Comments on: My thoughts on the economic mess

By: Nicole

Nicole — Fri, 26 Sep 2008 14:35:00 +0000

I really do welcome comments of all political stripes on this site. Thanks everybody for your feedback. Interesting stuff!

By: Anonymous

Anonymous — Thu, 25 Sep 2008 22:58:00 +0000

I’ve only been reading your blog for about a month. I stumbled up it when i was googling information on student loan litigation. As a lawyer (w/a lot of student loan debt), who deals in banking law (I have worked on both lender and consumer sides), I’m going to throw out a comment that may be a little offensive politically to some readers-but here you go-I didn’t vote for Bush, I voted for Gore and Clinton before him and I’m a Hillary Clinton supporter-(except for that whole 30% tax on your 401k bit her and Pelosi want to get passed-just this one time, until next time) Ok, back on topic-the reason we are in this mess, is because of Bill Clinton. Under his administration, he promoted Home Ownership and tasked the banks with finding ways, “Creative” ways to get everyone into homes so everyone could “realize the American dream”. There were two solutions. 1) Securitization-ie bundling loans into investments and selling them on Wallstreet and 2) not requiring people to put money down on their loans). Everyone was on board. If you look back historically since the Great Depression, homeownership nationally, typically ran around 55-60% of the population. It jumped up to 80% before things began cooling in late 2006.

The market needs to correct itself-people will suffer, sure, but the people who will suffer are the people that bought too much house, or should have never bought a house. The majority of people I see in foreclosure end up there because they were two income households when they bought the house. When the banks ran their numbers, they said “based on 2 incomes, you can afford X amount) and they ran out and bought their dream McMansion. One person leaves or loses their job and suddenly, the house is unaffordable. These are not subprime loans on their face. Good 5.5% interest rates. The problem, people didn’t put a dime down on the home. They’re not invested in it, they want the bank to roll over and give them their house for free because the bank should have never given them a loan in the first place. Come on people, buy assuming the worst case scenario, what can you afford if one of you loses your jobs. This is my first time rant on a blog ever and I have strep throat, thus why I have time to comment on a blog-so I apologize for any disorganization.

By: The Money Man

The Money Man — Thu, 25 Sep 2008 13:57:00 +0000

The President, in my opinion, made another major mistake last night. This is a “crisis of confidence” and he certainly didn’t help any. If you want to know the real reasons behind all of this, I would recommend you go to this link and read “Here’s a Plan to Avoid a New RTC” by Brian Wesbury. Being that I’m in the business, I understand it, but it may or may not be in layman’s terms for you. http://www.ftportfolios.com/Retail/Research/EconomicResearch.aspx You can also watch the two part segment of his interview with Dave Ramsey at the same site.

By: Abigail

Abigail — Thu, 25 Sep 2008 05:01:00 +0000

Well, from reading MSN Top Stocks, all I can glean is this:

The $700 billion bailout would barely touch the homeowners. It would focus mainly on the banks. Also, Paulson is asking for total discretion in how he uses the money: no review, no consequences, nothing. Scary stuff.

As for the homeowners getting help, here's what I think I've understood:
1. They will probably get a tax break, which is something, it not quite as immediate as they're hoping.
2. If we use the bailout to help individual homeowners, the government will spend months (or longer) wading through to find charlatans and deadbeats. So that's not much of an option.
3. We can use the money to give to the banks who need to get rid of bad mortgages clogging their capital etc. But again, homeowners won't see much actual help.
4. Essentially, if they rush the bailout like this, we're left with the option of giving money to a few foundering corps and hoping that the renewed amount of capital gets paid forward in the guise of lower rates for struggling homeowners. This, as you pointed out, may keep housing prices high.

Really, I see no good solution as of yet. But a bunch of economists wrote to Congress begging it not to approve Paulson's request, so hopefully we get a few more specifics before the gov't forks over that kind of moolah.

By: Sher's Creative Expressions

Sher's Creative Expressions — Thu, 25 Sep 2008 04:34:00 +0000

The whole situation just makes me sick. People buying bigger houses than they could afford, mortgage companies loaning more than they should and now I HAVE TO EAT THEIR MISTAKES BECAUSE I LIVE, HAVE LIVED AND CONTINUE TO LIVE WITHIN MY MEANS??!!! Stinks to me ~ real bad.

Why can't the executives who made all this money. . .give some back???? Those huge bonuses, etc.?

Blessings,

Sher