Times are tough all over
--wailing in the hallways over the stock market
--a friend of mine's mother just lost her job of 37 years, and tried to commit suicide. She is several states away, and can't afford to fly to her bedside
--did you hear about the MBA in finance who lost his job and could not find another, and so shot and killed himself and his entire family?
--lots of layoffs in the real estate, title, and construction industries.
a veritable pall hangs over everything . . .
The only grocery store within 22 miles of my house, a mom and pop place, closed. :( 29 people lost their jobs.
Old lady living 15 min. from me shot herself over home finance troubles.
DooM! DoooM!!! :)
Just putting in my last two cents. lol!!
I hope with all this hardship I develop a sense of humour.
sense of humor, sense of perspective, and love and support to and from one's loved ones.
We're all going to need it.
I'm worried about my sister-in-laws. One has a 1-year-old, the other has a baby on the way. The one with a one-year-old is a stay at home mom, lessening the financial security of her family. As far as I can tell, all three of the wage-earners jobs could be at risk.
My husband and I are intentionally keeping a bigger cash cushion than we normally would, in case they need the help.
sense of humor, sense of perspective, and love and support to and from one's loved ones.
We're all going to need it.
Umm. I already have the other stuff, which is why I specified. Thanks for the speech tho'.
:p
Oh and DooooM!!:D
Just found out that my brother was laid off. He's getting married at the end of the month. (Well, they've already been married for a year - they're just having the ceremony now.)
Shawnee and Flint just got newer, better jobs. I just changed jobs a few months ago.
It's not all bad news.
we got a lecture on cash flow problems at my firm; we're being pressured to bill more. I hate that, because we have no clerical support, so lots of my hours are spent doing filing, sending out correspondence, answering the phone, etc., and I feel like they want me to pad our bills. Bad.
Um, not to belabor the point, but Oprah would suggest you all get copies of "The Secret", read in a nice, hot bubble bath (while Enya softly plays in the background) and light your 55 dollar scented candles for some "aromatherapy."
Anyway---that's what she does. And Oprah is very, very, very happy. And smart! Smart and happy.
AND FUCKING RICH.
(Sorry, didn't mean to yell.)
AND FUCKING RICH.
(Sorry, didn't mean to yell.)
*tilts head towards SD, gives him a sidelong glance*
That's what I meant, Steve. I was being ironically.
^^^^ I don't get. ^^^^
????????
There isn't anything there to "get".
Oh, Irony. Another one of those English major things, right?
No steve. It's one of those there philosorgany things. I've seen those types.
Meanwhile, across the Atlantic, European stocks have all just lost 7 to 10% in a day (Germany, France, Britain etc). You are not alone. Banks throughout Europe are suddenly finding themselves needing bail-outs, and being part-nationalised in response. This has a lot of similarities with how the great Depression started.
Although I nearly choked when the TV news announced that Iceland's banking system had "gone into meltdown". :lol:
If I find time, I'll soon make some comments about international currency exchange rate fluctuations. As a teaser, the AU$ has fallen about 33% against the yen in the last two months, and about 15% in the last week. :eek: Since I have a large(ish) stash of yen, this is actually great for me, but changes that big, that fast, are not good for anyone.
There isn't anything there to "get".
There is a period (.) <----like that. That is a "something." Is this some kind of strategery? Or is it a double-secret ironical?
Oh, and Zen? I've a yen for you. :D
After being almost even with the US dollar for the last couple of years, the AU dollar just dipped below 70 cents. Great news for exports from Australia, not so great for imports.
We had a 1% interest rate drop yesterday. Our bank passed on .8% of that. That means about $200 saving for us each month.
Things are tough for some people, and I'm sorry about that. It did have to happen though, and it's going to get much worse before it gets better.
The good thing for me is that if Dazza loses his job and we can't pay our mortgage, we can always go live on Dad's farm and pick mangoes. :) I think we'll be pretty right though. Unfortunately though, I think we're going to have to ride out a loss on our recent purchase for probably 10 years or so.
Oh, and speaking of 'The Secret', I just started reading it after my Dad loaned it to me last week. So far I haven't learned much. I already have a pretty positive view of my life. I'll keep going with it though...just to see what all the fuss is about.
No bubble baths and $55 candles though. Just lonely old me at home alone curled up at night with a book instead of my husband. :(
Ah, but at least you have a husband to miss! Bright side! Bright side!
(I'm told that when the Irish first came over, the only jobs the "decent" girls could get was to be maids for the grand houses. When Madam would point out to Colleen that the dust on the armoire was so thick Madam could write her name in it, Colleen replied, "Ah, what a blessing it 'tis to be able to write!") :)
In good news - I found out my bro got a job!
He's working for The Treasury in Westminster (bloody hell) so hopefully when I am allowed a day off I can go & see him in his lunch break.
It's a heck of a commute for him, but I imagine the money is worth it - he's got a good head on his shoulders and would have sorted that out.
This morning my colleagues were talking in the office. I heard one of them say, "A friend of mine... Iceland... just got out in time..." I thought, Bloody Hell, someone's bombed Iceland! Thinking it was one of the chain of frozen food shops. I was probably the only person who was relieved to find out the truth. I mean else would I have bought my frozen chicken?
Shawnee and Flint just got newer, better jobs. I just changed jobs a few months ago.
It's not all bad news.
We've been hiring people all summer at my firm and just hired a new person last week for my department.
Edit: And we're looking for IT litigation support people. So if you are good setting up and working with Concordance and Summation databases, and are willing to work in DC, let me know.
Badger and I got new jobs this September. I had 8 positions at two companies to choose from, he had 8 positions at 4 companies.
There is life out there.
The recruiters are filling my mailbox and voicemail with inappropriate offers. And none of them are sexual in nature!
I doubt that.. surely there's at least one where you would get screwed. (Of course they probably don't say that up front--you have to read between the lines.)
The recruiters are filling my mailbox and voicemail with inappropriate offers. And none of them are sexual in nature!
What? You think you can just announce that you're out of work and start a sex company right away? Nooooo, my friend. It takes days and days to build up your clientele! There's filthy mags you've got to advertize in, 900 numbers to establish, etc. Takes a good few hours to get yourself firmly ensconced in the sex biz.
I'm going to go back into advertising. I'm going to have beer logos etc. temporarily tattooed to strippers butts and take a cut.....Once I figure out how to write this proposal to budweiser about the "installation"....heh. Or I just have too much time on my hands now.
Here's how many Yen it costs to buy one Australian Dollar, over the last 12 months:
[ATTACH]19782[/ATTACH]
Just to help you see that cliff at the right hand end, here is the last 30 days:
[ATTACH]19783[/ATTACH]
I doubt this affects any of you very much, but it is pretty damn spectacular. There is some serious stuff going on out there.
Here's how many Yen it costs to buy one Australian Dollar, over the last 12 months
What has been ongoing in the Australian economy to cause such a dollar drop? Have commodity exports dropped off sharply? Was the government running massive deficits? What was ongoing four and more years ago to cause that dollar drop?
America's economy drives everyone else's. We are the largest consumer of *everything* there is, and when we cut back our consumption, everyone else takes the hit, too.
America's economy drives everyone else's. We are the largest consumer of *everything* there is, and when we cut back our consumption, everyone else takes the hit, too.
Except whale meat.
When we cut back our consumption, everyone else takes the hit, too.
Dude, it's time we stopped bogarting the bong!
:bong:
My cousin just received notice that all state employees are being forced to take a 6 day furlough. The state needs to save $48 million by the end of the year. It is unclear whether they have to take them all at once or can spread out the loss of income. The latter is the most likely option at this point.
Amazing that not only are we all paying for this bailout, but some people, State/Fed employees, are now losing income too.
A wise old gentleman retired and purchased a modest home near a junior high school. He spent the first few weeks of his retirement in peace and contentment. Then a new school year began. The very next afternoon three young boys, full of youthful, after-school enthusiasm, came down his street, beating merrily on every trash can they encountered. The crashing percussion continued day after day, until finally the wise old man decided it was time to take some action.
The next afternoon, he walked out to meet the young percussionists as they banged their way down the street. Stopping them, he said, "You kids are a lot of fun. I like to see you express your exuberance like that. In fact, I used to do the same thing when I was your age. Will you do me a favor? I'll give you each a dollar if you'll promise to come around every day and do your thing."
The kids were elated and continued to do a bang-up job on the trashcans.
After a few days, the old-timer greeted the kids again, but this time he had a sad smile on his face. "This recession's really putting a big dent in my income," he told them. "From now on, I'll only be able to pay you 50 cents to beat on the cans."
The noisemakers were obviously displeased, but they accepted his offer and continued their afternoon ruckus. A few days later, the wily retiree approached them again as they drummed their way down the street.
"Look," he said, "I haven't received my Social Security check yet, so I'm not going to be able to give you more than 25 cents. Will that be okay?"
"A freakin' quarter?" the drum leader exclaimed. "If you think we're going to waste our time, beating these cans around for a quarter, you're nuts! No way, dude. We quit!" And the old man enjoyed peace and serenity for the rest of his days.
My cousin just received notice that all state employees are being forced to take a 6 day furlough.
Which state?
What has been ongoing in the Australian economy to cause such a dollar drop? Have commodity exports dropped off sharply? Was the government running massive deficits? What was ongoing four and more years ago to cause that dollar drop?
Similar things that were happening in the US economy. Citizens had enjoyed lower interest rates for a considerable period of time. The gov was running a surplus and giving out money all over the place. Our dollar was up around 98 cents US for almost 12 months shortly prior to this recent meltdown.
Basically everyone was spending money like it was going out of style (which ironically it has) which injected more and more money into the economy so of course it kept growing. Housing prices inflated as more and more people decided to get into the market, so the construction industry boomed about 10 yrs ago. Then all of a sudden, someone realized that inflation was getting out of control (this was about 3 yrs ago), so the reserve bank started putting up interest rates. They went up really only about 4% in the end over that period...maybe 5%, but it took the average mortgage rate up to nearly 9%. More in some cases. This of course put a huge amount of financial pressure on mortgagees who had in many cases taken out 100% loans in the last few years. So, people started trying to sell their big expensive houses.
At the begining of this year during the months of January and early February, people were selling within 2 days of putting their house on the market, and often getting more than the list price, but that was the last gasp as our economy reached the top of the hill. After that, there were too many houses on the market, and not enough buyers. People who had been thinking about buying started getting picky. They didn't want to pay the inflated prices created by our inflated economy so they started making crazy low offers, and mortgage holders in trouble had no recourse but to accept those offers.
Lower the median house price and your economy starts to slow.
Basically, the interest rate rises brought down inflation to a managable level, but they hurt the citizens who had high mortgages.
Anyone with half a brain to watch what was happening should have seen this coming. Some didn't though, so our dollar continues to fall as people continue to keep their wallets closed in order to try and hang onto what they have now.
Increased fuel costs during this period have also contributed. Not only to household budgets at the fuel pump, but the cost of groceries and most other utilities has risen considerably also.
That's a very simple explanation. Obviously government policy contributed to the problem also along with world markets and a healthy trading market for Australia.
America's economy drives everyone else's.
That's not the reason for problems in Iceland. Apparently Iceland's three biggest banks invested heavily in American mortgaged backed securities - helping to fuel an America that was spending massively (like all Republican administrations do) and using the incoming investments to deny how large the deficit had ballooned.
In another post, described was how China (in trying to be a close American friend) was inadvertently making Americans ignore the costs of “Mission Accomplished”. China’s massive investments also contributed to the ponzi scheme of tax cuts and spending increases.
Eventually economics takes revenge – including revenge on those who invested in America NINJA style.
But again, why has the Australian dollar dropped so far and so fast (Brianna xxxxx Aliantha answered after this was asked)?
Brianna? You didn't like my answer tw?
Then all of a sudden, someone realized that inflation was getting out of control (this was about 3 yrs ago), so the reserve bank started putting up interest rates. They went up really only about 4% in the end over that period...maybe 5%, but it took the average mortgage rate up to nearly 9%. ... This of course put a huge amount of financial pressure on mortgagees who had in many cases taken out 100% loans in the last few years.
Increased central bank interest rates should have no affect on a mortgage even if the mortgage is 100%. However, with bean counter mentality, something new was created - rate adjustable mortgages. Nobody with basic financial knowledge would take out an ARM.
For your reasoning to be valid, ARMs must have been widespread in Australia. Otherwise higher central bank interest rates would have left mortgage payments low. One reason to own a house: inflation and the necessary higher central bank interest rates make life easier for the holder of a fixed mortgage. His mortgage payments remain unchanged and the house value increases. Just another reason why no informed home owner should even take out an ARM.
We call them variable rate mortgages, and in Australia, a variable rate is the most common mortgage you'll get and pretty much always has been.
I note tw, that having fixed rate mortgages hasn't saved the US economy, or any other country's economy.
Also, regardless of whether mortgages are fixed or variable, you surely must realize that as interest rates go up, more people are locked into higher mortgage repayments for the same thing their neighbour has at a lower price. And of course with an inflated economy which Australia has had for many years now, housing prices are inflated which of course means that people have been paying even more on the capital aside from the interest at whatever rate it's at.
As I said, it's not just housing interest rates which have contributed to this issue. It's fuel costs also. Every household in Australia has much higher expenses than it did 3 or 4 years ago. Do you think fixed rate mortgagees should have realized that was going to happen?
You asked for an explanation and I've given you one. Personally we have a fixed rate mortgage which is now lower than it would have been if we'd taken a fixed rate mortgage out six months ago when we bought this house. The recent interest rate drops means we're saving over $250/month which goes a long way towards paying our utilities.
It doesn't matter what sort of mortgage you have if you haven't allowed yourself some breathing space for fluctuations in the market.
I note tw, that having fixed rate mortgages hasn't saved the US economy, or any other country's economy.
American is chock full of ARMs - variable rate mortgages - sub-prime mortgages. ARMs are one reason why mortgage backed securities all went crashing at the same time. America 30 years ago did not foolishly market or apply for ARMs.
The way I read it, Australians were doing the same irresponsible mortgaging that Americans were doing - ARMs - sub-prime loans.
Fuel prices also contribute. However, to subvert responsible action as a result of higher energy prices, America mortgaged itself (ie 0% car loans) to avoid and ignore the necessary recession. While whining Americans complained about high gas prices (ie $1.80 per gallon), Americans continues to say to industry, "Make the most stupid vehicles that only an accountant would design." Americans complained about high gas prices, then bought even more SUVs. Gas had to go to $4 per gallon before Americans said, “Oh, energy not something to waste.”
BTW, the same stupidity occurred in 1970s America. Then when patriotic Americans with Japanese citizenship provided superior products, Americans put up tarrifs and other corporate welfare to protection the problem. Deja vue.
Then America said the economy is no longer is dependent on energy. Well, those energy bills have yet to start causing job losses - another lesson from the 1970s.
Essentially, you are saying Australians were doing the same money games that business school graduates were promoting in America. As I read it, Australians are not suffering due to events in the American economy. Australians are suffering because they did exactly same as Americans.
Meanwhile, Australia is far more attached to commodity exports. Have economic changes in commodity markets also contributed to problems in Australia? If so, how?
If done properly and house bought within ones means with either a fixed or adjustable rate mortgage was purchased... Where is the issue?
The abuse comes into play when one is sold more house than one can afford and convinced that one can by utilizing an ARM.
... you surely must realize that as interest rates go up, more people are locked into higher mortgage repayments for the same thing their neighbor has at a lower price. And of course with an inflated economy which Australia has had for many years now, housing prices are inflated which of course means that people have been paying even more on the capital aside from the interest at whatever rate it's at.
In the 1970s, the same reasoning is why interest rates were kept low. Therefore the economy only got worse. Of course. A mismanaged economy that throws money at problems (ie tax cuts without spending cuts, tax rebate checks, excessively low interest rates, etc) only gets worse years later.
How did America finally fix the housing market and all other problems? Housing interest rates were jacked up to 20% because central bank interest rates rose well above 10%. Only then was the American economy fixed in the early 1980s.
High interest rates do not create the problem. High rates and the resulting hardships may be necessary to fix the problem now. Otherwise economic forces take further revenge later.
Whats wrong with a 5 yr arm if you are planning to move in less than that amount of time. I realize there is some risk inherent in that, but that is what they were essentially designed for ...no?
ARMs were designed to give you a house that you otherwise had no business owning. What made possible those 4000+ square foot houses with three car garages? A more productive America? Of course not. Variable rate mortgages, NINJA, and the ponzi scheme found in Enron style accounting.
Let's see. All those homeowners, expecting to be there only five years, suddenly got stuck with what? Suddenly they can't move? Economics takes revenge many years later on an economy that plays such money games.
I think it's pretty fair to say that most economies in the world have been doing the same as America. These types of trends do tend to be global which is why recessions and depressions do tend to be global. I would suggest that if the US economy had remained stable, many other economies world wide would have done also. obviously that's simply because the US economy is so large and effects all other economies, particularly those running under the same rules.
Having a conservative government that was living out of Bush's pocket definitely contributed to our problems here.
Fuel prices have been much higher in Australia than the US for a long time, as have interest rates. Where your reserve bank dropped interest rates to try and avert the crisis in order to prop up the economy, ours increased them in order to gain some control.
I'm not a financial expert. I simply pay attention to what's going on. Not all of our issues here are because of the US market, but you'd be a fool if you didn't agree that it was part of the problem.
I think we'll come out of this ok in the end, mainly because we do have a huge export industry linked to energy resources, and we all know the world needs energy.
If done properly and house bought within ones means with either a fixed or adjustable rate mortgage was purchased... Where is the issue?
The abuse comes into play when one is sold more house than one can afford and convinced that one can by utilizing an ARM.
Not all of our issues here are because of the US market, but you'd be a fool if you didn't agree that it was part of the problem.
That is part of the question. How much intertwined? We know Iceland banks foolishly invested heavily in the American ponzi scheme - mortgage backed securities. And we know some European banks are at risk for doing same. But I have heard very little that suggests Australians had any significant attachment to America's mistakes.
But again, are those exports to China diminishing so much as to harm the Aussy economy? Not just energy (coal). Other exports (grains, meat, metals) are also a major part of the Aussy economy. Have these industries suffered due to Asian downturns?
{and then apparently deleted}
The abuse comes into play when one is sold more house than one can afford and convinced that one can by utilizing an ARM.
ARMs made possible that abuse. If homeowners had to buy homes they could afford, then housing prices would not have skyrocketed, the minor recession would have corrected economic mismanagement (ie force out bad management in GM), and homeowners would not have been slapped by the double whammy of a recession AND skyrocketing mortgage payments.
ARMs are equivalent to what George Jr was doing - tax cuts with massive spending increases. ARMs are just another of many examples that explain the 35% stock market downturn - and we have no idea how much lower it may go. But again, economics always takes revenge many years later when finance games rather than product innovation creates a booming economy.
To get people into houses they could not afford – to avoid a necessary recession – the bean counters marketed another money game – ARMs (also called variable rate mortgages or sub-prime loans).
So do you feel richer now that George Jr gave you another $600 tax rebate check? Just another example of an idiot doing things so that you *feel* better rather than addressing the problem - excessive spending.
The cost of money is higher for us now. That's one problem. If we want to borrow it costs more. Our big banks generally are fairly strong though. A couple of our smaller ones have been a bit wobbly because of their ties to the US, but in general, so far so good for Australian banks. I can't tell you exactly what's making them stable, but we've had no big banks even look like folding, as opposed to those from larger economies.
This is a good thing for Australians. At least there is that stability.
I think you have a very biased view towards ARM's tw. Long term variable rate loans can be a big advantage if you take out your loan while rates are high. Then during the normal course of economic cycles, rates drop, and you find that the loan you could afford before, now becomes a breeze and you pay your loan off quicker.
If however, you take out a high mortgage when rates are low, not leaving yourself room for rate increases, you deserve what you get imo.
The problem is, banks allow people to take out a mortgage they can afford today without thought to what they can afford tomorrow. If people are too stupid to realize what's coming down the road, whose fault is that? The lender that knows? Or the borrower who's ignorant? Some say that ignorance is not excuse. I agree. If you're going to borrow money from anyone, you should know how you're going to pay it back.
tw - sorry bout the deletion - I thought I double posted it. I think I still did. Anyway, I took you off ignore today - did you address my point at all? Here I'll quote it for you.
If done properly and house bought within ones means with either a fixed or adjustable rate mortgage was purchased... Where is the issue?
The cost of money is higher for us now. That's one problem. If we want to borrow it costs more.
Higher cost of money today means the economy will fix its problems now. In America in early 2000, when the economy needed fixing, instead George Jr threw money at the economy. His people (ie Harvey Pitts of the Security and Exchange Commission) made ponzi schemes easier (ie Enron accounting is now rampant). To mask the resulting debts, George Jr restored the massive government debts that had been eliminated by Clinton. And then promoted myths such a lower taxes to the common man (who never saw lower taxes) while lowering the rich man tax rates to 3% below everyone else.
America desperately needed to correct fiscal mismanagement. Even the $trillion for "Mission Accomplished" has been mortgaged. Americans will pay for that debt years later. Rather than address inflation (that George Jr said did not exist using another money game), America pushed interest rates lower. That means current economic problems were only made worse.
No problem. This economic downturn was not obvious until after the mental midget leaves office. BTW, Nixon did the exact same thing. Problems were corrected during Carter's time by finally running interest rates to 14% and 20+%. Guess who got blamed for Nixon's economic mismanagement.
Your higher interest rates today would only force the economy to fix its problems before jobs are lost and before those problems fester.
That's not the reason for problems in Iceland. Apparently Iceland's three biggest banks invested heavily in American mortgaged backed securities - helping to fuel an America that was spending massively (like all Republican administrations do) and using the incoming investments to deny how large the deficit had ballooned.
In another post, described was how China (in trying to be a close American friend) was inadvertently making Americans ignore the costs of “Mission Accomplished”. China’s massive investments also contributed to the ponzi scheme of tax cuts and spending increases.
Eventually economics takes revenge – including revenge on those who invested in America NINJA style.
But again, why has the Australian dollar dropped so far and so fast (Brianna xxxxx Aliantha answered after this was asked)?
I see. So Icelandic banks invested heavily in our mortgage banking, but that isn't America's economy driving theirs in any way?
I gotta learn more about economics.
I think you have a very biased view towards ARM's tw. Long term variable rate loans can be a big advantage if you take out your loan while rates are high.
Then explain this. The greatest economic problems exist where more ARMs were promoted. If you think ARMs solve problems, then the government printing money also solves problems. ARM is simply a money game to avert what is needed - a house that the homeowner can afford rather than larger and more homes that nobody would otherwise buy.
This is not bias. Where ARMs were mostly used (ie Stockton CA), now $million+ homes sit abandoned - cannot even be sold for $70,000. More trophies to people who think such money games (ARMs) make people wealthier. The only reason a person should even afford that more expensive house - he is more productive in his job. Instead we created ARMs - money games - to get him in that house. No bias. These same lessons are found all through history.
The only innovation that should make a larger house affordable is product innovation - not money games. My only bias is found in facts of fundamental economics. If finance games make someone richer, eventually economics takes revenge years later. No way around that reality.
There is not free money. Even free money – printing more – results is far more severe consequences years later. That reality is again being demonstrated. Why do we need recessions? To even create the threat of bankruptcy so that the money gamers get exposed and severely harmed.
Another example is GM who should have been in bankruptcy in 1991. Instead they played money games (ie short the pension funds) rather than fix GM’s only problem (some of the world’s worst products). Now GM is even worse and taking more of the US economy with it. Back then, we could have solved GM’s problems by replacing grossly overpaid bean counters with car guys. Now the average American must suffer because GM was not fixed by bankruptcy in 1991. Just another example of why money games only makes economic revenge more severe later.
BTW, did anyone notice? Separate from the $700billion bailout was another $25billion to automakers. George Jr also gave the airlines $8billion for free bad in 2002. Notice how that corporate welfare fixed the airlines. So what will $25billiion do for GM, et al? Protect the #1 problem such as Rick Wagoner - GM's president and a lifetime bean counter.
Sidebar. The entire MI delegation voted for $25billion in corporate welfare. But most of that same delegation voted against the $700billion bailout. Throwing money like a grenade at a problem does not fix the problem - whether it is corporate welfare or easy money using ARMs. The only solution to houses that people cannot afford - smaller and less expensive houses. The only solution to GM's problem is elimination of management that routinely stifles innovation. Neither problem is solved by using money games. Not a bias. A reality proven repeatedly in history.
tw, an arm is not free money. Australia has been going through the exact same financial cycles as the rest of the world, even though historically, more Australians have always chosen variable rate mortgages.
You're trying to blame a crisis on a particular facet of the mortgage market, and that's just not the answer. Maybe it's part of it, but it's not the root cause.
I see. So Icelandic banks invested heavily in our mortgage banking, but that isn't America's economy driving theirs in any way?
I never said that. Iceland is apparently in trouble due to entanglements with the American economy. And so the question. Does Australia have the same entanglements?
I have no idea why you concluded otherwise.
I think a company leveraged at 30:1 might have had something to do with it too - just maybe.
All economies are intertwined or entagled to use your words tw. It's only the degree that differs. As I mentioned before, so far, our major banks have weathered the storm very well, and they've gobbled up the couple of smaller ones who've become slightly unstable.
We may be more isolated here and as I also mentioned before, our banks invest very heavily in resources and exploration. This is a market which is performing well here in Australia so things are not so bleak. Also our ability to export natural resources gives us a leg up which many other countries don't have. Our dollar being weaker is good for our export market also, and with the cost of imported products then becoming more expensive, people are encouraged to buy Australian, which in turn boost our economy and keeps it stable, at least in house.
tw, an arm is not free money.
Australia was listed in The Economist article - a falling brick labeled housing prices. ARMs - described as easy money - were blamed for higher housing prices. Either the buyer could afford a home with a fixed mortgage, or he could use a money game - ARMS, sub-prime loans, variable rate, etc - to get an even larger home. So what happened? Housing prices rose 20% and 40% too high for no reason? Excessively higher house prices: also a symptom of money games. Since prices are even higher, more people wanted a bigger house and also resorted to ARMs. And so the money game is also self inflating as it sucks more homeowners in.
ARMs are a classic example of a money game. If the homeowner cannot afford a fixed mortgage, then the homeowner is not productive enough to earn that house.
Now, are you saying the massive economic implosion where ARMs, et al were more common - is that a coincidence? Hardly.
ARMs are a classic money game. Your mortgage should be structured to never becomes a burden when times get tough. That means no ARMs.
Let's see. Where ARMs were more common, then housing prices skyrocketed. Where ARMs are most common, then homeowners got homes they otherwise could not afford. Where ARMs were more common is where the worst mortgage crisises are now found (ie Stockton). But you say ARMs are not a money game? Then how do you explain the contradiction in those examples? How do explain economics taking the most revenge where ARMs were routine?
Meanwhile, still not answered are the questions about Australia's commodity export market.
Our dollar being weaker is good for our export market also, and with the cost of imported products then becoming more expensive, people are encouraged to buy Australian, which in turn boost our economy and keeps it stable, at least in house.
That reasoning works to a certain extent. Buy Australian does not make a stronger economy. The strongest economies buy the best - believe in the free market - regardless of where it is made.
Furthermore, an economy heavily dependent on commodity exports is then very dependent on other imports to maintain that economy. That part gets forgotten. The productivity of higher tech industries then gets stifled as the necessary import costs are higher.
Example - a lower dollar means gasoline prices go higher.
Lower dollar is a double edge sword - with good and bad points. But the bottom line: a lower dollar means a lower standard of living. If an economy does not fix its problems, one way that economics takes revenge is to lower the dollar's value and therefore lower the country's standard of living. As a result, the people either work more productively or work more hours.
Another example of 'no free money'.
But again, how have the commodity markets affected the Australian economy?
I think a company leveraged at 30:1 might have had something to do with it too - just maybe.
What were they leveraged with? Mortgage backed securities that looked so good on paper because these securities were regarded similar to fix rate mortgages. Its not the fix rate mortgages that went into massive default. It is the irresponsible ARMS, et al mortgages that created problems.
Where did this house of cards stumble fastest? Where finance companies were holding so much ARMs in the form of mortgage backed securities.
VP of Merrill Lynch warned about this almost two years ago. So they fired him. Goldman Sachs is one of the few who (are said to) predicted the problem and hedged six months earlier.
So why did all that debt come crashing down at once creating the largest economic calamity since 1929 - the Great Depression? Most of it was created in money games such as ARMs.
Which institutions suffered most? Not all banks with a 30 to 1 ratio collapsed. But those mostly invested in ARMs and other classic money game equities required corporate welfare or no longer exist.
The banks were forced to make more loans thru the Community Reinvestment Act.
The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law [1]designed to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.The Act was intended to reduce discriminatory credit practices against such neighborhoods, a practice known as 'redlining'. [2]The Act requires the appropriate federal financial supervisory agencies to encourage regulated financial institutions to meet the credit needs of the local communities in which they are chartered, consistent with safe and sound operation. To enforce the statute, [3]federal regulatory agencies examine banking institutions for CRA compliance, and take this information into consideration when approving applications for new bank branches or for mergers or acquisitions.
This was the beginning of the end.
[1] Excellent idea in theory - Very noble.
[2] Who are these and why aren't the being held accountable?
[3] Hmm, The lenders who play the game and offer the most are allowed to expand and acquire,merge and gain power. NOT A GOOD IDEA! Therein lies the opportunity for corruption and bribery.
There were other major problems primarily the mark to market ( The rules of how their assets were valued changed.) which others here disagree with me on. My admittedly limited research has led me to believe, and I am not alone in this opinion, that these are two of the major causes.
ARM's when used properly are not the problem - they have a greater opportunity for abuse, yes, but when used/issued properly should be no issue whatsoever.
ARM = Adjustable Rate Mortgage
LEG = Leveraging Equitable Gain ? ;)
The banks were forced to make more loans thru the Community Reinvestment Act.
So why did this cause the collapse of so many investment banks that had nothing to do with CRA? Just the first in a long list of embarrassing questions.
Rather amazing how two silly little regulation changes - the Community Redevelopment Act (CRA) and an accounting rule change - explains the disappearance of $2trillion. That reasoning is extremely naive. And yet there it is in classicman's research.
For example, his post completely ignores the 20% to 40% excessively overvalued housing prices for everyone - especially the wealthiest homeowners. It ignores that the CRA was passed in 1977, last modified in 1995, but somehow started creating ARMs in mass numbers and a housing bubble sometime after 2002. It ignores that the CRA is only for low and medium income earners - not for the $200,000+ homeowners. It ignores the slashing and burning of financial regulations that occurred after 2000 either by regulatory rules changes or by simply discontinuing all enforcement. It ignores that Enron style accounting (which has nothing to do with 'mark to market') meant that spread sheets would become unreadable. It ignores that losing ventures and other debts could simply be hidden in off-balance entities. It ignores that after 2000, large numbers of equities were carefully created so to not be insurance (regulated by the states) and instead would be equities (regulated by the SEC which was ignoring regulations so as to 'free the markets').
ARMs were not created by the CRA as classicman would have us believe. ARMs were created by post 2000 deregulation that meant mortgages could now be approved without any due dilligence of whether the applicant was even eligible. And then those mortgages, carefully structured to avoid state regulations, could be sold as mortgage backed securities. Sold as if these were fixed mortgages without any consideration for their actual value and risk.
All this somehow gets ignored by classicman who says he did all the research.
CRA only targets low and medium income housing. So how did it create massive numbers of ARMs for $million+ homes? It did not. CRA did not create the ARM. A market suddenly liberated from regulations replaced fixed income mortgages with ARMs. CRA had nothing to do with that. Whereas but a few (single digit percent) of loans were ARMs, then suddenly after 2000, over 25% of all loans were ARMs. This sudden and massive increase in ARMs then resulted in a post 2000 housing bubble so large that The Economist warned of the resulting meltdown in June 2005. How did the 1995 CRA cause this? It did not. How did one accounting change create this? It did not.
Why were so many high income applicants, who could have easily qualified for fix mortgage loans, suddenly moved into ARMs? Did the CRA cause this? Of course not. Did one accounting change create this? Of course not.
When a research source is an extremist propaganda machine trying to divert blame, then suddenly an accounting change and 1995 CRA change (to blame Clinton) caused $2trillion to vaporize? Market changes that created a housing bubble, the sudden use of ARMs, numerous deregulations of financial markets, etc all occurred mostly after 2000. Clearly Clinton and the Democrats who did not control Congress or the White were to blame. Blame 1995 Clinton and one accounting change? A commentary on how that research is identical to right wing propaganda spin.
Congress literally tried to double the Security and Exchange Commission budget in 2002. Harvey Pitts refused to accept a budget increase. After 2000, George Jr objectives were to free finance markets of regulations. What resulted? NINJA. Did the CRA create NINJA? Of course not. Did 'mark to market' accounting changes create NINJA? Of course not. Why does classicman only blame what right wing extremists blame? Why did CRA and accounting changes cause $trillion defaults? Political spin without numbers can blame anyone that must be blamed rather than where failure really exists.
Why were those mortgage backed securities so carefully written to not be insurance? Because elimination of regulation only existed in the Federal Government - the George Jr administration. If a mortgage backed securities was not carefully written, then it became insurance; regulated by the states. State regulation would have never permitted those equities to exist without due dilligence. The entire mess was made possible because the George Jr administration was slashing and burning market regulations. To be free of any regulation, the various SIVs, CDOs, etc all had to be carefully written so that the ponzi scheme could continue without oversight.
I asked one of my bankers some years ago about Glass-Stegall. Yes, it still existed. Then he noted how existing laws were no longer enforced - all but did not exist. Glass-Stegall created finance market firewalls. Due to a political agenda of deregulating markets, even Glass-Stegall was gutted. So how was this created by Clinton, the CRA, and an accounting change?
Why did classicman ignore all this when he did his research? Why did a 1995 law change and an accounting change suddenly cause the greatest financial market meltdown since 1929? Because a political agenda demands someone else be blamed.
Why did the commercial credit market (that maybe does $55trillion of business) completely seize up? Classicman tells us that this was due to a 'mark to market' accounting change. Meanwhile, the entire commercial credit market completely seized since Enron style accounting (that included SIVs, CDOs, etc) made it impossible to determine who was safe to do business with. Transparency that is so necessary in unstable markets no longer exists.
Enron was a wakeup call. The accounting industry was completely devoid of accountability. Completely obvious in 2002 was a finance industry desperately in need of across the board review and regulatory standards. Enron accounting standards had all but destroyed transparency so necessary in today's uncertain times. So what did George Jr's administration do? All but refused to even prosecute Enron. Did nothing to address accounting reasons that made corruption acceptable. A company could simply spin excessive debt into an off-balance entity where nobody knew it existed. What was AIG doing? If was creating a spin off company to unload debt; but failed to do that fast enough.
Classicman tells us this too is due to the CRA and 'mark to market' accounting? Hardly. But again, he curiously blames the same things that wacko George Jr extremists also blame. Coincidence? After all, a moderate would not parrot the George Jr administration - would he?
Clearly, the greatest financial disaster since 1929 was directly traceable to a Clinton 1995 CRA law modification for low and medium income home loans (actually created by a Republican Congress) and a ‘mark to market’ accounting change. Amazing how two little changes completely seized the entire American financial system. It must be true. classicman did the research.
Enron accounting standards had all but destroyed transparency so necessary in today's uncertain times. So what did George Jr's administration do? All but refused to even prosecute Enron. Did nothing to address accounting reasons that made corruption acceptable.
Signed
Sarbanes-Oxley, the biggest set of new accounting regulations in our lifetimes.
A company could simply spin excessive debt into an off-balance entity where nobody knew it existed. What was AIG doing? If was creating a spin off company to unload debt; but failed to do that fast enough.
Can you point to the specific deregulation that made that possible.
Sorry I went quiet there, after stirring things up like that. I was moving house. Graphs do catch the imagination, don't they?
So, Australia's economy. There are two main reasons why the AU$ has fallen so steeply, especially against the yen.
Reason number one is an indirect link with the USA's problems.
We are NOT very badly exposed to the bad mortgage market in the US. Most of our banks have written off a billion or so, but nothing they can't handle. The "Big Four" banks are cashed up and looking to buy other banks.
However, we are indirectly feeling the pinch of the current problems.
The main export earner for Australia is commodities, especially minerals. However, we sell most of those resources to China (etc), where the Chinese manufacture them into consumer goods and sell them to the USA. Now that demand in the USA has gone frigid, China is slowing, and that means both lower volumes of sales for us, and lower prices, thus significantly lower total earnings. This of course means less demand for AU$, and so the price falls.
So, one factor in the steep decline of the AU$ definitely IS the US problems, only indirectly.
The second factor driving the fall of the AU$ is interest rates. Note that the AU$ has fallen much more against the Yen than any other currency. This is because of the unwinding of the "carry trade".
The carry trade is made possible by different interest rates in different countries. The Japanese central bank, in an attempt to stimulate their economy, has kept interest rates at either 0 (yes, ZERO) or 0.5% for more than a decade. Many people realised they could borrow money in Japan, and invest it in a bank overseas where it would earn a nice interest rate, and rake in the interest. Until a year ago, you could get 7.5% or more capital guaranteed in Australia. New Zealand was offering a few points more.
(Digression: this shows the folly of extreme interest rates - in this case, they caused money to flood out of Japan, thus sedating, not stimulating, the economy. The same works the other way: high interest rates can suck in capital from overseas, thus stimulating, not slowing, an economy. It only works if the difference with other markets is small enough that the risk of currency fluctuations (see below) is enough to deter carry trading. End digression.)
The risk with the carry trade is if the currency exchange rate changes - if the Yen goes up, the Japanese carry-traders might not have enough foreign denominated holdings to pay back their initial loan in Yen. They can get burned pretty badly.
As a result, carry-traders are skittish and prone to panic. If the Yen starts to rise, it sometimes spikes dramatically, as carry-traders try to rush their money back and minimise their losses. This of course is an extra spike in demand which just drives the Yen even higher.
That is what has happened recently. The end of the resources boom caused the Australian dollar to fall moderately. More of a slide than a fall. But as it slid, it crossed some thresholds that caused *some* carry-traders to panic and get out, which started a feedback loop and led to something more like a stampede, and the result was a big, swift rise in the Yen.
I am less sure but I think there is a third factor: with the Japanese stock market sliding, some heavily leveraged Japanese investors got margin calls from their brokers and had to shift capital back to Japan to cover themselves. This has been little discussed in the sources I read.
I will say that I have been expecting this for well over a year, maybe two. It has been widely discussed by economics writers in both Australian and Japanese media. But even so, I have been stunned by the size and speed of the recent shifts.
And yes, as Ali said, we did have a real estate bubble, driven by three factors: the mining boom, the gradual running out of land close to our urban centres, and the too-low interest rates of a few years back.
We have had variable mortages (ARMs) for ages, and as always, some people lock into a 30 year loan they can only afford while rates remain low. Then rates go up, as they do. And the people suffer. So it goes.
Now if you will excuse me, I want to go and cuddle that big pile of Yen I brought back from Japan.
[Burns] Eeexxxcellent!!!!!! [/Burns]
The banks were forced to make more loans thru the Community Reinvestment Act.
This was the beginning of the end.
[1] Excellent idea in theory - Very noble.
[2] Who are these and why aren't the being held accountable?
[3] Hmm, The lenders who play the game and offer the most are allowed to expand and acquire,merge and gain power. NOT A GOOD IDEA! Therein lies the opportunity for corruption and bribery.
There were other major problems primarily the mark to market ( The rules of how their assets were valued changed.) which others here disagree with me on. [COLOR="Red"][SIZE="4"]My admittedly limited research has led me to believe, [/SIZE][/COLOR]
and I am not alone in this opinion, that these are two of the major causes.
ARM's when used properly are not the problem - they have a greater opportunity for abuse, yes, but when used/issued properly should be no issue whatsoever.
So why did this cause the collapse of so many investment banks that had nothing to do with CRA? Just the first in a long list of embarrassing questions.
They wanted to get in the game too - MAKE MONEY!
You should be embarrassed to ask some of your questions.
For example, his post completely ignores the 20% to 40% excessively overvalued housing prices for everyone - especially the wealthiest homeowners. It ignores that the CRA was passed in 1977, last modified in 1995, but somehow started creating ARMs in mass numbers and a housing bubble sometime after 2002. It ignores that the CRA is only for low and medium income earners - not for the $200,000+ homeowners. It ignores the slashing and burning of financial regulations that occurred after 2000 either by regulatory rules changes or by simply discontinuing all enforcement. It ignores that Enron style accounting (which has nothing to do with 'mark to market') meant that spread sheets would become unreadable. It ignores that losing ventures and other debts could simply be hidden in off-balance entities. It ignores that after 2000, large numbers of equities were carefully created so to not be insurance (regulated by the states) and instead would be equities (regulated by the SEC which was ignoring regulations so as to 'free the markets').
I didn't ignore the housing prices I CLEARLY STATED what I believe are two of the initial causal factors of the current issue. There were others. ARMs don't make people buy houses they cannot afford - corrupt and/or greedy people do. I'll again ask the question which tw, as usual, conveniently ignored because it doesn't fit into his cute little theory - Who was in charge of regulation?
ARMs were not created by the CRA as classicman would have us believe.
100% FALSE - I never said nor implied anything of the sort.
ARMs were created by post 2000 deregulation that meant mortgages could now be approved without any due dilligence of whether the applicant was even eligible. And then those mortgages, carefully structured to avoid state regulations, could be sold as mortgage backed securities. Sold as if these were fixed mortgages without any consideration for their actual value and risk.
TITLE VIII, ALTERNATIVE MORTGAGE TRANSACTIONS, Garn-St Germain Depository Institutions Act of 1982 allowed Adjustable rate mortgages.
All this somehow gets ignored by classicman who says he did all the research.
READ MY POST - I even highlighted it for you. I'll paste it here again
My admittedly limited research has led me to believe...
CRA only targets low and medium income housing. So how did it create massive numbers of ARMs for $million+ homes? It did not. CRA did not create the ARM. A market suddenly liberated from regulations replaced fixed income mortgages with ARMs. CRA had nothing to do with that. Whereas but a few (single digit percent) of loans were ARMs, then suddenly after 2000, over 25% of all loans were ARMs. This sudden and massive increase in ARMs then resulted in a post 2000 housing bubble so large that The Economist warned of the resulting meltdown in June 2005. How did the 1995 CRA cause this? It did not. How did one accounting change create this? It did not.
It was INTENDED for the lower income households. I even mentioned that in a prior post and commended it for being a noble gesture with good intentions. What I said was, and perhaps you could actually read it this time, was that it created a situation whereby the greedy and corrupt could ABUSE it, and they did.
Why were so many high income applicants, who could have easily qualified for fix mortgage loans, suddenly moved into ARMs? Did the CRA cause this? Of course not. Did one accounting change create this? Of course not.
GREED & Corruption. A situation was, in some cases, inadvertently created and determined to be exploitable and therefore it was. Which part of that are you not grasping?
Political spin without numbers can blame anyone that must be blamed rather than where failure really exists.
And you are doing a wonderful job of it. I fully recognize that I am not in the majority of people on the cellar with my views, but the biggest failure here is your post.
I asked one of my bankers some years ago about Glass-Stegall. Yes, it still existed. Then he noted how existing laws were no longer enforced - all but did not exist.
tw seems to continually ignore basic facts and avoids answering the simple question of ... Who was in charge of regulating these companies? For the third time.
Classicman tells us this too is due to the CRA and 'mark to market' accounting? Hardly. But again, he curiously blames the same things that wacko George Jr extremists also blame. Coincidence? After all, a moderate would not parrot the George Jr administration - would he?
Again and again I have to repeat my prior post because you do not read - you simply get on your soapbox and attack posters with any opinion that differs from yours and selectively choose information that fits your theory while ignoring or dismissing anything that does not.
If they were correct, yes. If not, no. More classic diversionary tactics to attack the poster and not the post - all this from one who routinely complains and whines about it when done to him. I'll ask this - Would a wacko left wing liberal nutjob only chant mental midget, 85% of all... mission accomplished... and a host of other crap even when it is completely inappropriate and immaterial to the subject matter at hand? Would this person be saying virtually the same thing in every single one of their posts of theirs no matter what the topic? Would this person have an agenda a political axe to grind? perhaps? I guess so.
Clearly, the greatest financial disaster since 1929 was directly traceable to a Clinton 1995 CRA law modification for low and medium income home loans (actually created by a Republican Congress) and a ‘mark to market’ accounting change. Amazing how two little changes completely seized the entire American financial system. It must be true. classicman did the research.
Well at least you came to your senses in the end after all
your spin. :P (I'm sorta kidding)
ARMs are simply a tool. A quite effective one for specific purposes that was used by far too many for very incorrect reasons. The loan isn't to blame - the people who approved it and the people who took it are. The housing bubble didn't happen because a bunch of republicans figured out they could scam the system, it was a result of human nature colliding with market forces.
1) Home ownership changed from being the American Dream to the American Expectation.
2) Tech Bubble burst, money flooded out of equities. Money has to go somewhere real estate was attractive at the time.
3) Greenspan dropped rates to lowest in well over 40 years. Real estate became very attractive due to low cost money.
4) This made mortgages more affordable for everyone. New lenders and loan officers flooded the market and competition increased.
5) "highest percentage of home ownership in history" started creeping into the news and political speeches. People who never considered buying a home were now told they should, so they did.
6) Low Rates + Large amounts of cash + human nature (ego/greed) resulted in bigger houses, bigger prices, and competition between consumers/builders/lenders.
7) People started using ARMs to buy more house than they could afford rather than the intended purpose for the product.
8) Housing supply begins to outstrip demand with more development continuing.
9) Rates increase causing people to rethink the next new house compared to their current cost.
10) Supply starts to surge.
11) Builders offer incentives, causing resales to become less attractive, thus causing prospective buyers problems in selling current home or to keep it as "an investment property".
12) Smart money left real estate. ARMs start to reset. Everyone starts talking about the elephant in the room.
13) The snowball now has enough momentum to take out pretty much anything in it's path.
ARMs are simply a tool. A quite effective one for specific purposes that was used by far too many for very incorrect reasons. The loan isn't to blame - the people who approved it and the people who took it are.
lookout123's analysis far more accurately describes how the avalanch started.
ARMs always existed and were useful for the few (single digit percent) applicants that needed it. ARMs would never have been approved for so many when rules and standards existed. Few qualified for an ARM until recently with deregulation. Suddenly almost anyone qualified for an ARMs when we were fixing the economy by throwing money at it - tax cuts, Greenspans low interest rates, etc. Loan officers could offer such dangerous mortgages to most anyone. Those mortgages would then be sold to markets that no longer bothered to review what they were investing in - mortgage backed securities carefully written so as to not be insurance and therefore devoid of any serious regulatory oversight. NINJA became the new standard for mortgages.
Perot was quite blunt about this. An economy is never fixed by throwing money at it like a grenade. And yet that is exactly what we did rather than let a recession fix the economy. Unfortunately and as a result, we are now doing it with literally the entire value of both the Federal Reserve and US Treasury. Yes, even those institutions have run into monetary shortages by issuing so much corporate welfare.
Money games were so widespread especially since 2000 that even the Treasury and Federal Reserve are scrambling to find and free more funds. Appreciate how massive this meltdown. Accounting changes and the CRA had near zero effect - obviously irrelevant to the problem.
Classic man - your admittedly limited research has led you to post the right wing extremist mantra. Blame it on Clinton. Blame an accounting change. A finance market meltdown due to those trivial reasons?
Ignore that the mental midget intentionally deregulated and kept throwing money at the economy as if tax cuts to the rich, tax rebates, and massive government spending solve everything. Even equities were carefully written to be regulated only by the SEC (not regulated by the states) where regulations were subverted, ignored, or liberated. Where even NINJA was the new model for business.
George Jr got the deregulated economy he wanted. None of which is mentioned in classicman's research. Research curiously echoes what right wing extremists say. Blame Clinton. Never blame the administration that all but refused to prosecute Enron, did nothing to address a lack of transparency, and even refused to increase the Security and Exchange Commission budget.
Why such great care so that securities would not be insurance? Then the equity had near zero regulatory oversight by federal regulators – George Jr’s deregulation.
Rule changes after 2000 made it easy and profitable to market equities without due diligence. As a result, $trillions were tied into unstable equities - especially mortgaged backed securities that started an avalanche. As a result, credit and equities markets froze because no one knew who was stable and who was about to go belly up. As a result, companies ran to government for corporate welfare while the reason for those failures walked away with $hundreds of millions. All these somehow are missing in classicman's posts that would attack the messenger rather than address a fundamental problem. His research parrots right wing extremist mantra.
Blame 'mark to market'? Why not also blame Putin? Classicman – do you realize that is equivalent to blaming an ant for causing you to stumble? Can you deal with the absurdity of your ‘research’ rather than take it as a personal attack?
Unfortunately and as a result, we are now doing it with literally the entire value of both the Federal Reserve and US Treasury. Yes, even those institutions have run into monetary shortages by issuing so much corporate welfare.
This is why I am fretting about my simple savings account. Everyone I talk to tells me not to worry, its protected by the FDIC, but with banks continuing to tank, when mine reaches that point, will the government really be able to back up my money?
I wish I didnt have to worry about this.
1) Home ownership changed from being the American Dream to the American Expectation.
I think I said something like this in the "Finger Pointing" thread when people tried to narrow it to a specific political party.
Greed drove the market to sell off the American dream, along with the paint for the pickett fence. Greed is not a political affiliation.....I have known libs. and conservatives bent on selling this dream.
On the other hand: It was also job opportunity for a great many people, and I am sorry to see that they have no income now either.
1) Home ownership changed from being the American Dream to the American Expectation.
This is the biggie for me. This is the huge cultural shift that fed the rest. It happened here too. Owning a home became an expected part of being an adult; renting meanwhile, became stigmatised at all but the highest levels (executive let). Council housing (social housing projects) which had been the mainstay of working-class housing for a long time became associated with the underclass.
When I was a kid, one of the first things most of my friends did when they hit 18 was get their name on the Council's housing list. Unless you were pretty well off this is what you did when you grew up.
I know lots of people have said to me over the years, why don't I buy a house, instead of throwing my money away renting. Answer? I have never felt financially stable enough to risk taking on that level of debt and potentially having my home taken off me. I rent, I dont accrue more than a few hundred in debt and if I end up unemployed I can claim help with that rent. Whatever the economic climate there will always be landlords. I don't need to own a house, I just need to be able to live in one.
This is why I am fretting about my simple savings account. Everyone I talk to tells me not to worry, its protected by the FDIC,
If government runs out of cash (and cannot borrow more from foreigners), then it will print money. You will have that money whether in a bank or under a mattress. And if the government prints money, your cash depletes in value equally whether in a bank or under a mattress.
Worry not about your bank. Worry more (or prosper) about what happens when the markets finally find a new value for America. This market crash (and the resulting upturn) is about discovering what America was really worth. The American economy was clearly overvalued due to so much bad equities. This market crash is finance markets desperately seeking our actual net worth AND for economic forces to take revenge for the money games.
In the short term, this is a stunning opportunity for people like me who never get out of markets, but saw this coming, and got out completely many months ago. For others who stayed put, expect to lose at least 20% because the American economy (like housing prices) was probably at least 20% overvalued.
Typically, markets overshoot in the downturn, and then rise up to what is a corrected market value. Obviously, everyone with cash is waiting for this market to find that bottom (at least a 35% downturn), then ride the wave back up to a new and lower American economy value (probably something below 20%).
When will it end? We don’t know. Too many shady institutions have not yet been punished by economic forces. One such possibility is hedge funds who I suspect are currently getting corrected which would explain the latest multi-hundred point market drop.
Worry not about your bank account. Worry more about how this economy, your job, and your government services may/must change now that America is revalued.
I'm with you (Dana). The only way I will do it is if it is paid for all in cash plus some for renovations. This is not going to happen until I win the lottery. ;)
And:
My husband and I can't stay in one place for long enough to really make it worth it. Not for now. When we are older and have the cash we might think about it. And by then maybe the dollar will be worth something again. Dunno. I love not worrying about the upkeep of the entire property when the pace at work gets too heavy.
I live in a place I could not afford to own. It's awesome and I love it. It really doesn't have to be mine for me to get pleasure from it.
Cheap gas actually started all of this.
Well, thats what Kunstler says.
I rent, I dont accrue more than a few hundred in debt and if I end up unemployed I can claim help with that rent. Whatever the economic climate there will always be landlords. I don't need to own a house, I just need to be able to live in one.
This works as long as you have other investments. One reason that home ownership is encouraged: a home is the only investment that so many have. The home mortgage *requires* him to invest in something. If you don't have a mortgage, then you should be investing continuously in some other equity.
Mortgage makes it easy for one to accumulate some wealth by forcing homeowners to keep making those payments - to keep investing in their net worth.
The greedy* homeowners that took ARMs are now again being greedy* by defaulting when their home loses value, instead of just sticking with the program and paying until things get better.
*in this context, "greedy" means behaving pretty much like everyone else in the culture.
tw - you are a pompous ass and back on ignore you go. You repeatedly blamed ARMs and I countered every time. You denied and attempted to refute my points with half truths and conveniently avoided the question put to you 4 times. You disregard anything that doesn't fit into your little preconceived notions and any culpability implicating anyone other than GWB and the EVIL republicans. That is your game - You are as extreme left as UG is right. Buh bye
The greedy* homeowners that took ARMs are now again being greedy* by defaulting when their home loses value, instead of just sticking with the program and paying until things get better.
*in this context, "greedy" means behaving pretty much like everyone else in the culture.
Are you refering to my post about greed in some way? Or are you calling homeowners greedy with a hint of sarcasm, or are you seriously saying homeowners were greedy? This is hard for me to read, if you are serious or not.
I think tw's been quite reasonable lately.
When I was a kid, one of the first things most of my friends did when they hit 18 was get their name on the Council's housing list. Unless you were pretty well off this is what you did when you grew up.
This is what happens here, with generation after generation being dependent on welfare. I didn't realize it was the norm in the UK.
Classicman – do you realize that is equivalent to blaming an ant for causing you to stumble? Can you deal with the absurdity of your ‘research’ rather than take it as a personal attack?
So how does classicman respond? More personal attacks.
tw - you are a pompous ass and back on ignore you go.
So is anyone else willing to admit that they rode this market down? We've got a couple Dwellars who say they saw this months ago and got out before the crash. I remember a thread back a few months ago where lookout asked if we were positioned where we should be. I don't know if that was supposed to be a subtle warning, but I ended up taking a long view after reading that thread and staying in the stock market.
So did you all get out months ago? Or don't any of you have 401ks?
I know it's tacky to talk about personal money, and I'm not asking for any details, but is anyone else wincing when they look at their 401k accounts? Or am I the only dummy?
My 401k is down 31% from one year ago, and I've been pumping money regularly into it for that entire year, so when you consider that, it's even worse.
I dunno...I have PERS and don't know a damn thing about it. :blush:
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.
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.
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.
(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.
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.
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.
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.
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?
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.
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:
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.
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.
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.
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.
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.
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.
Given that everybody is so glum, what with the stockmarkets going into freefall an'all... I am injecting a little cheer into this mix:
Chin up everybody, some people have it worse:
[youtube]78XrI_2bPVA&feature=related[/youtube]
Given that everybody is so glum, what with the stockmarkets going into freefall an'all...
... I could not be more excited. To me, opportunities abound like we have not seen for almost a decade. The market was so boring for so long with so few opportunities. Remember what generals were doing as the Battle of the Bulge started. Eisenhower had to turn on them. Remind them that this Battle was one of the greatest opportunities they had to end the war. This market meltdown is a rare and exciting opportunity even for those who may lose an average amount - maybe 20%. Exciting if one chooses to make it so.
Dana I'm not discussing the merits of the different social programs, or the justifications for using them - I'm responding to the tone of your post. The defeated-before-you-begin attitude. This specifically;
When I was a kid, one of the first things most of my friends did when they hit 18 was get their name on the Council's housing list.
I have never felt financially stable enough to risk taking on that level of debt and potentially having my home taken off me. I rent, I dont accrue more than a few hundred in debt and if I end up unemployed I can claim help with that rent.... I don't need to own a house, I just need to be able to live in one.
I'm just saying that these are the same sentiments as those expressed by generations of US welfare recipients. It's one of the reasons I'm not a fan of socialism... it seems to suck the initiative out of people. Just getting by becomes more attractive than trying harder and possibly facing setbacks...
"The lesson is, never try" - Homer Simpson
No. It's realism and pragmatism. I was not in stable employment. Years of working in sales jobs, then a family business that went under, then unemployed whilst going through a minor breakdown, then doing voluntary work and then into adult ed. I loved my job teaching literacy, but I didn't feel like it was in any way secure. A lass who started working there about 4 months before I did, signed up to a mortgage, got herself a tiny little one bedroomed terraced house (£100k). She, like me, earned less than 15K a year and was starting with no deposit. She was a sub-prime mortgage. None of the main sellers would take her on because of the rule of thumb on percentage of income.
The same people were saying to her, that she should try and get onto the housing ladder, that were saying to me I should get on the housing ladder. Houses are big, fucking expensive things. How in God's name does someone earning £13,500 a year think they are going to buy a house that costs £100,000?
Less than six months after moving into her house she got made redundant. She was scrabbling around desperately trying to make mortgage payments while the industry she'd been working in (in various firms) collapsed around her. It's since picked up again, and she may well be back in her usual line of work. But I do wonder if she managed to keep hold of the house.
If I make it to my eventual goal of history lecturer, I'll probably look at getting a very modest property, but until I am able to earn at a level that justifies that kind of investment/debt, I wouldn't touch it with a ten foot bargepole.
So basically she bit off more than she could chew and got in over her head buying a house bigger than she could ever afford. And somehow this all comes back to being "someone elses fault". And there in lies the problem with the generations which think they are owed something by the government.
No. It was her fault. But there were pressing reasons. She had just escaped an abusive relationship and I think was seeking some sort of security. But she was also swayed by the generl consensus around that adults shold own houses. I cannot tell you how many people have advised me to try and get a house. I have never earned enough, or been in a stable enough job to buy a house. I could have got a subprime mortgage. I'm very glad I didn't.
And as for choosing a house that was too expensive: that's the housing market round here. It was a tiny terraced house, she wasn't buying something greater than hr needs. It was significantly smaller than the one she was renting.
I got a better job about 6 months ago. Not a better job a great job with good money. That said...
It did take me two years to nail it. It was about 'who I knew' before I could talk about 'What I knew', I still get other state gov.job interview offers but I could never nail them. I would need to take classes to be competetive in other sectors. At my workplace we closed down a building to save money. Overtime is at risk. The buildings are old. The property is valuable and there are so many other reasons the D.O.E. wants to relocate it. If I ever get laid off I can lateral transfer into another position even if it means bumping someone. That means someone could bump me too.
There is good and bad. I feel secure but not TOO secure. I am driving a beater car so I can eventually save all my expendable cash in the event of a future emergeny.
On the back of my check stub there was information about employees contributing to a 457. I am torn about saving extra for myself, and not knowing if my investment would be at risk. Maybe it would be riskier not to, personally and by not making the government coffers richer. ?? Does not contributing make the state poorer? ( mostly just thinking out loud )
my boss asked me if I had any money in my 401k. (You'd think he'd know). But yeah, I lost a bunch, along with everyone else.
doom, doom, doom!
My experience is that if you are not with in 5 or better yet 10 years of retirement you can't go wrong putting money away for retirement. You may want to consider an IRA or a Roth IRA. There are some people on here that are much better at giving you this advice. I just know what has worked for me recently. Look up "dollar cost averaging", it works if you hang through the ups and downs.
my boss asked me if I had any money in my 401k. (You'd think he'd know). But yeah, I lost a bunch, along with everyone else.
doom, doom, doom!
You only lose if you pull it out at a loss. If you sit on it, it should come back up when the market recovers.
You only lose if you pull it out at a loss. If you sit on it, it should come back up when the market recovers.
That's what my brother says, and I have to agree. He told my parents "you've only lost if you pull your money out now."
The problems with the house buying thing, in my eyes, is so many people don't WANT a modest home that's liveable, and comfortable, and safe. They want the McMansion and the people going "damn that is some nice house you got there."
I see that all the time around here, everyone wanting to live in a subdivision (is that what you call them? not sure) where all the McMansions sit next to all the other McMansions that all look vaguely the same. I find that boring.
There are so many beautiful old homes with character. Granted, an older home will cost money in other ways, but why do so many people (sheep) want to be like all the others, keep up with the Joneses, show your friends how well you've done (even if you're drowning in debt?)
My dream is to save up, get some land, slowly build a log home. Not a big one, just a sweet cozy little home for me. It may take a long time...but it's my goal.
Around here, the "old houses with character" are the ones closer to downtown, and thus they cost more than twice as much.
Ahhh, it is location location location, huh?
That makes sense: in this smaller town no one needs to live closer to anywhere. Across town is like 15 minutes, and many people commute out of town anyway!
Well,
this one sucks. Take a stable company with a national brand that has been built up since 1936. Enter the 1990's and have the company be sold to two food companies, one of which imploded due to internal accounting fraud. Have it end up in the hands of an equity fund. Cue meltdown of equity markets.
Why do I feel that if the company had just maintained it's focus and sold cookies and not been treated as a financial poker chip, that everyone would still have a job? I also would like to know how they can duck the 60 day notice requirement if the parent company, Catterton, is still in business.
Read the blog at the bottom of the article where the current and previous employees are posting. Some of them make me want to cry and others make me so ****ing mad.
BTW, Michigan is/was a battleground state. Small towns like these were a Republican bastion which would offset the urban areas.
First question for the candidates - "How can the company violate federal law?"
[FONT=arial, helvetica][SIZE=2]Archway & Mother's Cookie Company abruptly closed its headquarters in downtown Battle Creek Friday, leaving almost 60 employees to pack up their belongings and grasp for a rationale.[/SIZE][/FONT]
[FONT=arial, helvetica][SIZE=2]In a Friday e-mail to Mayor Mark Behnke, Jennifer Marquette, Archway's vice president for human resources, said the company was closing the office at 67 West Michigan Ave. effective Monday.[/SIZE][/FONT]
[FONT=arial, helvetica][SIZE=2]The move leaves 59 workers out of a job.[/SIZE][/FONT]
[FONT=arial, helvetica][SIZE=2]Marquette is based at the cookie company's Ashland, Ohio, manufacturing plant. Archway also has a plant in Kitchener, Ontario. The company is owned by Catterton Partners, a private equity firm based in Greenwich, Conn.[/SIZE][/FONT]
[FONT=arial, helvetica][SIZE=2]Marquette, who declined comment Friday, said in the letter the company was unable to provide the full 60-day layoff notice required in the federal Worker Adjustment Retraining and Notification Act (WARN) because of "unforeseeable business circumstances."[/SIZE][/FONT]
Archway was founded in Battle Creek in 1936 and operated a bakery here until 1993. Parmalat Bakery Group purchased the company from Specialty Foods for $250 million in 2000. Parmalat sold to Catterton Partners in 2005.
And this differs from just picking up your Corprate HQ and transfering the whole thing lock-stock-and-barrel to Dubai how.
You should fully expect such action in the near future when NoBama is elected.
And this differs from just picking up your Corprate HQ and transfering the whole thing lock-stock-and-barrel to Dubai how.
You should fully expect such action in the near future if McCain is elected.
Fixed that for ya.:p
Marquette, who declined comment Friday, said in the letter the company was unable to provide the full 60-day layoff notice required in the federal Worker Adjustment Retraining and Notification Act (WARN) because of "unforeseeable business circumstances."
The law says, if they don't give notice they have to pay them for it.
Legal battle to ensue....Great another way for the lawyers to get rich and the people who are rightfully deserving of the money to get even less.
Somebody asked earlier how we had positioned to avoid the crash.
My wife and I were about 80% invested contrary to the market, mostly in ETFs like
SDS and
SKF. There was a little bit of nervousness when short sales froze ... overall, a very good holding.
I think we're at or near the bottom, so I'm switching over to a more standard basket of stocks.
I got the benefit of the WARN act back in 2003 when OFS/Lucent laid everybody off...
Good times, good times.
Wait.
A COOKIE company just went belly up?
O.
M.
G.
This is really bad.
That's the way the cookie crumbles
My 401k is down 31% from one year ago, and I've been pumping money regularly into it for that entire year, so when you consider that, it's even worse.
I heard this morning on GMA that the average american has lost 19-25% of the value of their 401K investments. The overall market is down 40%, so as long as you were diversified, hopefully you haven't taken too bad a hit. (
What to Do With Your Money
Mellody Hobson and John Bussey discuss the government's plan for the economy.)
I just got my last quarterly statement, and have lost 10% so far since the first of the year. I have been a bit conservative up to this point, but I am making a point to now shift my allocations so I am dumping a lot more into more and different stocks than I was till now. I am youngish, and figure I'm gonna buy while it's cheap and have time to wait for the market to recover.
This is what happens here, with generation after generation being dependent on welfare. I didn't realize it was the norm in the UK.
Just to reiterate what Dana said - council housing was the standard option after the war for working class people. It was really appreciated because private landlords didn't labour under a fraction of the regulations they do now and renting was always a gamble. With the council as your landlord you were not going to be kicked out without notice, have your rent doubled or live in somewhere hazardous to your health.
Certainly, living in London - or on its outskirts - you had to have property in the family if you weren't renting.
My Grandad lived all his life after the war in council accommodation. Syill does - his bungalow is council owned, built specifically for pensioners as part of a new estate in the 1980s. He worked hard all his life in low paid, low skilled jobs and now has a decent standard of living as he was lead to believe all the years of paying in Social Security. He's better off than many single men his age living in their own houses. He won't leave anything behind for Mum or Uncle Jim, but again his generation and his class never expected to, and his children certainly don't expect it.
I grew up in a council house. My parents still live in it now, although they bought it in the 80s. Mum says she wishes she'd never bought it because the repairs and maintenance would still be paid for by the counil if they hadn't, and it probably needs rewiring. They are on a list for sheltered housing with a housing association (like Dana says, private associations fulfil this need now). As Dad gets older, they'd like to move somewhere where he doesn't have to worry about stairs, DIY or gardening.
It is a different culture here. We pay higher taxes, so hard working people will take help that's offered without the same stigma as in America. Yes, council housing did get a bad name in the end, but certainly things like child support and state pensions are seen as rights, not welfare.
Quite a lot of my family on mum's side lived (and some still do) on those estates. When I hung out with my older cousins it was the on streets of Madam's Wood estate. Lot of my schoolmates were from estates in Bolton. It was just a fact of life.
My own situation was slightly different. My parents owned their own home from before I was born. When I was three we moved into a beautiful old stone cottage. The area wasn't brilliant, which is why we could afford it, but it was a lovely house and quite big. Quite a few of my friends' parents owned their own homes too (we were a very socially mixed school). Nonethless, every single one of us, including me was advised by teachers, parents, friends and anyone else with an interest to get our names on the housing list as soon as we were of age. Given that it could take years to get to the top of the list and be offered a property it was seen as sensible to get on there as quickly as possible. Better to have the offer of a house that you don't need than no offer of a house that you need :P
I've never owned a house and I am not on the housing list. I rent from private landlords. Like Sundae said, the regulations on the private rental sector are much stronger than they used to be. Though there's still a long way to go and slum landlords are not yet a thing of the past. I see no reason for me to own a house. I don't know where I am going to be at in five years time. I have recognised over the years my limitations and proclivities; I am not motivated by earnings and ownership. If I find myself in a stable setting at some point that allows for property ownership I may consider it.
As a single woman with absolutely no DIY knowhow nor indeed a desire to acquire such, being able to phone the landlord when the boiler breaks down, or the lock on the front door starts sticking, is a definate plus.
It is a different culture here. We pay higher taxes, so hard working people will take help that's offered without the same stigma as in America. Yes, council housing did get a bad name in the end, but certainly things like child support and state pensions are seen as rights, not welfare.
If you're all happy with the system you've got in place, well I think think it's fantastic.... although I wonder if so many hard working people would need help from social programs, paid for by taxes, if their taxes weren't so high. The hoops you have to jump thru to get the help have to cost a percentage of those taxes eh, making it more expensive than if you'd kept your money and bought what you needed yourself?
Also, it seems like the word welfare is a hot button of sorts... why is welfare bad if social programs are good?
As a single woman with absolutely no DIY knowhow nor indeed a desire to acquire such, being able to phone the landlord when the boiler breaks down, or the lock on the front door starts sticking, is a definate plus.
I hear what you're saying but.... why is it easier to call the landlord than calling the boiler repair man yourself? Or is it the money.... you think you're saving on repairs by renting? Does real estate not appreciate over there? Of course everything is afu right now and I have no idea what our current house is worth compared to what we paid for it (especially since its listed as 2 seperate properties on those house-value websites)..... but our first house, purchased when I was 23, increased in value about $10K per year that we owned it. That's a lot of boiler repairs..... and potentially a lot of money put away for retirement.
Wait.
A COOKIE company just went belly up?
O.
M.
G.
This is really bad.
Not going completely belly up, just moving everything to it's existing plant in
Ontario. At a guess I'd say that they'll probably open up a plant in Mexico and start making NAFTA cookies. Notice that the company is filing in Delaware, even though they do not have a plant or HQ there. This is because Delaware is to corporations what Liberia is to rusting oil tankers, a 'flag of convenience'. By the time they're finished, the workers will end up owing the company back pay.:mad2:
Originally Posted by TheMercenary
And this differs from just picking up your Corprate HQ and transfering the whole thing lock-stock-and-barrel to Dubai how.
You should fully expect such action in the near future if Obama is elected is elected.
Fixed that for ya.:p
"but certainly things like child support and state pensions are seen as rights, not welfare."
Awesome SG. Very well put....I have some ideas for a non-profit but the first primary mission would be to neutralize the stigmas associated with program, and not rub it down and soak it in pity;marginalization. Let people have some dignity, and utilize a non-profit. As a right not welfare. This means that the acquisition of state and city grants would not be solely on their terms to disparage the interested.
It sounds like those cookie people are getting a crumby deal.
"but certainly things like child support and state pensions are seen as rights, not welfare."
Awesome SG. Very well put....I have some ideas for a non-profit but the first primary mission would be to neutralize the stigmas associated with program, and not rub it down and soak it in pity;marginalization. Let people have some dignity, and utilize a non-profit. As a right not welfare. This means that the acquisition of state and city grants would not be solely on their terms to disparage the interested.
Child support should come from the penis that supplied the sperm, not form the state that had nothing to do with the sexual act.
and if the sperm donor can't pay?
and if the sperm donor can't pay?
Not my problem. No way. No fucking how. I would fully support free birth control and orphanages. You can't pay for your spawn, give it up and we will care for it and give it to someone who can.
Ah, you're just bitter because your tax deductions are moving out one by one... ;)
If you're all happy with the system you've got in place, well I think think it's fantastic.... although I wonder if so many hard working people would need help from social programs, paid for by taxes, if their taxes weren't so high. The hoops you have to jump thru to get the help have to cost a percentage of those taxes eh, making it more expensive than if you'd kept your money and bought what you needed yourself?
Also, it seems like the word welfare is a hot button of sorts... why is welfare bad if social programs are good?
It's like insurance. We pay in via taxes, you pay in as individuals. No-one has the right to look down on you for making a claim on your car insurance, house insurance even health insurance. The difference is that the money is there for people who otherwise can't afford it at specific times - Grandad certainly wouldn't have imagined living until 86 alone with someone coming in to wash and dress him, with expensive medicines and regular falls necessitating hospital visits. But when he was a young and lusty scene shifter working at Covent Garden Opera House, his taxes were paying for other children's dental care and teenagers like my Dad in isolation on a TB ward.
I know it is seen very differently in America and I am certainly not trying to change your mind. I was just trying to show how we see it, so the posts make sense.
I understand a lot more about America reading the posts here and it is helpful rather than divisive. But like the idea of what constitutes a decent cup of tea, you tend to be comfortable with what you grew up with :)
Ah, you're just bitter because your tax deductions are moving out one by one... ;)
I am not sure many of the tax deductions will go away as much as the NoBama's will find a way to take more of what I earn away. I have no problem with it, as long as everyone from those making $1 to $1 million dollars pays the same percentage. But since those at the top tiers already pay the majority of taxes and those at the bottom pay none, how are those at the bottom going to get a tax break?
I am not sure many of the tax deductions will go away as much as the NoBama's will find a way to take more of what I earn away.
But according to you, as sperm supplier you never should have had tax deductions for your kids anyway, right?
Not my problem. No way. No fucking how. I would fully support free birth control and orphanages. You can't pay for your spawn, give it up and we will care for it and give it to someone who can.
But according to you, as sperm supplier you never should have had tax deductions for your kids anyway, right?
But if you give them to me. And since I have had children, and have been taking them for 21 years, and then you take them away to pay for some other spawn who does not pay taxes, and most likely never did, that is a problem.
Huh? Both of you lost me on this one.
Well, Merc was bitching about taxpayer-funded programs, of the kind he believes Obama will increase by taking more of Merc's money. I indirectly pointed out that Merc himself has been taking advantage of a taxpayer-funded social perk all these years, in the form of tax deductions for his children. Just because they didn't call it "welfare" doesn't mean he isn't getting a break from the government to help raise his kids.
His response seems to be that it's okay to give back money to people who already pay taxes, it's giving free money to people who pay no taxes that he has a problem with--but I'm not entirely sure, his last post above isn't terribly clear.
And worthy to note, in most cases the money you are getting "back" is not money you paid out during the year. You are getting back more than paid out i.e. a total tax liability in the negative range.
His response seems to be ..... but I'm not entirely sure, his last post above isn't terribly clear.
If Clodfobble can't understanding a post, ain't nobody gonna understand that post.
His response seems to be that it's okay to give back money to people who already pay taxes, it's giving free money to people who pay no taxes that he has a problem with.
She gets it.
Getting money you haven't paid out...same damn thing.
You paid 1000 over the year. You do your taxes. You get 5000 back.
Welfare ho in sheepish clothing!
Getting money you haven't paid out...same damn thing.
You paid 1000 over the year. You do your taxes. You get 5000 back.
Welfare ho in sheepish clothing!
Well actually it doesn't work that way. I pay $60000 in taxes and get a break by not being futher taxed on the rest of the money I make by subtracting the $5000 from the top. Hardly the same thing.
How about this. I make $18000 a year, I pay no taxes. Now give me my free health care and I want a burger with fries too.:headshake
If you're paying 60,000 in taxes, you must be a CEO of a bank or something.
Total. Tax. Liability.
I pay far more than I ever get back. I have never gotten back more than I have paid in. Furthermore, the deductions I get for having children do not even remotely cover the actual costs associated with raising, caring for & educating them.
What am I missing here?
Merc could you live on $350 a week? Consider trying to make rent, groceries, gas, utilities, insurance and whatnot on that amount. Now, take off the taxes are that ARE taken out of that check and try. I work with people who have to make hard choices about what gets paid or not. Life is really really hard at that level. A LOT of people are trying to struggle through at that level.
Merc could you live on $350 a week? Consider trying to make rent, groceries, gas, utilities, insurance and whatnot on that amount. Now, take off the taxes are that ARE taken out of that check and try. I work with people who have to make hard choices about what gets paid or not. Life is really really hard at that level. A LOT of people are trying to struggle through at that level.
Without going into my personal circumstances too much...
I know I couldn't - I tried. Caring for a family of 5 on that is impossible. So I got a 2nd job and a third job and put myself through college so that I could independently provide better for my family. I did what was necessary to generate more money.
I received food stamps and using them made me sick every time - The stigma THAT I FELT taking a handout was a great motivating factor for me.
Another success story for government programs. My Mom did the same Classic. You may have felt bad for taking the handouts, but thank goodness they were there to help you over the hump of hard times.
I pay far more than I ever get back. I have never gotten back more than I have paid in. Furthermore, the deductions I get for having children do not even remotely cover the actual costs associated with raising, caring for & educating them.
What am I missing here?
You must not be doing your taxes right, then. A single parent with what, 2 or 3 deductions, will get more money back than paid in due to EIC and additional child tax credit.
To play debil's advocate (and I get so tired of saying this) I KNOW it costs money to raise children. I didn't get you, or your ex, pregnant. I didn't participate in the coitus, had nothing to do with YOUR sperm or HER egg, and wasn't even invited into the delivery room.
I assure you my TOTAL. TAX. LIABILITY. is not in the negative range. I've seen about 20 tax forms so far today. There was one single person, one married couple...the rest all made a profit on their taxes.
I think we should change the system to an "adopt a family" system. I'll just write my tax payment check out to a family of my choosing every year. I'd feel better.
You must not be doing your taxes right, then. A single parent with what, 2 or 3 deductions, will get more money back than paid in due to EIC and additional child tax credit.
Didn't have it for most of the time that was happening. Now my income is >.< that much over the limit.
To play debil's advocate (and I get so tired of saying this) I KNOW it costs money to raise children. I didn't get you, or your ex, pregnant. I didn't participate in the coitus, had nothing to do with YOUR sperm or HER egg, and wasn't even invited into the delivery room. I get tired of people wanting children then whining about how much it costs to raise them: you made a choice. I didn't make that choice for you.
Absolutely correct - That is Merc's point almost verbatim.
I assure you my TOTAL. TAX. LIABILITY. is not in the negative range. I've seen about 20 tax forms so far today. There was one single person, one married couple...the rest all made a profit on their taxes.
OK lets do it this way then - Will "those people" then get
MORE of my hard earned money under Obama's plan? Fuck that - I worked for it I earned it - I WANT IT.
Pico - Yes I took the food stamps as they were the only thing I qualified for.
I could have gotten a heck of a lot more if I CHOSE not to work. I actually grossed less by working more and moving toward being self reliant and independent. Many - too many choose not to do so.
I've seen about 20 tax forms so far today.
Think about what kind of people walk through your door. You're not seeing a fair sampling of the overall tax returns out there. I think because you are seeing this every single day, multiple times a day, you are thinking it's a big problem. But your job is to see exactly this group of people. The people who don't make a lot, but who know to fill out forms to get what is being offered.
That's true, glatt, good point. But what she's saying does prove there is that class, or sub-class, of people out there. It's just a question of how big that class is.
Sure. But they aren't doing anything that they aren't supposed to be doing. If they weren't eligible for those benefits, the government wouldn't provide them. And I'd argue that they are the good ones, because they are actually seeing Shawnee so they can get an education and hopefully get out of the situation they are in.
Classic,
From all I've seen and heard McCain is promising 5 grand more to families.
Who do you think pays for that? Where is that funding going to come from? Oh, you're all welcome.
glatt--good point, but I don't just see poor people. I see many middle class, upper middle class as well. Those who know they won't be eligible for free money still need to go through the steps to get student loans. I don't see any millionaires, but I see an awful lot of upwards of 60 grand. I see upper middle class as well as poor.
Classic,
From all I've seen and heard McCain is promising 5 grand more to families.
Who do you think pays for that? Where is that funding going to come from?
ME! Therein lies the problem - no matter who gets elected, I am the one paying for their promises. As a hardworking and productive member of society, I get to pay for the promises these guys make.
Sorry if I don't believe you...
Sure. But they aren't doing anything that they aren't supposed to be doing. If they weren't eligible for those benefits, the government wouldn't provide them. And I'd argue that they are the good ones, because they are actually seeing Shawnee so they can get an education and hopefully get out of the situation they are in.
Yes, they are taking advantage of a program set up to help people in their situation, nothing wrong with that.
You're right about Shawnee seeing a disproportionate number of these cases, but it still leaves the question of how large a group this group really is... are they really a statistically significant group, or minor blip in tax filer population?
ME! Therein lies the problem - no matter who gets elected, I am the one paying for their promises. As a hardworking and productive member of society, I get to pay for the promises these guys make.
Sorry if I don't believe you...
Yeah, if you're so hard working and productive, what the hell are you doing posting on the intarweb?:lol2:
I got short-timers, man. Actually, I have for quite some time.
Besides, what are YOU doing on the interwebz...you're supposed to be over here biting my ass! :p
No. no biting, nibbling. ;)
At that rate, it'll take years to finish.
Sorry if I don't believe you...
What don't you believe, that the productive taxpayers are the ones who pay for those programs? Where does the money come from then?
If you got the booty, honey, I got the time. :blush:
Im confused....my husband makes just over 60,000 grand and we never see negative taxes. Are we doing something wrong????
ME! Therein lies the problem - no matter who gets elected, I am the one paying for their promises. As a hardworking and productive member of society, I get to pay for the promises these guys make.
Ditto. I make in the mid-high 100k range, and because most of it is self-employed income, my annual tax nut is around 40k.
Yes, I know that I play music and I'm not out laying concrete or picking produce, but if anyone thinks you get to that level of income in the music industry without working your ASS off, I'd invite you to ride along with me for a week or two.
Every gig, every session, every arrangement or orchestration I write, every week on the road touring, every class I teach, it's all time spent away from my family and kids. When I drop into bed exhausted at 3am, and hustle out the door at 8am, that's a real cost to me and my family.
I'm not complaining, I'm glad to do it and I'm blessed to be able to do it. But I get viciously angry when people assume that once people have reached some arbitrary income point, they are no longer "earning it", and therefore its perfectly fine to take away their income to redistribute it elsewhere.
I pay a metric assload of taxes, and I pay it out of money that I earn, and because there's no withholding on my paychecks, I'm the one who actually writes the check to the IRS and feels the kick in the balls every time.
If you're paying 60,000 in taxes, you must be a CEO of a bank or something.
Total. Tax. Liability.
Not a CEO. But I do work 5 jobs, one as an employee and the other four as a independent contractor, working for myself.
Didn't have it for most of the time that was happening. Now my income is >.< that much over the limit.
Absolutely correct - That is Merc's point almost verbatim.
OK lets do it this way then - Will "those people" then get MORE of my hard earned money under Obama's plan? Fuck that - I worked for it I earned it - I WANT IT.
Pico - Yes I took the food stamps as they were the only thing I qualified for. I could have gotten a heck of a lot more if I CHOSE not to work. I actually grossed less by working more and moving toward being self reliant and independent. Many - too many choose not to do so.
What he said. Verbatim.
Yes, but that's becoming unamerican.:rolleyes:
Im confused....my husband makes just over 60,000 grand and we never see negative taxes. Are we doing something wrong????
No. The system is broken. If you make squat, you actually make money on the tax system. The harder you work, the more you pay, and the bigger the bite the system (gov) takes. That is the problem with a tiered system. If we all pay the same percent, flat tax, and do away with the deductions then the playing field would be leveled. If you make 20k a year you pay x% if you make 400k, you pay the same x%. That would be fair.
Im confused....my husband makes just over $60,000 grand and we never see negative taxes. Are we doing something wrong????
Yes, you aren't cheating the system.
Ditto. I make in the mid-high 100k range, and because most of it is self-employed income, my annual tax nut is around 40k.
I get viciously angry when people assume that once people have reached some arbitrary income point, they are no longer "earning it", and therefore its perfectly fine to take away their income to redistribute it elsewhere.
I pay a metric assload of taxes, and I pay it out of money that I earn, and because there's no withholding on my paychecks, I'm the one who actually writes the check to the IRS and feels the kick in the balls every time.
Exactly - oh and you pay the full boat too, correct? No employer contribution right?
No. The system is broken. If you make squat, you actually make money on the tax system. The harder you work, the more you pay, and the bigger the bite the system (gov) takes. That is the problem with a tiered system. If we all pay the same percent, flat tax, and do away with the deductions then the playing field would be leveled. If you make 20k a year you pay x% if you make 400k, you pay the same x%. That would be fair.
That would eliminate so much bullshit too. It would avoid all the confusion the ambiguity ...all of it. I see no reason not to have a flat tax. I would alter the basement though. Tax liability starting at something way more than $20,000 but thats just me.
Child support should come from the penis that supplied the sperm, not form the state that had nothing to do with the sexual act.
Yes it
should. Agreed. But daddy is in jail on drug charges so maybe it's impossible, because daddy is a dumb ass. Kids should not suffer because of the actions of their parents. So uh would you like for them to starve and get no healthcare or education, is this what you are suggesting? Not that this
isn't happening or anything. Hey let's turn into Africa and have non profits come in to spread christianity and food with no sustainable plan for the future. That sounds fantastic.
What is your plan again?
Without going into my personal circumstances too much...
I know I couldn't - I tried. Caring for a family of 5 on that is impossible. So I got a 2nd job and a third job and put myself through college so that I could independently provide better for my family. I did what was necessary to generate more money.
I received food stamps and using them made me sick every time - The stigma THAT I FELT taking a handout was a great motivating factor for me.
I really admire you classic, that can't have been easy. I think it is enormously to your credit that your rose to the challenge and didn't drown. But, consider this: with society stepping in to help carry some of that burden, maybe you wouldn't have had to work three jobs and would have had more time to spend with the family you were working so hard to raise. Why not? If the children you were raising grow up to be strong and well educated, proud and loving, responsible and courageous, do you not think that society will reap the benefit of that?
Let society, the wider community, take some of the burden when raising a family becomes an almost insurmountable task. The good that your children might do in the world, could extend far beyond their front lawn. Why should parents, working hard to bring about the nation's most precious and valuable asset, be left stranded high and dry, humiliated in front of their kids with voucher-based charity, or separating themselves from ther children for much of their waking lives?
The fierce independence of the American way is wonderful. That people take such strong responsiblity for themselves and their families is a worthy and admirable thing. But there is a price.
Dana, More than once my children have not quit on doing something or have taken on more than they should have and yet they still achieved success. They never quit. When I have asked them why...they remind me of what I did when they were younger. They learned BY EXAMPLE. There is no substitute for that.
The price - yes a costly one for me... the reward - priceless.
Yes it should. Agreed. But daddy is in jail on drug charges so maybe it's impossible, because daddy is a dumb ass. Kids should not suffer because of the actions of their parents. So uh would you like for them to starve and get no healthcare or education, is this what you are suggesting? Not that this isn't happening or anything. Hey let's turn into Africa and have non profits come in to spread christianity and food with no sustainable plan for the future. That sounds fantastic.
What is your plan again?
My plan. You should have a license before you are allowed to be pregnant. If your dumb ass hooked up with a drug addict then maybe you should starve, but your kid should go to someone who can actually care for it. Non--profits can not save you.
I'll bet you every country has approximately the same percentage of people who could work but don't.
I think work ethics come across in parent's attitude and example, whatever other help they have been offered. I was raised within the Welfare State, which to US eyes should have encouraged everyone of my generation to be a deadbeat scrounger. We're not. The majority of people will always want the freedom of making their own way through life.
You brought your children up in what I see as a we-might-rescue-you-when-you-have-nothing-left system (my bias and I admit it) but they learned the same work ethic I did. And you are probably their hero the same way my Daddy is mine, except you have more money.
If you love your children you will prepare them for the future, whether that means setting them to pick rubbish at 10 years old, working to earn money for them, or taking shifts so you barely see your wife for the best part of ten years. And you take what you feel is your due, whether it's the patch of earth your own father worked, food stamps that gall you or the free schooling that every family is offered.
You should have a license before you are allowed to be pregnant.
You think the government is qualified to decide who should be allowed to be pregnant? Do you really want to give that power to the state?
You think the government is qualified to decide who should be allowed to be pregnant? Do you really want to give that power to the state?
Move to China.
You think the government is qualified to decide who should be allowed to be pregnant? Do you really want to give that power to the state?
No, but stupid rhetorical questions get stupid rhetorical answers.
Move to China.
Fuck China. There is a perfect example of why communism has failed the people. Now were going to get Obama? Maybe China has already moved here.
A stupid rhetorical question is all a stupid rhetorical statement deserves.
No, but stupid rhetorical questions get stupid rhetorical answers.
Well I think it's great that you can admit that some of your posts are stupid. :D
Now if you can just give us a hint on sorting out which is which.
You see my point here, right?
You can respond as you deem fit. I shall do the same, wtf, you think this is China or something? :D
Well I think it's great that you can admit that some of your posts are stupid. :D
Now if you can just give us a hint on sorting out which is which.
You see my point here, right?
:lol2: That was a pretty stupid statement on your part, but hey, that's cool.
Fuck China. There is a perfect example of why communism has failed the people. Now were going to get Obama? Maybe China has already moved here.
There's a link or two (hundred) missing from your chain of logic. Could you fill in, please?
My plan. You should have a license before you are allowed to be pregnant. If your dumb ass hooked up with a drug addict then maybe you should starve, but your kid should go to someone who can actually care for it. Non--profits can not save you.
Srsly. I was asking for your plan so you don't have to pay for
anything. Which seems to be the
moral bottom line for you. Hey let's work it out so you specifically won't have to pay for anything ever...mmm...K?
Really, what is your other suggestion. It wasn't a rhetorical question. If people aren't
doing it right how would you have it done, outside of the ridiculous idea of licenseing. (in which case assholes would also have to get one) Scary ain't it? :)
Srsly. I was asking for your plan so you don't have to pay for anything. Which seems to be the moral bottom line for you. Hey let's work it out so you specifically won't have to pay for anything ever...mmm...K?
Really, what is your other suggestion. It wasn't a rhetorical question. If people aren't doing it right how would you have it done, outside of the ridiculous idea of licenseing. (in which case assholes would also have to get one) Scary ain't it? :)
Ok. No it is not that I don't want to pay anything myself. Everyone should pay. All people should pay across the board the same amount as a percent of the income they earn. Pick a number. Say 20%. All people should pay 20% of their income into the system to pay for those that cannot. What we have here on the otherhand, is people driving up in their BMW's to by formula with food stamps. We have generations of people who have learned that they should neither contribute or work. It is a large and complicated subject for sure. But taxing people who worked hard to get ahead and sacrificed to make good for themselves and families should not have to carry the complete burden. Spread it out. A mini VAT tax would help as well for all goods, except maybe food. I don't have all the answers but what we have now is not working and what Obama and McCain have put forth are not solutions either.
Tod: You know, Mrs. Buckman, you need a license to buy a dog, to drive a car - hell, you even need a license to catch a fish. But they'll let any butt-reaming asshole be a father.
I'll say it again. 1% on every dollar earned up to $35,000. 15% on every dollar earned over $35,000. No loopholes, no credits, no deductions, no need to pay thousands of accountants, no need to pay thousands of IRS agents to go through audits line by line.
There's your income. Now start cutting expenses.
Medical care for illegals? nope, buh bye.
Education for illegals? nope, buh bye
Vastly increase the speed and ease for legal immigration while making the penalty for illegal immigration well and truly prohibitive.
Start counting the savings.
If avoiding contributing and avoiding work is such a sweeet deal, why do so many many many more people choose instead to work hard, earn income, pay taxes, knowing that some portion of their taxes, however small, will be given to these freeloaders?
Are all of us, including you with your four jobs, stoopid?
I'll say it again. 1% on every dollar earned up to $35,000. 15% on every dollar earned over $35,000. No loopholes, no credits, no deductions, no need to pay thousands of accountants, no need to pay thousands of IRS agents to go through audits line by line.
There's your income. Now start cutting expenses.
Medical care for illegals? nope, buh bye.
Education for illegals? nope, buh bye
Vastly increase the speed and ease for legal immigration while making the penalty for illegal immigration well and truly prohibitive.
Start counting the savings.
That's appealing. What do you consider income? Wages, I imagine. What about interest and dividends and capital gains? What about entitlements, like social security or survivor benefits and annuities from the government?
I'd say the majority want to make a go of it and succeed on their own. Unfortunately there are a lot of people that are just looking for the scam. those that are genuinely on hard times and need help usually go about it quietly and do whatever it takes to get back on their feet again ASAP.
I'll say it again. 1% on every dollar earned up to $35,000. 15% on every dollar earned over $35,000. No loopholes, no credits, no deductions, no need to pay thousands of accountants, no need to pay thousands of IRS agents to go through audits line by line.
There's your income. Now start cutting expenses.
Medical care for illegals? nope, buh bye.
Education for illegals? nope, buh bye
Vastly increase the speed and ease for legal immigration while making the penalty for illegal immigration well and truly prohibitive.
Start counting the savings.
I think that some 15-30million illegals have an impact on our economy. Some of it positive some of it negative. I do not believe they put back into it the majority of what they get out of it. That bleeder needs to be stopped..
Tod: You know, Mrs. Buckman, you need a license to buy a dog, to drive a car - hell, you even need a license to catch a fish. But they'll let any butt-reaming asshole be a father.
... and add own a TV in this country.
And yet I'm jumping through hoops to be a mentor 4 hours a week.
I do agree with the fact I'm being thoroughly vetted.
It's right.
But I do face a terrible liberal dichotomy re people having children.
- It's a natural urge - support it as best your economy can.
- There are people out there who are unfit parents! Stop them!
- There are women out there who just like pregnancy/ babies - why should we pay for them? Put a limit on it!
Actually that's a trichotomy - if such a thing exists.
That's appealing. What do you consider income? Wages, I imagine. What about interest and dividends and capital gains? What about entitlements, like social security or survivor benefits and annuities from the government?
Capital Gains is already capped at 15% in a very simple profit/loss calculation. Leave it alone.
Dividends and interest are already considered income and taxed at an individual's rate.
Social Security, survivor benefits, and annuities are income and should be taxed as such.
Of course, being the even tempered individual I am I also suggest that any lobbyist or politician who actually suggests deviating form the code to add deductions or credits for any reason should be executed on the spot and left as a lesson to those that would try to gain special status again.
That's appealing. What do you consider income? Wages, I imagine. What about interest and dividends and capital gains? What about entitlements, like social security or survivor benefits and annuities from the government?
I would not consider including entitlements as you have them listed above as taxable. And the only retirement I would tax exempt is that for a disabled vet.
Ok, thanks for answering.
What about the difference between individual and corporate tax systems? Your thoughts?
eta: So you would place the floor and the ceiling for capital gains at %15?
I think very few Corps should get any tax breaks. If they do because they provide some special service it should be limited in scope and time.
I also want to say that I find the 1% rate from $0 to $35,000 a very good idea.
We *all* contribute.
Corporate tax code:
revenue under $1,000,000 annually is taxed at 5%.
revenue over $1,000,001 annually is taxed at 10%.
No deductions, no incentives. Produces income for the gummint. Reduces attractiveness for practices that lead to accounting scandals. Companies can quit spending millions trying to avoid taxes.
Medical care for illegals? nope, buh bye.
We have a situation in northern Australia at the moment, where Papuan traders are comming ashore on Torres Straight islands to trade, bringing with them people infectected with a new strain of TB. ATM, these people are being treated by Australian doctors illegally in order to try and prevent further spread of the disease into the rest of Australia. Considering one Torres Straight island is only 3km from Papua, it's difficult to stop the traditional traders from visiting, especially as until about 20 years ago, some parts of Papua were under Australian authority.
15% Capital Gains tax is ok, but lower would be better because the big players move their money and pay their 15% because they are looking at the big picture. Joe Six pack quite often makes horrible investment decision because he doesn't want to "lose" 15% of his gains to the government, thus setting himself up for a crushing when the market turns.
In the end I don't think any of those numbers actually matter so long as they are clear, strict, and enforced. There are two sides to every equation and the income side is less important than the expense side.
The budget should absolutely be balanced and we should absolutely ditch the obscene "progressive" tax system we use. It is simply a political tool to enslave us in class warfare.
We have a situation in northern Australia at the moment, where Papuan traders are comming ashore on Torres Straight islands to trade, bringing with them people infectected with a new strain of TB. ATM, these people are being treated by Australian doctors illegally in order to try and prevent further spread of the disease into the rest of Australia. Considering one Torres Straight island is only 3km from Papua, it's difficult to stop the traditional traders from visiting, especially as until about 20 years ago, some parts of Papua were under Australian authority.
I see where you're going and let me assure you that I know none of my ideas will ever be accepted and put into practice. I like simple, well defined laws that don't require an advanced degree and legal representation to enforce. That doesn't play well with lawmakers.
That being said, I've stated my position here before. Overhaul the immigration system here to allow anyone in who can actually find a job. No job? No entry. That is step one. Step two involves enforcing that legal process by absolutely destroying any company willfully employing illegals. Dry up the income which is the motivation for illegals coming in the first place. Step three involves creating truly painful penalties for those caught here illegally. Incarceration? Yep, in tent cities. When they are released they will be returned to the airport within their country of origin that is furthest from US borders.
*Smiles at Lookout* you do realise, of course, that from my perspective the 'flat tax' system is a weapon of class war.
The higher up the income scale you go, the less impact that 15% tax will have on you and your life. If a household has a single earner bringing in $55k a year, 15% of the $20k higher bracket income impacts on decisions about some fairly basic household needs. When someone is paying $4 million in tax as 15% of their earnings above $35k, that doesn't leave them wondering if they can afford to put both their kids through college.
[eta] there's no need for progressive taxation, or anything else, to box us into class warfare. Class conflict is an inherent part of a class based society. You guys may define class differently, but it is there. And the conflict exists when the needs of those classes collide and conflict.
But Dana, you can make that statement about every financial decision and purchase between those two groups.
The purpose of the tax isn't to ensure everyone feels the same weight of burden, it is to raise money for necessary government functions. Penalizing someone for making more doesn't help those that make less to feel better about anything.
More importantly a system like this eliminates the millions upon millions of dollars spent every year trying to beat the tax system. (beat = not pay extra, not pay so little you get audited and penalized)
Most middle class Americans pay in the hundreds of dollars each year for an accountant to make sure they're doing things right and all they while they keep their fingers crossed hoping they don't get audited.
The very wealthy pay thousands up thousands to build tax shelters and bend the system to benefit them.
Who do you think feels the burden of that cost more sharply?
Two men go to a car dealership to replace their old vehicles. One makes $50,000/year the other makes $350,000/year. Who feels the pain more when they purchase a $30,000 car? Should we lower the price for one and raise it for the other so they feel pain equally?
Our government is not meant to make sure we all experience the same pain and joy in equal amounts.
We pay an accountant to keep us out of trouble and to find ways to pay less tax legally. That is the way it is set up. If we all pay the same rate regardless of income not only would they get more money to run the government, we could make things simple for even the common man.
15% Capital Gains tax is ok, but lower would be better because the big players move their money and pay their 15% because they are looking at the big picture. Joe Six pack quite often makes horrible investment decision because he doesn't want to "lose" 15% of his gains to the government, thus setting himself up for a crushing when the market turns.
Joe Sixpack can certainly be a doofus, we agree. But having capital gains taxed at a different rate than other "income" flies directly in the face of your warning in the last paragraph here. Clearly, those with capital gains at all are a minority, and those with a substantial capital gains exposure are a fraction of a fraction of the rest of the flat tax rate paying population.
In the end I don't think any of those numbers actually matter so long as they are clear, strict, and enforced. There are two sides to every equation and the income side is less important than the expense side.
What?! I agree with you that 15 vs 14 vs 16 vs some other dang number is minutiae. But do you seriously mean that one side is more important than the other? YIN vs yang? How can expenses be more important than income?
The budget should absolutely be balanced and we should absolutely ditch the obscene "progressive" tax system we use. It is simply a political tool to enslave us in class warfare.
Good observation, see my first comment.
Keeping in mind that this will not come to be for the simple reason too many people in powerful positions see this as an loss for them.
Accountants - oops, not as much demand
IRS - oops.
Politicians - Uh oh. There goes a major table slapping terrifying subject to rally the troops with.
I see where you're going and let me assure you that I know none of my ideas will ever be accepted and put into practice. I like simple, well defined laws that don't require an advanced degree and legal representation to enforce. That doesn't play well with lawmakers.
That being said, I've stated my position here before. Overhaul the immigration system here to allow anyone in who can actually find a job. No job? No entry. That is step one. Step two involves enforcing that legal process by absolutely destroying any company willfully employing illegals. Dry up the income which is the motivation for illegals coming in the first place. Step three involves creating truly painful penalties for those caught here illegally. Incarceration? Yep, in tent cities. When they are released they will be returned to the airport within their country of origin that is furthest from US borders.
I wasn't actually going anywhere in particular with that post. I just think it's an ethical and moral dilemma caused by laws which don't allow for such borderline (literally) issues.
Personally, I think it'd be better if we had a ship patrolling the straight in order to stop Papuans from making landfall in Australian territory, however the issue is not just about a boat to stop illegal landfall.
Anyway, I'd rather the disease be stopped where it enters than to be permitted to flourish in our tropical climate.
Keeping in mind that this will not come to be for the simple reason too many people in powerful positions see this as an loss for them.
Accountants - oops, not as much demand
IRS - oops.
Politicians - Uh oh. There goes a major table slapping terrifying subject to rally the troops with.
Which is why none of this will ever make it past any house of Congress. So basically we are stuck with the same ole system and making any attempts to legally shelter money, get tax breaks, or do what ever you can do to avoid wealth redistribution.
Two men go to a car dealership to replace their old vehicles. One makes $50,000/year the other makes $350,000/year. Who feels the pain more when they purchase a $30,000 car? Should we lower the price for one and raise it for the other so they feel pain equally?
Our government is not meant to make sure we all experience the same pain and joy in equal amounts.
More importantly the person who makes 50k a year needs to recognize that they cannot afford a 30k car and needs to get a car that costs 12k. That is what gets people in trouble. Living outside their means. They have this sense of entitlement to "stuff" ownership. The real estate mess is a large part of this as well. Now we have to pay for their bad decisions? I don't think so. Let them go bankrupt. Same for the big corps. And then you will get "what about the children!?!?!?" Sorry, ask mommy and daddy why they bought a Car/house/whatever they could not afford.
Joe Sixpack can certainly be a doofus, we agree. But having capital gains taxed at a different rate than other "income" flies directly in the face of your warning in the last paragraph here. Clearly, those with capital gains at all are a minority, and those with a substantial capital gains exposure are a fraction of a fraction of the rest of the flat tax rate paying population.
Anybody who owns a little bit of a mutual fund outside of their retirement plan has to consider the capital gains tax at some point. That is more than half the country. (not going to pull the stats) Like I said 15% is acceptable. 0% would be better simply because I see what stupid tax-avoidance decisions do to individual retirement plans. Either way as long as it is standardized and "flat" I don't really care.
What?! I agree with you that 15 vs 14 vs 16 vs some other dang number is minutiae. But do you seriously mean that one side is more important than the other? YIN vs yang? How can expenses be more important than income?
How are expenses more important than income? Simple answer - my wealthiest client is a retired letter carrier. We all know they don't make a lot of money so his secret to success wasn't earning vast amounts of money - it was wisely managing the money he did earn so that it would meet his needs now and into future generations. It isn't what you make that matters, it is what you spend.
I picked the numbers I used based on some old back of the napkin stuff I did a long time ago. If 15% is insufficient to meet our initial needs - then start with 17%. I don't care so long as it is across the board. It is up to the government to prioritize our spending needs within the very real limits of the income that is generated. I cannot spend more than I make, neither can you, neither should they.
Which is why none of this will ever make it past any house of Congress. So basically we are stuck with the same ole system and making any attempts to legally shelter money, get tax breaks, or do what ever you can do to avoid wealth redistribution.
Absolutely. That is the part that upsets me. I see politicians touting more "progressive" tax systems knowing damn good and well it benefits no one but themselves. they're power brokers, nothing more nothing less.
:lol2: That was a pretty stupid statement on your part, but hey, that's cool.
Really? I thought it was rather clever.
This is a question for Dana and Sundae.
Is the social services system in the UK means tested? The reason I ask is this.
My Dad has worked his guts out all his life in average income jobs, first as an electrician and then in sales. He's now 60 and comfortably retired with a business he still draws an income from, and several investment properties which he owns outright.
ETA: It's actually two businesses if you count the mangoe farm he owns and lives on.
My fathers question recently has been that he's contributed to our social security here in Australia for about 40 years, and continues to do so, but he can't even get a pension card so he can get a half price fare on a bus. He doesn't want health care or anything like that. He really just wants someone to acknowledge that he's been a valuable member of society.
Incidentally, from my observations of my father, it's what you spend that's far more important than what you earn.
I don't really have a lot of options. Other than maxing out my SEP contributions to the tune of 30k per year there is not a lot left over. I claim as much business deductions as I can but there is a limit to that as well. I am thinking about just becoming incorprated and funneling all my purchases of anything into that and claiming it, legally as a business deduction.
You're right, taxes are there to pay for what is needed. The act of class war comes in when the legislative class orchestrate a tax system which is inadequate to the country's needs and justifies it by reducing what is considered necessary. The clear winners in this scenario are not just those in jobs paying less than $50k, they're also the billionaires on Wall St. The clear losers: anybody who is economically and socially vulnerable.
Tax the wealthy at a higher rate than the poor, and ensure everyone has access to healthcare, free at the point of need, schools for their children, a comfortable retirement and dignity in the difficult times.
The tax burden on your wage packet doesn't weigh so heavy when you don't have to try and do everything with it.
I'm not able to check through this entire thread, but has anyone mentioned
Iceland's woes?
The beleaguered Icelandic stock exchange plummeted by 77 per cent yesterday, following a three-day suspension of trading.
The OMX Iceland 15 Index fell by 2,326.2 to 678.4 - the lowest since April 1996. The fall in shares contrasted sharply with a strong performance by European and Asian shares for the second consecutive day. The Icelandic index has lost 89 per cent of its value this year, making it the worst performing stock exchange globally.
That just can't be good for those people.
What it is like to live on the edge of it:
here and
here.
A few months ago it costed me 64 ISK to buy one dollar. Last night, it was 127 ISK for one dollar. That means all imports like gasoline, cocoa puffs, Pampers and other necessities are sky rocketing. The stock market has collapsed and it looks like I've lost a big part of my live savings. The future is unknown.
Lots of people have their loans in foreign currency, but income in Icelandic Krona. Those people are in immediate trouble since the loans are much higher now than the house or car they used it to buy - and the payments have doubled.
The world is treating us like we’re dead. Bank accounts frozen. No buziness without cash payments in advance. No currency can be bought. The stock market is closed (not that I have anything left there). Imports have stopped because of closed currency markets and diapers, flour, sugar and other neccesities are selling out in the shops.
Sad to read. Makes me feel like we're freaking out over nothing in comparison.
@ Ali. The state pension is means tested, but stuff like free prescriptions and bus passes aren't. The government recently reintroduced the pensioner's 'bus pass' giving all over 65s free travel on buses nationwide. There's also something called a pension credit guarantee, which means that if you are at retirement age and your pension (either state or private) doesn't amount to the minimum threshold (£114 p/wk) the government tops it up.
But no, most of the little benefits, and recognitions for being a pensioner come with pension age, rather than the state pension itself. Official retirement age, at which state pension can be drawn is I think 60 for women and 65 for men? I can't recall.
I'll tell Dad to move to the uk then, although he'd have to wait another 5 yrs for his bus pass still.
You're right, taxes are there to pay for what is needed. The act of class war comes in when the legislative class orchestrate a tax system which is inadequate to the country's needs and justifies it by reducing what is considered necessary. The clear winners in this scenario are not just those in jobs paying less than $50k, they're also the billionaires on Wall St. The clear losers: anybody who is economically and socially vulnerable.
Tax the wealthy at a higher rate than the poor, and ensure everyone has access to healthcare, free at the point of need, schools for their children, a comfortable retirement and dignity in the difficult times.
The tax burden on your wage packet doesn't weigh so heavy when you don't have to try and do everything with it.
I don't want the government involved in my healthcare, my retirement, or my kids' school any more than they are now. In truth, a little less would be better. I respect your view but we come at this from two completely different angles. Me: There are few things government actually does well, so why should I trust them to do more? You: Government if properly funded (whatever that means) can and should provide much for the people.
lookout123.
Social Security, survivor benefits, and annuities are income and should be taxed as such.
Have you thought about living on SS? I'm going to redo my budget soon, because my power bill varies with seasons. I'll post the figures later. Tax my money!! No thanks.
Busterb, I fully appreciate what you are saying. As I pointed out earlier there is exactly zero chance of our politicians setting aside their own interests long enough to consider this idea. So let me just put this out there - if you were given a 2% increase across the board would it kill you to pay 1% in tax along with the rest of the country?
Ali, there are quite a few benefits that accrue just for getting older in this country. For example an annual Winter Fuel Payment, to help with the rising cost of heating. £250 for the over 60s, £400 for the over 80s.
And a Christmas Bonus of £10 (go crazy Grandad!) although thinking about it, that might only be for people with low personal income.
As well as free bus travel, which Mum & Dad take advantage of now that petrol is so expensive, Grandad gets taxi vouchers, because he has Parkinsons. Dad drives Grandad around when it's needed of course, so he gives my parents the vouchers to use. They tend to use them if they're going out somewhere, so Dad can have a drink!
On the social rather than the Government side of things, there are lots of discounts for OAPs. Mum is still really flattered when she is asked for ID ("Do you have your bus pass on you dear?"). Places like hairdressers, cinemas, cafes, hotels, even some pubs offer special rates. They are always given discounted or free entry to places.
Old people in this country love to moan. Oh they love it, it's an over 80s hobby! But Mum and Dad think they are treated very well by society in general and feel that they are appreciated for what they've done. Just don't get them talking about the benefits availble to teenage mums.
Hah, I'll see your Brit's moaning and raise you a pissing.
Nobody can piss & moan like Americans. USA! USA! USA! :lol2:
Oh yeah? Well down under, we expect the government to do our moaning for us. Nyeah.
That's the best solution I have heard all day Zen!
Your government must be doing it's job.
The tax burden on your wage packet doesn't weigh so heavy when you don't have to try and do everything with it.
Unless that tax is coming from your wages to pay for all the others.
It's just like the ant and the grasshopper.
I'm not able to check through this entire thread, but has anyone mentioned Iceland's woes?
Yes, but Iceland is in the top 5 of the Happiest Countries
Researchers at the University of Michigan said Denmark's prosperity, stability and democratic government placed the country at the top of the rankings, with Colombia, Canada, Puerto Rico and Iceland all in the top 5.
:headshake
Yes, but Iceland is in the top 5 of the Happiest Countries
:headshake
Are those polls recent? I suspect that should be past tense since they got run over by the world economy.
Are those polls recent? I suspect that should be past tense since they got run over by the world economy.
Just 3 months ago. BTW Zimbabwe was last with it's 4-digit inflation rate. It's gonna get crowded down there -- and I don't mean the Southern Hemisphere.;)
Just 3 months ago.
I bet they'd be different now.
Busterb, I fully appreciate what you are saying. As I pointed out earlier there is exactly zero chance of our politicians setting aside their own interests long enough to consider this idea. So let me just put this out there - if you were given a 2% increase across the board would it kill you to pay 1% in tax along with the rest of the country?
Why all the smoke and mirrors? Why have the government give you 2% with one hand and take away 1% with the other? It seems to me all the paperwork would end up costing extra, too. If the government in its divine generosity wants to give my elderly neighbor a social security pension of $700.00/month, then take back $50 (or whatever) a month, why not just send her $650.00 and be done with it? :eyebrow:
Why all the smoke and mirrors? Why have the government give you 2% with one hand and take away 1% with the other? It seems to me all the paperwork would end up costing extra, too. If the government in its divine generosity wants to give my elderly neighbor a social security pension of $700.00/month, then take back $50 (or whatever) a month, why not just send her $650.00 and be done with it? :eyebrow:
But...if it was taxed at source, then there would be no need to send out one amount and have another amount come back in.
I respect your view but we come at this from two completely different angles. Me: There are few things government actually does well, so why should I trust them to do more? You: Government if properly funded (whatever that means) can and should provide much for the people.
*Chuckles* I think that fairly accurately sets out our stalls aye :P
In truth I wasn't trying to persuade you m'dear...but you raised the spectre of class war and I'm never going to be able to stay out of that now, am I?
Actually, I am quite proud of myself for sticking to basic ideas about how I feel a modern (post marxist and post laissez-faire) society can enrich the lives of its citizens and not going off on a massive tangential leap into a discussion about the nexus points of class and gender construction in matters of taxation and benefits...'cause that's where my head's at right now...
I just cashed in my change at the machine. Went to get a free coffee with my bulit up coffee accrual. And now I have to come here and work on Sunday as a counter-person. I just wanted coffee.
Due to real lack of interest in my resume, sparse job offerings in occupations other than the medical field, I am so fuc***. My husband laughs and says I don't have to do it. But I am broke. I just can't seem to kick back and spend my husband's hard earned money. Where in the hell did this pride thing come from? It's annoying at best.
Why can't people quit saying over-qualified at the wrong moment, instead of not even looking, and saying come in on Sunday?
You may think I'm an ass, but refilling ketchup bottles, and wiping them down is really going to chap my ass. Let's not forget the post wipe-down scrutiny of said, ketchup bottles. Even if it ends up being met with approval I think I'm going to go put my head in the toilet. And flush.
Cicero, I have a perfectly good job for you here in Colorado ;) And I won't make you wipe any ketchup bottles. "Overqualified" is not in my dictionary.
Well it's a good thing I already started packing then, isn't it? ;)
Yes it is. Be here by Monday and I will show you the ropes. Oh, btw, since you are also the sales dept for our new furniture company, I hope you are bringing your nice dress clothes, too. :D
See, that's how it should be. Case is right on!! :)
That's the attitude. And the know-how.
I'm so happy with that, I am not even going to make any wood jokes.
See, that's how it should be. Case is right on!! :)
That's the attitude. And the know-how.
I'm so happy with that, I am not even going to make any wood jokes.
Oh Go on.
[Y]ou do realise, of course, that from my perspective the 'flat tax' system is a weapon of class war. . . Class conflict is an inherent part of a class based society. You guys may define class differently, but it is there. And the conflict exists when the needs of those classes collide and conflict.
I think the entire point of the American republic's (or republics') existence, economics-wise, is that at bottom "the needs of the classes" don't conflict. Everyone has to make a living, and that isn't open to dispute. Any differences of detail are usually differences of scale.
I asked tw,
Can you point to the specific deregulation that made that possible.
He couldn't, because there wasn't any.
http://online.wsj.com/article/SB122403045717834693.html
While there has been significant deregulation in the U.S. economy during the last 30 years, none of it has occurred in the financial sector. Indeed, the only significant legislation with any effect on financial risk-taking was the Federal Deposit Insurance Corporation Improvement Act of 1991, adopted during the first Bush administration in the wake of the collapse of the savings and loans (S&Ls). FDICIA, however, substantially tightened commercial bank and S&L regulations, including prompt corrective action when a bank's capital declines below adequate levels and severe personal fines if management violates laws or regulations.
Who was in charge of regulation?
In the summer of 2005, a bill emerged from the Senate Banking Committee that considerably tightened regulations on Fannie and Freddie, including controls over their capital and their ability to hold portfolios of mortgages or mortgage-backed securities. All the Republicans voted for the bill in committee; all the Democrats voted against it. To get the bill to a vote in the Senate, a few Democratic votes were necessary to limit debate. This was a time for the leadership Sen. Obama says he can offer, but neither he nor any other Democrat stepped forward.
http://online.wsj.com/article/SB122403045717834693.htmlStop it with the facts already Merc - Geez! I already voted and you know it just pisses people off.
Indeed, the only significant legislation with any effect on financial risk-taking was the Federal Deposit Insurance Corporation Improvement Act of 1991, adopted during the first Bush administration in the wake of the collapse of the savings and loans (S&Ls). FDICIA, however, substantially tightened commercial bank and S&L regulations, including prompt corrective action when a bank's capital declines below adequate levels and severe personal fines if management violates laws or regulations.
~snip! look back to 1998, when the Clinton administration ruled that Fannie Mae and Freddie Mac could satisfy their affordable housing obligations by purchasing subprime mortgages. This ultimately made it possible for Fannie and Freddie to add a trillion dollars in junk loans to their balance sheets. This led to their collapse, and to the development of a market in these mortgages that is the source of the financial crisis we are wrestling with today.
In the summer of 2005, a bill emerged from the Senate Banking Committee that considerably tightened regulations on Fannie and Freddie, including controls over their capital and their ability to hold portfolios of mortgages or mortgage-backed securities.
The bill I remember reading about then put restrictions on mortgage back securities for low-income homes. It did not fix the problem with mortgage backed securities - no underwriting - NINJA loans. It did nothing to address the problem which were mortgage backed securities where non one (because so many finance people with big bonuses are only salesmen) knew what was even inside those SIV, tranches, and other financial instruments.
The reasoning was simple. Fannie and Freddie are government agencies. Therefore mortgages from them are as stable as Treasury bonds. Well, that reasoning was popular because so many financial experts never bothered to learn what was inside those instruments - did not bother to learn that Fannie and Freddie were not branches of government.
Meanwhile, that 2005 bill did nothing to address the problem, in part, because it would hurt the wealth created by Wall Street salesmen who did not even know what NINJA meant.
In 2004, Freddie and Fannie werel required to provide the easy money to the low income homes as it was also financing those McMansions. Problem was not that Freddy and Fannie had to finance everyone. Problem (that Wall Street ignored even in the credit rating agencies - Dow Jones, Standards and Poors, Moodys, etc) was how these mortgages were underwritten. An underwriter that did his job lost his job. In the new and heavily deregulated Wall Street, any underwriter who notice NINJA did not bring in sufficient income.
During this massive deregulation, Glass Stegall was even shredded. The parts of Glass Stegall that remain are ignored - SEC no long investigates or prosecutes those regulations. In fact, most bankers don't even know what parts of Glass Stegall remain - the regulations are that much ignored.
Any blame for the meltdown of the mortgage industry is directly traceable to mortgages issues to most anyone because no one vetted mortgages any more. Why bother? Government no longer demanded fiscal responsiblity for more than 10 years. No one bothered to even notice that the mortgage applicant had a job or sufficient credit rating. No longer were there any legal consequences for offering money to everyone. Every mortgage could be bundled up and sold to other companies such as AIG and Bear Stearns who were simply hiding any losses in spread sheet games.
TheMercenary forgot to learn all that. He worked hard to find a newspaper article to support his politcal agenda - his 'American is secondary' attitude. Somehow he would even blame Obama for fiscal irrresponsibilty created by the destruction of regulation on the finance industry.
I can think of no other industry that both deserves and desperately needs heavy government regulation. The industry is chock full of salesmen who look like pretty boys, spin that they are finance experts, and ... Well, only a fool pays a financial adviser to put money in a mutual fund where another financial adviser takes another 1% or 2%. That is simply salesmen without industrial knowledge hyping myths. Well their myths - including NINJA style mortgage backed securities - has just come crashing down.
NINJA - what happens when your financial expert is nothing more than a salesman for equities he knows nothing about. TheMercenary forgot to blame the real reason for economics now taking revenge because the so called Wall Street experts were nothing more than heavily enriched salesmen. They never even knew about NINJA. NINJA knowledge would only threaten profits and bonuses.
Bonuses? They are not clamoring for their bonuses claiming that their salaries are too low. Greed is good. TheMercenary posting more praise of those who are the problem.
The bill I remember...
Well that pretty much settles that and negates everything after the opening statement.
:p