Market down 450+ pts

[Stumbleweed]

Re: Market down 450+ pts

Hah, economics make for strange bedfellows. You have Federal Reserve and IMF officials as well as House Republicans (indirectly) agreeing with Michael Moore and Dennis Kucinich. Strange times we live in, eh?

Glad you guys liked the article.. it seemed to present some good alternatives and clearly state why this is a bad idea. Beyond the lack of oversight and the basic conflict of interest (Paulson and Goldman Sachs mainly), it's extremely short-sighted to just throw money at a problem, when there are so many other things that "throwing money at" might actually help (bailing out homeowners, national healthcare taking the healthcare burden off of businesses, investment in green energy, etc.)...

[rj9949]

Re: Market down 450+ pts

So what are oil prices now, i'm curious to see how they are affected. Anyone know a site that shows them?

[p_rushing]

Re: Market down 450+ pts

I do not agree with bailing out homeowners. These people, both poor, middle class, and rich, bought homes that they couldn't afford. Then when rates went up, they couldn't afford the payment. I'm sorry, but you shouldn't have been buying a house to begin with. Its time to sell if you can and rent a house or apartment. There are plenty of houses for rent now. People have been living on credit for too long and now is the time you have to pay.

If they are going to bail out homeowners, I should stop paying my mortgage, credit cards, etc. I'll sit back and keep all my money and let the government pay for it. Why should I pay my bills that I agreed to when others are being freeloaders.

[Blzer]

Re: Market down 450+ pts

I only wish I understood any of this!

I gotta get in another Econ class... now.

[Stumbleweed]

Re: Market down 450+ pts

I do not agree with bailing out homeowners. These people, both poor, middle class, and rich, bought homes that they couldn't afford. Then when rates went up, they couldn't afford the payment. I'm sorry, but you shouldn't have been buying a house to begin with. Its time to sell if you can and rent a house or apartment. There are plenty of houses for rent now. People have been living on credit for too long and now is the time you have to pay.

If they are going to bail out homeowners, I should stop paying my mortgage, credit cards, etc. I'll sit back and keep all my money and let the government pay for it. Why should I pay my bills that I agreed to when others are being freeloaders.

Well, it's just another idea that can help mitigate the damage of this, considering that one of the root causes is predatory lending, which was assisted by deregulation in the late 1990's continuing through now and aided by the greed of the lending industry. When the government and businesses allow this to happen for the sake of making more money, I think both are equally at fault. And considering that keeping people off the streets is good for the economy in every way possible, I think you personal responsibility types can bite your lips for a minute and take the hit. I understand the argument about not bailing out irresponsibility -- but it's gotta be a two-way street.

Are you totally against this kind of intervention from both sides? If so, I think that's a consistent position -- if you're for a bailout of some kind from the business side of things, I call shenanigans. Personal responsibility applies to corporations, government officials, and homeowners alike.

And from a purely humanitarian perspective, would we rather have this money go to corporations and the individuals that caused this mess or to people who are now struggling to make ends meet due in large part to factors outside their control and actually need the help? People are losing their entire lives because of this.

"Its time to sell if you can and rent a house or apartment."

Uhh, yeah, that's a VERY important "if" statement, considering the housing market is in the crapper. And even IF they were able to sell, they'd be taking a loss and (especially for those who are losing jobs/retirements) might not even be able to afford to rent something. That statement was very short-sighted and typical of that "personal responsibility"-focused ethos that I hear so often by many of the same people who preach deregulation.

[TombSong]

Re: Market down 450+ pts

Its good to see people discussing this very real problem. its good to see that some understand the Fed Reserve needs to be abolished.(Constitutionally it should never existed in the first place)

I hope equally many will see further into the abyss. The current economic problem is not fixable. No matter how much money they throw at this it will not turn anything around. Its like sticking an IV into the arm of a dead man.

The dollar currency is in reality toilet paper. It becomes less than that with each "bail out" and infusion of more paper into the system. This is why you see, and will continue to see the price of everything go up and up and up.(except the houses, they will lose their value cause no one can afford to buy them) When you can barely put food on your table and gas in your car, who can afford a house ?

I dont think they are gonna dump the full magitude of how bad things really are until after the elections.

[stewaat]

Re: Market down 450+ pts

I agree that those who bought houses under the assumption they would increase in value should not be bailed out. Basically these people tried to use their house like a credit card.

I remember always hearing how houses don't go down in value like cars and whatnot. It was rare back then but look what happened. People all shared this frame of mind, built a ton of houses figuring the value would keep going up. People then buy these houses thinking the value will always increase and use the equity in the house to purchase other things. Well when the value of the house goes down they are completely screwed.

I do not want to see them bailed out.

[ZB9]

Re: Market down 450+ pts

built a ton of houses figuring the value would keep going up.

yea houses were being built at an insane rate

[Stumbleweed]

Re: Market down 450+ pts

I agree that those who bought houses under the assumption they would increase in value should not be bailed out. Basically these people tried to use their house like a credit card.

I remember always hearing how houses don't go down in value like cars and whatnot. It was rare back then but look what happened. People all shared this frame of mind, built a ton of houses figuring the value would keep going up. People then buy these houses thinking the value will always increase and use the equity in the house to purchase other things. Well when the value of the house goes down they are completely screwed.

I do not want to see them bailed out.

But are you okay with bailing out the firms if it comes down to that?

And the houses were being built by whom? And the loans were being made and approved by whom? And the regulations that allowed these kinds of loans in the first place were eased by whom? Pointing the finger at taxpayers who got in over their heads (whether they should've known it was a bad idea or not) is very short-sighted. If they happen to work for these banks that are folding or many of the other industries in America that are undertaking massive layoffs (or were already unemployed and hanging on by a thread), then they're totally screwed -- no help for them then?

Yay, let's create a large class of homeless, jobless people instead of bailing them out. Sounds like a plan! And let's bankrupt the government further so we can't even pay for things that could actually help our economy and the people in it in a REAL way! Our country is sick... like, this is insanely ****ed-up.

Not to mention that the REAL problem with those risky loans was that the bank that originally made it sold it off to Bank B for a $50K profit on the assumption that the value of the home would increase. That's (as well as the influx of new homes being built, often by the same investors who have a hand in the mortgages that were eventually offered) where all these collapses are coming from, not simply people not being able to pay back their irresponsible loans. This fake economy of speculation is biting us in the *** finally.

[Stumbleweed]

Re: Market down 450+ pts

Another killer post from another forum:

"3. do people even pay any ****ing attention any more?

there is a fine line between the end of the world, and the end of the american dream. that's the issue. the american dream is a dream; it is not reality, nor a right. and too many people got suckerpunched into believing it could be them. people migrated to suburbs, got the freedom of cars, picked up the right of home ownership, ate convenience foods...and look where we are? a fat ****ing country of debtors with a wrecked environment and no control over our country. and yeah, it takes this level of crisis to motivate people to do something and think about it. this is like a triple bypass for our economy...and yet, rather than stop smoking and eating twinkies (or in this case, repealling the CRA, suspending fannie/freddie, and regulating this **** with some oversight) we are talking about taking an advil for our aching knees because we can't support our sausage guts. damn ya'll. this should be a wake up call that crazy **** like sustainability, work/life balance, and living within your means are pretty good ideas.

the only thing that is problematic here is that our culture of guilt makes us blame ourselves and try to fix the problem without taking stock of what created it, and frankly, without getting the kind of people who created it out of office. for once, wake up tomorrow happy that republicans killed a bill, even if it was for the wrong reasons, because this was a terrible idea."

And a counterpoint from another poster to the part concerning the CRA (Community Reinvestment Act):

"I've said it before and I'll say it again, the CRA is not to blame for this. The CRA encouraged banks to lend to lower income households, but it did not force the banks to make crappy loans based on little to no evidence that the people could pay them off. It didn't encourage banks to lend via third party brokers who didn't care whether the information they obtained was accurate, much less that the loan would not default.

It also doesn't cover, nor did it help, the people who were buying homes for $500k+, which are a large part of this problem. It did not establish the securitization of debt that allowed all these banks to sell off the debt, allowing them to loan more than they could ever back up. It did not establish the credit default swap contracts that screwed over AIG and many of these banks. Go to the suburbs of Las Vegas and see if the CRA enabled that **** storm to occur."

[callmetaternuts]

Re: Market down 450+ pts

The problem with the houses too also stems from a very simple economic principle.......Supply and Demand. You had demand for houses in the late 90's and early 2000's, but as families slowed down and didnt grow at the same rate, the need knocked off. Supply < Demand = many people building houses to make money and now Supply > Demand = dropping prices.

Factor in gas prices, the sub prime garbage and lending being screwed up its not Suppl > Demand with loans being impossible to get.

Everyone buys a house because they think it will increase, otherwise, why buy a house? Why not rent? Everybody who buys a house expects it to increase. Now, the short term flippers are one thing but 95% of us (including me) buy the house to live in and expect to be able to sell it, at a profit in 5-10 years and move on as our lifestyle changes. If houses were going to depreciate in value and we knew/expected that, you better believe we all would rent. Why buy something where it goes down in value, could have a catastrophic problem (termites, plumbing etc) and lose tons of money when you can rent it out with no ties?

I have a great example i wrote up for how this whole problem started. Its very long, but i think an interesting read. I'll post it if anyone is interested.

[callmetaternuts]

Re: Market down 450+ pts

The gov't does have a role in all of this mess, but we are trying to figure out where that is and to what length they need to be involved. Do we want them throwing money at the problem? Do we want them to be laissez faire and not do anything? Do we want them to tighten regulations and knock this stuff out?

The biggest issue is, most of the top people can come to a consensus as to what we need in basic terms (buy out bad debts, dont bail out execs, tighter regs) but agreeing in principle and agreeing in action are totally different. How do we buy back bad debt? Do we buy it all back? Portions? From who? Companies so they can lend? individuals so they can purchase? How much do they pay? 50 cents on the dollar? 30? When is it paid back? At what interest rate? How do we enact tighter regs and still allow people to function?

THis problem is way beyond multi-pronged. We are seeing bits and pieces of it but you have to factor in everything. Oil prices, sub prime, failed companies, corruption, FDIC, SIPC, foreclosures etc. Its a mess, and its going to take awhile to fix it.

Getting this bailout to go through, in whatever form, isnt a miracle fix. This is a long process and the bailout, however it passes, is the first step, and hopefully the right one. Think about a broken arm. You dont put a band aid on it, you set it, put a cast on it and let it heal over time. We need this bailout to be the setting of the arm so to speak and let it heal.

[Stumbleweed]

Re: Market down 450+ pts

I'd be interested in that write-up you did, taternuts.

And yeah, the houses were being built at an insane rate in part because the rates were low and they assumed that people would be rushing to get rental/investment properties if not primary residences. It's totally a symbiotic relationship, and everyone is at fault here.

Agreed 100% on "everyone expects a house to increase, otherwise why buy?" and I think that is a point that needs to be made over and over again. We're not in this mess because of that, we're in this mess because of all the speculation markets that passed that same bad loan on at a profit to other greedheads who are now panicking and trying to pass it back to the taxpayers... very disheartening that people aren't seeing that...

And to stewaat and whoever else I replied directly to (p_rushing I think), don't think of my reply as an attack.. I'm mostly just venting about people who support some form of bailout for the financial sector but not for the homeowners. I'm not actually sure if you guys support the bailout in general. So sorry if my frustrated posts came off like an attack against you guys... that wasn't the intent, unless you actually do support a bailout for the financial industry haha...

[stewaat]

Re: Market down 450+ pts

But are you okay with bailing out the firms if it comes down to that?

And the houses were being built by whom? And the loans were being made and approved by whom? And the regulations that allowed these kinds of loans in the first place were eased by whom? Pointing the finger at taxpayers who got in over their heads (whether they should've known it was a bad idea or not) is very short-sighted. If they happen to work for these banks that are folding or many of the other industries in America that are undertaking massive layoffs (or were already unemployed and hanging on by a thread), then they're totally screwed -- no help for them then?

Yay, let's create a large class of homeless, jobless people instead of bailing them out. Sounds like a plan! And let's bankrupt the government further so we can't even pay for things that could actually help our economy and the people in it in a REAL way! Our country is sick... like, this is insanely ****ed-up.

Not to mention that the REAL problem with those risky loans was that the bank that originally made it sold it off to Bank B for a $50K profit on the assumption that the value of the home would increase. That's (as well as the influx of new homes being built, often by the same investors who have a hand in the mortgages that were eventually offered) where all these collapses are coming from, not simply people not being able to pay back their irresponsible loans. This fake economy of speculation is biting us in the *** finally.

Point made. I don't have a solution. I just hate the fact that I have to pay for the mistakes of others. I don't understand why I am held accountable for their errors in judgment.

The problem with the houses too also stems from a very simple economic principle.......Supply and Demand. You had demand for houses in the late 90's and early 2000's, but as families slowed down and didnt grow at the same rate, the need knocked off. Supply < Demand = many people building houses to make money and now Supply > Demand = dropping prices.

Factor in gas prices, the sub prime garbage and lending being screwed up its not Suppl > Demand with loans being impossible to get.

Everyone buys a house because they think it will increase, otherwise, why buy a house? Why not rent? Everybody who buys a house expects it to increase. Now, the short term flippers are one thing but 95% of us (including me) buy the house to live in and expect to be able to sell it, at a profit in 5-10 years and move on as our lifestyle changes. If houses were going to depreciate in value and we knew/expected that, you better believe we all would rent. Why buy something where it goes down in value, could have a catastrophic problem (termites, plumbing etc) and lose tons of money when you can rent it out with no ties?

I have a great example i wrote up for how this whole problem started. Its very long, but i think an interesting read. I'll post it if anyone is interested.

I'd be interested.

[Cebby]

Re: Market down 450+ pts

So what are oil prices now, i'm curious to see how they are affected. Anyone know a site that shows them?

Lost in the bailout stock drop were a relatively large gain against the Euro and an absolutely HUGE drop in oil price.

As for the market and bailout, ya'll should have been on Capital Hill today. It was pretty damn exciting.