:) I am imagining Radar's childhood colouring books ... no colours, just black and white. And not one scribble over the lines. :)

Seriously:
Force is inherent in a capitalist system. Robbery is the most extreme form of capitalism. Either a system allows robbery (with force) or forbids it (by threat of punitive force). Some force is inescapable.

No market can exist without some kind of government intervention in the form of the regulatory environment that creates the conditions for the market to exist, such as banning fraud, stipulating accounting standards, and so on.
I acknowledge that you were denying the appropriateness of bailing out sub-prime borrowers, presumably with buckets of cash, which is a very different kind of intervention from this regulatory framework intervention. But there is a wide spectrum of possible interventions that fall in between (eg. cutting interest rates, injecting cash for liquidity, etc) and your (EDIT) zero intervention approach doesn't cope with this reality.

You say that markets always take care of themselves. Markets can be manipulated; they can swing wildly and irrationally, and real people get badly hurt by these swings.
Here, I think, is the root of our difference. Maybe markets do always take care of themselves. I don't care about the welfare of the market per se. Markets don't have feelings, interests, needs, in anything but a metaphorical sense. They have no value in the giant moral or utilitarian calculation. They are only of interest insofar as they serve to advance human interests.
It doesn't matter if the market can take care of itself. I care about taking care of the people. And I mean all people, not just brokers or investors or foolish mortgagees.

BUT! I agree that most interventions, like price limits, quotas, subsidies, tariffs, and such, usually provide temporary relief at the cost of making the problem worse in the long term. Bite the bullet, get it over with.
I am also opposed to middle-class welfare. I am opposed to rewarding greed and foolishness (it will just encourage more). And I don't have a solution to the sub-prime crisis that won't involve a lot of people loosing homes they can't afford. This is very rough on them, but ... in this case ... I don't support a buckets-of-cash bailout.

That is pure bullshit.

Robbery has absolutely NOTHING to do with capitalism. Capitalism is the free and voluntary exchange of goods and/or money on a value-for-value basis.

Any form of crime (robbery, fraud, etc) is not capitalism.

Markets can EASILY exist without any kind of government regulations or intervention. In fact they thrive without such intervention.

It can exist without being defended by force as long as force isn't used to intervene on the markets.

Capitalism = Freedom. Freedom is to be defended by force, but if there were no force, freedom and capitalism would still exist, while no form of socialism or communism could.

The stock markets could not exist without that regulation. To make it work - to establish rules so that trades are fair and equitable - only people trained in those laws and regulations can perform that trading. A free market as described would only subvert free market stock trading into a corrupt and avoided market. What makes stock markets so useful? They are safe and regulated places to conduct free market trading.

There is no way around some government regulations in all free markets.

I was watching 'world news' (a bit like the world series because it's all about one country) on the weekend and they had a segment about the effects of forclosures in Cleveland. There are 1000 repo homes in 1 zip code. The area is basically becoming a slum now because the empty houses are now home to crack houses and squatters or they're simply being defaced and pulled apart little bit by little bit.

This of course has meant that the people who have paid their mortgages now live in an area where the value of houses has slumped which in turn means their major asset is on the verge of becoming a liability.

While I was watching, the first thought that came to my mind was; where are all those people living now? What kind of stress is this causing in other neighbourhoods?

I got to thinking about this situation and thought of a way the government could step in but benefit all parties concerned, including themselves.

Rather than subsidise the mortgages, they should simply buy the house from the bank, then 'rent to buy' the house to the foreclosee on a long term deal (say 25 years). This benefits the community by not having empty houses prone to vandalism thus maintaining property values in the area. It gives the people somewhere to live with minimal disruption to children etc (which was a big concern from my perspective). It means the government has an asset which is also 'making money' for them. It means long term, the foreclosee either ends up owning the house anyway, or alternatively, the government can sell the house in the future when the market is in a more stable position.

Everyone wins.

That is what banks (et al) do. They resell these homes to companies specializing in refurbishing and refinancing homes to new qualified buyers. The problem is that American incomes in those price categories have been falling for the past seven years (relative to inflation). Interest rates are rising. Economic downturn is a real possibility.

All that means there are not enough companies to move these homes off the banks hands fast enough. Furthermore, many of these defaults are to large financial institutions who are not setup to handle so much defaulted real estate.

The system is swamped with too many homes, and liquidity shortages. A problem made worse because the market was inventing liquidity where it did not exist with money games.

Those homes lie on a fault line; an earthquake only in that part of the economy. It will take years to resolve. That neighborhood is the risk everyone takes when buying a home.

Meanwhile, this same problem has long been ongoing in some areas such as Detroit. Your report only cited a different area. But the same problem has long existed.

Americans are spending 10% more per year than they are earning. As Cheney said, "Reagan proved deficits don't matter." Welcome to the reality of what has not mattered for many years now. It could be ignored for many years by playing money games such as sub-prime mortgages. Sooner or later, the economy takes revenge - takes back what it is due. The problem existed many years previous. So we played money games to ignore it. Sooner or later, we have to stop playing money games and acknowledge the economic problem created by too much money migrating up to the top 1% - and too many lower incoming falling for the past seven years.

...and unchecked they do it to the point of completely and dangerously exhausting resources in a mad frenzy and permit wild, uncontrolled fluctuations that lead to disastrous boom/bust cycles.

I absolutely do not want a government bailout, but some regulation in the loan industry would have prevented this mess from happening in the first place.

I said government. Not private industry. There's a huge difference there. Also, I didn't say refinance, I said 'rent to buy' which means the person has no ownership claim over the house until such time as they've paid the value of the mortgage off, say 25yrs. If they move out prior to that, then that's their own tough titty. They're viewed as tennants rather than owners.

There's a big difference between what I suggested and what is currently happening tw. That's why there's a problem.

As to the rest of your post, I'm aware of all that. I'm not sure why you felt the need to explain it all over again.

The stock market...and ALL markets could easily exist and would thrive without any government intervention or regulation and would make sure that all trades were fair and equitable because they would be voluntary.

Without government involvement in markets, we'd still have laws against fraud, theft, endangering others, etc.

Free-markets do not lead to corruption or to criminal activity. Government regulations do lead to corruption and criminal activity especially when it comes to the markets.

There is a ton of regulation in the loan industry and it didn't prevent this from happening because no amount of government regulation can prevent people from doing stupid things like buying more house than they can afford. The loan companies didn't do anything wrong. Let me repeat that...

THE LOAN COMPANIES DIDN'T DO ANYTHING WRONG!

They lent money to people who promised they would pay back loans and who said they understood that when the fed raises interest rates, their payments would rise. But greedy people bought houses they couldn't afford and flipped them or bought more of them without thinking that the bubble would eventually burst.

Government meddling in the markets is what created this problem. If we got rid of the unconstitutional federal reserve, they wouldn't control the money supply and we might have something to back up our money rather than the promises of government.

People like you are exactly what is wrong in America. They think we should look to government to solve every problem or social ill. They think government should be all things to all people. They think government should provide, food, shelter, clothing, charity, retirement, education, etc... when the federal government should not be doing anything other than protecting America from invasion, settling disputes among the states, and staying out of our daily lives.

Charity, education, retirement, food, shelter, clothing, etc. don't fit within the valid role of government at any level.

Well lucky I'm not an American isn't it? For both of us when there's people like you about.

The long term effects of leaving vast numbers of houses untenanted is obviously too much for you to consider with your close minded view of the world.

If you don't like the idea fine. Either suggest something alternative, or at the least point out the flaw, but for fucks sake, find some other way to express your point of view other than spewing your capitalist bullshit all over the place and making a mess for everyone else to clean up!

The houses won't be empty long. When the prices drop low enough, they will be bought. The time period in question is a period of months.

My view of the world is most certainly not closed-minded. It's wide, expansive, and accurate.

I have never spewed capitalist bullshit. I have espoused the virtues and the truth of capitalism. No part of anything I've said is bullshit.

...and pure, unrestricted capitalism would change this, how? I tend to think an unchecked market would be a lot worse and the fluctuations would be extremely violent, far reaching, and long lasting. The actions of the stupid and irresponsible will never change and aren't going to go away, regardless what market they're placed into.

...and go to what, gold? Tell me how we should go about that transition without the market being instantly, dangerously cornered.

The exact opposite is true. Without government meddling, corrections in the market wouldn't be huge like they are right now. The government tries to prevent corrections and eventually the dam bursts and the money floods out of the market. An unhampered, free-market capitalist market without government interference wouldn't let the pressure build that high. Changes, fluctuations, and corrections would be more slight and more frequent.

The actions of the stupid and irresponsible won't change. The actions of the government to stop people from making stupid decisions for themselves should. Those who make poor decisions should have to live with the consequences of those decisions. This is how we learn to make better choices and to choose our actions more wisely.

It also opens the door for others to benefit by being able to buy a house. Why should those who work hard, save their money, and think carefully about what they will do be forced to pay the bill of others who acted irresponsibly? When those people lose their houses...as they should...the others who saved and acted wisely can move in and buy a house at a more reasonable price.

It's nature. In order for the lion to eat, the gazelle who wanders from the group must die. It also teaches the others to stay close


It doesn't have to be gold. It can be any hard asset or commodity with a limited supply like Diamonds...Platinum...oil....etc.

Maybe the fact that the government needs to get involved proves there are more stupid people out there affecting the economy than you might think.

Wow. Attitudes that underly Marxist socialism - from Radar. If Radar has posted accurately, then no stock market ever need exist. We are all honest and equal. We all treat one another with equality and impartiality every time. Stocks would be traded freely on any street without all that market regulation. That only possible if we all live according to principles that permit Marxist socialism.

Why do stock markets exist? Trading of stocks on the street, as in Radar's model, never works. Stocks need a controlled environment (NASDAQ, LSE, the Frankfort Exchange, etc) because stock exchanges only work in the safe and well defined environment of regulated exchanges. Radar says none of the world stock markets need exist. We don't need brokers. We don't need regulations and laws. We don't need all that bureacracy. The problem with this Radar world: stock markets exist because those standards, control and regulation are necessary. Without regulations of markets, then anarchy would reign.

There is a fine line between too much regulation and insufficient regulation. So we have numerous financial instruments with various types of regulation. But in every case, some regulation and laws are always required. No way around that imposed 'level playing field' to make free market economies work.

That is exactly what tw said. It's a huge difference. Private industry does this; not government. If possible, then private industry is already doing it and doing it far better than any government can.

There are too many homes and not enough people to lease these homes. Appreciate the problem. Lower income people - where so many of these loans exist - have been living well beyond their means.

Is this problem that people are going homeless? For the most part - no. Too many homes are now in this mess; too much product and not enough consumers. A mess that remain ignored while more money games masked the problem. Too many people in debt for so long that it is even appearing on spread sheets many years later.

Don't fool yourself. Spread sheets only report what was happening many years ago. Should we now bring in government welfare to further mask this problem?

Ridiculous is an idea that government will solve a financial problem. Government was already doing that years ago with money games that only made these problems worse. When money games and excessively low interest rates were not enough, then private industry played more money games: sub-prime loans and complex financial instruments. Home equity loans - borrowing money on home prices that were inflated by those money games and sub-prime loans. Meanwhile, everyone ignored the factor that spread sheets cannot measure – risk. Too many homes, too many Americans (at this income level) with massive debts, and America that was spending recklessly at 10% more than incomes (which also means no savings). Aliantha wants government to magically solve all this?

Put homes up for massively reduced prices. Yes, private investors will buy then and rent them at lower leases. Few are willing to do this. Even at reduced prices, few are willing to risk more capital because, well, where is a market?

Aliantha suggests government to, again, fix this market? More damage? Take these homes away from finance companies under martial law? Fine. A government already deeply in debt, going $hundreds billions further into debt, rewarding the companies who only made this problem worse with welfare, and then become landlord of still vacant homes. At what point do we end up with more Bronx slums that take decades to solve? At what point do we turn neighborhoods into 'the projects'?

Problem is not homeless people. But if we do as Aliantha suggests, then economics takes revenge years later - making many more homeless people. The problem is too many houses built for people who never had incomes to support them. Problem agrevated by an economy where the rich are getting richers and everyone else have a lower income. Problem created by the same government policies that Aliantha would further expand? What financial problem will government solve with financial welfare?

What Aliantha recommends creates more inflation AND real estate dependent on government (rather than private industry) while still looking for tenants who just do not exist. Meantime, when does the actual problem get addressed?

Never forget why too many homes exist. To make a recessionary economy look good, government dumped money into the housing market using low interest rates, tax games, etc. Government made things worse. When that still was not enough, then finance companies mortgaged those people further with sub-prime loans. Mortgaged more homeowners with home equity loans as homes values were inflated by those money games. Eventually we ended up with too many homes, an economy fully in recession if not for money being dumped into housing, and now Americans who are even poorer.

It was the cover page of The Economist. A falling brick labeled housing prices.

Worse, add the threat of stagflation, in part, due to these money games. Make this worse by having government step in, dump more money into an economy already under threat of inflation, and create another 'housing market' money game?

This is what bankruptcy does. Solve problems at the source. Same thing saved Chrysler and Ford. Gerald Ford (according to the NY Post) told New York City to 'Drop Dead'. As a result, NYC eliminated and fixed their money games. Why? Threat of bankructcy was the only reason every problem was solved. Every one asked for government welfare and (thank goodness) did not get it. Threat of bankruptcy finally killed off money games.

Let economics take revenge on an economy that has been lying to itself for four and more years. Too many houses and not enough people with incomes to support those homes. The sooner economic pains are addressed, then the less that pain will be long term, AND the faster private industry can solve this liquidity crisis.

Maybe if America was not spending $2billion every month on "Mission Accomplished", then the economy might have funds to minimize this problem without creating more inflation and other money games. Even bridge maintenance is being reduced. Let's not forget the brunt of an inevitable $1+trillion outstanding debt to pay for "Mission Accomplished". We have yet to see the damage created by money games played even in 2002. "Reagan said deficits don't matter".

Deja vue Nam. Money games in the late 1960s and early 70s to coverup a financial disaster and a war that cost $1million per day (as Nixon lied about the war and its costs) meant stagflation in the late 70s, masssive reduction of American standards of living, and everything worse. How to avoid reliving history? People responsible for irresponsible money games - homeowners and financial firms - must suffer the consequences.

It's not magic. It's simple economic sense.

The government stands to profit in the long run.

This is the situation already. Did you not read my earlier post? Do you not realize that this is the situation that is occuring already while people do nothing but blame the government and yet you don't want the government to fix it? So you just want someone to moan about but you don't want them to do anything proactive?

If too many homes exist, there can not be inflated prices. Your statement in this paragraph is false.

Again I ask, where are the thousands of people going who have had their houses repo'd? Are they moving into the already existing slums which in turn perpetuates the social problems already evident there?


I ask you, why would you not try to keep people in a better situation? If someone has to spend money one way or another, why not do so in a productive manner which will help all concerned.

If you leave a house untennanted for a year, you're losing $5k/annum straight up. Then there are the issues of vandalism. More dollars to spend. Neighbourhood values depreciating because there are too many houses vacant.

Yeah, I can see how people who borrow beyond their means are stupid and don't deserve a hand out, but they're your fellow citizens. They don't deserve to be kicked when they're down either.

If you wanted to send in a private company to do buy ups of these massive numbers of homes, fine. Go ahead, but remember if this happens, there is no chance of these people from poorer circumstances to close the gap.

If you want to preach about the gap between rich and poor widening tw, you should really think your argument over a bit more before you post it. You propose doing nothing? Letting the economy slump. Perhaps reach depression type lows just for the sake of saying 'fuck you Bush'?

Radar suggests doing nothing because those stupid people deserve what they got.

Neither of those suggestions seem to be logical to me. They seem highly emotional responses to an economic puzzle.

You're taking a huge leap and claiming I've said things I didn't. I said markets could exist and thrive without any government regulation. Without regulations on these markets, anarchy would most certainly NOT ensue. To claim that without government regulations, the markets wouldn't be regulated privately is laughable. To claim the markets wouldn't be held to standards, including standards that require honesty in trading, is on the verge of retarded.

Markets would exist without any regulation at all. They would be organized, held to standards, and regulated privately. We would still have brokers, and traders, etc. because most people would feel more confident trading stocks with these people than with a guy trading stock certificates from the trunk of his car. What would the problem be with going to a store on the street to buy stocks? I don't see one.

Without government intervention the playing field is always level. It's government that makes things unfair and tilts the playing field. Government regulations allow politically influential businesses to gain an unfair advantage over new start-ups or prevents new businesses from starting up at all.

They are moving into apartments. They aren't homeless and they haven't lost their jobs. They just can't afford their homes anymore.


I am trying to keep people in a better situation. A situation in which they have personal and economic freedom without the government meddling in our markets. A situation in which those who make poor economic decisions don't look to government to bail them out.

The house isn't vacant for a year in most cases. In fact it's not vacant until the hose is already lost and repossessed by the bank. Then the bank sells the house and are willing to lose 5k to sell a house they may have already gotten 100k on. But this isn't an issue in America because houses do not stay vacant for a year. In fact they don't stay vacant for 6 months before they are sold.

Expecting them to live with the consequences of their decisions without having their "fellow citizens" pay for it is not kicking them when they are down. When they lose their house, someone else will snap it up at a better price.

This is not what your news services (various) are reporting. It's also contrary to what some other posters have said in this thread. This is the main reason for the views I hold. A large proportion of untennanted houses is bad in anyone's books, regardless of whose fault it is.

The whole point is that if an economy is not growing - regardless of how slowly which of course is generally preferable to rapid growth - then it's slumping. If the economy slumps because of massive slumps in the housing industry, particularly the US economy, the whole world suffers.

This is the reason for my interest in this problem.

Ultimately, it's your country and you and your fellow citizens will do what you want without consideration for how those actions affect the rest of the world (seemingly), but people from other countries will definitely be affected by what is happening in your country right now.

Having run prices so high with low interest rates, sub-prime loans, and other money games; homes around here are selling for $30,000 less and are still too overpriced.

Welcome to the conundrum of why a liquidity crisis exists. Your logic assumes no liquidity crisis. Your post makes the same mistake that bond rating agencies made - measure risk only in terms of capital. Too many homes can exist AND prices remain inflated. Many cannot sell their home for what it is really worth. Why? Liquidity crisis. Please appreciate the difference between capital and liquidity. Appreciate why so many financial experts making $hundreds of thousands annually also did not grasp the concept. A problem that should have been obvious four years ago when this problem actually existed.

Numerous options exist for homeowners. Hold properties in hope prices might rise, or earn enough money by doing two jobs for five years to pay off their loans, or get enough money (liquidity) to eventually sell at a loss, or just suffer through bankruptcy, or ... numerous options. But the only acceptable options also must be painful for years. Emotion or empathy only makes reality worse.

No way around this reality: economics takes revenge when we solve money games with more money games, as you have advocated. That pain is good and necessary. Not in the short term. But the responsible person is only concerned about 10 years from now. How many obvious examples do you need - including NYC, Ford, and Chrysler? Or Baring, Northern Rock, AT&T, IBM, Apple Computer, Enron ... The music industry in denial for so many years needs some horrific threats of bankruptcy.

Almost nobody is going homeless. They are now living in two bedroom apartments or living in post WWII densities. They are suffering in 1000 or 1700 square foot homes. Good. Still living quite well but suffering a severe reduction in living standards because of their mismanagement.

What is the proactive action? Learn from history. As Gerald Ford is paraphrased to NYC - "Drop Dead". That is the proactive situation; the best solution. Anything else is classic bleeding heart liberalism that Urbane Guerrilla so criticizes AND actually rewards the wrong people. Who would prosper most from your solution? The rich financial houses that created this mess by playing money games so that their failures stayed off spread sheets for maybe four years. You want to reward them with government welfare?

Why were the seventies so bad? Rather than address the problem, we did bleeding heart solutions. Nixon used price controls. Gerald Ford even distributed campaign badges that said WIN. (Whip Inflation Now). Therefore stagflation only got worse. Everyone suffered even more. What did we do to finally fix the American economy? Interest rates went to 14% and 22%. Only then did the American factory worker stop getting poorer. How can this be? Raising interest rates on everyone that high make everyone's life miserable. Of course. We all suffered. Our economy had been playing money games to mask lies from top government and industry criminals. It took 20+% interest rates to create enough pain; finally fix the economy.

Welcome to what we knew was coming when some here instead mocked The Economist for what was obvious.

Best thing that can happen to those who were not fiscally responsible? Five tough financial years where household budgets are made daily. Anything less would have meant even destruction of Ford and Chrysler - everything sold to fiscally responsible foreigners. It takes something that vicious to educate even our so called financial geniuses who make big bucks by playing money games rather than doing things productive. They go by titles such as stock brokers, bond traders, and equity analysts.

It is only a liquidity crisis; not a capital crisis. Shame on anyone who treats it like an accident by recommending welfare. Like car crashes, this liquidity crisis is directly traceable to human brains that must witness or suffer pain before they decide to learn. That sometimes means five years working two or three jobs.

Bankruptcy threat must be that vicious to change mindsets. Would you rather wait for people to actually become homeless? This liquidity crisis is almost trivial; will be solved in only a few years IF we don't aggrevate it with corporate welfare. Aliantha, your solution would only be corporate welfare to those who created this problem by not doing their jobs. Your solution would mostly enrich those finance firms.

Well again, I wouldn't involve a finance company.

And with regard to market value of homes. The market sets the value. You may want $30000 more than someone is willing to pay for it, but if that's all people will pay, then that's what it's worth.

What are toy industry benchmarks begging for? Government regulations. Standards so that their 'fly by night' peers must also protect kids from lead paint and date rape drugs. The most responsible American toy manufactures - those who voluntarily announced dangerous toys as soon as the problem was discovered (ie Mattel) want regulations to create a level and productive free market.

If stock markets could exist without regulations, then nobody needs a stock market. All trading would be on the street. Why do stock markets create so much trading and capital investment? To repeat what you avoid: because without those regulations, then stock trading will halt due to the anarchy. If what you are saying had any truth, then all stock markets would fail completely. Stock markets would have no purpose. Why do stock markets exist? Why do commodity exchanges exist? Because productive trading cannot exist without regulations - a standard, level, safe, and predictable trading floor (virtual or real). Anarchy (also called widespread criminal activity) would create near zero trading.

The only reason stock, bond, commodity, etc markets exist is because that is where the regulations exist and are enforced. Even the private markets demand certain government regulations so that their trading is secure, honest, and liquid.

Name one trading exchange that exists without government regulation? Smuggling? What happens when smuggling markets become legal - conform to laws? Trading increases. Everyone is wealthier. People stop getting shot down in the streets. Name that market that thrives better due to zero regulations? It does not exist. If you knew markets would be better with zero regulations, then why do you not list 100 of them? Because they do not exist. A certain amount of regulation always results in a more productive and profitable market.

But everything you have suggested can and must involve those finance companies. Who is the at the center of these problems? Who holds those defaulted properties? Who prosper most if these defaults are removed from their books? Everything you have posted is corporate welfare for the most irresponsible financial institutions. I should not have to use the word again - liquidity.

My $200,000 home is now worth $100,000. But I cannot sell it for $100,000 since my mortgage is $150,000. I cannot pay my mortgage, cannot sell my house for market value, and my neighbors are in the same position. To sell my home would make me homeless. My home must sell for $150,000 because of a liquidity crisis. I have no choice. Either that or bankruptcy. The market value is only $100,000. But it cannot be sold at that price. Again. Liquidity crisis. Please stop using economic concepts (law of price and demand) that assume no liquidity crisis. Stop making the same assumptions that those big shot finance experts also made to create this problem.

Those simplistic economic rules of supply and demand are based in assumptions that do not exist here. Again, I keep using the word because your posts ignore its significance - liquidity.

The gov buys the houses from the finance companies at their current market value (much lower than the going rate) and then sits on the asset while recieving 'rent' until such time as the 'tenant' leaves. Then the house is either sold at a profit, or re-rented.

It's very simple really, and creates a lot of jobs in the process.

You shouldn't have been stupid enough to buy a house that you couldn't afford. Shame on you.

Shame is all well and good but it doesn't stop people being made homeless.

I couldn't give a rats behind for who's at fault. What concerns me is the social cost of largescale repossessions.

Yesterday morning I visited a constituent. Her husband was laid off work. When you are in rented accomodation and unemployed the benefits system will assist you with rent. If you own your house, however, the benefits system will not assist you to maintain your asset. They put the house on the market but the recent slump in our area means they were not able to sell. They were also not able to keep up with the mortgage payments and on the 1st of this month their house was repossessed and they were evicted. Now this woman, her husband, their 13 year old son and 17 year old daughter are all living at a friend's house. It's a one bedroom terrace, in which lives their friend, her partner and a teenage son on the sofa. There are now seven people living in a one bedroom house.

They keep trying to bid for association (ex-council) housing on the open letting system...but when more than one person bids, the winner is decided by points...points which increase with length of time on the list. This family stand no chance of getting a house through that system for about 6 months. Though the benefits system will assist with rent, they do not cover moving expenses, downpayments and deposits. Since pretty much all their meagre savings went on trying to stave off the repossession of their home, they cannot pay those costs and are therefore unable to take on a private tenancy. They've been offered hostel places, which would break up the family and have them living in different towns. Their son would have a journey of several miles to get to school.

The husband has worked his whole life, since the age of 16. She used to work but was forced into inactivity by ill-health.

It could be argued that they bought too much house, given the lack of fall-back should the worst occur. They had a three bedroom house in a cheap part of town. Not exactly greedy.

Again, I don't really care about the moral dimension of credit. All I care about is that there are seven people living in a one bedroom house, and a family in crisis because the raft they built wasn't strong enough to weather the storm.

And yet I live a half-hour away and my $200K home mortgaged for $210K has risen in value to $300K in the last 3 years. And the only way I could afford to stay here was through a crappy high-interest ARM.

I am very thankful they decided to loan me money. Of course before they did they sent out their guy to look at my place and my neighborhood and put a value on it.

This is correct IMO. The price paid every month didn't change. The value of the house did, but this is what happens, and a house is a long-term investment.

The toy industry does a very good job at regulating itself. They VOLUNTARILY recall toys that do not meet their high standards. Mattel is a great company and is certainly not responsible when people in China don't stick to the standards they've laid out, but they immediately recalled toys and took a hit on their reputation. Government regulatiosn don't give "confidence". Also, claims of "date rape" drugs are false. GHB is not a date rape drug. It's a party drug used by ravers. From what I understand these toys didn't even have GHB on them, they had another chemical that metabolized into GHB when inside the human body.

That is 100% False.

Again, entirely false. Most people don't want to buy or sell stock with a guy working from the trunk of his car. They want to work with reputable businesses.

That is an outright lie. Without government regulations stifling business, the stock markets would continue to exist, see triple their current trading volume, and would have much greater returns on investments.

Why do farmer's markets exist? To have a central place where people can buy vegetables from many farms. Stock markets exist so investors have a single place where they can buy or sell stocks from various companies. These would still exist. Trading would easily continue without any government regulations. The trading floor would be MORE predictable, safe, level, and held to better standards without government involvement. Government regulations don't prevent criminal activity, they promote it.

You're batting a thousand. You are wrong again. You may want to read the writings of famous economists (Several have won the Nobel prize in economists) like Robert J. Barro, Walter Block, James Buchanan, Donald J. Boudreaux, Richard M. Ebeling, David Friedman, Milton Friedman, Friedrich Hayek, Robert Higgs, Israel Kirzner, Ludwig von Mises, Murray N. Rothbard, Mark Skousen, Thomas Sowell, Vernon Smith, Mark Thornton, Richard Timberlake, and Walter Williams. Perhaps then you wouldn't be so clueless when it comes to economics.

Farmer's Markets, Computer Fairs, Swap Meets, etc.

Also, remember that not having government regulations is not the same as being unregulated. Self-regulation in the markets is what is called for. Government regulations CREATE uncertainty, unfairness, etc. in the markets.

This would not make you homeless. You would do a "short sale" and work out a deal with the bank. They may allow you to sell your home for 100k and take the 50k loss. They may want you to pay them 20k and then allow you to sell the house at 150k.

Is there a housing crisis in the UK also Dana? Are you having similar issues with mortgage companies as the US?

BTW, I completely agree with you on all points you've made above. My shame on you comment was simply taking tw at his own words for the sake of continuity. I think I've argued my point fairly clearly in the last few pages.

I don't think it could yet be classed as a crisis. We are having some problems though. Slow down is at different rates in different parts of the country, but where I am people are taking much longer to sell their houses and if you have an apartment for saler you've a snowball's chance in hell of selling in some parts of town.

The people above were probably not part of the sub-prime problems. For them it was just the economic winds that took the main breadwinner out of work.

Interesting.

In the part of the country I live in, we're in the middle of a housing crisis for the simple fact that there really are not enough houses to go around, even though the construction industry has been booming over the last decade. It's really become somewhat of a self fullfilling prophesy in that when it started, people started moving here for work, and needed houses which had to be built, so more people came...more houses required...more labour etc etc. The problem is, now that the boom is at it's peak, the value of properties is incredibly high. In the last 18 months since we bought our home, the value has increased not 5% which would be good, and not 10% either. It has increased by nearly 50%! This of course is good for us in so far as being able to 'get extra credit' if we wanted it - along with now having a valuable asset, but it would be foolish to do so because it's going to end because of all the other people who 'get extra credit' because they can. The bubble is going to burst and there's going to be a lot of people living in houses they can't afford. On top of that, rents are over inflated simply because prospective tennants are offering to pay more for places than they're worth (in comparison to other states and historical prices) which of course leaves out the lower income earners who're then suckered into a 100% mortgage (they'll even be loaned more than 100% sometimes) which there's no way they'll pay off before the prices are deflated in say 10yrs time (maybe less).

The only benefit we have in Australia is the amount of natural resources we can pillage from our land. The mining industry (always a good source of cash for unskilled labour and tradesmen) is of course booming also which in turn gives people more cash than they'd otherwise have had. We as a separate economy here can probably support ourselves through a large market slump because of this boom in mining, but it wont sustain us forever and eventually things will topple here also.

Mmm. *nods* sounds insecure. In terms of having enough housing, we have a serious shortage of 'affordable housing' as it's usually termed. The soaring house prices over the last few years have made it very difficult for first timers to get onto the housing ladder. Developers are mainly building for the high end market, gentrifying areas that previously had fairly low house prices. Councils are responsible for ensuring that an appropriate mix of housing is developed within their borough, done through regulations on large scale developments (if you're building more than x number of houses you have to include within that 20% 'affordable housing', or some similar stricture). But, not all councils push that enough and there is plenty of room in interpretation of the term 'affordable'.

Currently in my borough, there are about 2-3000 people on waiting lists for housing association lets and the like. Bout half of them are of a socio-economic status that ten years ago would have had them on the housing ladder by now. So we have several thousand people who cannot find permanent homes, whilst at the same time we have over developed areas with houses and flats (especially flats) standing empty and unsold.

Aliantha would keep houses vacant longer. Your solution 1) gets the most irresponsible finance companies off the hook at the expense of responsible people, 2) leaves homes sitting vacant longer because government always takes much longer to do this stuff and has no structure to process this problem, 3) means homes sit unsupervised and decaying again because government has no organization to maintain vacant homes, 4) ends up making government into the landlord of public housing - 'the projects' - which we all know do not work, and 5) provide best welfare to those who are the least responsible. Only five reasons? More are below.

Aliantha - "gov buys the houses from the finance companies at their current market value ... and then sits on the asset while recieving 'rent'" is the perfect example of corporate welfare to the finance companies AND is what every American knows as "The Projects" - welfare housing. We spent decades eliminating that mistake. Aliantha would bring it all back while also rewarding finance companies.

The best solution already exists in current laws and organizations with this experience. Why would Aliantha use government welfare to subvert what already works best? Why would she advocate public housing - "the projects" - and so few call her on this massive 1960s proven mistake?

Aliantha, do not grasp a fact: nobody is going homeless. People who were so irresponsible have earned the right to years of economic rehabilitation - maybe even bankruptcy. This is called good economics. Either they must move into small apartments or townhouses, OR they must take on two or three jobs for the next five years, OR they must take in tenants, OR they must get rid of the two $30,000 SUVs that nobody needed anyway, OR they must cut expenses such as weekly dinners at the steak house, OR they must start taking public transportation or carpool, OR ... every useful solution means no government and personal financial responsibility. Yes, these are the people Aliantha calls homeless.

Every solution means both the irresponsible financial companies and the irresponsible homeowners must suffer through well proven legal and financial hoops designed to rehabilitate the irresponsible. Necessary so that these mistakes do not happen again AND so that the economy fixes itself. Welcome to what the most sympathetic endorse: economic rehabilitation that has proven for generations as the best and most generous solution.


Where does Aliantha reward Goldman Sachs? GS was a more responsible company who admitted up front to their few mistakes, addressed them early and openly, minimized their exposure, and therefore did not contribute to an American recession. Instead Aliantha would reward Merrill Lynch who operated to maximize profits rather than financial services. It’s called greed. Aliantha would now reward companies whose greed is most likely to create an American recession. Merrill Lynch finally admitted to $8billion in mistakes. Merrill Lynch is rumored to have another $10billion problem. Why does Aliantha reward the guiltiest? Who gets most rewarded by Aliantha's solution? Not Goldman Sachs. Aliantha would reward Merrill Lynch with massive corporate welfare for being irresponsible AND again for not be candid (honest). Aliantha - your solution is a 100% reward to the most guilty finance companies. And you also deny this?

I no longer expect Aliantha to understand this. She is more worried about minimizing pain to America's irresponsible homeowners. Just because one has an ARM does not mean one is irresponsible. We are discussing people who can hardly afford the ARM when its interest rate was low. We are taking about finance companies who loaned money on NINJAs. They had no business buying that house or offering that mortgage. Aliantha would reward both with government assistance.

There is no housing shortage. There are plenty of homes. But there are not enough homes so that the Smiths can keep up with the Jones'. Too many want to live in homes they have no business in rather that in townhouses or apartments. This arrogance (a tribute to others who accurately used that description here) is what irresponsible finance companies preyed on.

It scares me how Aliantha has no respect for others who were responsible. Where do you reward Goldman Sachs for minimizing their exposure AND for being both up front and responsible? Aliantha would even punish both Goldman Sachs and me for being responsible? Where are the others who question Aliantha's socialism of rewarding the guilty? Why would you punish me by helping those who most need to learn from their mistakes? Why would you have me pay for their greed? Why would you only encourage an American recession - maybe stagflation?

Your heart is in the right place. But your solutions are vile - a tax on other who were responsible and may suffer the economic downturn created by the greedy; made worse by welfare to the guilty. How to mimimize the economic consequences? The best solutions already exist – and without government welfare. Plenty of solutions exist including apartments, refinancing, second jobs, public transportation, small used cars, and protections afforded by bankruptcy laws.

As Radar demonstrates, the best solutions already exist and would only be subverted by the corporate welfare advocated by Aliantha. Aliantha does not intend it as corporate welfare. But she advocated 100% assistance to those most irresponsible finance companies. As Radar notes and as I keep posting - Aliantha - get it out of your head. There are not all these homeless people. There are all these people who must now spend years rehabilitating themselves due to greed and using the so many existing solutions as Radar has exampled. Those with true sympathy would offer better solutions including the protection of bankruptcy.

Again, Aliantha. Your socialism that threatens productive economies is scary. The best solutions already exist if not subverted by what Aliantha proposes. In the previous post are maybe eight reasons why Aliantha heartful sympathy results in the worst possible solutions for everyone.

TW, if you already think how the system works over there (the USA) is perfect, why are you even responding to me?

Obviously the strategy I've suggested would be far more involved than what is written here. I'm not prepared to compile a whole financial report on the benefits of the scheme I would propose just for the sake of refuting your argument.

Just think about the social issues in your country and try and consider that some of those issues are directly related to poor social services and a basic lack of safety nets provided by your ever so brilliant government.

Yes people make bad financial decisions and no it's not good if people who toe the line have to pay for that, but there is a middle ground, and for a western country, your government provides precious little safety for your citizens in comparison to other western nations.

So in summary, whatever you think is the best thing for your countrymen is fine by me. I can't be bothered arguing with you anymore. Just take your fucking blinkers off every once in a while and you might find there's a whole wide world out there.

I obviously don't think the system is working properly. But your plan only rewards those who are the problem.

Again, too few financial firms operated with the ethics and transparency of Goldman Sachs. Its smells too much like Enron, the manufacturers CA energy crisis, Adelphia Cable, AT&T, and...

Well GM was expected to announce another massive loss at $0.25 per share. What has GM been doing with losses so large? GM has been hiding so many losses as to suddenly announce a $68 per share loss. Where have $67.75 per share losses been hiding for the last decade? Did GM suddenly lose tens of billions only in one quarter? At what point do we call for life sentences on another Enron corruption?

Look back upon my justified criticisms of the financial people including stock brokers who routinely underperform the market. These are the same people who are supposed to provide oversight and therefore recommendations on companies such as GM? The GM accountants only suddenly discovered $67.75 more losses per share? Bull. Why have I routinely seen here their products are that bad - and Wall Street analysts don't?

Anything we do to reward people who take home $hundreds of thousands annually (plus bonuses sometimes in the $millions) - well that is just bogus. Your plan would only remove pain from these people who created the problem by not doing their jobs.

I believe the president of Merrill Lynch, having hidden all those losses for so long, received something like $200 million just to quit. He is the one who ordered Merrill employees to purchase massively in risky investments. Merrill was once the benchmark for Wall Street stability.

So we reward him? So we have the government reduce their losses buy buying those conduits or collateralized debt obligations?

The system has another problem. The rich keep collecting more of the wealth. Why does the average American's incoming keep dropping every year (when adjusted for inflation)? Oh. And why have my groceries gone from $20 to $30 over the past year - but there is no inflation according to government core numbers?

No, I believe there are serious problems in this finance industry. So how did we fix NYC when it was playing money games in 1975? "Drop Dead". The resulting turmoil finally caused castration of the problem. Is that word harsh. Well unfortunately we did not address the CA energy crisis as it deserved. We were not that harsh. We did not go after the ones who got rich by creating it. IOW anything less severe than castration of such problems only permits problems to fester.

You would tea-tattle people who need to suffer severe budgetary constraints for up to five years? It cannot be harsh enough. So how many others will we reward for perverting the American economy - because greed is good?

In 1981, Americans stopped buying Fords as Ford, Chrysler and GM begged for government assistance and protection. It took near bankruptcy in Ford to save all Ford employee jobs, to remove a man who did more to destroy American than Nikita Khrushchev (Henry Ford), and to finally let engineers design the first Ford car in 22 years. Because we attacked the problem with threat of bankruptcy, another problem at Ford was eliminated. 48 levels of management were reduced to five. Many who were the problem - managers - were made redundant or reassigned to the lower skill levels where they belonged. Castration.

Financial penalties were so severe as to save Ford Motor. So severe that engineers were finally permitted to design the Ford Taurus. Any government bailout or assistance would have killed the Taurus and probably cost massive American jobs in Ford. It is how economics works.

We cannot be severe enough with these finance people who believe Gordon Gekko's "Greed is Good". These were not accidents. These finance people did not do their job. Many are so corrupt as to believe the purpose of a company is profit. That is mafioso reasoning. And yet they are so corrupt as to believe those lies. We have a serious problem in our finance industry where they routinely get fat and drunk on everyone else's sweat.

I am appalled that you would recommend something that is finance company welfare - and be so naive as ignore the corporate welfare you are promoting. To not recognize you are preaching their propaganda - what they need you to say to save their sorry asses. Those homeowners have plenty of options. There are near zero homeless despite what others have posted. But there is this massive and corrupt finance industry were 'greed is good' rather than customer service: their job is to service the financial needs of America.

tw, individuals in the US don't have the bankruptcy option anymore; George Jr took that away, at the behest of, yes, financial companies.

And Radar, GHB is a date rape drug. I'm surprised that molesters don't have the wicked idea to slip Aqua Dots on children.

No it does not only reward those who caused the problem, but if you can't see that, then there's no point in me wasting my time here anymore.

Thanks for your input though. I see where you're coming from.

It's not a date rape drug among kids or ravers. I was a raver for a long long time, and people used GHB on themselves to relax and come down from ecstasy.

Yes, and date rapists use it to 'calm down' their victims, and their inhibitions.
That's like saying a pencil isn't a writing utensil among 'office darts' players.

misconception alert. BK's are still available. filing BK on $30K in credit card debt while having $150K in home equity is no longer an option.

Maybe, maybe not.

It's closer to calling a pair of scissors "eye stabbers". It wasn't made to be used for "date rape" so such use is out of the ordinary.

it's not out of the ordinary as far as drugs used to subdue women (and sometimes men) go.

Did a Republican President just nationalize the housing market? For the record, the answer is yes. :headshake I gotta get a piece of this socialize the losses game...

If he didn't, then it would be obvious why throwing money at the rich makes the economy look good (short term) and results in massive economic revenge on that economy (long term). These are all symptoms of a George Jr who made the economy look good by throwing money at it. Nixon did same. So the economy took revenge many years later.

Eventually we will pay for government welfare to the rich. Fannie and Freddie are simply then next irresponsible entities to line up for free handouts. GM and other domestic automakers will demand equal welfare. Never forget the party line. Enrich those who are your campaign supporters (ADM, Halliburton, etc). Massive government deficit spending has been financed by China, et al who are now flush with dollars. So much for wiping out the balanced budget and then setting records for deficit spending. New record for government borrowing is something above $400 billion - probably higher. This was the budget that conservative (wacko) extremists said would be the first balanced budget. How could their political agenda be wrong? Reagan proved that deficits don't matter? Cheney said so.

Lehman Bros is going the same way a Bear Stearns. Even with Fed offering discounted money. Something like 39% of American mortgages are estimated to be non-performing (hopefully that number is erroneous). And yet the same administration also said there is no inflation - despite prices in grocery stores and gas stations.

Denial means welfare to the rich is alive and well. Best solution to these problems is bankruptcy. Bankruptcy - if applied early enough (if spread sheet fraud was not encouraged by George Jr's Harvey Pitts and his predecessors even in the Enron days) means jobs are saved and the problem (top management) is eliminated. Instead, George Jr's political agenda dictates protecting the problem who are also major campaign contributors. And yes, even Fannie and Freddie were major political fund donors.

Their conservative agenda is only good for America in rhetoric. George Jr's people will spend money everywhere to make themselves look good. Oh. The Federal Highway Trust fund surplus? That trust fund is something like one to two months away from no more cash. Where did the surplus go? Enron style accounting is justified by a political agenda that also says "deficits don't matter".

How curious that Clinton could be fiscally responsible. The party rhetoric says that only Republicans can be fiscally responsible. And yet both George Jr and Nixon spent money we did not have.