Posted on 08/16/2008 12:51:32 PM PDT by vietvet67
Don't worry, a million of those homes are in Las Vegas.
I am not worried the Messiah OB will save us. sarc
"If you want to rob Peter to pay Paul, you can always count on the vote of Paul"
Let me give you 2 case studies.
1 My daughter bought a home that she could afford on a 30 year conventional loan. She bought a house within her means to repay it. She doesn’t have a brand new car, she has the car I bought her in 2005. She knows she will get a bonus in early 2009 and she plans to pay off the rest of her bills, which are NOT big ones. She has $40k-$50K in investment account.
2 My college roommate. Is ‘paying’ for a house she cannot afford on 2 acres. The place is a dump. The house, the yard, the garage. It is full of mice. It smells so awful, we stopped visiting there in 2002. She almost lost the house in 2006. She had not paid monthly payments for months. She had not paid property taxes or filed income tax return for 3 years. She almost lost the house. She was paying 23% interest on her used car she was buying because her credit was so bad. She is buying a house that WAS worth $789K in 2006 when she got her loan. On a teacher’s salary of $80K a year in California. Clearly she cannot afford her house. It is in horrible shape, mantel missing in living room. Huge hole in kitchen ceiling. Plumbing that doesn’t work. Kitchen full of mice, she had to throw away all of her pots and pans, they were full of mice and nests. That didn’t happen over night. Yet she wants to put wood floors in the house. Of course, the most expensive thing she could do. She has a pool and is going to pay $100 a month for some pool service to come take care of it for her.
I mentioned that it is too bad she didn’t stay in her first house. It would have been paid for by now, has a much smaller yard, and she might be able to take care of it herself. She is alone. She said “But that house is only worth $350 thousand dollars!” I said I would rather have a nice little well kept, clean house, that is paid for ... than a big one that is in horrible shape that she cannot afford. she got a 1 or 2% interest only ARM and so in a couple of years she will be right back in foreclosure. And she won’t even stay in the house at night because it is in such bad shape. It MIGHT appraise for $400K now. But she thinks it is worth a million dollars. Only if she can sell it to a blind person!
Let me rephrase that, her house was not WORTH $789K in 2006, but that is what the bank was willing to loan. On the other hand a friend was trying to buy a house that appraised for $799K a year ago in the IE of Calif. She went to get her loan and the bank would only loan $435K on it. It was NEVER WORTH the $799K. The banks were enjoying making all the interest payments, from people who clearly could NOT afford their houses. Now the people are being foreclosed on so banks are tightening their credit. They should have never had such loose mortgage credit. I said in 2005 this is not going to last. Little tiny houses for a million dollars being sold to people who could barely afford a $100K house. They all hoped for EQUITY. They thought they would make a haul. Then the home values went down. My sister had a house that was worth $500K to $600K and it is now worth $233K in IE of Calif. (Inland Empire) It is like a gamble. Like buying a lottery ticket. Everyone should live within their means! Always have enough in savings to pay off everything you own. Duh
I meant to say always have enough in savings to pay off everything you OWE!
Don’t borrow from Peter to pay PAUL!
You missed the point of that article, the “engines of capitalism that brought us colossal economic power” was a result of increasing personal debt and reduced savings.
And the article is just bollocks becuase it has left out one importat fact:
The ratio of Americans who are debt free and equity up versus those who are highly leveraged and are debt high.
Even if that number is .10, then there is enough capital in America for consumers to keep on consuming.
Whether the banks have to write of bad debt etc. is another thing altogether. Just because people cannot borrow to buy does not mean that its consumer end times, it just means that those who can pay cash will, and not only that, they will be getting some great bargains to boot.
That deserves celebration , not gloom and doom. The economic conservatives of our nation win economically, and the economic liberals who have borrowed their way to prosperity, welcome back to Hooterville on the rough side of the tracks, you'll survive though, too bad. And its your own fault if thats where you find yourself, and NO,the government has no duty to bail you out!!!!!
This may be one of the best researched and cogent articles on the Credit crisis I have ever seen. Very scary.
I wonder how Pelosi and all the Dims in the congress are handling this crisis? Oh thats right never mind.
I wonder how many of those 1.5 million houses are damaged beyond repair by metal thieves and vandals?Meth heads are stealing the siding from occupied homes here in Northern Ohio,I think this must be happening just about everywhere.
Indeed.
Try to check out at J.C. Penney’s today. Not scared here.
I wonder why he saw fit to place this statement in an otherwise well-supported argument without making a critical distinction:
“Consumers used their credit and debit cards to buy $51 billion of fast food in 2006 according to Carddata.”
Debit cards are just inkless checks not borrowing.
To order a pizza here some places require a card; either their drivers are getting robbed or personal checks are bouncing.
Here’s an editorial on what’s coming next year. It’s a worst-case senario, but it’s not implausible. The fact that it COULD happen is scary.
She need a couple of cats. The mice know the smell of a cat, and pretty much exit on their own. A deterrent if you will.
Thanks, I haven’t read it all yet. Simple fact is when you spend more than you have, you fail. I am the only person I know who has NO debt. I bet you don’t know many. And as they always have, they’ll run to me when they get in trouble. I think Ed McMahon is a perfect example of the mess we find ourselves in. A guy who made millions, and still spent more than he had and finds himself in forclosure...should NOT have lived in the house if he couldn’t afford it! But Trump is going to bail him out. There will be no bail out for many, they’ll learn the hard way.
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