The Housing Bubble

Yes, you have a good point there, Rio. There probably is no other developed country that friendly to business that the goold old USA. Or to use the helpful OWS terminology, there is no other developed country more friendly to the 1%.

All 1%ers want all the 99%ers’ money.

Great plan, except for the fact that the TBTF banks are all massively leveraged and insolvent, probably in the trillions, if all their assets and derivatives are marked to market. And when we clear the debt, all the pension plans go bust.

Just like Europe, we really have run out of other people’s money. It’s just not evident here yet to most.

I’ve been a big fan of shutting down all the insolvent banks since the first round of bailouts, and I still am. Just be careful what you ask for, and why.

“if all their assets and derivatives are marked to market. ”

If all their debts are getting paid off, then they won’t be insolvent. And they’ll be taken over and nationalised, so it won’t be a privatize the profits/ moral hazard kind of thing.

“The money goes to the government”

And who controls the government? If we have learned anything from this mess, then we have learned that banks can far too easily take control of governments, as long as any central bank is in place.

“If all their debts are getting paid off, then they won’t be insolvent.”

But who’s paying them off? All the underwater borrowers?

Is the government paying them off? I thought you said that the government was going to get all of the money by nationalizing.

If it’s not the underwater borrowers, and not the government, then who is it?

The money was never there to begin with. It was manufactured, out of thin air, when the loans were initially underwritten. Now it’s gone.

This is the great shell game that Europe has been playing for the last couple years. They money’s here! Oops, no it’s over there! Well it’s somwwhere, trust us! Finally, those still standing are calling them on it.

“But who’s paying them off? All the underwater borrowers? ”

Yes, with the money given them by the gov, which returns to the gov (’sterilizing’ it) after they have nationalised the banks, or else goes to the holders of MBSs, thus supporting the pension funds, etc, who hold them, thus relieving the government of having to bail them out in the future.

Jon Stewart has been asking the same question for years. Instead of filling in the banks from the top of securitization food chain, fill it in from the bottom of the food chain. So, say the gov pays off a $100K loan. Not only does that save the FB, but it fills in all MBS and CDS above it. (trillions worth)

That’s the ideal, but I think I know why they didn’t do it that way. First the MBS and CDS were based on the homeowner paying back all the interest. Paying off $100K in a lump sum won’t fill in an MBS and CDS that was depending on getting $200K eventually.

Secondly, I suspect that even the toal value of the mortages is too high for a lump sum plan. Gov (likely Geithner and summers) may have thought that if they just put in enough liquidity and got the economy going again, the banks could heal, using a lot less money. Well, we know how that turned out. Like crap.

This is not one of those situations where grace is called for. You do not gracefully accept the fact that you can’t support yourself, or that you have to accept a lowly position as an uneducated hairdresser to make ends meet. That is the sort of grace that causes people to be run over by those with more ambition. You know, the 1% who is more than happy to pay out your paltry welfare payment while they continue to rule the world with impunity?

Man, your post sucked big v. Totally.

The lady that does my hair probably rakes it in. It takes like 15 minutes for her to cut my hair. If she does 2 or 3 an hour, she’s winning pretty good.

Big V,
A hair stylist is by no means, “lowly” nor “uneducated”. Ambition is what you make of it.
Going to school full time, taking every educational/instructional opportunity available to me so I can be the best I can be in my chosen profession IS AMBITION.
Scouting the most prestigious salons on Long Island and NYC so I can be mentored by the best in the business IS AMBITION.

I am not some 19 year old that flunked out of college so she figured she’d do hair. I am a woman pushing 40 that had to evaluate what profession could bring a viable income to her family, not take too much time to accomplish and didn’t create the sink hole of educational debt that so many people on this blog complain about. Besides….I LIKE doing hair and I’m damn good at it.

I realize when you put yourself out there, there is always an opening for criticism.
I always respected your posts…but that just sucked.

Danni

“I am a woman pushing 40 that had to evaluate what profession could bring a viable income to her family, not take too much time to accomplish and didn’t create the sink hole of educational debt that so many people on this blog complain about. Besides….I LIKE doing hair and I’m damn good at it.”

Good for you. You have made an honest evaluation of your best options. Vidal Sassoon made a very good living ‘doing hair’.

Yes Danni, hairstylists are uneducated.

And so are the rest of you fools who think it’s cool to be “grateful” for being on welfare.

Oxide:

When you use such words as “tactless”, it makes you look like a snob who doesn’t even realize that it’s tactless to call people tactless. I disagree with your Socialist opinions.

Wow. I assume that Danni has already been busting to keep the household rollin. And is educated in the school of hard knocks as well as getting a real education in cosmotology. It is real and how ladies and men stay nice looking for those job interviews and such…tactless is a nice turn of phrase, Oxide, to describe the sanctimoniusness(is that a word) of someone presuming a hairstylist is uneducated. Whatfor she be going to hairstyling school fer?

I, for one, am almost fully employed, my wife has two jobs. If it was not for food stamps and my wife’s persisitance to get our kids on to govt. assisted health and dental, we would be even broker than we are.

Even with rental income of 10k per year from a house I own, it contributes to the 30k-40k per year total income for our under-employed family; it is not enough to keep up the “luxuries” like medical coverage. And managing to get some benefits as well as work two part time jobs is difficult, especially while keeping up a household. Congrats for keeping yours, Danni! don’t let anyone get you down; hard enough knowing it costs more to live than what we make. Also costs to get an education. A cosmotology license costs no less than 5k, usually more.

so big v may tell me I don’t deserve to own a house and perhaps I should give it to someone from the 1% who will manage assets better than I should be allowed to. They would allow the wealth to trickle down, giving employment for all, and gov’t programs could all be cancelled getting folks to pull themselves up by their own shoestrings.

Happy Thanksgiving all. I love my family, and count my blessings each day. It’s nice to have people who care for you and to have people to care for.

Thank you MikeInBend
The full education will ultimately cost me 9k. According to Indeed.com an avg. hairstylist in Nassau County, L.I. makes 47k working 3 days a week (albeit long days). Freelancing is also a viable option if more money is needed.
An education that costs me 9k and completed in 9 months that yields an avg. salary of 47k.

As for BigV…I feel no animosity. Ignorance is an epidemic. Perhaps a bad haircut has colored BigVs point of view.
It happens.

I know this is an old thread, but I would just like to point out that my mother is a hairstylist, who got her license when I was about 5 years old. She has been the owner of her own shop for over 30 years now and has done very well for herself.

We were not rich growing up, but we made the jump from poor to upper middle class by the time I was starting jr. high school. My dad is an auto mechanic, who did not earn a whole lot, but it was a steady income base for the household. So between him and my mom’s income which grew steadily, our family did well. Hairdressers make a lot more money than most people realize.

GrizzlyBear:

When you deign to tell others what is or is not in the spirit of Thansgiving, you are essentially putting yourself on a pedestal. There are a lot of good reasons to let others opine.

Your post sucked. Face it.

I agree big V maybe the unemployed should have been marching at OWS with signs Take my unemployment check..please.. i want a job!

Only the real hardcore deadbeats want welfare and food stamps.

Bankruptcies due to medical bills increased by nearly 50 percent in a six-year period

Not surprising, as medical insurance has become extremely more expensive and a whole lot crappier during that same timeframe.

The medical bill is just what pushed them over the edge. Most of them have been standing on the edge for decades. People rarely are bankrupted by a single thing. Medical bills are the stated reason as often as they are, because they in a majority of cases they can claim they were unexpected and unavoidable (certainly as compared to financial mismanagement) and they are an attempt to pull on heartstrings.

Funny I had Thankgiving dinner with a very left-wing crowd where we used to live two years ago, and this was the exact dinner table topic back then. This whole “medical bills causing bankruptcy” is to the left what the “CRA caused the whole housing bubble” is to the right.

Don’t you just love neat, tidy little explanations?

“This whole “medical bills causing bankruptcy” is to the left what the “CRA caused the whole housing bubble” is to the right.”

Except that the former is factual- in this case relying on a study by the American Journal of Medicine (hardly a bastion of socialized medicine), and the latter isn’t, relying on Rush Limbaugh’s word.

One false claim doesn’t disprove a totally different claim. One is based in reality, the other isn’t. That’s a key difference.

“The medical bill is just what pushed them over the edge. Most of them have been standing on the edge for decades”

Link? Or do you ‘just know’ this? In your gut.

If you’ve ever had any experience with our health care system, you would know that it can burn through a 6-month emergency fund in days, even if you’re insured, unless you’re one of the privileged few with excellent health care coverage.

Iftheshoefits:

No, medical bills are enough to bankrupt anyone who gets sick. Getting sick often means you can no longer work (or at least not full time). Combine that with the fact that a bout of cancer can set you back several years’ salary, and yes, medical bills can bankrupt the most responsible of people.

The medical bill is just what pushed them over the edge…..they can claim they were unexpected and unavoidable (certainly as compared to financial mismanagement)..“medical bills causing bankruptcy” is to the left what the “CRA caused the whole housing bubble” is to the right.

No. The percentages in the CRA vs medical BK’s are too different and the math’s implications are too clear to make that comparison. For example: CRA loans defaulted make up a tiny fraction of total defaults and even at the height of the bubble “A study by the Federal Reserve shows that more than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions(not CRA institutions) .” bangordailynews dot com

Now compare that to 60% of BK’s listing medical expenses as a primary cause. 60%. Now remember that 1/2 of working Americans make less than 26K per year so if we include the official 9% rate of unemployed we get to 60% of Americans making JACK SQUAT. Therefore for 60% of the Americans declaring BK we really can’t blame your implication of financial mismanagement because remember that 60% of Americans are making JACK SQUAT. How can we blame 60% of Americans making JACK SQUAT of financial mismanagement? That dog don’t hunt.

So anyway, we have 40% of Americans making more than JACK SQUAT and sure some of them can be blamed for financial mismanagement but most? I don’t thinks so because even a family of 4 making 70K per year can manage their finances well and still be driven to BK by a 100K medical bill. No?

So as you see, the numbers and percentages are entirely too different and clear to make your claim that ““medical bills causing bankruptcy” is to the left what the “CRA caused the whole housing bubble” is to the right.”

I’ve had plenty of experience with the health care system. I’m self-employed of modest means, and pay for my insurance out of my own pocket.

My wife had a stroke and needed emergency heart surgery two years ago when we were on vacation, 1000 miles from home. We made it through, and got better care than we could have anywhere else in the world, at any time in history. I don’t like the costs of our insurance payments, but I pay them rather than buying fancy cars and houses and iWhatever toys and enless entertainment subscriptions, because I want a backstop for times like this, and it doesn’t come cheap.

Most people just like to whine anymore. Take care of yourselves, no one else is ever going to.

“I don’t thinks so because even a family of 4 making 70K per year can manage their finances well and still be driven to BK by a 100K medical bill. No?”

Those are the exceptions. Of course some people are bankrupted by medical bills. For many others, the medical bills were the last straw, for sure. But had it not been the medical bills, it would have been something else, because that’s the way their cake has been baked at this point.

As a rule, it’s clear that the vast majority of Americans have grossly mismanaged their financial lives. It’s in large measure what this blog is about. And now the bills are coming due. And what’s been proposed to “solve” health care isn’t going to change that fact, one bit. Sorry.

As a rule, it’s clear that the vast majority of Americans have grossly mismanaged their financial lives.

This is not the “rule” and it is entirely wrong because remember that 60% of Americans are making JACK SQUAT.

It’s all in the math.

“Don’t you just love neat, tidy little explanations?”

When they’re factual, I do. When they’re based on a gut feeling, personal anecdote, or someone’s idea of un-linked ‘common sense’, then I agree they are valueless.

I don’t believe this for a second. Putting together an emergency fund is nearly impossible these days. Needs industries like rent, food, gas, health insurance, college, etc, all raise their prices until there is nothing to put aside for an emergency fund.

It’s easy to say “live below your means,” but even for someone who bought a house pre-bubble, his mortgage payment is the same, but his income hasn’t increased* but his other expenses are going up.** Sure, he can stop the daily Sbux or cut the cell phone minutes, but at some point, the living rises above the means, even if nothing bad happens. Meanwhile, kids grow up, people get sick, Grandma gets old and needs care. I guess the guy is supposed to move from house to house to house, each more decrepit than the last.

Of course, it will be easy to blame it on them for their flamboyant lifestyle, and yes, there were people with the flamboyant lifestyle. But not everyone was like that. We need to know individual cases before we accuse. Many many responsible people tried and failed, and finally realized that it wasn’t the fault in them, it was the system. That’s why they’re Occupying Wall Street.

———-
*remember all those charts where salaries haven’t increased in real terms since 1973 or so. COL raises just don’t happen anymore, especially in private sector and now in public sector too.

**This, by the way, is also why a social security “opt-out” won’t work. Expenses will rise and will eat up that money that people are supposed to save for retirement. Even if they try to save, they won’t be able to save.

Putting together an emergency fund is nearly impossible these days.

It’s quite possible. It’s all in how you look at things. There are exceptions, but the rule still holds just fine.

The biggest hindrance is the wrong incentives that our genius overlords consistently put up in front of us. Namely, little to no interest on savings, and what there is, is taxed, while all types of debt and foolishness are still subsidized. You just have to look beyond all that, and realize that you will be penalized by the system for doing the right thing, but in the end you’ll be better off.

I will allow, that once one starts down the road of debt serfdom it becomes much harder to jump off. But still not impossible.

Expenses will rise and will eat up that money that people are supposed to save for retirement.

Indeed. So many things cost 50% more at the grocery store compared to 3-4 years ago. Gasoline is stuck at $3+ despite weak demand. Healthcare and education are through the roof. Car prices are up 50% from 5 years ago.
Meanwhile the gov’t tells us that inflation is “tame” and few get a pay increase.

Job loss did it to us.

We had an annuity plan AND 20 grand in savings knowing my husband could be laid off. We were soooooo confident we were prepared. My husband has been able to get work a total of 8 months in 2 1/2 years.
At first we lived life like normal cause we were covered right? We honestly didn’t believe how long he would be unemployed.
Then we became hyper sensitive to how prices have gone up.
Gas, milk, bread, diapers, electric, oil, etc.
Husband was hospitalized for one week and the car dies and BAM, all savings are gone and we’re living off credit cards.

$16,000? I can see that happening.

Danni

Kind of hard to have an emergency fund when you get laid off every couple years.

“I don’t believe this for a second. Putting together an emergency fund is nearly impossible these days. Needs industries like rent, food, gas, health insurance, college, etc, all raise their prices until there is nothing to put aside for an emergency fund.”

First, families should relocate to a non-bubble area if home ownership is a goal. They can drive older cars, and do the repairs themselves. Cut out the vacations, the electronic toys, cable tv, etc., since these are luxury expenses. We’ve done this and more since we live on one income, and we’ve always carried reserves. And yes, it’s no fun having to live with major sacrifice. I truly f*ing hate the bitter cold, five month long, winters up here in WA state, but it’s better than going down the economic drain.

rms:

Who are you to decide what is a luxury item and what’s not? Let’s let the free market decide. All we need to do is stop contaminating our free market with unfree ones. Charge tariffs on manufactured imported goods from unfree countries (with artificially oppressed wages), and then let people decide for themselves how to spend their own free-market salary.

“Who are you to decide what is a luxury item and what’s not?”

How many people do you support, Big V? Deciding what are luxury expenses will become clearer.

“First, families should relocate to a non-bubble area if home ownership is a goal. ”

In other words, move to lesser and lesser shacks in towns with lesser and lesser jobs. Ain’t that america, little pink houses for you and me.

rms:

It’s better to let people support themselves. I don’t want you “supporting” me, and then telling me that I have to live in poverty because anything better would be a luxury. I would much rather have the opportunity available to support myself.

“…….buy older cars, and do the repairs themselves……”

There aren’t that many old cars (pre 1996……or even better, pre 1985 or thereabouts). The ones that are out there are either “collectibles/specialty” cars, or are still running, but rusted out.

Yeah, you can do brakes and tune-ups…..but 99% of the people I know don’t have the know-how, or the garage/shop, or equipment to fix cars with OBD-II. A decent fault decoder costs $300 (and no, the ones you can use for free from Autozone aren’t “decent”)

Any electronically controlled auto transmission (and they are almost all electronically controlled since the mid 90s) is going to run 2000 bucks for a rebuild, plus labor. Not too many manual transmissions out there anymore. The ones that are are mostly in front-drive cars, which are a bi#ch to work on without the right tools.

There’s a reason why trucks are so popular. For the people who can still work on their own stuff, trucks are a lot easier/cheaper to fix.

Ooh ooh I know! I know!

Suzanne did it, on the island, with a chunk of granite?

“Suzanne did it”

HAR! (gobble gobble)

Well, it’s not candy..

http://www.youtube.com/watch?v=lxHhBx1FtLQ

Plus I don’t work for free. I suggest you do it instead. Your type is against “selfishness” of capitalism, which includes salary negotiations. But I suppose you are too stupid/inept to negotiate ever?

Bill i disagree partially we didn’t overstep our mission what we really did was overstep it when we paid for it all …

Now if other countries want to reimburse our costs, i don’t have a problem with that. But we really need our people home spending money in America protecting our MeHikan borders.

We overstepped it by protecting other nations

Are you saying you are too dumb to know the difference between defending America and occupying/bullying other nations?

Bill, Are you too dumb to know the difference between walking the walk on your “Constitutional” stance and your hypocrisy in working for an industry supporting unconstitutional activities?

“But I suppose you are too stupid/inept to negotiate ever?”

Yes.

“the stuff works well for heating.”

Until there’s an accident. I wish I had your faith in our fellow man (then again, maybe it’s a good thing I don’t). About six months ago, we had an incident one town north of us where some kids were messing around by a supply line, managed to break it, caused a major leak, which then caused a highway to have to be shut down and nearby neighborhoods evacuated, but not before a number of people nearby got sick from exposure to the gas. Oh, and if memory serves, it took three days to resolve the problem.

Good think no one lit up a ciggy. Or a spliff.

Carl is right. NatGas accidents are very rare. You’re far more likely to be in a car accident.

Out west whole neighborhoods have been hooked up for many years.

More like decades.

Yeah, my whole life anyway.

George Buck, president of Chevron Brazil, apologized Wednesday to deputies and the country for the oil slick. “I would like to reiterate that we have deep respect for Brazil, for the Brazilian people, for the environment, for the laws and institutions of this country,” he said.

He had better say that in Brazil. They aren’t as far down the corporatist road as the USA. If he’d said he “wanted his life back” like the BP CEO said, he might be lucky to make it back home.

the rights of the Union now supersede the rights of the states

Iffin’ you $elf-quits being a US state and decides in Anger to be a CSA state then you have to just suffer the consequences of that angry decision making decision.

(See Gen. Butler vs Virgina: “those slaves is OUR property” decision

I wonder if Greece will decide to go confederate against the EU?

I wonder if Greece will decide to go confederate against the EU?

Iffin’ the Greeks deposit a 79 meter wooden Euro Coin onto Gibraltar $hores, eyes suggest the answer is YES!

Check this out: Gas efficient cars and drivers cutting back on ther driving are imperiling our highways because the needed gasoline tax revenues are falling off.

http://www.economist.com/node/21538771

First they said people are driving less miles and then they said highways are too congested. ???

While I agree there are infrastructure age issues, it seems like they might find it’s not as congested as the earlier projections would have suggested.

Another sign of inflation: the top 48 domestic air routes experienced a 20% increase in fares over a year ago while gas prices are up sixteen percent over a year ago.

This is exactly what I plan to do. Over time I am going to add more panels and a storage system so I can sell electricity to my neighbors. Either that or buy a EV and totally go cold turkey on petroleum.