.
1. Experience suffering: loss, sorrow, lamentation
2. Understand the origin of suffering: craving
3. End the suffering: release the craving
4. Take the way forward free of suffering: be wise, ethical, mindful
To give credit, an a old Buddha of mine came up with all that.
Mandatory Financial Education?
As if all the JDs, PhDs and MBAs with their Ivy coated degrees who work for the institutions that bought the toxic CDOs could have figured out loaning $500,000 to people making $50,000 wasn’t such a good idea….
What i meant was common sense economics…balancing check books…interest rates etc
i would say 90%+ never ever read an apartment lease until its too late.
let alone a car lease or …now mortgage papers. This is not a few days but an ongoing type Civics…oh remember that…..no no not a honda but a real civics class.
i remember a field trip to small claims court and the teacher explaning how you can sue someone for small sums of money all by yourself…..
Remember my HS was on the blue collar side of town….
I think plenty of high schools teach this stuff to seniors as part of prep for life. Goes in one ear and out the other.
I remember my HS econ class. The teacher went on and on about “supply and demand”, a bit on calculating interest and establishing credit. Very few got it. Most of the class was only thinking about what they were going to do over the coming weekend.
The only day I can really remember most of my classmates getting a clue was the day that the teacher got frustrated. The teacher asked some of the most clueless guys in the class what they thought a good paying job would be. $9/hr? $10/hr? They thought that would be great! The teacher then showed them what that would be yearly, minus taxes and compared it to what a house might cost. They were pretty surprised at how little it really was. Still, most of them were only concerned about how much clothing, beer or car payment their money could buy.
A lifeskills type of class starting at about 7th grade would be a good step in the right direction. Maybe something would eventually sink in.
Didn’t Jim Morrison once say “I’m gonna get my kicks before the whole Sh*thouse goes up in flames” ?
That dude has to be laughing his ass off drinking Jack Daniels, smoking dope and playing lead guitar…SOMEWHERE
I’d join him.
Didn’t Jim Morrison once say “I’m gonna get my kicks before the whole Sh*thouse goes up in flames” ?
Ah, but he wound up dead in a bathtub. This same selfish attitude of “getting what I want while I can ” is a major cause of the RE bubble that is about to bankrupt our country along with many others.
A more appropriate Doors quote for the situation we find ourselves in is ” When the music’s over, turn out the lights.”
“This is the end, my only friend, the end”
How about ….”Break on through to the other side “.
But , the changes that are needed now in American have been building for a long time . I think the grand experiment of the entitlement society ,that ends up not being productive, has proven to be a silly dream by people who never understood human nature .
It doesn’t take long to corrupt a human if you reward them by being non-productive . We got a bunch of fat and lazy people running around that think the world owes them a living . We have to become productive again as a Nation . Stop rewarding people that didn’t earn it . Our standards are getting so low these days that it’s alarming .
I’m all for people having the opportunity to improve their lives ,but still ,it has to be earned . it will be harder for some people ,but the Constitution only insures that all people have the right to pursue happiness . The Constitution didn’t say that the government was there to hand out happiness to people . Sure there needs to be a government ,but who decided it was the governments role to give people the “American Dream “of home ownership, for example .You work your ass off, save money, and become a homeowner if you want that . I have always felt that the worst thing that can happen to a person is being deprived of a job or ability to make a living .
“If we as Americans knew how to do 8th grade math and use a calculator, there would not have been a housing bubble…IMO.”
I disagree wholeheartedly. Silicon Valley is a bastion of highly educated people with above-average mathematical ability, yet it’s hard to name a region where the housing bubble was more extreme. I personally work with a number of people who are routinely exhibit facility with much higher-level mathematics than that taught in 8th grade, yet they drink the same “it’s different here” urine as everyone else.
I also disagree.
Numerous psychological studies have shown consistently that people will do things they know to be stupid or wrong because they deeply fear being left behind or not being part of the crowd. Social pressure is an extreme motivator for most folk.
During the bubble times the argument that seemed to sway people the most was “if I don’t buy now I’ll never get a chance”. No independent thought about the sense or the logic of it all. Just a pure brute herd instinct in play.
I tend to be a loner and an independent thinker. But, even for me, it was a major bummer to endure years of people’s sneers at my renter status while they crowed about their windfall real estate profits. And the mere hint by me that it could not possibly last was invariably met by extreme derision and contempt.
Most people just caved in, joined the crowd, closed their minds to any deeper thought, and bought a great big huge stucco box. Even single guys in their twenties would be ground down by their relatives and friends until they bought a huge house.
“Dude”, I’d tell them, “you’re young. You’re supposed to foot loose and fancy free, exploring the world and testing your options.” “I know”, they’d reply, “but everybody keeps telling me how dumb I am if I don’t buy a house and start making big returns.” And they would buy. Not one of them held out against the pressure.
Binko,
OT, did you go to Emory undergrad ? Just thinkin’ I might know you.
I disagree third. It was an easy way to make money. They were not even gambling because they didnt have to pay the losses. Buy an over priced home in an inflated market with little or no money down. if it goes up you keep all the profits, if it goes down you just send the keys back. No skin off your back. The homebuyers understood math and laws way too much. It’s those that want to send them aid that dont really get it, or just want votes.
Excellent post. That was exactly what I witnessed, and I successfully resisted at great cost to my credibility during that time. What I remember most in 2005, pre-Katrina, was the ubiquity of real estate discussion. It was everywhere, like a full-on ideological assault.
On the topic of repairing America, the best thing we can do is destroy the idea that something can be had for nothing, and that the future can and should be degraded to preserve an unsustainable present.
Some parallels between the elections of 1932 and 2008, IMO.
The Republicans are likely to see a renunciation of their candidate and party due to the condition of the economy. For many voters, Bush = Hoover, and the Repukes are deservedly trounced in November; in their opinion.
The Democratic candidate is likely to be advised after his “mandate”, that what the country REALLY needs is a huge increase in Government spending. Almost no one in 2008 recalls the fact that in 1932 FDR ran on a pledge and platform of greatly REDUCING Federal spending, and the size of Government. He had many campaign speeches about the problems of the economy; without many concrete or specific proposals.
The Democrat’s promise of a “New Deal” somehow was going to eliminate the perceived massive waste in the Federal budget.
Of course, what was promised was immediately scrapped after the election. FDR had, after all, been given a “mandate”. You need to remember who advises Presidents, particularly new ones. Other politicians. Bankers. Industrialists. Rich people. Military people. People with connections and vested interests.
The responses of the politicians and bankers to the realities of the Great Depression are probably the proximate causes of the Depression lasting longer than it did in other countries. In other words, they made it worse. Dodd, Barney, Boxer, Pelosi, Waters, etc; IMO, will make things worse next year.
What is very disturbing to me is the unprepared nature of most of the population. They have been conditioned to expect the Government to just “correct” and “adjust” the economy. That is NOT what is about to happen. The U.S.and much of the world is slipping into an economic New Depression of the first order. Banks and banking systems are collapsing. Millions of individuals, and many towns, cities, counties, states, and Federal agencies are technically insolvent. Bankrupt. Today. Right now. Already.
This is that stage of the sinking of the Titanic where people are jumping into icy water, hoping to stay alive somehow. Most are in disbelief and not prepared, and financially speaking, they are not going to make it.
Roosevelt was considered a messiah by my parents. Yet the only way he could get the country out of the Great Depression was to get us into war. Talk about an economic stimulus!
And then there was the implementation of shared sacrifice as a way to unite the country behind the effort. Brilliant!
Nothing needs to be done, just let the ebbs ebb and flows flow.
I agree 100%, but it does sound kind of like something those FBs who let their swimming pools go would say…
“it does sound kind of like something those FBs who let their swimming pools go would say…”
Lol. I can make it more like something an FB who let their pool go would say:
“Let the neighbors swim or the mosquitos breed!
Fixing this mess is easy… A good ole depression will cleanse the bad debt… Preventing it again is harder…
To prevent it you have to take some basic financial constraints and turn them into laws that can’t be broken. Enough people would have to agree that these laws are soooo important (on the level of freedom of speech important) that they are put into law and never violated except under extreme circumstances.
So Joe Six Pack only makes $30K per year and wants to buy a $200K house, well he needs an act of Congress, literally, to get the loan.
Since they aren’t that important, it won’t happen… Over enough time, the crowd is very rational…. So we get a depression every 70-80 years…. Not the end of the world….
Btw if everyone always made the right decision financially, nobody would take risks and profits would be very small. Enough profit to take risk only happens when people don’t understand the value of things or screw up in some other way.
People don’t borrow money at 15% because they made all the right decisions and are sitting on a mountain of cash… they pay 15% because they just lost a bundle at the craps table and don’t want the little misses to find out.
Quote: One posted, “We need a crash course in America to not only teach people to read write and speak English, (eliminate functional illiteracy) but also mandatory financial education courses to graduate high school AND college.”
Let the masses be financially illiterate if they want. Natural selection will take care of that.
Just get rid of fractional banking and the Federal Reserve. The market will take care of all other ills. The thing about free markets is that they only work if they are free.