Posted on 08/27/2007 4:06:37 AM PDT by Notary Sojac
I know people are going to hate me for saying this, but I'm not sorry that foreclosures nearly doubled last month and are increasing every day.
I'm not sorry that real-estate prices are creeping down by the glut of desperate "for sale" signs all over Southern California.
I'm not sorry that all those developers building lofts downtown and in Hollywood and North Hollywood with no parking might have to eat their investment when they find they can't get half a mil for the 400-square-foot corner of a former sweatshop.
I'm not sorry that people who kept taking the "free" home-equity money from the banks beyond all reason are now finding out how not free that money was.
I'm certainly not sorry that the huckster mortgage companies and banks that thought it was a good idea to make subprime loans to people with bad credit ratings are now taking a bath. I only wish it involved some sort of public humiliation involving glue, sand and glittery body paint.
I'm not even sorry that people will lose their homes and be forced to give up the Hummer they bought with a home-equity loan, and move into a one-bedroom apartment in Panorama City or, worse, in with the in-laws in Porter Ranch because suddenly their adjustable home rates adjusted higher than they can pay and they can't unload their McMansions for $1.3 million, as was the plan, despite the newly installed horizon pool and cork flooring.
I tell people I am sorry, but I'm really not. I am, in fact, gleeful.
And I'm not the only one.
Most everyone who is not employed by a mortgage company or is not a real-estate agent or is not trying to sell a house or can't pay the mortgage anymore feels the same. We are secretly dancing little happy jigs because it seems that the insanity is about to, finally, end and the snake-oil hucksters will fold up their tents, take their sleazy subprime offers and slink out of town.
Then maybe life can slowly come back to normal, and regular people with regular incomes can buy regular houses again without agreeing to loans so abusive they ought to be handed out of the back of gangster bars. We don't even care that it means our own property values will drop, if it means we might avoid another block of luxury lofts.
It's a relief, too, because we all knew this was coming, just like you know the Poppin' Fresh dough carton is going to make that loud noise when you pull the tab, and you can't really relax until it comes. Even people like me with math anxiety could work out that at some point the hot real-estate market, built in part on risky loan deals, was someday going to reach critical mass and start to crumble.
Well, here we are, and it's beautiful. And that's why I must implore all the well-meaning politicians proposing bailout measures (You know who you are, Richard Alarcon and Hillary Clinton) to just go away and work on curing cancer, or something that will actually help humanity, not enable it to continue on its financially irresponsible path.
Homeowner bailouts, as warm and loving as they seem, are, in fact, bailouts for mortgage companies, and they don't deserve it. But bailouts play well on the news, and everyone from L.A.'s Alarcon to state legislators to U.S. senators are proposing deals to help people continue to pay their mortgages.
Sure, some poor grandmas and inner-city families will get to keep their homes, at least until the next rate shift on their interest-only loans, but at what price? Is it helping people to keep them tied to abusive mortgages that only help the abusers profit? (C'mon, Hillary, it's the other guys who are supposed to be helping big business exploit consumers.)
To Clinton's credit, she's also proposing penalties on mortgage companies, though it's hard to see the sense of punishing with one hand and rewarding with the other. Better to support restructuring of the loan industry and government-sponsored mass refinancing for at-risk homeowners.
It's hard for Democrats not to rush to the aid of the victimized homeowners. It's a good instinct, but sometimes it's in everyone's interest to step aside and let faulty systems fall apart. This is one of those times when we ought to let it burn. I'll bring the marshmallows.
Not at all.
Better to support restructuring of the loan industry and government-sponsored mass refinancing for at-risk homeowners.
This moron Mariel Garza gets nothing.
Agreed.
I ahve said it before but if you can not afford 120% of the total monthly cost, on a 30 year fixed, and put at least 10% down you need to seriously rethink buying that much house.
I think that’s solid advice.
You want wiggle room in your bills. My wife and I ahve about 10% of our gross going to savings. We are building it up, but there have been bumps, example last year I had to have transmission completely rebuilt, cost us $2k. We had money in the bank to pay for it. Like Dave Ramsey says, when you buy a new home chances are Murphy has already picked out a room. Also I would not buy a house unless I had at least $5K in savings to cover any unexpected expenses with moving and setting up the new house.
“That can and will recover if the fed acts and minimizes the downturn.”
The Fed has a much bigger job than just the mortgage market.....with the dollar at historic lows already, and debt of all sorts being looked at with a jaded eye, I’m not sure the Fed has any room to ease in the long term.
But then again, I’m not an economist, I just play one on the internet.
You are right about one thing the FED is backed in the corner with now were to run. I doubt there is much they can do now to turn this around.
It depends on motivation and circumstances.
A greed-motivated speculator who submitted fraudulent applications and "owning" 12 houses and 7 condos ==> Highly amusing
A young couple with three small children who got swept up in the nonsense and didn't have the benefit of experience ==> Not amusing at all
Okay, you are pessimistic, right?
I want you on record.
How bad will the recession / depression / total economic collapse be, and by what date may I say your prediction has been undermined?
A dirty word in America.
BUMP
I think we will be in recession in the next 12 months. I hope I am wrong.
You are now on record. Would you like to add any more information to the prediction? Unemployment rate, severity of recession, etcetera?
That I don’t know, to many variables for my worms eye view.
Here’s my take:
1) It’s a ‘buyer beware’ economy. That means you must read the fine print on anything that you buy. This includes mortgages.
2) Americans have been living beyond their means for a decade and a half, perhaps more. I agree with other posters that bailing out the little guy now will only encourage the bigger companies that offered these loans. The bigger companies and Wall St. all had golden parachutes and new exactly when to liquidate assets to retain exceedingly large profits.
3) Banks will have little choice but to take less risks for housing and that trinkles down into business banking. My bank had a letter of intent to fund up to 25% of my companies post-tax revenues. Now they have limited it to 15% causing a cash crunch to the business. I can blame all those greedy real-estate and oil speculators for the coming mammomth recession but truth is, it’s a free market and we all take the good with the bad. The bad is coming en masse, but the good will be at the end of 2008 when I buy such assets for pennies on the dollar. Does it make me feel funny I will be profiting off other people’s stupidity? NO! That is how free markets work, the smart folk with access to accurate information and a spreadsheet will always win economically.
Do I feel bad Joe, his wife and three kids will have to live in a dumpy two bedroom apartment when he had the 52’ plasma in the McMansion in 2006, driving the new BMW while I had a modest home and drove my used F-150 truck? NO! I do not feel bad.
http://money.cnn.com/2007/08/27/news/economy/temp_workers/index.htm?postversion=2007082710
Temp hiring falls for 6th straight month
Trend raises concern because last significant decline in temporary hires preceded a major drop in overall employment, according to a news report.
I came across this earlier today.
This guy gets at least some of it - he does understand that when you engage in financial risk, which was the case in the over-inflated real estate business, you should not feel sorry for those involved.
There is a little too much class envy in this article for me though, which is what I think when some liberal loser uses the word "McMansion". However, a correction in this market is looooongg overdue.
Well I am not a senior but 30 something going close to 40. Let me be frank on my opinion and state that the American majority is going to suffer at this point for the decisions of the minority (it’s a big minority).
However you feel I can relate to it, considering I am likely paying your Social Security and Medicaid benefits that will not be available to me or my family when I am your age.
We all take the good with the bad and unfortunately, the next 3-4 years are likely to be ugly economically.
Hey, there's no need to save when my tulip bulbs Beanie Babies Pets.com shares condos in Sarasota are guaranteed to triple in value in two years.
So much of this fueled by over-specualation, and MASSIVE mortgage fraud, especially in the inner-cities...
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