The US Economy and Current Financial Crisis

[Cheech Tremendous 0]

My point is that borrowers and lenders should have thoroughly examined the finances of the borrower and made sure they were able to make good on their mortgages. Moreover, borrowers should have made sure that the lenders weren't putting a bad mortgage on them.

 

In addition to that, people should have had to put some sort of down payment on their house. 5-10 percent. Is that too much to ask? Nobody's going to be able to borrow now, even if they're able to put money down. That isn't fair. These institutions and the American people who made these mistakes screwed everyone else.

 

Right now, if people are moving, those people are going to have to buy houses with hard cash or they'll have to rent. This is all, of course, a bad thing, but there is good in that these banks will learn from their mistakes (because they won't be around!) and not be able to put us in this situation again. Unless, of course, the government bails them out. If they know a bailout will come to correct their mistakes, what's keeping them from doing the same shit to us all over again. That's been my point all along.

 

This is a contradiction to what you wrote earlier. You said that if you can't afford to buy a house without using credit you should be a renter. That probably eliminates like 95% of the US population. Maybe we just misunderstood you earlier.

 

Down payments should be at least 20%, and that was the industry standard before this recent crisis. What has happened now is that people with good credit AND a down payment can't get loans. That's why the current credit crunch is being a called a crisis. Money has to be available to keep the economy turning.

 

Lastly, we need to move on from the continued blame towards lenders and borrowers for bad mortgages. Yes, they made mistakes, but this isn't all at the feet of the lenders. This was a failure in government oversight and regulation. It doesn't matter that these current institutions made the loans; if they didn't they would have been put out of business by those who were. We are looking at the results of a free and unfettered market. This bailout must be combined with increased regulation and federal oversight.

[MrRant 0]

We've always had loans available for less than 20% down (HUD etc). The problem is the types of loans that were given the last 5-7 years. Interest Only, ARMs etc to get people into a house that is bigger than they could afford.

 

Putting down 5% just means that your payments are slightly higher with a fixed interest but you are within your means. Putting down 10% on a house you probably won't afford with an ARM which you took so your payments could be within your range and then getting them blown up to high hell is an issue. People and lenders were looking in the short term and saying you can buy this $400,000 and pay what a $200,000 house would cost and then in 5 years you can refinance out or sell and buy a new house since the market was high. Then it bottomed out and some people can't take on the readjusted mortgage payment.

[Guest]

This is a contradiction to what you wrote earlier. You said that if you can't afford to buy a house without using credit you should be a renter. That probably eliminates like 95% of the US population. Maybe we just misunderstood you earlier.

 

This is what I put down.

 

What's wrong with renting or living within your means? People don't NEED gigantic houses. Well, unless you have 6 or 7 kids.

 

I think there has got to be a better plan out there than this bailout as currently constructed. There's gotta be.

[MrRant 0]

This is a contradiction to what you wrote earlier. You said that if you can't afford to buy a house without using credit you should be a renter. That probably eliminates like 95% of the US population. Maybe we just misunderstood you earlier.

 

This is what I put down.

 

What's wrong with renting or living within your means? People don't NEED gigantic houses. Well, unless you have 6 or 7 kids.

 

I think there has got to be a better plan out there than this bailout as currently constructed. There's gotta be.

 

Most people live within their means dude. I've explained the reason why own vs. rent is always amost a better deal and for some people they need some help with the down payment portion but it will be a fixed amount. I don't think anyone here is disagreeing that some people extended themselves way to far with the hope that the housing market would continue to rise and they could sell or refinance before the readjustment hit them. They gambled and lost. Some knowingly and then some unknowingly when the lenders agreed to give them no doc, no down loans and just hammer the point on the monthly payment is the same as you're paying now and not really telling them what happens in year 5 or 6. Certainly if those people knew what they do now they would take the $100 or 200 higher payment for the next 30 years rather than it balloon.

 

Note that I don't think people shouldn't read up on what they are signing but unfortunately some people put trust not only in the lender but also their agent who is *supposed* to be working for them.

[MarvinisaLunatic 0]

I like how the Senate has added 150 billion dollars in tax cuts to the bill. Why not go for 300 billion in tax cuts and make the whole thing an even Trillion?

 

 

[Dandy 0]

True, Rant, but I know an overwhelming number of people who only hear the good that can come from what they are doing (investments, using an ARM, etc.) and tune out the bad. These are the same people who bitch and complain about how their agent/broker/lender fucked them and is a crook.

[Gary Floyd 0]

So much for that.

[Cheech Tremendous 0]

So much for that.

Good. Looks like they think they have all the support needed for House passage as well.

 

I have regained faith in our democratic system. For now.

[NoCalMike 0]

Question: So for the sub-prime loans, which interest rates go up every so often. Why can't the banks just eliminate the rising interest rates altogether and restore the original rate and make it a fixed rate? It will keep people in their houses, and they will be able to afford to make their house payments. Isn't that the problem in the first place, that people were originally making their payments, but as the interest went up, the payments skyrocketed and since people weren't making more money, they couldn't keep up with the rising payments? So why not just restore the original rates and keep them fixed?

 

I am not saying this can or should happen, I am just asking why not? I am not well-versed in this subject and am just kind of wondering why the banks can't just do something like that?

[Dandy 0]

Not delving really far into the question, Mike, but almost all of the adjustable rates started off a lot lower than your standard rates, so I doubt they would want to cut them back to the original rates. I also imagine there would be many a lawsuit from those who have already lost their houses.

[Cheech Tremendous 0]

Your daily economic update, courtesy of the New York Times. The Senate's passage of the bailout was a step in the right direction, but the economic conditions continue to worsen under the specter of vanishing credit.

 

Credit worries continue

 

Another day of worry on Wall Street.

 

Stocks fell sharply on Thursday as concerns about the tightening flow of credit and the worsening economy outweighed the prospects of a quick passage of the government’s bailout plan.

 

With the House vote on the bailout bill expected on Friday, it appeared that investors could not hold their nerve in the face of an increasingly dire picture in the credit markets.

 

Key borrowing rates rose overnight, signaling that banks remained reluctant to lend to businesses and consumers. Anecdotal reports of businesses slashing dividends and scrambling for credit lines have underscored fears about the potential consequences of an evaporation of credit.

 

The Dow Jones industrial average dropped at the opening bell and never looked back; it closed down 348.22 or 3.2 percent. The broader Standard & Poor’s 500-stock index fared worse, dropping nearly 4 percent.

 

The worst declines came among companies in the manufacturing, chemical production and mining industries: sectors that are usually impacted by poor economic times. The declines suggested that the problems of the tight credit market, once mostly contained to Wall Street, were spreading across the broader economy, a sentiment supported by weak reports on manufacturing activity that were released this week.

 

Economic data released on Thursday morning added to the gloom. Jobless claims rose slightly last week, according to the Labor Department, and investors are bracing for Friday’s employment report for September. Economists are already pessimistic: they expect that employers shed 100,000 jobs last month and that the unemployment rate ticked up above 6 percent.

 

In addition, orders to American factories declined by the largest amount in nearly two years in August, as credit strains began to hit manufacturing with full force. The Commerce Department reported that orders for manufactured goods dropped 4 percent in August, compared with July. Oil prices declined for a second day, falling $4.56 to $93.97 a barrel.

 

Treasury yields dropped again as investors sought safety in the government notes. A key three-month borrowing rate for banks, known as Libor, continued to rise. And companies were having trouble finding buyers for their corporate debt, rates of which have soared.

[MarvinisaLunatic 0]

What do the makers of Wooden Arrows, Wool products, Rum as well as Television companies and Racetracks have in common? They all got tax breaks in the Senate version of the financial markets bill

 

I hope they realize that by making wooden toy arrows cheaper, they run the risk of little johhny shooting someone's eye out.

 

 

[Guest]

Definitely too long to post here, but worth a read.

 

http://www.forbes.com/home/2008/10/01/inte...eynolds.html%20

Did bank lending suddenly turn south since August? The latest data is for the week ending Sept.17, when the U.S. expropriated 80% of AIG (nyse: AIG - news - people ) equity and thus tanked most financial stocks. U.S. bank credit hit a record of over $7 trillion in the latest week--up from $6.57 trillion a year earlier and $6.92 trillion at the end of July.

Contrary to many comments, consumer and industrial loans actually increased in the latest week. Troubled giant banks have cut back on lending, but smaller banks have picked up the slack. Consumer and real estate loans dipped insignificantly through Sept. 17, remaining much higher than they were a year earlier.

[Cheech Tremendous 0]

Job losses worse than expected in September

 

The government is out with more bad economic news this morning: The job market began to deteriorate even before the financial crisis reached a more serious stage two weeks ago.

 

Employers cut 159,000 jobs in September, more than twice as many as in August or July, the Labor Department reported. It was the biggest monthly decline since 2003, when the economy was still losing jobs in the wake of the 2001 recession.

 

Forecasters had been expecting a loss of about 100,000 jobs in September.

 

The new number was especially worrisome because the government conducted its survey during the week of Sept. 8, before the credit crisis took a new turn for the worse on Sept. 17.

 

...

 

Until last month, job losses in the current economic slowdown had been relatively mild. Employers added relatively few jobs over the past five years, compared with past economic expansions, and it seemed that job losses might remain mild as a result. But a monthly loss of 159,000 isn’t mild; it was typical of the kind of decline during the job market’s slump between 2001 and 2003.

 

The unemployment rate held steady, at 6.1 percent, last month, but that was in part a reflection of the fact that more unemployed people stopped looking for work. To be counted as unemployed in the statistics, a person must be out of work and actively looking for a new job.

 

According to the new data, 375,000 people dropped out of the labor force last month. That number comes from a smaller, more volatile survey than overall employment and probably shouldn’t be taken literally. But it is also the reason the unemployment rate did not rise last month – and goes to show that the job market clearly is getting worse.

 

There was also a big spike in the number of people working part-time because they couldn’t find full-time work. More than 1.5 million people fell into this category in September, up from 400,000 a year earlier.

 

The job losses continued to be heaviest in industries tied to the housing market, like construction and real estate. But retailers, manufacturers, restaurants and hotels also shed jobs.

 

Government agencies and health-care employers – like hospitals and doctors’ offices – added jobs, as has been typical in recent years.

 

There was hardly any good news in this report. And the jobs numbers are especially important for two chief reasons. They are the first broad measure of economic activity during the previous month; and – unlike some other indicators, like gross domestic product – the jobs statistics describe the tangible effect that the economy is having on households.

 

Over the last year, the average hourly pay of rank-and-file workers – roughly 80 percent of the work force – has risen only 3.4 percent, according to the new numbers. The average workweek has also become shorter, so the increase in weekly pay has been even smaller: only 2.8 percent.

 

Inflation has been running at about 5 percent a year, which means that the most workers have taken an effective pay cut over the last year.

[Cheech Tremendous 0]

House approves bailout

 

Final vote was 263-171. I'm not happy with some of the provisions in this new pork-filled plan, but I'm still of the opinion that the $700 billion is absolutely necessary. I do like that there seems to be quite a bit of oversight into how the money gets spent and when and how it will be paid back.

[The Niggardly King 0]

Eh, will be back in the same position 10 years from now.

[Guest Vitamin X]

House approves bailout

 

Final vote was 263-171. I'm not happy with some of the provisions in this new pork-filled plan, but I'm still of the opinion that the $700 billion is absolutely necessary. I do like that there seems to be quite a bit of oversight into how the money gets spent and when and how it will be paid back.

 

One positive thing was that they snuck in the Bike Commuter Act in there, which Earl Blumenauer's been pushing for fucking ever and it's nice to see it pass, even though it didn't get to do it on its own and instead might get labeled as additional "pork". But the reality of the fact is there are a lot of people out there that will benefit from it, not to mention the countless new bike commuters we're seeing every year as well.

 

Ironically, Blumenauer voted against the bailout bill.

[SuperJerk 0]

Factcheck.org looks at the causes of the economic crisis:

http://www.factcheck.org/elections-2008/wh...mic_crisis.html

[Dandy 0]

That bailout did the trick. Oh.

[EricMM 0]

I have-ah the buyers remorse-ah

[Guest]

Like I was saying...

[At Home 0]

House approves bailout

 

Final vote was 263-171. I'm not happy with some of the provisions in this new pork-filled plan, but I'm still of the opinion that the $700 billion is absolutely necessary. I do like that there seems to be quite a bit of oversight into how the money gets spent and when and how it will be paid back.

 

One positive thing was that they snuck in the Bike Commuter Act in there, which Earl Blumenauer's been pushing for fucking ever and it's nice to see it pass, even though it didn't get to do it on its own and instead might get labeled as additional "pork". But the reality of the fact is there are a lot of people out there that will benefit from it, not to mention the countless new bike commuters we're seeing every year as well.

 

Ironically, Blumenauer voted against the bailout bill.

 

Yeah boy. It's only $20 a month per employee, but it's something.

[MarvinisaLunatic 0]

So..what do we think about states lining up to the bailout trough for their share of the bailout frenzy? California wants a couple billion, and no doubt more states will follow given the tough economic times, especially when its easier to go lineup at the bailout trough than it is to say no to people and cut bugdets instead of increasing them and raising taxes ad nauseum.

 

[Guest]

It's pretty fun though to note that most of the states facing financial trouble are blue states though.

 

 

I know you got that opinion from Glenn Beck, because someone on another board posted something very similar. They also like Glenn Beck.

 

Do you understand that image or not. If the US didn't have this state, the country would fucking sink. We're supporting everyone else while not getting anything back from the fed. Get it? Hopefully. They owe us. Pay the fuck up.

 

I know that post made me sound like a hardcore leftist, but you know what, I deal in truth, not untruths. Congress wants to give money to banks, while California can't afford to pay their workers? You know all state employees may have to be paid in IOU's. Fuck that shit. Help the people who need it, deserve it, and put in the work for it. Just their hourly fucking wage. The people who count on it. Not some fucking bank.

[NoCalMike 0]

It's pretty fun though to note that most of the states facing financial trouble are blue states though.

 

 

I know you got that opinion from Glenn Beck, because someone on another board posted something very similar. They also like Glenn Beck.

 

Do you understand that image or not. If the US didn't have this state, the country would fucking sink. We're supporting everyone else while not getting anything back from the fed. Get it? Hopefully. They owe us. Pay the fuck up.

 

I know that post made me sound like a hardcore leftist, but you know what, I deal in truth, not untruths. Congress wants to give money to banks, while California can't afford to pay their workers? You know all state employees may have to be paid in IOU's. Fuck that shit. Help the people who need it, deserve it, and put in the work for it. Just their hourly fucking wage. The people who count on it. Not some fucking bank.

 

Fuckin' A. I believe California has the 4th largest economy in the entire world. So back the fuck off.

[Guest]

I made a misstep. We're paying the Treasury more than anyone else and nobody is willing to help out our workers when we really need it. I didn't mean to put down that we aren't getting anything back from the Fed. But they should help right now in a momentary time of need, rather than piss away money into the market. They've put trillions in over the past few weeks. TRILLIONS OF FUCKING DOLLARS.

[SuperJerk 0]

"Why put in trillions when you can put in...millions?"

[SuperJerk 0]

It's pretty fun though to note that most of the states facing financial trouble are blue states though.

 

 

California had both Republican and Democratic governors during that time. Mostly Republicans, though. To be fair, the worst hit while Gray Davis (the ONLY Democratic governor from 1983-2003) was in office, though.

 

 

(Just saying.)

[Guest]

I don't think you understood the graph.

 

In fiscal year 2003, Californians’ tax payments to the federal treasury exceeded federal spending in the state by $50 billion, a record high. Much of that discrepancy, however, may be attributed to demographic factors such as youth and wealth. For every tax dollar paid by Californians in 2003, the federal government spent 79 cents for grants, wages, contracts, retirement benefits, etc. It was California’s 18th year in a row as a net donor state.

 

And I would guarantee that discrepancy has raised to at least 60 billion. Maybe these other states need to get their shit in order so that they aren't sucking from our teat. We're getting robbed here. What is everyone else doing for us? I don't know anymore. I'm just upset. I'd hate to see what would happen to less self-supporting states if we decided to withhold payments to the treasury and keep that money at home. They'd run up that national debt some more, but at some point, they'll stop. They have to.

[Jingus 0]

I believe California has the 4th largest economy in the entire world.

How does that work? By what scale? Not attacking, just curious, since there are various industrial giants (Germany, Russia, Japan, China, Great Britain, etc) which you'd think would easily be much larger than any particular state in the union here.