The President's stimulus package, wrapped around a short term "shot in the arm" strategy, is stupid. Giving every taxpayer a rebate wastes resources better used to target those in need, and does nothing to change the underlying problems. Many recipients of these government checks will use the funds to pay off debt or save, doing nothing to bolster the economy short term. Channeling those funds into long term unemployment benefits, mortgage rescue payments for people defrauded by criminal mortgage brokers (yes, some of these people should be in prison), and food stamps will do more good.
Until the President and Congress hold those accountable for causing this meltdown and regulate the industry the mortgage market will not rebound. Until it does we will remain in recession and the feds cannot afford to keep pumping rebate checks into our hands to forestall doom. If major banks begin defaulting and failing the current mess will seem like paradise. Something needs to be done and it isn't tax rebate checks.
Here's a condensed version of what is behind this whole collapse and looming recession and possible depression.
Factors that affected Sub-prime mortgage collapse:
1. People who had shaky credit.
2. Banks, brokers, and investors willing to take big risks and back-load the payment structure
3. People who were greedy and signed on for more than they needed because it looked "too good to be true" (and so far generally it has been)
4. Soring home prices to begin with that lead to needing people to borrow so much in the first place.
5. The supplanting of truly "good paying jobs" with jobs that were far less able to support the kind of larger payments that are coming due for a lot of people.
6. This was brought about by Bush and Co. and greedy business and corporate wonks who moved their operations overseas or to Mexico, etc. and little in the way has filled in the vaccum left by that large scale move, over the last 5 or 6 years.
7. Predatory practices of credit card companies that are either tied to or unrelated to Mortgage banks that are squeezing the life out of people.
8. People who took on too much credit card debt, because of either wanton greed, or trying to survive in a dicey job market. I don't give a damn what the "employment" figures say. Talk to me about median weekly wages and industries and such.
9. The marketing gurus and people behind multinational conglomerates and even still U.S. owned businesses that push the whole "you need to buy more and more and more" and that is what is behind Bush and these misguided Rebates.
10. A federal reserve chairman who's not even half the man Greenspan used to be. I'm not even a frickin' economist by trade and I can see the factors clear as day, and what they want to do now is not going to do jack squat, and may in fact raise inflation, which will screw poor and middle class people even more.
All, the while the market is tanking, I've got to get my retirement stuff out of equity funds, before I end up working till 80+ just to enjoy a few years of retirement.
People wonder why in the world that there would ever be the conditions for the kind of upheaval that would lead to a communist or socialist revolution on at least an economic level, well, we're beginning to see it emerge.
Posted by: DC 93 | January 20, 2008 at 01:09 PM
If you cant afford the house, don't buy it.
Cant afford the car, dont buy it.
Can't afford the large screen plasma tv, dont buy it.
Predatory lenders? How about stupid buyers?
I would LOVE to live in a huge house too...but I;m not dumb enough to get myself in a mortgage that i cant afford.
There is no shame living in a small house until you can save up for something better. I lived in a two bedroom apartment for 4 years to save up for a downpayment on my 3 bedroom house. And I wont move into something bigger until I can afford it. It's not rocket science.
can't afford it, dont buy it...and those who knowingly signed their names on a contract with a ARM? Total stupidity. Dont blame the lenders...they are the PT Barnums who see a sucker...and a fool and his money are soon parted.
DC, if you want to see how well your communist utopia is doing, pack up and head to Havana...and you will see people who literally rip the roofs off their houses and paddle 90 miles through shark infested waters to get to America.
have a great day :)
Posted by: tyler | January 21, 2008 at 09:00 PM
I saw a former mortgage broker on TV this weekend say she regretted ripping people off and cheating them in that work. Many of these people committed fraud and should be in jail. Yes, stupid people didn't read the fine print and/or bought more house than they could afford, but not all did.
Posted by: John Morgan | January 21, 2008 at 09:05 PM
John,I understand your compassion for your fellow man...and its truly admirable.
But realisticly...in todays age...if you sign your name to ANYTHING without reading the fine print...then you are asking for trouble.
Posted by: tyler | January 21, 2008 at 09:21 PM
Tyler, I dare you to read those mortgage documents and tell me what they say. Lay people are not lawyers and one shouldn't have to hire a lawyer to examine their mortgage documents.
Many of these lenders inserted language preventing the mortgagees from even refinancing these loans.
I applied for one of these loans a few years ago until the lender tried to change all the terms the day before closing. They'd lied about the rate and the terms and everything else. Truly disreputable people. I chose not to close the deal and I lost my up front money. Better that than enter into that crooked deal.
What I'm saying is is this: this happened frequently in many of these mortgage deals. Surprises were sprung at the last minute when the people had no choice but comply because it was too late for any alternatives. That should be criminal.
Posted by: John Morgan | January 21, 2008 at 09:37 PM