Wednesday, September 17, 2008
Only The Greedy are Getting Hurt
The economic financial crisis being hullaballoo'ed in our Newspapers, is a monument to the greed of many people, who took advantage and talked a lot of people into speculating on houses they couldn't afford, with mortgages that never should have been allowed. (nothing down , interest rates below the going market, adjustable in six monthes or a year to the then prevailing interest rate, but why worry house prices are going up 20+ percent a year, so you can refinance then on the increased equity you will have and it will be fine----cept didn't happen, so these greedy people victimized those that really couldn't afford houses into mortgages they didn't even understand----my daddy always told me if it looks to good to be true---it most likely isn't---"e pluribus unum----let the buyer beware". So the entire crisis we now are hearing about, has to do with the bad mortgages, the exotic loans and equity swaps that even the experts don't really understand, are now stuck with mortages that are almost worthless, so who is getting hurt? The Lehman Brothers, and the "Investment" Banks (not to be confused with the commercial banks), and those that greedily bought it mortage backed exotic loans---in short the rich and greedy. Underneath it all the basic economy is really not bad. Once the public finally decides what property is truly valued at----we can get back to growing the economy----Here is an excellent summary of how things are right now and where things are going---its a relatively short article (its not political by the way)---I think if ya read it , it will help ease your concern about the economy in general) http://www.csmonitor.com/2008/0917/p08s01-comv.html
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I've been really worried about our 401(k)s; mine has dropped almost 20% since the first of the year [sigh] ... very scary. Thanks to my wise husband, we've cut way back on credit use, and operate within our budget. But it's still very, very scary.
ReplyDeleteGary, I've never borrowed. Never owed anyone anything. Lived BENEATH my means while those around me had the nice houses and new cars and wouldn't associate with me because I couldn't "entertain" in the high fashion style.....BUT I HAD MONEY!! Now, it's going up in stock smoke and I never lived my life with any of the GOOD STUFF.
ReplyDeleteAll of this makes me glad I'm poor! Don't have to worry cause I ain't go nuttin anyway..lol
ReplyDeleteJust goes to show ya...money really CAN'T buy happiness.
If we didn't have the Obama-ites (aka the leftist liberal Democrats) screaming the sky is falling , the sky is falling people woujld realize the economy isn't about to self distruct---. The stock market will improve once the election hype by the leftists is over. Two years ago everything was pretty much okay, market at new highs, houses selling nicely, unemployment waay down ---then the american public bought the leftist line of hooey--and we elected a leftist democratic congress headed by Pelosi in the House and Reid in the Senate-----two years of a democratic do nothing congress---can we afford to let the leftist control BOTH houses of congress AND the WHITE HOUSE too?? I think not.
ReplyDeleteFirst, "let the buyer beware is caveat emptor.
ReplyDeletesecond, the dream of owning a house is practically in the DNA of the country as part of the American dream, so if you never owned one, and some banker-type says you're qualified to buy the house, this is not greed. It may have been foolhardy, but these are not people who were speculators.
third, as more homes foreclose, the homes that remain often diminish in value through no fault of their own, so yes, innocent people do get hurt.
Good points, Roger. There is definitely a domino effect on the rest of the housing market. And good Latin, too: caveat emptor = buyer beware. E pluribus unum = From the many, one.
ReplyDeleteOne of things that I don't completely agree with is the notion that most of the home buyers or those homeowners who did some refinancing were innocent or not greedy. Some were innocent, for sure, but many more were also unbelievably and inexcusably stupid. And many refinanced with the goal of increasing consumption on things they didn't need - lots of that was driven by greed.
Too many people overborrowed! If a person is excused from this nowadays, it says a lot about the intelligence of the average person, and about the willingness of others to give them a pass. What the hell happened to having a knowledge of basic math? What the hell happened to taking a mortgage deal from the bank's office, and before signing on the dotted line, taking the information to one's parents or friends or a trusted acquaintance for a second opinion? When did it become so difficult for a family to sit down at their kitchen table for fifteen minutes, where they could add up their monthly take-home pay, and then start subtracting expenses like mortgage, lights, gas, groceries, car payments, and the babysitter, to see if they could afford the deal offered by the bank? Even people who have never owned a home before who are enticed by a stupid/greedy/unethical banker's reassurances should have done this. It's common sense!
Anyway, it irritates me to no end to see the US political parties blame each other for this mess. There are two causes to this mess:
1) Loose or missing regulations in the financial industry. A few rules about how high a loan-to-value ratio can be when writing mortgages, related limits on mortgage insurance from Freddie and Fannie, and a prohibition on the resale of uninsured or subprime loans to third parties (like AIG, Lehman Bros., etc.) would ahve avoided this entire bloody mess.
2) A culture that values consumption above all else. When the hell did it become the overriding goal to buy as much as possible, carry as much debt as you can handle, and forget about the goal of owning your home free and clear?
Sigh... so much to teach, such little time...
I totally disagree with Roger. Everyone knows what they can or can't afford. They knew getting in at a very low interest rate that would balloon in a few years with nothing down was a gamble. Then there are the people who never even lived in the homes that they bought and spun. These are the people we are bailing out. Only 2% of the population thats all and we are having to protect them. The speculators and the people who didn't have two nickles to scratch together anyway. Why should we as a country have to bail out these people. If I gambled my money away frivolously do you want to get me out of my problem? I don't think so but thats exactly what we are doing under the democrat Congress. This is what happens when Fannie Mae and Freddie Mac are primarily government regulated and run. Socialism here we come if the dems win. Hold on to your hineys. Good comment El Cerdo, you hit it out of the ballpark.
ReplyDeleteGreed is the culprit in any scenario and it is certainly a bipartisan downfall. 1999 was my last year in the banking industry and our mortgage lenders were actually wanting us to refer customers who would qualify for 105% mortgages. I'm afraid both political parties get to accept blame for the repeal of the Glass Steagall Act.
ReplyDelete