Times are tough all over

[Undertoad]

I guess I'm saying that home buyers and defaulters were greedy, but it doesn't matter. It's just human nature. If you tell people they can make a quick buck most of them will do it. When it became a notion that it was perfectly fine for someone to default if their house lost value, people took up the practice.

[HungLikeJesus]

glatt, I'm probably in the same position as you. I've had that uneasy feeling for months and haven't done anything about it. I just got investment statements last week and haven't opened them. I've buried my head.

I put a lot more effort into making money than into holding on to it. I think this is true of a lot of us.

[glatt]

Thank you. Misery loves company, and it makes me feel slightly better to know I'm not the only one.

Oh, and I'm probably cursed to have my online account bookmarked. I've been checking it every day these last couple weeks. I should just delete that bookmark and forget about it.

[Cicero]

(UT)? When I was marketing last year and a little prior for real estate (sub-prime) this never came up. People thought they had finally gotten into a position to afford a better home or a new home, when they in fact were not able to, but were approved. They could not afford what they were sold. Bottom line. But they were sold.

We worked with a lot of people just getting by, and shoving large families in what they thought they could afford at the time.

The market is also different down here. You get a broom closet for 200,000 and you are doing great...It's 1200 a month to rent a sub prime property so people thought they could buy cheaper and pay less, and they did. They could afford no substantial increase as they were already strapped. They thought they could save by not renting. All the rich white folks drove up all the prices and renting became outrageous. Buying a nasty shack was cheaper for all us poor folk that can't afford 1250.00 a month in rent. So they bought houses to fit their family in for 800.00 a month mortgages instead. At the time it seemed like a wise choice for them to invest and not spend so much on a rental they could not afford.

Long story long. They defaulted because they thought it was a more practical choice and one they could live by (more economical, can buy groceries too).

I am sure some people are doing what you imagine. Defaulting when the value dropped. I just haven't heard from any that weren't just ass out broke.

That's just how I see things on the local level. I almost fell for it and let my husband talk me into too. I did not. Thank god.

[classicman]

Originally Posted by glatt

I should just delete that bookmark and forget about it.

That's what I did. Its ugly, really ugly - down more than yours too. Maybe that'll make you feel a little better too.

[tw]

Originally Posted by glatt

I remember a thread back a few months ago where lookout asked if we were positioned where we should be.

Maybe it was Fall 2007 that I posted a warning of a serious market problem. I cautioned about unloading all credit card debt and setting up for an economic downturn. In Fall 2007 it had become obvious that a downturn was inevitable. I could not say if it was immediate or due to happen in a few years. But I do remember posting that caution especially with having no outstanding balances on any credit card.

It still applies. What happens in equity markets adversely affects jobs and Main Street some years later. Again, no way to know how severe that downturn will be. But that downturn will occur and will not be on George Jr's watch.

[glatt]

Originally Posted by classicman

That's what I did. Its ugly, really ugly - down more than yours too. Maybe that'll make you feel a little better too.

I'm sorry.

[glatt]

Originally Posted by tw

Maybe it was Fall 2007 that I posted a warning

Yes, but tw, you've been warning of the collapse ever since I came to the Cellar years ago. Why should I have given that one post any more weight than the others?

[TheMercenary]

Dollar cost averaging. It will come back up eventually. The people who really need to worry are those who just retired and are now living off those investments and I would say those who are within 5 years of retirement, because I bet it will take at least that long before they come back up.

[tw]

Originally Posted by glatt

Yes, but tw, you've been warning of the collapse ever since I came to the Cellar years ago.

As I noted, I could say why BUT I could not say when. The warning was not in 2007. The warning was posted in 7 Sept 2006. Since the problem did not happen in months, then was it 'Chicken Little'? Posted in
Which is your favorite paranoid fantasy? are also reasons why we knew something bad was brewng:

Originally Posted by tw

Has good news in this economy been based in productive activities? Well, incomes have been dropping for the past five years. So why the strong housing market? Was that housing market due to productive and necessary products - or just wild speculation? ...

Those who otherwise could not afford the home and those who were only buying on speculation will suffer. Big part of the American economy that has been its 'engine' may collapse. That is the economic fear to a flurry of bankruptcies, a collapse of industries that kept the American economy looking good, and maybe a major recession. ...

Any one of three things may happen. Housing prices drop leaving massive debts for homeowners - maybe a house worth less than its mortgage. Rents skyrocket. Third is inflation resulting in much higher interest rates. We already see inflation jolting upward AND massive American dollars overseas waiting for what?

This economy has not been about America producing things. America's manufacturing economy is about 15% below what it once was - proportionally. Americans are becoming less technically able as indicated by college degrees (and skyrocketing numbers of student no longer finishing college), exportable products, and the number of immigrants who are now required for the more productive jobs. All this time, those problems are vague and looming because problems do not yet appear on spread sheets. ...

Economic diseases are cured by recessions. Are you financially secure to weather a recession, loss of housing values, or massive rent increases? This is the question that a 2% drop in housing prices asks of you. After all, what other industry is ready to employ Americans when the housing industry drops by 50%. Toll Brothers has already seen a 50% drop in sales – therefore even resulting in a drop in house prices. What's in your wallet - or savings account? Were you foolish enough to take out a balloon mortgage or interest variable rate? Are your credit cards at $0 balance? That 2% drop in housing prices may be your last few warnings. Speculation and easy money is over. Satan demands his due.

That 2% drop in housing prices is considered a leading indicator of economics taking revenge on easy money. A problem only made worse by an $800billion trade deficient and a $100billion war that is being lost. Of massive dollars sitting overseas and not yet appearing on spread sheets either as the selling of America, devaluation of the dollar, or inflation. The American economy was so stable and reponsible in the 1990s. Major problems are looming. Maybe this time, we will not make mistakes - and instead increase interests significantly before damage occurs; avoid the 'guns and butter' mistakes by Nixon in late 1960s. We have major outstanding debts and we have an economy that looked good only as long as housing prices kept increasing.

[classicman]

Originally Posted by glatt

Yes, but tw, you've been warning of the collapse ever since I came to the Cellar years ago. Why should I have given that one post any more weight than the others?

lol - truer words were never spoken.

[DanaC]

Originally Posted by jinx

This is what happens here, with generation after generation being dependent on welfare. I didn't realize it was the norm in the UK.

Welfare? I am talking about social housing. All that means is that the landlord (owner) is the local authority instead of a private landlord. Instead of it being run for profit, as a private landlord must, the estate is run to cover its costs, thereby leading to much lower rent and more secure tenancy status.

Setting aside the wealthy rental market, getting a council house was a step in between private rental and home-ownership. It was seen as an affordable and secure option for people who didn't have access to the kind of capital or credit necessary for home ownership (i.e most of the working-class). It wasn't a solution to an underclass problem, or a way of housing the unemployed, it was a solution to the shortage of habitable housing stock in postwar Britain and quickly became a settled institution in British culture. Council housing didn't take on the stigma and connotations it has now until well into the 1980s, maybe even the 90s.

[TheMercenary]

Originally Posted by DanaC

Council housing didn't take on the stigma and connotations it has now until well into the 1980s, maybe even the 90s.

Same goes with our public housing. I really think it is due to a change of the generations from one of those being greatly appreciative of the help provided and among whom they had great pride and a sense of selfworth and work and changing to one of a generation of entitlement, hand outs, and dependency on the system based on some stupid idea of imaginary wrongs to a narrow group of people.

[DanaC]

Originally Posted by TheMercenary

Same goes with our public housing. I really think it is due to a change of the generations from one of those being greatly appreciative of the help provided and among whom they had great pride and a sense of selfworth and work and changing to one of a generation of entitlement, hand outs, and dependency on the system based on some stupid idea of imaginary wrongs to a narrow group of people.

Not all those wrongs are imaginary, Merc. Whether or not they're relevant is an argument to be had.

I don't know what it's like over there, but over here most of the social housing is now owned by not for profit companies rather than the state. It was sold off in the 80s and 90s. The reputation the estates sometimes have for anti-social behaviour, drugs and nightmare neighbours is partially a fair one. But the reputation is down to a minority of the tenants. It's amazing what absolute chaos a relatively small number of people can cause. In terms of unemployment, the reputation is again partially a fair one. But higher unemployment than the national trend still amounts to a minority of the community. What is problematic is the high percentage of unstable, unskilled, low-paid sink jobs. But even then, that isn't the whole story. Most people on 'council' estates are just like everyone here: trying to get by, making sure their families are fed and happy, hoping their kids will do well and attending parents evenings, making good and bad decisions and coping with the consequences. They just rent their house from a social landlord.

[TheMercenary]

The most frequent one around here is related to race. They are easily argued against in most cases. One thing is for sure, if Obama is elected much of the wind will fall out of the sails.