September 24, 2008

Why We're Having an Economic Meltdown

Because Americans will piss away their money on anything, as long as they find it amusing.

Keep on bidding, folks. Can't we enthusiastically get behind this this empty, useless trash, and push it far higher than it deserves to be based on merit, for no reason at all?

Yes, we can! Yes, we can! Yes, we can!

Oh, wait a minute...

Posted by Confederate Yankee at September 24, 2008 09:37 AM

Meanwhile items other items of great worth languish, despite being far more unique and capable of refreshment..

Posted by: Confederate Yankee at September 24, 2008 09:39 AM

Ready for some comedy gold, y'all?

Let's take a look at the Republican Platform, adopted three weeks ago (!). Read it and weep/snicker.

'We support timely and carefully targeted aid to those hurt by the housing crisis so that affected individuals can have a chance to trade a burdensome mortgage for a manageable loan that reflects their home’s market value. At the same time, government action must not implicitly encourage anyone to borrow more than they can afford to repay. We support energetic federal investigation and, where appropriate, prosecution of criminal wrongdoing in the mortgage industry and investment sector. We do not support government bailouts of private institutions. Government interference in the markets exacerbates problems in the marketplace and causes the free market to take longer to correct itself. We believe in the free market as the best tool to sustained prosperity and opportunity for all.'

Funny how that morphed into:

'We will pay Wall Street 100 times what it would cost to pay off every mortgage in foreclosure and not give any of our average citizens a dime. We will encourage the most irresponsible financial habits this side of Vegas. We will suppress any attempts at investigating this mess by shouting "Blame game! Blame game!". We will try to ram through - wait, did we really say we don't support bailouts?! Yep! - the mother of all bailouts. And we will also babble about heightened regulation, although, in our defense, we're lying through our teeth. It is a glorious day to have your industry nationalized into the People's Free Market, comrade!'

Posted by: scarshapedstar at September 24, 2008 10:05 AM


Wonder if I can sell my leaves once they fall...

Posted by: WeBearArms at September 24, 2008 11:40 AM

lawl and lawl (at nascar)

thank you scarshapedstar

Posted by: poot at September 24, 2008 01:04 PM

"Wonder if I can sell my leaves once they fall..."

You can market them as 'slightly used carbon offsets'.

Posted by: Dan Irving at September 24, 2008 01:17 PM

Didn't Obama and his buddy Bill Ayers piss away $150,000,000 amusing themselves by diverting Annenberg's 'educational' money to a bunch of lefty activists?

I mean, it could have done some good if actually applied to education, but political games meant far more to that dunciad duo.

Posted by: Micropotamus at September 24, 2008 01:53 PM

We will pay Wall Street 100 times what it would cost to pay off every mortgage in foreclosure and not give any of our average citizens a dime.

So let's see; the total value of foreclosed mortgages in this country, is, by that analysis, is $7 billion dollars.

In California, the average residential loan funded by Freddie Mac is $265,879 -- which would then work out to 26,327 mortgages in foreclosure.

Unfortunately, California's actual completed foreclosure rate was over sixty-three thousand houses just in the second quarter of this year. That equals a total of $16.8 BILLION dollars to pay off all the foreclosures in California in just three months.

And that doesn't count houses in default -- which matters because a mortgage in default, by accounting rules, has to be reduced in value. That total as quoted was 121,341 loans; if each of those loans had to take a writedown of just 25% in value, that is another $8 BILLION dollars of lost value. In one state. In one month.

Meanwhile, let's take a look at these "average citizens" and what they are doing.

The inevitable seems to be that Gardner, 50, and her elderly parents will lose their modest two-bedroom home in Oakland's Sobrante Park neighborhood, where she's lived her whole life. Her parents bought the house in 1954 for $11,500 and raised their four children there, outliving two of them.

After refinancing more than a dozen times over the years to pull out money, the Gardners now owe $454,500 on the house. She thinks it is probably worth about $350,000.

Gardner said her lack of financial knowledge and the need for funds to fix up the house and pay off bills kept inducing her to refinance. Public records show that the home was refinanced four times in the past two years.

Or this one:

Susan Fallis, a communications professor at Saint Mary's College in Moraga, so far seems to fall into the "get the loans off the books" camp of Wachovia customers. In 2004, she sold the Santa Cruz parking lot her father bought in the 1960s for his mobile home business. She reinvested the approximately $3 million into 20 single-family houses in and around Reno, with a 40 percent down payment on each one.

Sixteen of the loans were Pick-a-Payment mortgages from Wachovia. Because Reno rents dropped as her minimum payments climbed, she is now losing about $7,000 per month. She has asked Wachovia to temporarily lower the interest rate on her loans by less than two percentage points, without asking for any adjustment on the loan principal. The change would enable her to break even, but company representatives have told her allowing it "would require a complete reversal in corporate policy," she said.

If Wachovia doesn't allow any modifications, Fallis expects she will have no choice but to default in the next few months. She said everyone loses in that scenario: Wachovia has to sell 16 homes at a loss, 16 families have to vacate their rental properties and her family loses wealth accrued over more than a generation.

"It's absolutely insane," she said. "I'm about ready to become the Cindy Sheehan of real estate; this is just making me so angry."

Explain why those people should get a penny of help from the government.

Posted by: North Dallas Thirty at September 24, 2008 02:07 PM

ND30...I am in complete agreement with you in that sentiment. I hold ONE 30yr mortgage and a 15 yr H/E loan. I make my payments each month plus a bit extra on each (the plan is to pay off the H/E within 5-6 years). Went into both loans with my eyes wide open, took on debt that I knew I could repay over time, and haven't asked for a dime's worth of help.

According to the 'old' rules, I would have never qualified for a loan to buy my home, much less the H/E loan that has allowed me to do quite a few other things.

I plan on being in my house for at least 10 more years, life's quirks depending. If I make it that long, my "un-wise" investment will turn out golden.

I would rather have speculators LOOSE if the 'market' tanks - whether it be in the commodities markets, real estate, or what have you. Then, the MARKET takes care of itself. However, in this case, the resulting 'correction' of market(s) MAY be a more bitter pill to swallow than the proposed bailout. My main requirement for the bailout is the Feds get the heck out of the private sector as quickly as is possible...with the least impact on the taxpayer and eventual resultant market as possible.

Once in, however, I never expect to see the Feds leave :(

Posted by: Mark at September 24, 2008 02:45 PM

Actually, the economy's probably in pretty good shape if people are willing to spend their money on this trash.

Posted by: Trish at September 24, 2008 08:26 PM

What many miss here is this is really not a bailout the way it is structured.

It is just what it is called by a public that has no grasp of the issues involved.

What is really going on is the acquisition of assets by a new market maker of elephant in the room size to provide stabilization and liquidity.

If done right even with many totally lost cause assets in the mix the government can over time come way far ahead on the investment.

Fix now , point fingers later, but the Dems have a lot to answer for on this one and are hoping to fool the rubes one more time.

Posted by: JustADude at September 25, 2008 01:16 AM

Dude, you are correct - though I still don't like it. While I haven't had a chance to actually see the contents of the 'bailout', it is - so far - a mechanism for the Feds to acquire "real property" that has the potential to be worth much more in the (near?) future. My concerns are now more focused on the following:
1) It is well-known that properties that are not occupied tend to deteriorate (this assumes responsible occupiers).
2) How is the FedGov't going to maintain the properties if they are going to wait for the market to turn.
3) Will the FedGov't decide, after the 'bailout', that this is a 'new way' to provide public (low-income) housing?
4) What happens IF B(H)O is elected?
5) What happens if McCain (I generally call him McRino) is elected?
6) How long is the FedGov't going to maintain its control of these assets and, by that association, a partial control of the market?
7) (here's the selfish one :) - Assuming the initial benefit "for me" is the economy as a whole does NOT tank, will I get a piece of those profits in some manner or fashion? After all, I'm a 'responsible' home-owner (that could change if I happen to lose my job in the next 15 years, hence the 'responsible')

Posted by: Mark at September 25, 2008 10:22 AM