The Housing Bubble

Who can remember the volcano that would erupt if anybody made a long distance call without prior authorization from the parents? K-A-B-O-O-M.

And two towns over was long distance.

Cool I see lots of fat kids…..so less eating would be healthier for them

They probably don’t even vote in large numbers - hence Acorn and other community organizations.

TDTF = Too Dem. to Fail.

ahem… all gluttons to the trough

sloths to their nap-sites!

Please keep your seven deadly sins straight.

snort

I have to admit I’m having a hard time understanding the current state of affairs.

Unemployment sky-high, massive state budget shortfalls with huge repercussions at city level, gas prices are back over 3$/gallon (with talk of 4-5$/gallon this summer), worst new-home sales numbers in 47 years, and a stock market flying up over 12,000.

Wait, WTF was that last part?!? I just don’t understand the flying market against all the other information I am receiving. Big dip incoming?

It’s been awhile since I posted, so I suppose I’ll go ahead and update the old HBB on how things are going for me. Someone here might remember that I bailed out on corporate life (automotive field, worked for honda) awhile back during the collapse to pursue a teaching degree. Fast forward a bit and I’m about to finish up the associates here in Arizona and move into the teaching program (starting in the fall, finish up spring 2013, should be in my new job by the start of fall school year 2013). Enjoying my mini retirement, haven’t had to work and have had a blast getting to know my wife again and spending time with my son (he’s 21 months old now - time flies).

Things are going really well, and I’ve decided to take on a dual major certification in elementary and special education to help stay marketable here. Special education is booming right now because schools in AZ are cheating the No Child Left Behind system by classifying massive numbers of English as a second language students as “special ed learning disabled”. End result is overcrowded special ed classes, and higher AIMS test scores to meet the need for constant improvement. Figured it’d be a good hedge major since there is a -lot- of doom and gloom about the availability of teaching jobs in a few years. Also qualifies for a pretty large forgivable grant to pay for the actual college expenses, so I should finish up with essentially no debt to worry about.

In other news, I finally bought a house again after a -LONG- wait for the market to get back to reasonable. It’s in Gilbert, sitting next to some of the highest rated schools in AZ (which isn’t saying much, I know). Beautiful and well-insulated block home built back when people actually knew how to build a proper home for phoenix weather (HINT: twigs and stucco 2-3 story McMansions with crappy insulation = RIDICULOUS A/C bills and don’t hold up well over years of exposure to phoenix 110F summers).

Anyway, it’s a nice thick-walled low slung single story block home that’s beautiful inside and out with a totally new remodeled interior (new carpets/tile/etc, probably result of a failed flipper and otherwise sitting empty for awhile). Completely surrounded by other beautiful homes all around, nice well-to-do-area (actual-mansions a block away, no slums nearby, very limited signs of depression (no blacked-out strip malls and bombed-out shells of buildings). Close to the us60 and a short commute from the wife’s work/my college. Picked it up for a price homes in the area last hit back in 1991-1992 (2X my wife’s teaching income, 1X our combined income once I’m working - 1/4th the price it went for at peak-bubble). It’s less in mortgage+utilities than the rent alone that we were spending on our former 2 bedroom apartment. Similar homes in the area rent for over a bit over double the monthly mortgage payment and our rate is insanely low. It’s the sort of deal that basically didn’t exist even 6 months or a year ago. We might even be buying too soon, but timing the peaks and valleys is HARD and finding a stylish block home in nearly flawless interior/exterior condition in the -exact- neighborhood we wanted to live in…. Well, lets just say we felt this one was the “right” one :).

Seemed like the right move to make, and it’ll be nice to give my son a back yard to play in. Even if things go all mad-max I’ve put the house specifically in the wife’s name. Gives us an exit strategy, should the need arise (community property state, so it doesn’t matter otherwise - just keeps my credit clean if things go pear shaped).

The markets are rigged by the “President’s Council on Markets” (plunge protection team) and the FED working in conjunction with their favorite NYSE “market makers”.
Anytime prices are starting to fall, by sell-offs, the Market Makers are ordered to BUY, thereby “stabilizing” the price.
As this goes on, the FED is BUYING securities to boost prices.
It’s worked out very nicely.
It’s another “bubble”, but they are hoping to get the real economy working by the time everyone realizes that this is all a fantasy.
Money for “education”……indoctrination camps for Amerika.
With the exception of a few folks here and elsewhere around, most of the people are football addicted morons.

Nice to see you back, and I’m happy for you and your family that you were able to look at life square in the eye and adjust to the signs of the times. Good luck with school.

Jeez, you really hit all the right buttons! Congrats.

You’re throwing your money away if you buy that third-party screw!

you mean the Torx Party?

Torx is a GM plot to take over the screw world.

(Big push on neocon hate radio right now to demonize teachers)

And I suppose that all of those people learned how to read, write, add, subtract, multiply, and divide all by themselves, right? With no teacher involvement at all, right?

I didn’t think so.

Demonize the teachers! Sigh.

I don’t understand the push to eliminate people’s benefits, unions, or job security. Do people have to attack teacher’s relatively formerly “secure” job simply because their own job has become such a cesspool?

Back in the day, American’s fought for basic human rights in the workplace. They fought for protection from wrongful firings or shipping of jobs to cheaper employees. They fought for retirement. They fought for reasonable hours. They fought for health insurance. Now it seems like the average American can’t step over himself fast enough to point and shout at anyone who still enjoys any of those benefits.

Some day, as the last -real- job goes to some poor peasant in china working for rice and water, we’ll come to realize that hole we’re digging is mighty deep..

Demonize the teachers and their union who contribute to Democrats more than Republicans. It’s all politics.

30 years of neocon hate propaganda will do that.

It all began with Reagan.

There shouldn’t be tenure, period. A good teacher would not get fired.

Only you’re wrong. Tenure allowed bad teachers to be fired, there had to be documented proof that they were bad. Sure it was a process, why SHOULDN’T it be? Why on earth should we make it easy to fire people on a whim? Getting rid of tenure was -purely- a monetary decision.

How about an example? Mesa alone laid off several hundred teachers recently. Due to my wife’s position I’m intimately aware of the types and seniority of teachers released from service. Want to guess how many teachers fired had been teaching less than 5 years?

0.

Yes, zero. Hell, there were only a smallish handful of the teachers eliminated that had less than 10 years of experience. That’s the news story they aren’t telling.

And they didn’t eliminate the positions. There are still almost the exact same number of teachers in the Mesa district, but they hired on new college grads or utilized subs (in many cases the very teachers they JUST fired) at lower pay brackets. Substitute teachers in Mesa receive roughly 100$ per day for their services. With only 180ish days in the school year, you do the math.

So who was fired?

All those evil bad teachers with masters degrees and beyond who had been working in education for 10-25 years and had hit the higher pay brackets.

Yeah, clearly those are the bad ones. Our most respected and educated educators, the ones with decades of experience. Clearly they are the ones destroying our education system and hiding behind tenure. Right? The fact that the district was saving 20,000$-40,000$ by replacing them with new teachers and/or long term subs had absolutely no bearing on this. Right?

You’ve been sold a story. Open your eyes.

“There shouldn’t be tenure, period. A good teacher would not get fired.”

Unfortunately this is not how things work. I have a behind-the-curtains view of several K12 systems, and there are many irrational, vindictive people out to get each other.

Spot-on muggy.

It’s a dog-eat-dog world out there, and the K-12 system has the same “good ol boys and girls” network you’d see in any traditional corporation. Getting rid of tenure is just allowing axes to be thrown more freely.

The decisions are being made based on personal vendettas and dollars. How well a teacher performs has little to no bearing on it. One of the best teachers I know was laid off recently and is currently working as a sub, unable to get a job -anywhere- because her experience and educational background warrants too high of a starting pay bracket.

Sigh.

This is what I learned when I went to college.

Most difficult major.
Pre-Med classes for Medical School.

Easiest major.
Education.

When you find yourself failing in college, you can transfer the the school of education.

The public schools need to compare their teachers to the equivalent paid teachers of a private school. Sorry, the public school teachers lose.

Was it? Link?

Of all the people i know maybe 10% are doing better then last year….so where did all the money come for the big tv’s i-phone x boxes etc……i wonder

Freezing spending at 170% of the current income level is a recipe for disaster. We don’t need freezes. we need cuts.

(or something else) ??

Cross burning ??

Many had to run to TV cameras to give their first impressions. Or maybe they all ran to get a room and make out with their “prom date.”

(or something else)?

late term abotions?

(or something else) ?? Cross burning ??

no, omgosh, perish the thought….No politicians nowadays are racist like that.

mabye I should have written “somewhere else” but a book burning is a thing therefore “something else” was correct too.

Besides, No politician nowadays would ever burn or ban a book.

“Besides, No politician nowadays would ever burn or ban a book.”

Of course not. That’s what neocon talk radio is for.

My wife visited with friends the other night that are definitely FBs. They fit the profile of strip mining the house of equity and living beyond their means. They are now teetering on bankruptcy. Let me tell you the attitude is still alive and well. They still spend every penny they can get their hands on, whether it is earned or borrowed. Hold all parties accountable because they are all willing to do this over and over again.

So many victim stories, so few victims.

” Hold all parties accountable…” Exactly.

There were no curtains involved when the FBs willingly signed away their futures.

I have to disagree. There was at least one curtain: decades of historically honest bankers who did due diligence and filtered their customers ruthlessles. (Amazing how responsible bankers can be if they have to sit on their loan rather than sell it up the food chain within a month.) Stern Mr. Banker Man used to be really picky about whom they gave loans to. So, if stern Mr. Banker Man thought you could afford that house, then you could afford that house. After all, Dad and Grandpa did it, right? And they never foreclosed, not unless something really bad happened.

Few people — except for HBB, the smoke-filled rooms at Golden Sacks, Alan Greenspan, and a few doom-and-gloom econ guys like Schiller Talbot and Roubini — knew that those safety nets were being taken away one by one.

There is some fault with the FB, but not all of it.

Amazing how responsible bankers can be if they have to sit on their loan rather than sell it up the food chain within a month.

It’s amazing how irresponsible bankers can be when mindless, do-gooder legislation dictates to them to whom they have to lend.

The FBs had in front of them documents spelling out just what the terms were that they were commiting their lives to. There they were, the terms, right in front of them, ready to be signed.

Many chose not to read them. Many complained later that they did not know that their two-percent teaser loans would be adjusted a few years hence. They said they did not know that there would be no way they could ever afford the ensuing payments.

These FBs commited themselves to handing over to strangers thousands of dollars - tens of thousands of dollars - of yet unearned money in the form of a legal document that was loaded with disasterous terms to their financial well being. A document they did not read or did not understand.

Now, whose fault is that?

It’s amazing how irresponsible bankers can be when mindless, do-gooder legislation dictates to them to whom they have to lend.

They don’t add up to much. Show me a study of the percentage of “those people” who defaulted. (You know the ones. The minorities that “legislation dictated” be lent to)

Then show me what percentage these “deadbeat defaulters” defaults comprise of total defaults.

Then explain why this very small percentage of total defaults is the target of such wrath.

I know why.

Comment by Kirisdad
2011-01-26 07:20:14
” Hold all parties accountable…” Exactly.
————————————————————

So what are you trying to say? You want the system to mete out punishment? Imprisonment? Caning? What? And for what? Other than foreclosure WTF are you talking about?

There were no curtains involved

Please
President talking of ownership society
Greenspan spitting platitudes daily
Realtors advertising on TV
Mortagage brokers pumping the ignorant customer about how much they could safetly borrow.
The mirrage created by all the easy money, neighbors bragging about how much they were making etc
Seeing paychecks rise, small businesses doing well instilled overconfidence

It’s amazing how irresponsible bankers can be when mindless, do-gooder legislation dictates to them to whom they have to lend.

Yes I know it’s all due to the CRA even though most of the subprime loans were made by non CRA institutions. Even though CRA would not cover all the McMansions out there or the reckless buisness lending.

Yes, there was a lot of pressure out there to buy, and an awful lot of it was highly deceptive.

Nonetheless I will maintain that the most insidious pressure was applied at the kitchen table, in the bedroom, at parties, picnics, weddings, showers, the water cooler, the locker room, etc.

No matter how one slices it, at the end of the day we either think for ourselves or we don’t. To expect that doing what’s right to be popular or easily recognizible is simply asking too much of life.

meatson:

Is there anyway at all for me to convince you that it is in your best interest for you to commit tens of thousands of unearned income to my coffers? Any way at all?

Would you do it if I got the endorsement of realtors and Greenspan and the President and mortgage brokers?

My guess is the answer is “no”. It’s probably “no” because you know better than anyone else what is in your best interests and what is not.

I liken the whole thing to the end of WW2 in Europe. You could make a damn good argument that the German people as a whole were guilty for the war- they elected Hitler, after all. But since at the time our leaders still operated in reality, they rounded up, tried, and imprisoned or executed the -leaders-, and let the rank and file go.

Following the arguments that some make here, they should have let Hitler, Himmler, and Goebbels go, and rounded up and imprisoned average citizens and enlisted men in the army. After all, weren’t the big guys forced to do all that naughty stuff by their supporters? They were the unwilling pawns controlled by the masses. Just like our banksters- the unwilling pawns of the CRA, the act that took 30 years to finally destroy economy, which coincidentally occurred a relatively short time after the banksters had their own pawns repeal the Glass Steagall act.

There were one hell of a lot of summary executions of the rank and file Nazis in the field in 1945.

Rio, I agree on CRA. From wikipedia:

“The law, however, emphasizes that an institution’s CRA activities should be undertaken in a safe and sound manner, and does not require institutions to make high-risk loans that may bring losses to the institution.[3][4] ”

and

“a 2003 research paper, economists at the Federal Reserve could not find clear evidence that the CRA increased lending and home ownership more in low income neighborhoods than in higher income ones.[79] A 2008 Competitive Enterprise Institute study resulted in a similar finding.[80]”

The Competitive Enterprise Institute is about a neocon as can be. Even *they* wrote that CRA didn’t play a role in the housing bubble or crash.

If CRA was the cause of *anything* the wingnuts say, why is it the default rates are lower in areas subject to CRA compliance?

“The Competitive Enterprise Institute is about a neocon as can be. Even *they* wrote that CRA didn’t play a role in the housing bubble or crash.”

It just feels so right to blame it on the welfare queens, especially when then that thought pattern is a well-worn groove in your mind.

So what can we say about a bank that gets short-term deposits or loans and puts the money into long-term Treasuries? Yes, it’s earning more interest now than it’s paying. But it’s also tying up funds in long-term assets; if and when short rates rise, it will either find itself paying more interest than it receives, or have to sell those long-term bonds at a capital loss. There’s no subsidy here.

Absolutely not

what you said was

There were no curtains involved when the FBs willingly signed away their futures.

There were plenty of curtains.

Yes plenty of peole deserve what they got, but there are many people who are not as skeptical of the msm, or as financially literate as most on this board who weren’t house flippers that just wanted to own a home and were worried they’d be priced out of the market. I just object to the complete disdain for these people and blaming them over banks, the banking elite knew what was going on,they fascilitated it, they got their puppets to roll back regulation, and they are the ones in this mess who profited. It’s no different then blaming a rape or theft victim for not being physically strong enough to fight off an attacker.

Speaking of wingnuts, we have the religious left of alpha and Exeter pushing their nonsense as usual. CRA is a bunch of crap. It is not just the direct result of CRA that comes into play. It is also the indirect and the mentality it builds.

First off the idea of forced lending is ridiculous. It places people in the market that shouldn’t be buying houses. Next it helps to drive prices higher at the low end. This causes actual qualified buyers to stretch further and borrow more. This continues to work its way up the food chain.

As unqualified buyers qualify under “Fair Lending” legislation then it becomes harder and harder to stop the, “everybody must qualify for a loan” mentality. This is what pushed the subprime market further and further. We all know where that led. It led to higher prices and a sea of unqualified buyers.

Lefties and righties are to blame. Even your favorite person, George Bush, is on record spouting that no down payments should get in the way of people becoming homeowners. To compete with the CRA crap he concocted that “ownership society” rhetoric. When the Dems are buying votes the Reps have to compete. A financial arms race ensued. Bring on the biggest bubble in history.

I know you can’t see through your partisan colored glasses but good god try just one time. CRA loans didn’t crash the system. Changed attitudes crashed the system helped bury it. The attitude that everybody should have access to cheap credit buried the system.

Please resume your partisan partisanship. I love the ignore feature that was added to this site. The ridiculous leftyism on this blog is much easier to take when you can ignore the posts of the partisans.

First off the idea of forced lending is ridiculous.

It was not “forced lending”. Not at all.

“The law, however, emphasizes that an institution’s CRA activities should be undertaken in a safe and sound manner, and does not require institutions to make high-risk loans that may bring losses to the institution.[3][4] ” wiki

The Community Reinvestment Act of 1977 seeks to address discrimination in loans made to individuals and businesses from low and moderate-income neighborhoods.[7] The Act mandates that all banking institutions that receive FDIC insurance be evaluated by Federal banking agencies to determine if the bank offers credit (in a manner consistent with safe and sound operation as per Section 802(b) and Section 804(1)) in all communities in which they are chartered to do business

ie it doesn’t mandate that banks extend credit to people who can’t afford it. It stipulates that they must extend credit in communities they take deposits from.

If you make X then you should be able to borrow Y(x) and at a rate of Z(x) no matter where you live. Show me where it mandated that banks lower their lending standards (with the exception of redlining neighborhoods)

Banks were always free to leave those neighborhoods they didn’t want to lend in.

As unqualified buyers qualify under “Fair Lending” legislation then it becomes harder and harder to stop the, “everybody must qualify for a loan” mentality

This is the dumbest statement ever. Banks did not make loans based on the “mentality that everybody must qualify”. They made loans to unqualified people because they knew they could off load that risk via securitization and probably that the gov would bail them out when the Sht hit the fan. That’s why CRA is not the problem securitization is the problem.

Look NYCBoy….. In your repetitive worn out demand for justice, you refer to me as a religious lefty and then accuse everyone else of being a partisan?

You better lay off sauce my man.

Nonetheless I will maintain that the most insidious pressure was applied at the kitchen table, in the bedroom, at parties, picnics, weddings, showers, the water cooler, the locker room, etc.

Exhibit A: the infamous “Suzanne researched this” commercial.

“Speaking of wingnuts, we have the religious left of alpha and Exeter pushing their nonsense as usual. ”

We forgive you, for you know not what you say. Now go, and spin Kochtoganda no more…

Meatson:

Let’s get real here: Blaming a rape victim because she is not strong enough to beat off an attacker is not quite the same thing as blaming a FB for willingly commiting to a loan that is far beyond his means of repaying it.

“What’s amazing is that this occured at a time when information has never been more widely accessable.”

An astute observation! Anybody who CARED ENOUGH to look could have armed himself with all the information necessary to keep himself insulated from the insanity.

“What’s amazing is that this occured at a time when information has never been more widely accessable.”

This doesn’t matter much at all when 95% of the information is pointing in the wrong direction.

You “victims” who just blame the FB’s are not very big on personal responsibility are you?

And when I say personal responsibility I am speaking of corporations too because they enjoy most of the rights of people in courts, policies and society. Actually more so in this and many cases because they influenced public policy leading to the bubble. Joe 6pack did not. How could he?

So the VERY POWERFUL and GREEDY “person” say BofA, bears much more responsibility than a FB because BofA is a BILLION times more powerful and influential than a FB.

Therefore “people” such as BofA, GS et al. bear MUCH more responsibility than FB’s.

It’s all about personal responsibility guys. Your self-pitying mantra “Boo Hoo, we’re all victims cuz the bad FB’s borrowed too much money” is pretty sad and gives Banks a free pass on personal responsibility.

The Banks bear the most blame by far. And they got bailed out. What a bunch of wussies.

“This doesn’t matter much at all when 95% of the information is pointing in the wrong direction.”

Which suggests that 5% of the information is pointing in the right direction.

How much information does one need?

Usually financial decisions come down to a few yes-or-no questions: Is this a good idea or is it not? Can I or can’t I afford to do this?

Which suggests that 5% of the information is pointing in the right direction.

Apparently you only need 5% because you only address 5% of my points. (come on that was funny)

Shouldn’t the ‘people’ (which is what corporations are, as Rio points out), who are very well-paid, supposedly expert professional bankers, bear more responsibility for a massive banking failure, than the people who have other jobs with other responsibilities, who fell for the bankers extremely well-funded and deceptive marketing campaign?

If I buy a commercial pain-killer, and it makes me blind because it has a toxic chemical in it, am I to blame because I didn’t take it to a lab first and have it tested? The information was out there, I was just too damn lazy to have my medicine lab-tested, right? I’ve no right to blame the company, I should have known better. The information was out there.

FBs didn’t have to take loan documents to a lab to have them analyzed; All they had to do was read them.

The Borrowers would not of gotten the money to begin with had
MBS’s been rated the junk they were and Money men breached their duty to underwrite loans and Appraisers ignored long held
appraisal principals .A Ponzi-scheme from the professionals who
are held to a higher standard . Borrowers will take whatever leverage is given to them ,especially if there is no counter data
and nothing but a big PR campaign going on that RE always goes up. No doubt borrowers were convinced that RE going up would cover their leverage bets . In fact the mentality of Wall Street is
to create fake prices to make money ,and that mindset just
translated down to the masses .

If it had been stocks that they gave this leverage on we would of has a 1929 stock market crash ,but they did it with real estate .
Apparently the people in the 1920’s did the same thing with stocks and easy credit as they did with real estate in these times
which brought about regulations like Glass- Steagal . It only took the money men about 7 years to screw up real estate with unheard of leverage and side casino bets .

So I blame the repeal of Glass-Steagal and a hands off policy by Government that those non-transparent entities could regulate
themselves .

Borrowers could of been in mania psychology until they were
blue in the face ,but if Lenders didn’t supply the ill-gotten funds ,it wouldn’t of happen . Which comes first the chicken or the egg.

Borrowers should of crashed ,just like their corrupt money suppliers .A contract conceived in fraud from the top to the bottom is a bad loan and it can’t be made good in most cases .

Again I say ,Wall Street money changers had no right to mix investment principals with lending principals because they are
in conflict of interest .
I was deprived of the knowledge of what kind of loans were being made and the extent of the fraud and that my competition was fake . This is the main reason why the responsibility of this goes back to the fraud of
the lenders .

Ask any borrower ,would they have made that high bid if they knew the 10 people in competition with them were obtaining the loan fraudulently or using leverage ,or had no intentions of
being end users . Developers were in bed with the lenders and
they were building tracks simply for speculator flippers ,which is a breach of lending principals that speculation is not the basis for lending principals that the borrower had to be a willing and able borrower in arms length transactions based on current value of the property ,not future value .

In other words ,Money Changers had no right to loan funds based on real estate will go up in value and it doesn’t matter if the borrower is able . It’s a total violation of lending principals .It was a fraud loan market and thats the lenders fault . Just thinking that you could falsely market securities and say they were sound when they were nothing but fraud and faulty loans
with bogus new models is unacceptable .They couldn’t even get the transfer of loans right for God sakes in their haste to just
make big money fast and short cut laws .

Ponzi-schemes are always a violation . The borrowers could of
rejected the scheme and the real estate people could of refused to take borrowers to property they couldn’t afford and the Ponzi scheme would of died a early death of course ,but that wasn’t likely to happen with the extent of the marketing from lenders and the PR on leverage . Real estate was sold as a leverage investment ,not as a long term home that you had to really qualify for .The final responsibility goes to Lenders for creating a false real estate market by faulty lending and breach of duty to prevent fraud ,in fact the idea was pass the fraud to the
conned loan investors .

!t is true that borrowers as well as loan investors who bought the AAA ratings were relying on the longer term reputation of the loan market being true on ratings and people actually qualifying for
loans .

The fact that Wall Street Money changers changed long term models to no underwriting is required or prevention of fraud and
loans are based on real estate goes up was simply the acts of money men trying to create a false market in which they used
real estate as the leveraged asset . It could of been anything that
they used for this objective ,lobster could of been the asset . To also falsely increase property taxes based on a Ponzi-scheme is another fraud that was created. Real estate being tied to property tax is another reason why you don’t mess with real estate .

“If I buy a commercial pain-killer, and it makes me blind because it has a toxic chemical in it, am I to blame because I didn’t take it to a lab first and have it tested? ”

I always like to throw this kind of logic out to those who believe that there should be no government regulation. We don’t have time to be experts on everything, nor have the resources to do all the homework that should be done.

In the case of mortgages and buying houses, I can understand why so many people got into trouble. There was just so much info out there telling them what they were doing was right. But I still can’t see them as victims. Be to be quite blunt, I bought into the bubble and will lose money as a result. However, due to a modest lifestyle and running the numbers before my purchase I’ll be just fine*. It is unimaginable to me that people wouldn’t take a hard look at their finances (with or without help) before making such a large purchase.

* barring one of those life changing emergencies

The individual people are responsible for their individual foreclosure (or short sale or whatever). That is their punishment. Lose some down payment money and lose your good credit. FBs should be saying “I screwed up. I took a risk and I lost. Now I’m willing to take my medicine and move on.” I think the frustrating part is that very few of them do. Most blame someone else and go kicking and screaming from “their” houses.

The politicians and bank executives are responsible for the mess that is the banking system. They should be fired and where criminal activity occurred, charged with crimes. I think the most frustrating part here is that not only is this group blaming everyone else (just like the FBs), they’re not even getting fired! Heck they’re not even taking pay cuts!

FBs are taking their punishment as laid out by the laws in each state. Sure they complain and blame others and play the victim, but they’re still eventually getting their house taken away. For the most part, politicians and bank executives remain unscathed up to this point.

For the most part, politicians and bank executives remain unscathed up to this point.

Methinks that 2011 will be the year in which the above will change. I’m thinking about Wikileaks and the files that it has on a Big Bank, most likely BofA.

And the indictments. We’ll see more of those this year too.

You nailed it MaxPower

The FB’s whine like little babies BUT lose their credit and house and inner peace. That was the deal

The Banks and WS fail their institutions, people and country and get HUGE bonuses, keep their job, escape jail time and get financially bailed out. THAT WAS NOT THE DEAL.

FBs didn’t have to take loan documents to a lab to have them analyzed;.

Wrong.

Signing loan documents had to be analyzed within the context of what the consequences of signing them implied. (personal responsibility right?)

And the context of what signing them implied included key variables that were fraudulently influenced by the same banks having the FB’s sign the papers.

The key variables that were fraudulently influenced by the banks included, manipulated home values, fraudulent underwriting, fraudulent appraising influenced by the lenders and the lender’s knowledge that they would profit making bad loans because of securitization.

So addressing the factual chain of responsibilities and events above; How could the Banks NOT be most responsible??

I think you nailed it Rio and measton.

The thing that gnaws at (most of) us is that the informed perpetrators/insiders of the fraud in large part walked away with profits intact, while the uninformed FB lost their credit and perhaps some down payment, perhaps more (and it is very fitting the FB did lose these things).

I am incredulous that the average american has enough wisdom and intelligence and historical references to withstand the marketing barrage they were assaulted with during the bubble years. Some of us do have these things, it’s why we self-selected this site and come to commiserate. We’re unlikely to fall for marketing gimmicks, in general. The political parties, for instance.

But we can’t and shouldn’t expect the average joe to trust us over their trusted banker of financial advisor or their neighbor who just made 100k flipping a house.

“But we can’t and shouldn’t expect the average joe to trust us over their trusted banker of financial advisor…”

Why can’t we? At what point did the average joe come to trust bankers and other assorted financial players to such a degree as he did in recent decades? Where did healthy skepticism and irreverent humor historically directed at such players (think Will Rogers) go to? When did they become trusted sources? How many commercials did it take for them to earn that trust?

Regulation can only go so far in preventing this from happening again. Is regulation still necessary? OF COURSE. (I knew enough to wince in 1999) But the bankers are slippery customers. Why FB bubble behavior should come under more scrutiny is simply because it is the progeny of today’s FBs which offer the best hope of avoiding a repeat (through personal vigilence and also collective calls for adaptable regulations). After all, just since 2008 we can already see that the bankers and the regulators (under the status quo) are not up to the task of preventing more bubbles.

Great debate btw, good points all around. Not sure it’s fair to assume that anyone wants the bankers to get off easily though. FB complicity does not have to equate to banker innocence, just as banker malfeasance does not mean every FB is a victim.

Great post! thanks Edge.

I don’t believe in the angelic innocence of the FBs, even though I recognize that the bankers are also con men.

There is no “angelic innocence” implied to any party in statements such as
“Banks and WS are by far most to blame for the housing bubble.”

Until the housing bubble and securitization, bankers granting mortgages were not con men conning people into mortgages they could not afford. Proof? Holding their own paper, how could they be and survive?

The above reality in bold was the game changer. Game changers change games. This was the difference. Human nature did not change, people did not change. However bankers and securitization CHANGED. Those instigating great change that included encouraging and willfully ignoring FRAUD bear great responsibility.

Unless of course they get bailed out and own politics and MSM propaganda.

Madoff’s clients were not humble worker bees. They wanted high returns with no questions asked which makes them con-artists themselves.

“Years from now some scholar will wonder why this housing bubble didn’t occur at the height of the Pax Americana instead of during its waning days.”

ONE WORD

Securitization

actually I’ll add
regulatory/gov capture.

As more and more campaign money comes from the financial elite is it anywonder that they are more and more able to scam the lower 99%.

Either way, the FBs signed them.

Combo,
I’m starting to realize your argument’s premise is that FB’s are walking because of the “terms of their loan papers”.

But the “terms” are not why most are walking. Not at all. Some may use that as an excuse but we all know why they are walking.

Therefore you are not arguing the same point as we are. And even if you think you are then their walking’s consequences are already spelled in what they signed.

They signed them because the loan officer said they were good for it.

The FBs can afford the terms of the loan documents or they can’t. Either way this has nothing to do with what happend to the loan documents afterwards or what happend to the price of the house they signed up for.

Even if the market value of their house were to fall by half they would not be hosed as long as they were able to make the payments. They are only hosed if they are not able to make the payments.

This is not only true of houses, it is true of most everything one buys on credit. Buy a new car and drive it off the lot and it will immediately lose a hefty chunk of its value. Should one then park the car on the side of the road and walk away and mail in the car keys to the dealer? No? Well that seems to be the attitude of people who recently bought houses.

The true FBs are not the ones who merely commited themselves to buying a house; The true FBs are the ones who commited themselves to buying a house they could not afford. And a quick read of the loan documents that were set before them would disclose to them if they could or could not afford the terms of the loan they were signing up for. Again this is true for most anything one buys on credit. Cars boats, houses - whatever; Either one can afford to commit to the terms of the loan or he can’t.

And nobody should know better than the buyer whether he can aford the loan terms or not. Not the banker, not the realtor, not the brother-in-law - only the FB can make this determination.

…and most of them could…. until they lost their jobs.

And let me tell you, this guy looked worried, very worried. In the past he was always upbeat, but now I saw fear in his eyes. There is no money to build new schools, jails, civic centers, etc.

In our little burg we actually financed the expansion of the local library by saving for years, and that included silly things like bake sales, etc.

Ensuring that the final destruction of our economy is even bigger.

Ensuring that the final destruction of the dollar will be even bigger.

As with banks they will wait until a few headline news articles about a state or major city going bankrupt. The GS of the world will drive down the prices of all munis and congress and the people will be scared into the bailout. Then the FED will print and buy up all the muni’s which at this point will be owned by GS.

What would GS do? The new investing mantra.

Meanwhile, a historic financial event is underway.

Wrong again, Ben. That event is done. Just ask anybody on CNBC.

Something tells me the next earthquake will make the 2008 earthquake seem like a rabbit fart.

“Meanwhile, a historic financial event is underway.”

But it’s going to be underway whether we beat it to death or not.

But beating it to death may somehow generate some much-needed understanding as to what has happened, what is happening, and what is about to happen.

We can’t decide, because we’re asking the wrong question. Who is to blame?

We should own up to the root problem. American workers are not cost competative with global wages. For 50 years, since the rest of the world rebuilt from WWII, we’ve been looking for ways to avoid having to deal with that.

We use debt, we use bubbles, we use smoke and mirrors… We’ve created a government/billionaire partnership to consturct a massive fake economy, a house of cards held up by lies….

When you don’t like the truth, I guess it is in everyone’s best interest to believe a lie.

However, eventually you run out of ways to avoid the truth.

We can’t decide, because we’re asking the wrong question. Who is to blame?

We should own up to the root problem. American workers are not cost competative with global wages.

No. That’s absolutely not the root problem because there is a root to that problem.

And the root to that problem is assuming it is necessary to be competitive with global wages and that assumption is false.

Successful countries who protect their industries prove this assumption false.

Now what is the root cause to promote that false assumption?

The root cause to promote the assumption that Americans need be competitive with “slave labor” is that it benefits a very few- the few with all the money.

What is the cause of that? Unregulated, unpatriotic and unbridled greed.

The root cause to promote the assumption that Americans need be competitive with “slave labor” working in toxic environment, is that it benefits a very few- the few with all the money.

BINGO

Yup, but I hear over and over that IF we were to enact protectionist policy then it would make things even worse. Reminds be of that movie “The life of Brian”. “How could things possibly be worse?”

Our entire economy in the West is collapsing under it’s own weight and really the economy only ever existed as a result of a vibrant middle class anyway, but what do I know. Economists swear things would be better if everyone was dirt poor!

“Economists swear things would be better if everyone was dirt poor!”

We have to destroy America to save it.

Right on Rio . The assumption that we have to be competitive with
the Worlds slave labor markets is the error . It’s impossible to be competitive unless we are willing as Americans to go to 1 dollar a hour for labor . How do you think America functioned for all these
years before the Corporations decided to throw people under the bus .Price cutting is a form of monopoly and when you use the lowest labor as the monopoly to determine wages your benefiting
Corporations and middle men ,not the BEEHIVE .

This is really stupid ,I can’t believe that this BS is excepted . If we go this route Corporations and Wall Street they won’t be happy until
Americans make a dollar a hour while they have to pay 1500 a
month for health insurance .I can’t wait until all the monopolies
get in conflict with each other over who get the money when the government runs out of funds to supplement the elite .

Not competing with the world’s labour by using protectionist means can protect jobs, but there would be side effects. Any good that is (and requires) protection from foreign competition will be more expensive. Average cost of living will be higher. I’m sure many of the unemployed wouldn’t care though; better to have an income with a higher cost of living.

Some goods that aren’t protected will be more expensive anyways. For instance, the US may not want to place tariffs on foreign energy, but energy producing nations may place export taxes on energy going into the US in retaliation.

Protectionism might be better than not at this time. I’m not sure, and doubt anyone has enough resolution on their crystal ball to be sure. Just wanted to point out that protectionism isn’t a sure fire means to prosperity for the middle class and could in fact backfire.

We can’t expect to be paid $14 per hour to perform a mundane task on an assembly line when there’s someone else in the world willing to do it for 10 cents. As long as you can ship goods around the world relatively cheaply, corporations will move their manufacturing to wherever they can get the labor they need at the lowest cost.

In my opinion, we can still thrive as a nation in this new world. We just have to have better and more productive labor. You can’t get crappy grades in high school and expect to get a job at 18 in a factory doing unskilled labor with a sweet pension at the end. That world is gone and it probably isn’t coming back.

Study hard. Learn things. Acquire knowledge and skills that labor in the rest of the world doesn’t have. Do better work. That’s how you get paid more. Be more valuable. All labor is not equal.

And a little help from a US friendly trade policy wouldn’t hurt either. We have to at least level the playing field.

Somebody needs to start protecting US intellectual property. When Hu Shin Tao visited from China, didn’t he make polite noises about wanting “greater access to US technology?” In other words, they are looking for more knowledge to steal, pirate, slave labor, and sell.

” You can’t get crappy grades in high school and expect to get a job at 18 in a factory doing unskilled labor with a sweet pension at the end. ”

The best they can do now is a P/T, no benfits, minimum wage job. Why do you think there’s no shortage of young pups willing to sign up in the military?

The best they can do now is a P/T, no benfits, minimum wage job. Why do you think there’s no shortage of young pups willing to sign up in the military?

And the military doesn’t take just anybody. Matter of fact, they reject quite a few of those who try to enlist.

“You can’t get crappy grades in high school and expect to get a job at 18 in a factory doing unskilled labor with a sweet pension at the end.”

Why not?

How many damn times do I have to post this?

American workers have the HIGHEST PRODUCTIVITY IN THE WORLD, BAR NONE, but the worst benefits and the least amount of time off compared to other 1st world nations and the pay is average.

SO WHY THE HELL NOT?!

And let’s not forget the tax breaks for offshoring jobs.

Yeah, that’s tight. Tax breaks to send your job overseas.

So take that “American workers aren’t competitive” bullcrap and shove it some painful in your body.

+1, eco.

All this bullcrap about the American worker being a stupid, lazy sh*t who doesn’t deserve squat is nothing more than propaganda akin to what the Nazis used to degrade the Jews, so they could debase, degrade and eliminate them. This operation is at work in the US right now, so we will accept the wages and living conditions of the third world.

“You can’t get crappy grades in high school and expect to get a job at 18 in a factory doing unskilled labor with a sweet pension at the end.”

Why not?

Maybe because there are millions and millions of people who fit this “criteria”, and therefore the supply/demand balance simply isn’t there? And if they get this sort of deal, what about those who actually study in high school? What about those who go on to college? I would love to see the business you would run, who you would hire, and how much you’d pay them. Everyone spouts this leftist nonsense until the real world weighs in - where are all the liberal Fortune 500 companies? Surely some of the millions of ‘progressive’ liberals in this country have managed to exceed in business to the point where they can put their liberal beliefs in practice at their companies (ignoring the cost advantages of outsourcing, little differentiation in pay b/w the executives and the ‘peons’, providing free and comprehensive healthcare, etc). Surely Gates and Soros ran their companies like this right?

Everyone spouts this leftist nonsense until the real world weighs in

Apparently real world reality hasn’t “weighed in” with you as I will point out below. You spout un-backed right wing nonsense. But here’s some things AM radio don’t want you to know.

- where are all the liberal Fortune 500 companies?

In Europe of course. Gosh. There are more Global Fortune 500 companies in the “socialist” EU than in the USA. The “socialist” EU exports way more than crony-capitalist/corporatist USA. Not only is Europe better at socialism than the USA, but……

The liberals in the EU are better capitalists than the corporatist Americans.

And outsourcing is not a given. Many countries protect their markets better than the USA. Outsourcing is a policy issue.

If you think innovation is going to save the USA ,your wrong .
Production and innovation go hand and hand . Because China is a big producer they filed the most Pattens and are creating far more innovations than we are .Innovation is just the byproduct of production . You also have the ability to shift from one innovation to another if you have the manufacturing set up already .

Unless the cost of living in America is reduced to third World
countries costs ,than we cannot compete World wide . This is
silly ,I’m not even going too argue it anymore .

Let me modify that slightly. We can do little about the claims of other countries upon the alegience of US citizens short of war. We did after all, fight a war over just this issue nearly 200 years ago.

Not to muddy the waters, but without the assistance of that foreign frog Lafayette, the War of Independence probably would’ve gone the other way.

Not to muddy the waters, but without the assistance of that foreign frog Lafayette, the War of Independence probably would’ve gone the other way.

And let’s not forget Baron von Steuben, a German, who turned that ragtag bunch at Valley Forge into an army.

True, dat.

Good point, I guess all our early presidents were born British, really. Couldn’t really have an American-born pres for our first 35 years.

Never thought of that or heard it discussed until now. Huh.

No, they were British subjects, not citizens. There’s a difference.

the state of arizona already has the votes to require real proof to get on the 2012 ballot

This might be great if they got Obama off the ballots by 2012.

Then maybe the Dems will nominate a Dem who could be elected easier than Obama.

This might be great if they got Obama off the ballots by 2012.

Then maybe the Dems will nominate a Dem who could be elected easier than Obama.

LOL! Be careful of what you wish for … it might come true.

Tango, I notice that you have gone from “Obama isn’t a citizen” to “pass a law to show proof.” Way to lower expectations, dude! Let the citizens pass their law. Heck, I have to show proof just to get a Social Security card, or sign up to vote. Big deal.

I had more to say, but I think this has gone far enough.

Notice how the party of smaller government and less regulations is actually doing the opposite??

Not only that Stev J, i’m sure Obama showed proof of birth and citizenship to those who needed to see it so he could run for the office of President of the US. That he doesn’t show it to everyone else is beside the point.

Thank you, Overdog. During 2008, I noticed that the more conservative parties, like FOX News, conservative pundits on TV and radio, the McCain campaign and the GOP all backed off the birther issue *very* quickly. Why didn’t they continue the hammer the issue? Somebody must have shown them something.

In mid 2009, a friend of man showed me an advertisement from a birther group who wanted to force Obama to show his birth “real” certificate. This advertisement, btw, asked for a donation to continue operating. Ding Ding Ding! Even if Obama had shown the birth certificate to the rag-tag groups, repeatedly, these groups would simply continue to claim the certificate was fake and demand the “real” certificate, repeatedly. And they could continue to solicit donations, indefinitely.

It’s a scam! Hope you didn’t give them too much, Charlie.

Not only that Stev J, i’m sure Obama showed proof of birth and citizenship to those who needed to see it so he could run for the office of President of the US. That he doesn’t show it to everyone else is beside the point.

See the Birthers have already won with the misinformation that he has not revealed his birth cirtificate to everyone

He released his birth certificate, certified by the Hawaii Department of Health, and posted a scanned image of it online.

Here is the FACTcheck . org link

factcheck.org/elections-2008/born_in_the_usa.html

“He released his birth certificate, certified by the Hawaii Department of Health, and posted a scanned image of it online.”

Photoshop is awesome.

Why would he show it? He’s got his opposition making complete fools of themselves over the issue, and spending all kinds of money and political capital.

On the off chance they do make something stick, he’ll show it, and make them look even dumber.

Why would he show it? He’s got his opposition making complete fools of themselves over the issue,

If I were a Birther I’d be secretly afraid President Obama would show his full birth certificate.

It’s bad enough being called a “Birther” now but the possibility of being called an “AfterBirther” after he showed it would scare me.

“Photoshop is awesome.”

So how could you be convinced that Obama is ‘natural born’?

On the same note, (I posted this earlier but it appears to be lost in space) McCain spent 5 years in a Viet Cong prison, even (heroically) refusing early release, because it would be used as a propaganda tool, since his dad was a top admiral.

Could you imagine if Obama had suffered a similar fate? Does anyone doubt that there would be all sorts of web sites and groups (made up of the same ‘birthers’), claiming he was a ‘Manchurian candidate’ and questioning just why he ‘chose’ to remain in the camp for years longer than necessary? We all know they’d go crazy with such a story. And if they were honest with themselves (surprisingly difficult for many), they’d know it too.

“So how could you be convinced that Obama is ‘natural born’?”

I’m convinced. He’s a natural born con-job.

And, LOL, I did call McCain the Manchurian Candidate on occasion.

I didn’t vote for him either.

“And, LOL, I did call McCain the Manchurian Candidate on occasion.”

Are there web sites and movements full of loonies who espouse it every day, and take it very seriously, like there is with the Obama birthers?

No kidding!

I’m with you on the going to war thing. At some level, the Fed can simply print money because at some level it ISN’T the government. Heck, you can print up all the Quatloos, Simoleans, or Tire Dollars you want, so long as there’s no way to confuse them with Federal Reserve Notes.

Well no, naturalized citizens CAN become Senators, so long as they’ve been citizens for 9 years.

That’s not what I heard. I was born in another country of American parents and was naturalized when I was a kid. The officer at the courthouse was VERY clear that I could do everything an American-soil person could do, EXCEPT run for President.

For the purposes of running for president, you need to be born in the US or have US parents and be born in territory under US control, which the Canal Zone was at the time McCain was born there. Being born on US military ships and a few other scenarios would make you a US citizen as well.

Jeez….. According to Title 8 of the US code, one of the eight definitions of a natural born citizen of the United States is:

-Any one born outside the United States, if one parent is a citizen and lived in the U.S. for at least one year and the other parent is a U.S. national.

exeter–Of course that has changed over the years.

Priceless

Wasn’t there a Simpsons episode about that?

SS,

Youre allowing O to live in your head….. rent free.

you have to have lived in the property for 2 of the last 5 years to quailfy for the tax break, that’s probably how the accountant rigged it.

I believe the point in the 100$ bill isn’t to get max max to make change ;).

All hell breaking loose or not, 100 bucks is 100 bucks. It’ll get you places. If you -need- to use it you’re probably not worried about getting any of it back. If you’re just using it because your debit card stopped working at the restaurant, they’ll have change.

So true. It kept a Federale from tossing me in a Mexican jail. Actually it was 2 ben franklins.

Jesus! What kind of people think like that?!

Community property |= community credit.

Yes, we both own the property, but it is found only on her credit bureau. In the unlikely event the home -did- go into foreclosure, it would in no way affect me thanks to Arizona’s status as a no recourse state, and my flawless credit rating.

I could easily fund a new loan for a new home in my own name.

I don’t want any of that to happen, but if it does, I will be able to purchase a new home for my family in the future.

The same system can be gamed to purchase a second property should I find the need or interest to. Once again, it’s all possible because we aren’t connected by -credit-. I’ve had plenty of experience with loans like this thanks to my past career :).

My impression is that community property DOES imply community debt. Debts acquired prior to marriage are not joint, but debts acquired during the marriage are.

The debt may not show up on your credit-report at this point, but that does not mean you are not still legally liable for it.

With Arizona being a no-recourse state, they won’t be able to collect from you, but they could eventually report you to the credit-agencies as a no-pay.

p.s.: Oh yeah, you may be able to avoid a debt being determined to be community debt if you can show that the property acquired for the debt was not for-benefit-of the community (i.e. the couple). Good luck with that on a house-purchase, though.

Very logically explained. Banks lend money on homes in AZ knowing full well what their options are if the borrower stops paying. You would think they would charge a significantly higher interest rate and/or require a significantly higher down payment, but they don’t. Presumably the bank doesn’t care since they’re just unloading it on the government in most cases anyway.

If you’re significantly underwater on a purchase money mortgage in AZ and you don’t have a use for good credit, you’d be a fool to continue to pay. Unless of course the value of your house to you exceeds the amount you’re underwater. There is no “right” or “wrong”, only what the contract and the laws say.

NCinerate

Thanks for the depth of thought you have displayed. The thought that was lacking in the sugar-hormonal-rush induced from the prospect of near-immediate profits from property (investments = HA! - )

Clever but cruel. Reload.

Massive bailouts are the only thing working now.

Why type/brand do you have? Do you have to fill it often?

I’ve used the air-beds borrowed rom friends for extra guest space, and find that they tend to leak a little bit over the course of a week…

I didn’t _quite_ get the flywheel/drag comment… Hmmm.

Prime, I get mine from K-Mart, Wally World or Sports Authority - places like that. There’s a knack to preventing pinholes: avoid abrupt moves such as plopping down, and avoid rubbing the air mattress surface. I found three layers between me and the actual surface helps, particularly if the bottom layer is a pad that is kept stationary (for instance, having its nubby surface face down upon the nubby surface of the sir mattress). I hypothesize the layers mitigate friction against the mattress itself, as well as distribute my weight over a marginally wider surface area.

Guests might look at you kinda funny if you proposed rules of the road for air mattress usage. Using the three layers approach, however, you wouldn’t have to say a word. Personally, people give me a pass because I tell them I am saving every penny for my youngest son’s college bills. This is also true.

As for avoiding drag - air mattresses move easily no matter what the next destination. You can deflate them and carry them yourself, or take them out to the dumpster. They permit quick reconfiguration of living space, which may be useful for a number of reasons. My particular one is adding bookshelves periodically, and uncovering more ‘gallery wall’.

It’s all a matter of preference, I think, and YMMV. My preference is to have - within practicable limits - little impediment to reconfiguring and transporting my cocooning infrastructure.