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2010-09-27 Economy

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Posted by Fred 2010-09-27 00:00|| || Front Page|| [2 views ] Top

#1 Well you need to stop bubbles forming.

The best way to do this is two fold.
1/ Stop credit Bubbles forming by raising reserve requirements if credit creation increases.
2/ Tax the monopolies government creates (i.e Land Rights, but not the buildings on it) which do not get less of by taxation (unlike other taxes).

Posted by Bright Pebbles 2010-09-27 07:11|| 2010-09-27 07:11|| Front Page Top

#2 The so called 'Short Sale.' Never hit the news during the decades I watched my uniformed colleagues take their checkbooks to closings after PCS'ing in 18 months or less. Everyone just sucked it up and drove on and hoped they got on-post housing next time around. Little sympathy from me on this one. Welcome to the "New Reality."

Posted by Besoeker 2010-09-27 07:51|| 2010-09-27 07:51|| Front Page Top

#3 i know it would have hurt

but they should have let the banks collapse. All of them.

Out of the rubble new, stronger banks would have risen

We could have wiped the great vampire squid off the face of humanity for a start.

and then Audit the Federal Reserve.

The trillions spent on giving back Goldman Sachs 100 cents in the dollar on their bad investments could have instead been used to create the kind of jobs in the USA that cannot be exported to china.

ie: free universal healthcare like the NHS in Britain or Medicare in Australia (well what it used to be). That would employ shedloads of nurses, admin people etc.

And fixing roads, bridges, infrastructure. Building new gas-fired power stations in preparation for the day the oil runs out

building new dams and securing safe, healthy water supplies

cleaning up toxic waste.

in general making the US a better place to live, work and play.

Instead those trillions went straight into such worthy endeavours as paying Goldman Sachs executive bonuses for Q1 2009.

Posted by anon1 2010-09-27 08:37|| 2010-09-27 08:37|| Front Page Top

#4 According to my real estate agent son this sounds scarier than it is.

The only folks effected are those that are underwater and HAVE to sell now. Otherwise they can just keep paying on the mortgage that they signed up for (what a concept) and maintain the status quo. With the refinancing options out there they can usually get a lower payment.

Now, all those folk in this situation that are unemployed and didn't get one of those millions of jobs created during recovery summer might have a problem.

Posted by Alan Cramer 2010-09-27 08:38|| 2010-09-27 08:38|| Front Page Top

#5 Unless the folks underwater plan on paying for the next 20 years they will never see their house value rise back to the mortgage amount. As Besoeker said, on PCS we took our checkbook and paid, been there done that, but not to this current level. On our current house it is unrecoverable. The home's value here in AZ went from 500k to under 200k in 3 years. We are currently underwater by 150k. With whats lost and that much still owed, my 27 year retirement will be used for the duration of my life to pay this debt. Walking away from a debt goes against the very grain of my being, but I will be 70 before the house breaks even, 65 if the market grows. So the question for people in this situation becomes one of, ya I lost a bundle on the house to date, But should I dedicate the rest of my life to paying off the house and sacrifice my family in the process?
It's easy from the outside to say, you bought it, suck it up. Its a different reality to live it. The options are few, short sale, foreclosure, bankrupt. What to do, what to do.

Posted by 49 Pan 2010-09-27 10:39|| 2010-09-27 10:39|| Front Page Top

#6 Owner occupied houses are depreciating, non-revenue producing assets.

The problem is that during bubble, people paid the prices they did in the belief a house is an investment, which of course it's not. It's a lifestyle purchase.

Posted by phil_b 2010-09-27 11:11|| 2010-09-27 11:11|| Front Page Top

#7 Homes have always been concidered a stable investment. Not this short term stuff that created the bubble, but a long term investment as part of any retirement plan.

Posted by 49 Pan 2010-09-27 11:24|| 2010-09-27 11:24|| Front Page Top

#8 One's home is a place to live before it's an investment. A lot of people forgot that ...

Posted by Steve White 2010-09-27 12:46|| 2010-09-27 12:46|| Front Page Top

#9 Your right there Steve. But this is out of control.

Posted by 49 Pan 2010-09-27 12:54|| 2010-09-27 12:54|| Front Page Top

#10 Homes have always been concidered a stable investment. Many 'investments' used to be considered valuable until they weren't. Houses are mere consumables unless & until the owner can pawn them off on the next buyer, which may or may not happen.

Posted by Anguper Hupomosing9418 2010-09-27 13:46|| 2010-09-27 13:46|| Front Page Top

#11 What happened to all that PMI insurance that banks make buyers pay for? Where did all that money go. Most foreclosures are happening to people who bought in the last couple years, put little money down and got an exotic loan that did weird sh*t vis-a-vis the prime interest rate. Those are exactly the people who have to have PMI insurance, the wife and I did when we were just starting out. Where is all that money going?

Posted by bigjim-CA 2010-09-27 14:17|| 2010-09-27 14:17|| Front Page Top

#12 > Houses are mere consumables

It's the LAND RIGHT that's valuable and that's not consumed. The vast majority of the time the house rises in value because of what's done OUTSIDE the property (see: Ricardos Law of Rent).

Posted by Bright Pebbles 2010-09-27 18:26|| 2010-09-27 18:26|| Front Page Top

#13 1. Eliminate the adjustable rate mortgage.
2. Eliminate tax deduction for mortgage interest.

Those two moves would keep housing costs down to reasonable levels and make it much harder for a bubble to form in the first place. And if one does form, a sudden rise in interest rates won't force people already having a mortgage into the streets because their payments won't adjust upwards.

Posted by crosspatch 2010-09-27 19:58|| 2010-09-27 19:58|| Front Page Top

#14 #2 would crush home ownership for a while, I think, and drop actual value to the point that a lotta people's retirement (see: Reverse Mortgage) would be in question. Tough to implement....

Posted by Frank G 2010-09-27 20:02|| 2010-09-27 20:02|| Front Page Top

#15 Reduce the portion of mortgage interest deductible 5% per year over 20 years.

The construction industry would probably be cratered for 10 years, but we've got too many houses. And the longer we keep up these efforts to stimulate construction, the greater the overhang and the longer we're hungover.

There's only two ways to solve the problem, Reduce supply (demo houses - dumb) or increase demand (loosen immigration for people who can afford to buy a house - smart).

Posted by Nimble Spemble 2010-09-27 21:00|| 2010-09-27 21:00|| Front Page Top

#16 As I recall, historically Americans move house every six years on average. The problem is, except when mortgage rates are super-low, for the first five years very, very little of the mortgage payment goes toward paying down the principle. It's just that now the upside-downness is a great deal bigger than historically.

Posted by trailing wife 2010-09-27 21:16|| 2010-09-27 21:16|| Front Page Top

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