end of the USA as we once knew it

[DON WALKUP]

the DOW is down nearly 700 points as i write this.

california has passed the micro-stamping legislation.

there is "hate" legislation pending in congress that may affect teaching of the bible and attempt to silence it being taught.

russia is allying with venezuela and has nuke armed warships within reach of the USA.

iran and north korea continue their quest for nuclear weapons.

israel is in deep trouble with getting a new government formed.

it's very possible we are in the "end days" as told by revelations.

if we survive this financial crisis what will be the result? a HUGE govenment takeover of financial/lending instutions and housing related institutions...GOVERMENT owned and operated? sound familiar? the USSR, cuba and mainland china are some that pop into mind.

karl marx and lenin must be smiling from their graves.

[Valigator]

My boss came back from lunch and he was really depressed....he foresees some horrific times ahead...

I had two patients today who said they have to postpone their retirement.

I came home and moved my debt around...

think I'll have a drink..

[wrenchman]

Ok every one take a real deep breath let it out real slow. now dont you feal better?
That is about all we can do and if you think this crash does not hurt russia and china you are wrong.
All other markets are influenced by ours and have crashed as hard or harder.
This crash just might help it will help with the price gas and make the doller worth more.

[Valigator]

Originally posted by wrenchman
Ok every one take a real deep breath let it out real slow. now dont you feal better?
That is about all we can do and if you think this crash does not hurt russia and china you are wrong.
All other markets are influenced by ours and have crashed as hard or harder.
This crash just might help it will help with the price gas and make the doller worth more.

You know Wrenchman your right...two martini's and a deep breath.....I do feel better..:D

[fabsroman]

Wrenchman is definitely right. Not only are US banks failing, but it appears that European banks are also failing.

If the US suffers a recession and its citizens stop spending money like crazy, who is going to buy all of China's, Thailand's, Korea's, and Vietnam's goods? Trust me, they are plenty worried in those countries.

Oh yeah, then there are all the foreign investors that bought these stupid mortgages from the banks. You can bet they are worried.

The other countries are so worried about this becoming a global crash, that they are pushing the US for this bailout. So I ask, why aren't the other countries putting money into this bailout since it will affect the global economy and not just the US economy if the US economy goes into recession. The other countries have no problem buying US company stock, US real estate, and US mortgages when they can make a buck, but when things turn for the worse, they want to US government and US taxpayers to foot the bill on something they had a hand in doing (i.e., banks might have thought twice about lending if they didn't have buyers willing to buy these securitized mortgages).

This isn't the end of the world, but maybe it will have people thinking about things. For instance, spend less and save more. Diversify your portfolio as you near retirement age so that you aren't in extremely risky investments. There is plenty to add to the list.

[scalerman]

I remember Y2K- the world was going to end. I know for one thing that the sun will rise tomorrow and that there will still be people that need houses, cars, food, paper products . We will survive.

[skeeter@ccia.com]

So what started all this downward fallout? Seems just a few years ago things weren't all that bad then wake up and here it is...in our faces....was it all the oil pricing that started it?...how things all follow..cost of oil, cost of gas, shop less cause no gas to get there? cost of everything going up?...so where do you figure it all started to make it a global issue?.... maybe it is just cause it is 'election' year?

[skeeter@ccia.com]

end of the USA as we once knew it .........this seems to be a big thing around the globe now days....YOu can even stand on a street corner of NYC after 911 and burn the American flag and shout ' Kill all Americans' and people will walk past you and say.....well they have the right to do that in America and we pat ourselves on the back for letting them do so.....I know this post was about the economy and I am dealing with that too..stock sales.... but think of this..... If all gas stations were to shut doors tomorrow morning, what would we do?....The towel heads own all these places and are here by the numbers running our finances and our communications. Pick up a phone and call a bank..can't even understand them...it is just a matter of time they will pick a date and shut the doors of gas stations, dig out the AK's and take over our streets.....It will be here...so all of us with a ton of guns collecting dust need to remember that the gun isn't worth a dime if you have no ammo......again a reason to unarm Americans....is a plan....and this plan will happen soon...might even be in our lifespan..... stock up on ammo...be ready...they are already here in America....and if you don't agree....you will be in for a big suprise when the electric goes out....like we just had for a week here....etc etc...no gas, utilities, food, communications..???
end of the USA as we once knew it

[fabsroman]

There isn't any one thing that started this problem. Some, like me, say it started about 10 years ago. Others say it started 30 years ago when Carter passed legislation that reduced regulations on banks. Some, mostly democrats, say it started 3 or 4 years ago.

My theory is this. The stock market went utterly crazy from 1996 to 2000. You could have put money into almost anything and it was sure to go up. Stocks were being bid up on nothing but a gut feeling. It used to be that investors would buy stocks based upon how the company was doing. Essentially, they would look at the company's financial statements, look at the price to earning ("p/e") ratio, and then decide what to spend for the stock. That wasn't the case in the mid to late 90's. A friend of mine "made" $400,000 on an IPO, and then lost it within a week when the stock tanked. People were buying on credit because they felt like they were rish based upon their portfolios. Greenspan kept warning consumers about this because these were called paper profits and not actual profits because the profit isn't realized until the stock is sold. Enter 2001/2002, and the tanking of the stock market. People had a bunch of credit and no money now.

So, the stock market wasn't a good place for investors' money anymore and they needed to find a place for their money. Where to invest? Where to invest? Ah, real estate. They aren't making any more of it, so the supply is limited. What a great idea for an investment. Plus, real estate is safe.

Everybody started investing in real estate. People would buy and flip condo contracts before the condos were even built. Kind of like people buying IPO stocks and flipping them. Real estate prices were going through the roof, just like stocks were. Banks weren't scared of lending because the collateral was actually aprpeciating. Banks felt as though they could alway recoup their loan even if the loan was at 100% of the appraisal value because the properties were going up 15% to 20% per year. Finally, it started to go bad when the everyday joe couldn't easily afford a home, yet stretched anyway with a 3/1 or 5/1 ARM hoping to be able to refinance it or make enough to pay the increased payment amounts in 3 or 5 years. They weren't able to make the payments when the loan rates readjusted, and the loans were foreclosed upon. A lot of foreclsoures occurred because a lot of people stretched too far to buy a home. With so many foreclosures on the market, real estate prices started going down. Now, the lenders had a lot of loans that were under secured, and a lot of those defaulted too. Not only were the borrowers in credit trouble, but so were the lenders now. Problem is, who is going to loan money to the lenders?

[wrenchman]

I buy stock and i bougt today this is a good thing in someways if you have some money now is the time to buy.
I sold off a lot and bought hi yeald funds 2 years ago when they started selling interist only loans.
They were pushing them hard here thats why we have one of the hiest forcloser rates.
Buy the way they were flexibel interest only loans.

[rattus58]

Geeeeeeze.... Wrenchman and Valigator are the only ones to get it right... Slow down... have another drink... you'll feel much better sedated.... :D

I'm beginning to feel that no one here has been here before. I'm beginning to think no one here has ever been on welfare or foodstamps. I'm beginning to feel that no one here has ever been disabled. Geeeeeze get a grip. Have a positive mental attitude and PLEASE call your senators and representatives and tell them that Bail out for Wall Street means Bail Out for them, for they are the waters of a sinking ship. Rats like me will jump a sinking ship.... :D

The American Free enterprise system has been tampered with so much regulation and lack of oversight, that business isn't free to do business. The Demoncrats are the impedance to prosperity. I admit, I don't know the shape of the American Credit Markets but I know when I've not been able to get it before... and had to buy with cash. Tough times. Today I'm blessed, very little debt, still pay cash and don't EVER borrow unless someone else pays for it. That is how I see debt. Don't buy anything on credit except an education, a home, and unfortunately a car... but even there, sometimes leasing has benefits while you buy a good used car for the long term.

I don't believe that I should pay for someones bad mortgage. If the banks have to write down the value of a mortgage to current market of a default and someone wants back in, I'm OK with that as long as they are QUALIFIED... meaning you don't pay more than 40% of your income for debt. Not 50, not 60... 40%. What does that mean, it means that someone earning $14 an hour pays $5.60 an hour for his mortgages or about $952 a month. For a 100,000 loan at 6%, they'd need $600 a month plus insurance and taxes etc. Plenty of leeway there, but I don't want to reward bad behavior... I do enough of that with my Pincer...

What is the worst that can happen? We are not going into depression, the underlying assets of our economy are still too strong. If banks can write off their bad loans, that gives them the ability to make new loans. That's where congress should be focusing their attention in my mind. That is better than printing money. Problem with this is, congress wants to give the bad loan equity (homes) to the people who defaulted in the first place. Huge Government Giveaway that I am opposed to. Write off the loans and rewrite the loan based upon true and accurate market value today is fine with me.

Aloha... :cool:

[fabsroman]

The government wouldn't be giving the bad loans to the people that defaulted. The government would be buying these loans from the banks, seeing how they pan out, and then trying to unload them. For most of these loans, I am willing to bet that the home had already been foreclosed on and the previous owner kicked out. In about 9 hours, my wife and I will be looking at a home owned by the bank. The guy bought the place in 2000 for $650K, and the bank is asking $460 for it today. We can actually afford it and it is on a decent piece of land, so I am hoping that the house is at least inhabitable.

Forgot to add that a mortgage payment that equals 40% of income isn't a good idea either. The old lending limit used to be that a monthly mortgage payment could only consist of 28% of the borrowers monthly income before tax. Some people say one third (i.e., 33%), but that is stretching it a bit.

[rattus58]

You might be right about that, I don't really remember that long ago... but as a financial planner, borne in the 1980's, that was the figure we worked with which may have included taxes and insurance and all that as well.

I'm just tossing out 40% because that is a far better number than 60%.

Aloha.... :cool:

[Valigator]

Originally posted by fabsroman
The government wouldn't be giving the bad loans to the people that defaulted. The government would be buying these loans from the banks, seeing how they pan out, and then trying to unload them. For most of these loans, I am willing to bet that the home had already been foreclosed on and the previous owner kicked out. In about 9 hours, my wife and I will be looking at a home owned by the bank. The guy bought the place in 2000 for $650K, and the bank is asking $460 for it today. We can actually afford it and it is on a decent piece of land, so I am hoping that the house is at least inhabitable.

Forgot to add that a mortgage payment that equals 40% of income isn't a good idea either. The old lending limit used to be that a monthly mortgage payment could only consist of 28% of the borrowers monthly income before tax. Some people say one third (i.e., 33%), but that is stretching it a bit.

The bank will take less Fabs....make your best deal and good luck. Oh and by the way I liked your explanation a couple of post ago.....the other really bad thing is refinancing people did. Now they owe more than the property is worth...real estate was a milking cow for many ....My friend pulled out every bit of "fake equity" in her condo on a ARM . Now she owes roughly three times what its worth today..she has to walk away, but here in south florida a foreclosure can take up to 18 months to finally have to leave the property...know how much money someone can save each month living for free?
Oh for you stock people....FRO...Frontline is my personal favorite.....I try and buy as much of that as I can ...I like that stock and dont have to watch it too much.....

[fabsroman]

Val,

We went and looked at the house today, and it is decent. Not my dream house, but we can live in it pretty wll and I love the lot (i.e., 3 acres) with a view out the back of the house of rolling hills, all trees and grass fields, and a farm house off in the distance. Did I mention that it is 5 minutes from one of the farms I hunt on, and about 20 minutes from another, with the possibility of hunting farms all around it?

Our real estate agent said that banks are usually willing to take 80% of the asking price, which would be $368k on this place. I would feel like I was stealing it if I got it for that much, so I am thinking about offering $400K for it. Might think twice about that after sleeping on it and offer $380K instead.

The current problem is getting a mortgage. I spoke to our mortgage broker, and he didn't even want to try to quote me a rate today because they were all over the place, and rather high. He wants me to wait to see if the bailout bill passes, and then he will give me a rate. What really sucks is that our current mortgage is $280K, and we would only have to borrow a tiny bit more to buy this place and we can easily afford our current mortgage. Talk about frustrating. I might have to try to find some wealthy investors to give me a mortgage on this place in lieu of a mortgage company.

[Valigator]

Take it as low as you can go Fabs...this time next year it will sell for 30 cents on the dollar....key words not your dream house, but the location works for you...figure what it will take to make it the way you want and discount the offer accordingly..lower the price the easier the financing