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Not to "down play" this whole thing.

But as a for instance ... I believe the Federal Government made a bunch of money on the old Chrysler "bail out". Chrysler paid back the loan plus interest.

In this case ... as for AIG ... the Government owns 80% of the company and AIG has to pay the loan portion back in two years. Assuming that happens the Fed gets it's money back with interest and can sell off the stock ... the Federal government looks like Superman. Of course if AIG "****s the bed" on this deal then it's a loser all the way around, but it might not be bad if it works out like the Chrysler deal did.

Buying bad paper on housing loans is a little tougher to make out on ... the property must be held til the market allows for sale at prices that avoid hidious losses ... as I said , it's a little tougher deal, but no one other than the Federal Government is capable of pulling that off in any (so called) reasonable way.

Just a sideline point of view with a slight positive twist to it :)
 

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Robert A. Langager said:
I think it is a crock. Those who got rich, stay rich. Those who got screwed, stay screwed. Those of us in the middle (tax payers), foot the bill.
I agree and the banks need to be tough on loan applicants again. It's when they tried to be "fair" with everyone that we got in trouble. Many of those people bought beyond their means with no intention of keeping their contract. We are a victim of a lack of dignity today.
 

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Discussion Starter · #5 ·
all the loose lending legislation (that allowed Freddie and Fannie to participate) was enacted under the Clinton administration, the abuse crescendoed during Bush's term.
i will try to access the evidence once again and post it, but the "new rules of fairness" were enacted by Clinton and his team of socialists.
 

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Hopefully everyone understands (and I believe you all do) That I do not imply with my above post that the situation is acceptable.

Hopefully this results in some lessons learned. I do however believe as long as we have folks in Washinton D.C. legislating to aquire votes rather than legislating to keep America safe, financially solvent and strictly defending the rights granted to the People via the Constitution we are in trouble.

The people (themselves) are the only ones who can protect themselves from these problems and they do so in the voting booth.

It's just too easy to keep voting themselves money (in one form or another) just as Ben Franklin and his comrades feared some 220 years ago.
 

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A man's got to know his limitation.............

In 1969 we bought our first house for $18,500 we both looked at, really wanted and were encouraged to buy one for $22,000 We did our own math and knew we just could not afford it. Now a days there are so many goofy loan products no one knows what the heck you are getting into.
 

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Discussion Starter · #12 ·
most people know, they just don't care........they figure if they can get the loan, they must be capable of making the payments....stupid.

many high schools have added a required finance class for kids, so hopefully the next generation will have a chance to understand their limitations, no matter what their loan officer advises.....
 

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Discussion Starter · #13 ·
well..........today was all about the bailout plan.......the piss fight is on between the repubs and dems over executive pay rates, and could jeopardize a quick financial solution to buying up all the bad paper by the fed....this is what it has come down to, gridlock between parties and the taxpayer left to try to figure out what is next on the financial highway to hell......

the Arabs even said they saw no opportunity to support the banking institutions or invest in them, as they could not trust the solvency or value of any of them going forward.....they suggest their interest is in real estate in the US, something that they could depend on as having some value, no matter what happens.

folks, if we lose the confidence of our foreign investors one of two things will happen: 1) they will just stop buying our treasuries at auction or 2) they will demand much higher rates of return.....either way, our economy would be screwed.........

we are tittering on the edge here (as our leaders play politics) and the government is trying to preserve confidence and avoid panic.....
 

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hunter9494 said:
we are tittering on the edge here (as our leaders play politics) and the government is trying to preserve confidence and avoid panic.....
Ohh no we are not! Just listen to other folks on here! They'll tell you otherwise!

I was told just that about a week ago... hmmm... has a familiar ring to it.

:lol:
 

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R y a n said:
hunter9494 said:
we are tittering on the edge here (as our leaders play politics) and the government is trying to preserve confidence and avoid panic.....
Ohh no we are not! Just listen to other folks on here! They'll tell you otherwise!

I was told just that about a week ago... hmmm... has a familiar ring to it.

:lol:
I don't think you understand what either of us are saying. We may be on the edge. If people don't run around like a bunch of frightened grade school girls we will be safe. If everyone falls for the panic you were trying to instill last week (just like the Washington liberals) then we could be in trouble. Example: preserve confidence and avoid panic.

See Ryan last week I seen you as the problem for the economy. Your were being chicken little and trying to convince everyone the sky was falling. I on the other hand was trying to keep people calm. Have you noticed the stock market go up? We both know that trouble will benefit the liberals even though the problem begin under Clinton when they made house loans easier. One of his boys slipped and told the truth last week. Look for that on another thread. Here it is for you:

he had a clip of Robert Reich (Clinton secretary of labor) and he slipped and told the truth. He said it was the democrats and Clinton that demanded of the lending companies that to be "fair" they had to make loans easier so poorer people could have better homes. He admitted that it was the beginning of the problems we see today.
 

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It started with the subprime loans but the loan defaults are increasing within the non-subprime as well. I live in a suburb about 35 miles west of the Twin Cities - lived here since '96 and watched my home value go from $145k up to somewhere around $250k or more. What many homeowners were doing was refinancing their homes and pulling out the equity in the form of cash (to buy expensive toys or home improvements). Now that the market has dropped 25-35% many of these homeowners are upside down - owe much more than the house is worth. And they are starting to figure out that they can just walk away. It just ticks me off when I hear about the gov't not only bailing out the corporations but the homeowners as well. I guess the lesson here is too not take a conservative approach - like my wife and I did, never pulled out any equity.
And the subprime debacle wasn't about being "fair" to potential homeowners - it's more about corporate greed. Many of these companies, like AIG, couldn't buy enough packaged subprime loans, with the higher interest rate.......resulting in a higher return on equity. Simply put, reporting a higher return meant higher stock price, larger bonus, etc. - all through corporate shortsightedness. Until executives are held accountable for the risk they take this will continue - either way the sr. leadership wins via a generous severance package or performance bonus.
 

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Discussion Starter · #17 ·
i agree with most of what you said....BUT, even you were not tempted to "roll the dice" with the neighbors.......hell, you would have to be stupid to risk your house on the ruse that prices would soar and never collapse!

sure this gig was encouraged, but if you make 100K and think you can live in a 500K home, you should go back to econ 101.....the responsibility laid with borrower and lender both.......
 

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hunter9494 said:
i agree with most of what you said....BUT, even you were not tempted to "roll the dice" with the neighbors.......hell, you would have to be stupid to risk your house on the ruse that prices would soar and never collapse!

sure this gig was encouraged, but if you make 100K and think you can live in a 500K home, you should go back to econ 101.....the responsibility laid with borrower and lender both.......
H94 that is rather simplistic. Where do you live? I'd like to look up the housing statistics where your point of reference is coming from.

In my neighborhood, (Bellevue/Redmond WA), those numbers are common place. Everyone here who is into a home makes a combined income of between $120,000-$250,000 a year. The average home out here is around $610,000, with the average first time home buyer price of $475,000. That $475,000 home is a 20 year old "fixer upper" with no yard. That house normally last 72 hours on the market with multiple offers tendered. The only affordable housing below this level is a 45 minute + commute in 2 directions.

You simply cannot get into a house for less, and that is given that you are putting 20% down, as that is what others are doing to "get in the game".

Now. Given all of that, how do you expect someone like me to get in? I'm like alot of young professionals out here. We are all "stuck" if we want to get a decent place. There are no alternatives, lest we get jammed into a tiny condominium for $350,000 hoping that the condo market doesn't soften.

That is why we have folks making bank out here who are still living in apartments.

Those types of loans were the only thing getting young people into homes out here. It sounds all pie in the sky easy to you, and it seems like astronomical numbers that are getting thrown around, but you need to see the market in other parts of the country before you make a broad assumption that it is foolishness 101 going on all over the place.

It isn't as black and white as you'd like to believe it is...

here's my reference as I know noone believes my "facts" anymore :eyeroll: http://seattlepi.nwsource.com/local/365 ... ing06.html
 

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It doesn't make any difference if it is someone making 100K buying a home for 500k or if it's someone making 250k buying a home for 2 million. The thing is they are buying beyond their means. What makes people just starting out think they deserve the same thing as someone who has worked 40 years? Maybe they should save for ten years then look for a home, or buy a cheaper home and upgrade in a few years. It's like when I retired some of these college kids came to work expecting the same pay as someone who was at the end of their career. They need to get real.
They also need to stick with a contract when they sign on the dotted line, not expect everyone else to pick up the tab for their stupidity.
 

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Plainsman said:
It doesn't make any difference if it is someone making 100K buying a home for 500k or if it's someone making 250k buying a home for 2 million. The thing is they are buying beyond their means. What makes people just starting out think they deserve the same thing as someone who has worked 40 years? Maybe they should save for ten years then look for a home, or buy a cheaper home and upgrade in a few years. It's like when I retired some of these college kids came to work expecting the same pay as someone who was at the end of their career. They need to get real.
They also need to stick with a contract when they sign on the dotted line, not expect everyone else to pick up the tab for their stupidity.
To be clear I agree with you Plainsman. However you also have to look at market realities. Homes out here don't exist for $250,000. Given that, you either save more and put down a bigger downpayment, you apply for first time home buyer to help bring the payments into range or you sit in an apartment biding your time.

Many young folks out here did "upgrade" as the price of their first property skyrocketed 30% in 3 years. I wish I would have had money back then to make it happen. Many of my friends did. They now sit in a home worth $500,000 on $1800/mo mortgages, because of the equity gained on their first home. Homes out here are bubble proof, as we live in one of the 5 places in the country.

People just starting out don't think that they deserve anything. You need to lose that mentality. It simply isn't true.

The problem that exists in America is that inflation has surpassed wages. A salary that seemed reasonable just a few short years ago, won't even make ends meet anymore. period.

I think alot of you make huge assumptions that simply aren't there. There is a mentality to "talk down to" younger people, and make claims that are very stereotypical. You might make that claim for young adults in college, but the young adults 5+ year out don't have the same mentality as Generation X (ME generation). That generation has the "ME" mentality of entitlement.

I've looked at the numbers and read the articles concerning this. I'll see if I can find the apples to apples comparison that took wages, inflation and home costs all into account. Younger folks nowadays are really getting the shaft.

I've asked it here before, and don't think anyone took the bait. I'll ask again now:

Concerning your own personal balance sheet, financially speaking,
"Is buying a home an asset or a liability?"

Is it wise to buy a home if you have to pay a substantial mortgage?
 
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