Tough times/ Bad Economy

[sa meredith]

I am posting this story from 1999 (that's right, 1999) from the New York post.
Although it may seem like a tedious read, you have to read down to the part where the finacial expert states what will have to happen if the sub-prime mortgages go bad...talk about seeing the future.
This was written 9 years ago.

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.

Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3

[chipj29]

Thanks Woodsy.
I know I am asking dumb questions, and I accept it for what it is. I am an educated guy, and actually am kinda smart. I am just lacking the skills pertaining to investments and the economy etc. Never been a strong suit of mine. I do follow my 401k, and have it spread out over 5 funds, plus my company stock. Fortunately most of my nest egg is not controlled by me, and is strictly in municipal bonds, so I don't have to worry about my 401k so much.

[Jan]

Originally Posted by ITD

I remember 5 to 10 years ago, many prominent mayors, congressmen and senators jumping up and down because banks were not writing low income people loans. They were threatening legislation and lawsuits. Well, they got their way and look what happened......

Incredibly, there was not one word in the bailout bill that failed yesterday about stopping those insane lending practices. Barney Frank and other Democrats want them to continue.

In 2004 many Republicans and regulators were begging to reform Freddie and Fannie but were repeatedly blocked by the Democrats. They wouldn't even allow a vote on the proposed reforms. Watch this closely before you blame Republicans for this mess. Watch it all:

http://www.youtube.com/watch?v=_MGT_cSi7Rs&e

[HUH]

Why would we bailout lending institutions for their mismanagement. Years of no doc and low doc loans, not to mention credit cards have allowed people to borrow way beyond their means. I say let the house of cards tumble.

[Irish mist]

I'm old enough to remember the "usury laws". The usury laws were taken off of the books im 1980. They need to be applied again. It's at best amoral to unleash the wealthy to prey on the middle, and lower-middle class with 22% interest rates. Usury laws have been with us since biblical times, and a moral society should never allow these credit goons to gain money from citizens that the local mafia vig guy could only dream of getting !
________
Vapolution Vaporizer

[VitaBene]

I think there are a lot of people to blame on both sides of the aisle. Unfortunately, sometimes political correctness goes awry- and the middle class pays. Interesting story in the Globe http://www.boston.com/bostonglobe/ed...stPop_Emailed2

[jeffk]

Originally Posted by chipj29

Thanks Woodsy.
I know I am asking dumb questions, and I accept it for what it is. I am an educated guy, and actually am kinda smart. I am just lacking the skills pertaining to investments and the economy etc. Never been a strong suit of mine. I do follow my 401k, and have it spread out over 5 funds, plus my company stock. Fortunately most of my nest egg is not controlled by me, and is strictly in municipal bonds, so I don't have to worry about my 401k so much.

Many years ago my great Uncle made quite a bit of money on stock investments. He told me a little then about investing in stocks and I have learned a bit more on my own. Back in his day most stocks were in companies that manufactured things. The people that bought those stocks carefully looked at the company and it's business. If a company made farm equipment it was possible to estimate the market needs for new farm equipment and the likelihood that a particular company would prosper or not. The people that invested were interested in the real ability of a company to do business, essentially to sell its products, make a profit, and grow.

That is no longer true.

Value of a company's stock today is largely based on opinion of the stock's glamor. Since the stock (or really any type of investment) value is opinion based the value can shift very rapidly. To add to the power of this opinion is the fact that a lot of stock is managed by large investment firms. When they decide a stock has lost its glamor they start to unload it and that drives the price down, almost a self fulfilling prophecy.

The practical reality is this. I own a piece of paper that says I have rights to shares of XYZ company. Although it actually is a "piece" of the company, its value may have little to do with the actual physical value of the real company. So today, with everyone's good opinion of XYZ those shares are worth $10,000. Tomorrow, people hear something they don't like about XYZ company, perhaps that one of their biggest customers has cut their order by 50%. The glamor of the stock fades, some institutional investors dump the stock, and presto-chango the shares are now only worth $6,000. $4,000 in value has been "lost"! Where did it go? It wasn't real to begin with, it was based on an opinion of value which can vanish overnight.

However, what has really changed? XYZ company still exists. It is still doing business. It is likely that the company will make up the lost sales by finding new customers or selling more to existing customers, companies do this all the time. The real value of the company has changed little however the glamor of the company is in someone else's perception and subject to the whims of the investment community. Companies have become like celebrities, popular one day, ignored the next.

The same applies to housing value which is at the center of this crisis. When people who can afford their housing own property they aren't forced into selling it at bad prices. Prices go up or down but they float through the changes because they don't need to sell.

People who couldn't afford the house they bought get forced out. Since they can't be picky about the price they get, or the bank forecloses on them the house is sold for less than it's original value. When this happens rarely, someone gets a good deal on a house and that's it. When it happens frequently because poor lending practices have been institutionalized by the federal government it starts to depress all house prices. People that are buying see that many houses that used to sell for $400,000 are now selling for $340,000 and that is all they will pay. Now everyone's $400,000 house is only worth $340,000. If you need to sell you have "lost" $60,000. What changed? Your house is still the same, same rooms, same location, same climate. The only thing that has changed is the buyer's opinion of your house's value.

So where did the money go? It wasn't real to begin with. Until the money makes your fingers green it isn't real.

This is the "risk" in investments today. Hoping you call sell before the glamor fades. Hollywood investments.

[nj2nh]

I don't pretend to even begin to understand this mess, but I think this is what the goverment should have explained. The bailout plan was designed to keep the economy from crashing by buying the assets of the failing companies. When the economy turns around, then the government sells the assets. In the end, it would probably not cost the taxpayers anything or only very little. So, the government isn't pouring money into Wall Street or Main Street. People who ask why the government isn't paying their bills rather than saving the corporate hot shots just don't get it.

By the by, the $750 million bailout is far less money than the $1.2 trillion that simply vanished when the stock market lost those 700 plus points yesterday. Makes you think.

Remember, though, I don't follow this too closely although I probably should. Too depressing.

nj2nh

[sa meredith]

Stock market is (on a very basic level) made up of two parts.
Expectation (speculation) and earnings (a stocks true value).
The stock price rises as people expect (speculate) the stocks earnings (the stocks actual value) to rise. AAAAhhhhhh, but when expectation does not equal earnings, you have a fault, that eventually needs to be corrected...which, of course, is why it is called a "market correction".
And this time the market is correcting, and correcting, and correcting, and correcting, and correcting.....get it?
Most of these stocks were never valued at the price people speculated they would one day be worth. Never. Never even close. Why, then, would people but the stocks. They didn't know they were. You see, most American workers contribute each week to this magical thing called a 401K. They don't really know were the money is going...they just know that 7 or 8 or 9 or 10 percent disappears each week from their check (gross, not net, so pre tax) and goes into some pool (for lack of a better word), and then once a quarter they get a statement from some faceless money management company, and for many many years the return on these investments was effortlessly huge (or at least very good) so, why question it. Keep on going, keep on giving...
Well, those real dollars we all contributed, were not treated as real dollars by brokers, and market speculators who produced fake balance sheets (see: Enron et all) who continue to trade with our dollars, and buy into false expectations, with our real dollars....and now, well, thanks for playing. Please see the man at the door to settle all accounts. You're money???Well, uummm...about that....

[sa meredith]

Even the most optimistic person has to recognize the significance of what is happening around us. I mean, real estate, the market crash, Wachovia Bank actaully failing. The only safe investment right now is probably a Treasury Note...currently returning 1 to 1.25 percent (so $10 on every 1000). It is probably the equivalent of putting your money under the mattress, but it's safe.
Don't want to be the voice of gloom and doom...but I would say things are going to continue to get worse, very much so, before they get better.
I know I can't hold out much longer...my reserve cash supply continues to take a hit month after month, as I try to maintain some type of quality of life...but give it another year or so...and man, I've got to start all over. Sounds fun!

[Pineedles]

The "experts" have given you all their perspective of what this recent market flucuation is all about. If you are 5 years or less away from retirement and you have lost more than 20% of the value of your portfolio it is unbalanced! See your broker! Rebalace it, you have too much risk as you near retirement. BTW, it may not be your brokers fault, you may have told him that you are very risk/reward tolerant. If any other situation exists, don't look at your portflio, just watch the sunup and sunset, you will be fine. BTW, I am not connected to the Financial Services business in any way.

Just a semi-educated guy who is 13 years away from retirement and he will be adding bonds to his portfolio in 5 years. But not before!

[SAMIAM]

I remember,I couple of years ago.when Wachovia Bank announced they were "reaching out" to the illegal....oops,I meant undocumented immigrant community with loans and accounts without proof of residence.Looks like they reached a little too far.
Now,all of the sleazy politicians expect us to pony up.......they were elected to represent US, but don't care that the public is overwhelmingly opposed to the bail out.

[SIKSUKR]

Very impressed with the level of knowledge on this board of how this mess has happened.Methinks that people that play in water are very smart at knowing how NOT to drown and the Capt boneheads usually are the ones that get into trouble and need the Marine Patrol to bail them out because they had no idea what issues might arise out there.Yes,there is an analogy or something like that with that statement.It must be George Bush and the GOP's fault that guy on Long lake ran over those 2 poor people!

[Waterbaby]

Originally Posted by chipj29

Thanks Woodsy.
I know I am asking dumb questions, and I accept it for what it is. I am an educated guy, and actually am kinda smart. I am just lacking the skills pertaining to investments and the economy etc. Never been a strong suit of mine. I do follow my 401k, and have it spread out over 5 funds, plus my company stock. Fortunately most of my nest egg is not controlled by me, and is strictly in municipal bonds, so I don't have to worry about my 401k so much.

Only dumb answers, as the old adage goes. Keep asking your questions, it never hurts to learn something new. I understand a lot of this stuff intuitively, but would totally be unable to answer some of the questions cause it's kind of hard to do that when I understand it "in my head" but can't get the words right to have someone understand it, if that makes any sense. You're getting some good, very clear answers here!

[chipj29]

Some excellent explanations and discussion going here...good stuff gang! Many thanks!

Now who wants to tell me where 15% of my 401k went yesterday?

[brk-lnt]

Originally Posted by chipj29

Now who wants to tell me where 15% of my 401k went yesterday?

It went to people like me who have kept 6 figure cash reserves waiting for this day.

PS, thanks.

PPS (no offense meant )

[sa meredith]

Originally Posted by brk-lnt

It went to people like me who have kept 6 figure cash reserves waiting for this day.

PS, thanks.

PPS (no offense meant )

It went to you? Are you "short selling" stocks?
Keeping A strong cash postion is a good idea, but how that helped you realize some gain by the decline is puzzling.
Do tell...
Perhaps you are indeed short selling, or maybe you bought some "puts" awhile back. If so, nice forward thinking.

[dpg]

SA Meredith...Keeping some cash on hand allows you to buy into the market when it has a large drop (777) points is a HUGE drop to say the least. I guess you can say I "short sell" in my 401K all the time. I buy into the "DOW" fund in my plan (401K) let it go up a hundred points then move it all out. After you just wait for it to come down and do it again. I am not in the financial "biz" but have averaged 15% returns for the last three years (since I started doing this.) Double-Digit returns in any 401K or IRA is relatively simple to achieve. If your not AT LEAST into double-digit returns (10+%) every year your doing something wrong. I say 3 years cause I've only started doing this for that long and started putting my 401K front and center. My best year has been 23.3% and lowest was 14.2%. This year I won't break 10% but hey look around, what "average Joe" will? Next year I'm guaranteed to be right there again. I know this cause I got away from my strategy in the first quarter of '08 and watched my account go to -8% never again. I'm almost 48 and hope (and expect) to be at a cool million dollar balance by my middle 50's....That's my goal. This strategy is not for the faint of heart moving around six figures into a fund that drops doesn't feel too good. For me the rewards have out-weighed the losses.

[ITD]

Originally Posted by brk-lnt

It went to people like me who have kept 6 figure cash reserves waiting for this day.

PS, thanks.

PPS (no offense meant )

If you kept it in cash, then you got nothing, in fact your cash's value just shrinks and shrinks and shrinks. Balanced portfolio is the answer, if you have 6 figures in cash, you should have one.

[Island-Ho]

Good thread. One of the problems I'm hearing about is the inability of small companies to routinely borrow funds to pay salaries etc. This really sounds like a poor way to run a business to me. What happened to the profits from all the past good years? Must have been pulled out/paid to owner so he could buy his lakefront McMansion and GFBL. We need more responsible company management, large and small, not relying on someone elses money(credit) all the time.
There is an independent gas station near me that has gone out of business twice in the last two years. It's now back in operation selling gas at $3.36! (In MASS) on a cash basis only. He either could not get credit for the operation, or chose to bypass the enormous cost of dealing in credit cards all day. Yes, it takes a good deal of money (credit) to get going, but credit should not be necessary for continued responsible operation. Maybe we need to get back on a cash basis for routine stuff and cut up the credit cards!

[Pineedles]

Originally Posted by Island-Ho

Good thread. One of the problems I'm hearing about is the inability of small companies to routinely borrow funds to pay salaries etc. This really sounds like a poor way to run a business to me. What happened to the profits from all the past good years? Must have been pulled out/paid to owner so he could buy his lakefront McMansion and GFBL. We need more responsible company management, large and small, not relying on someone elses money(credit) all the time.
There is an independent gas station near me that has gone out of business twice in the last two years. It's now back in operation selling gas at $3.36! (In MASS) on a cash basis only. He either could not get credit for the operation, or chose to bypass the enormous cost of dealing in credit cards all day. Yes, it takes a good deal of money (credit) to get going, but credit should not be necessary for continued responsible operation. Maybe we need to get back on a cash basis for routine stuff and cut up the credit cards!

Small companies and large companies maintain cash flow with a LOC (line of credit) because business is cyclical, and yes it is used sometimes to pay salaries. It is not a poor way to run a business. As for the past good years, you often plow the profits back into the business so you can grow. THIS is responsible management! If there is enough profit then what's wrong with a McMansion or a GFBL? Nothing!

[beaner]

Originally Posted by Island-Ho

What happened to the profits from all the past good years?

For a lot of small businesses, a very large chunk of money is going right out the door every month for health insurance premiums. In our case, we've experienced double-digit increases every year for many years, despite having only two single, healthy, non-smoking employees. We raise deductibles and lower benefits year after year, but it seems there's no end in sight.

We set up HSAs, but found that they offer only a negligible premium decrease for the employer, along with a lot of record-keeping and expense for the employee. HSAs are simply a means to shift the cost from the employer to the employee - hardly a solution to a real and growing problem.

[brk-lnt]

Originally Posted by ITD

If you kept it in cash, then you got nothing, in fact your cash's value just shrinks and shrinks and shrinks. Balanced portfolio is the answer, if you have 6 figures in cash, you should have one.

My portfolio is rather large and rather well balanced.

My answer was purposefully somewhat off the cuff. For every stock seller there is a buyer. I have honestly been waiting for some of these selloffs, to pick up certain stocks "at a discount".

You are correct that his loss did not "directly" go to me in any transactions this week. And if people did not sell their stock, then their loss is only on paper, and will likely be made back as the market rebounds.

I was sort of trying to stay out of this because I don't have the time to write out all the data and details and explanations as some others have done much more effectively. My personal finances are split between a professional wealth manager (who has managed to do very well for me through all this) and some lumps that I manage on my own (or actually on "our" own, as my wife is a financial analyst by profession and knows more than a thing or two about all this as well).

[Irish mist]

I'm no fan of FDR, but it was a wise decesion to enact the Glass-Steagal Act, and it was a very unwise decesion to take that act off the books. The Glass-Steagal act kept investment banking separte from commerical banking.....once commerical banking became involved with investment banking the sharks took over, and packaged all these loans in exotic, and liquid products that they sold all over the world.

I'm pleased to see that most of our local NH banks learned their lesson from the 80s housing boom and remain in good shape. A good investment for you folks near retirement is municipal bonds. NH bond funds are double tax free (state & federal) and out of state bond funds are federal tax free.
________
Toyota Tf104 History

[ITD]

Originally Posted by brk-lnt

My portfolio is rather large and rather well balanced.

My answer was purposefully somewhat off the cuff. For every stock seller there is a buyer. I have honestly been waiting for some of these selloffs, to pick up certain stocks "at a discount".

You are correct that his loss did not "directly" go to me in any transactions this week. And if people did not sell their stock, then their loss is only on paper, and will likely be made back as the market rebounds.

I was sort of trying to stay out of this because I don't have the time to write out all the data and details and explanations as some others have done much more effectively. My personal finances are split between a professional wealth manager (who has managed to do very well for me through all this) and some lumps that I manage on my own (or actually on "our" own, as my wife is a financial analyst by profession and knows more than a thing or two about all this as well).

Nice job, I kind of figured as much, thank god for muni bonds in times like this, although they'll probably be next.....

[jrc]

Depending on your tax bracket muni bonds can be a good deal. As taxes go up next year they will be a better investment.

The problem is finding NH tax free muni bonds. There just aren't that many. So many purchase Puerto Rico muni bonds. Tax free in every state.

[Irish mist]

Originally Posted by jrc

Depending on your tax bracket muni bonds can be a good deal. As taxes go up next year they will be a better investment.

The problem is finding NH tax free muni bonds. There just aren't that many. So many purchase Puerto Rico muni bonds. Tax free in every state.

Good points. I own some California munis. Because of the problems out there they offer some very high rates. I believe NH has only one muni bond fund, but there should be enough single NH general obligation bonds that can be purchased.
________
F platform

[twoplustwo]

...I hope a new opportunity is right around the corner. This economy is rough - I was laid off in October and have yet to find a full time job. I'm putting in time at 3 part-time jobs while I try to hang on. My husband builds houses for a living, so you can imagine what that's been like the past year. I've never seen anything like this. We keep telling each other things will turn around, we have to hang on to hope. We don't have much left to hang on to!!

May that window open as the door closes.

[jmen24]

sa, thats is a shame to hear. It seems like every week I hear of someone new that has lost work. Keep your head up and better things will come from it.

[ILoveWinnipesaukee]

sa, as one that is 6 months removed from the "one door closes another opens" point, I am still looking for work myself. I know you cannot see the "things happen for a reason" issue right now, but believe me, it is for the best, you will never know while you live on this earth why you needed to lose the job at the point in time you did.

Maybe something bigger and better will come your way that you would not have even considered had you been working happily at your old job. Keep your chin up, and remember, even though it does not seem like it now, but there are people worse off than ourselves.

I will keep you in my prayers to find work quick along with myself and others in this forum who are in the same boat. Too bad we are not on a boat on the lake right now, but being among "friends" who know how we feel seems to help.

[sa meredith]

I am simply floored by the kind words offered here on this forum...some by people I have never even met.
The post I made was simply meant to add to the "Bad Economy" aspect of the thread...but the responses are quite a different thing. And to be honest, make me a bit emotional...during what is already a very emotional time.
Thank you, thank you, thank you.
Being in sales for 22 years has certainly "hardened" me as a person, so I like to think I'll come out just fine.
It's just that, well, who wants to start out again at 42 Yrs old?
Uncharted territory for me...that's all.
Anyway...weather permitting, I'm going to try to bring the boat into Meredith Bay tommorow (blue and white Crown Line Bow Rider) at 8:30AM or so, hit George's for breakfast, and enjoy a bloody mary or two on the boat after. If anyone is in the area, and feels the need to quench their thirst, stop over and climb aboard. If it is rainy...well probably a no go.
Hazelnut...going to try to cruise over your way tommorow (Friday), late morning...I'll call your cell.
Again...thanks for the words of encouragement.
The forum comes thru yet again.

It is sad to read of the more and more people that the Stimulus is failing to help. Where are all these new and saved jobs? Where is all this debt we are leaving for our kids being used to our benefit? Perhaps if you want to go to work for Acorn recruiting illegal aliens to register under several different names to vote for the local Democratic candidates you can find some work. And while it is little consolation, the good side to being unemployed is that you get to send less of your earnings to DC to be redistributed. And now you can join the millions more that become dependents of society every day...now a majority of us. This is really sad.
I lost my job last year, but have been able to make more money shorting the stock market. Even as it inches back up in this phone recovery, there are many opportunities to turn the bad economy into a profit. It is unfortunate we have to turn to tactics like this to get by if we aren't willing to go on the dole. Socialism has its benefits though...pretty soon jobs will be unnecessary.
Sorry for the rant, but you pushed my button with this.

[jrc]

SA I found Linkedin to be a very good way to find old co-workers and network for new opportunities.

It can be very stressful trying to find a job and getting depressed is possible. You're only 42, you have plenty of time to do whatever you want.

Now is the time when you find out who your true friends are. A friend of mine just got layed off, luckly I could scramble a contract job for him, at least he has something to keep him afloat while he plans his next step. Maybe your friends have similar opportunities.

As a salesmen, you already know how to sell, your new job is to sell yourself. Sounds corny but it is true.

[Argie's Wife]

I'm so sorry about your job situation and hope you find something that exceeds your expectations.

I'll raise my bloody Mary to you tonight and wish you every good success in your job hunt efforts.

[Fishy Cover]

I majored in Economics in college and remember these definitions:

RECESSION: When your neighbor loses his job
DEPRESSION: When you lose your job.

I am self employed and thus cannot be laid off or fired.....nevertheless business is slow. And I can't blame the management!

They said " Smile, things could be worse" so I smiled----and things got worse.

Hope a little humor helps you cope.

[eillac@dow]

SA-

I wrote to you saying that I (also) had been let go after 21 years...something we both have in common.

Another thing we have in common...I was also 42. And let me tell you....I was scared to death. I thought it was the worst thing in the world. Low and behold, I found a new job and am much happier. You will do ok. Give it time and please....don't stress yourself out. Your in sales and like JRC said, you know how to sell...so just go sell everything you've have got to offer. You will be okay!.

Best.

Eillac@dow

[Meredith lady]

Times are tough all over and everyone is trying to make ends meet-hope you find something really soon!

[Chowdaguy]

Sa what industry do you have experience in?

[Winnigirl]

I'm so sorry sa! A job hunting site that I have found particularly helpful is www.indeed.com. Best of luck to you!

[SIKSUKR]

You can always help me park cars SA.You know where it is.

[hockeypuck]

My question is: If the "Bail Out" passes and the government buys some (many) bad mortgages and now owns some (many) foreclosed property, who is going to manage the property? The usual chain of events for unoccupied homes is that the grounds grow wild, the lawn is 3 feet tall, birds and vermin take up residence, local kids do some mischief, vandals do some real damage, drug users may take up residence. The value of the property continues to fall. The local government has problems finding or contacting the owner. My point is that the Fed. Gov. is too large to manage individual properties, and properties will be lost in the red tape. Maybe this will be a new business in the making, the management of government properties.

[VitaBene]

http://en.wikipedia.org/wiki/Resolut...st_Corporation

I think the plan is to set a group up like the Resolution Trust Corp that was set up during the last RE bust/ banking meltdown.

[tis]

hockey. And the fed sells it for a dime on the dollar and we are stuck with the loss. We expect the gov. to do it better than a bank?????

[jetskier]

Originally Posted by hockeypuck

My question is: If the "Bail Out" passes and the government buys some (many) bad mortgages and now owns some (many) foreclosed property, who is going to manage the property? The usual chain of events for unoccupied homes is that the grounds grow wild, the lawn is 3 feet tall, birds and vermin take up residence, local kids do some mischief, vandals do some real damage, drug users may take up residence. The value of the property continues to fall. The local government has problems finding or contacting the owner. My point is that the Fed. Gov. is too large to manage individual properties, and properties will be lost in the red tape. Maybe this will be a new business in the making, the management of government properties.

Hi Hockeypuck,

The government will take the assets and start selling them off. This will create a secondary market in the properties as they will be sold in larger lots to brokers and then likely broken down and sold to smaller investors. Clearly, these properties will sell extremely inexpensively as this is a fire sale and there will be costs to clean up the properties and resell them.

So the properties get sold, cleaned up and ultimately end up on the retail market. Everyone along the chain is trying to make money. As the taxpayer we probably only get a small piece of the action.

Jetskier

[Mike M.]

It all comes back to personal responsibility.

No one was forced to take a mortgage for more than they could afford to pay back. From the push of too much government regulation we have created part of this mess. A quote from the article sa_meredith shared:

“Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.”

This lifestyle of living beyond our means is unfortunately unsustainable and quickly coming to an end. This problem is not isolated to the housing market; it is visible in all parts of the economy. Car leases, credit cards, loans for everything. Everyone is over extending themselves and one day these bills will all be due.

To put it simply we are maxed out.

What is the problem with the housing market, why aren’t homes selling?

Housing values kept getting pushed up by easy credit during the housing bubble. Now we reached a point where the housing market is trying to reset itself to there true market values.

Regardless of what we do now it’s going to be painful but I believe we need to let these assets reset. In addition to giving Paulson unchecked powers to spend our money, the bailout is going to prop up the housing market and the same banks that practiced poor lending practices in the first place. These are the same people who led us into this mess and now we are going to trust them to give us the solution to get us out of it?

Besides what the 850 billion dollar bailout will cost us on the surface, we need to consider the cost it will have to our dollar. Very few people are considering the effects this bailout will have on our buying power. This is going to affect the poor and people on fixed incomes the most.

The Federal Reserve (Private bank, not elected by the people, taxation without representation?) is going to create this money out of thin air like always, further debasing our dollar and driving up the price of everything in the process. The inflation tax in addition to the close to a trillion dollars is something we can not afford.

If we don’t bailout the banks what will happen according to the president?

The credit market will freeze up and it’ll be difficult to acquire credit.
-It will be, but easy credit is the reason we are in this mess.

If we don’t pass the bailout our 401k will suffer and our retirement will be in jeopardy.
-If we do pass this bill it is going to lower the value of our buying power with our 401k anyway. Without addressing the actual problem that caused this mess, we can expect we will have to bailout more companies in the future, further lowering the value of our 401ks.

Until we address the bubbles we create from the Federal Reserve and fiat money we will not be able to solve our economic problems. We at the very least need to have some congressional oversight of the fed to make sure they are making the best decisions for us.

Every time the fed puts more money into the financial system they are devaluing our money.

The bailouts solution to the problem is to pump-in (create) another 850 billion into the system to cover assets that are essentially worthless. If these assets had any true value we wouldn’t have to bail them out. (The whole idea of these assets giving us a return in the future is faulty. The reason we are bailing them out in the first place is because of a credit bubble that drove the prices up over true market value.) So the bailout is going to save the system by means of more fiat money, driving our living standard down more?

We need to allow the free market to work this out without government interference. If we keep patching the problem rather than fix it, we are only going to enlarge the bubble and make it that much more painful when it finally does burst.

An appropriate quote from Thomas Jefferson:
“The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.”

[tis]

You are so right Mike M. Personal responsibility is such a big thing! I also agree, we need to allow this to play out without government interference. The more the government gets into our lives the worse things get. This would only be the first step. I don't know if they really know what will help.

[Mr. Prop-B-Gone]

Anyone else see the quarter page ad Laconia Savings Bank ran in the Union Leader today? In a nut shell it says "We didn't make sub prime mortgages, we didn't lend to Wall Street, and because we lent our money wisely we have plenty of capitol and we are still making loans."

Judging by today's mail Amex still wants me for a customer and Countrywide still wants to lend me more money.

So, if this is the trend with the Main Street banks, where's the problem? Sure smells like Wall Street.

This money is coming from one place. The printing presses. The net effect will be to instantly devalue the US Dollar by about 10%. At the same time, a substantial portion of this bail out money will go to foreign investors, not Americans. I'm sure that will help the country!

On tonight's WMUR news Carol Shea Porter is saying she likes the bill now because it contains "money for disaster victims". Funny, but I seem to remember that there was NO money for the individuals who's homes were damaged in the tornado and floods here in New Hampshire.

Sweetening this bill with things like tax cuts, disaster relief, FDIC insurance expansion and the like is nothing more than legislative terrorism. If these are good things they should be voted in anyway, and not used as pork to grease this bill in. And of course, no one is saying just how much extra these things will add to the cost of this bill.

Even if the Feds get a great deal on these distressed properties and make money when they sell them do you really think that they will use that money to repay the debts they ran up? If so, I have just two words for you: Social Security.

I hope everyone who dislikes this bill will call Carol Shea Porter at (202) 225-5456 tomorrow and let her know that if she votes for this bill, you won't vote for her. Pass the number on to your friends.

[Orion]

There was $160B of added pork to buy the votes needed to pass this bill. I say vote the whole bunch out. We're headed down the long slide. Should be able to buy some cheap waterfront in the next year.....if you still have any money.

[This'nThat]

Originally Posted by sa meredith

I am posting this story from 1999 (that's right, 1999) from the New York post.
"Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer.".

And who is Franklin D. Raines?

• He is accused by The Office of Federal Housing Enterprise Oversight OFHEO), the regulating body of Fannie Mae, of abetting widespread accounting errors, which included the shifting of losses so senior executives, such as himself, could earn large bonuses
• On December 21, 2004 Raines accepted what he called "early retirement" from his position as CEO while U.S. Securities and Exchange Commission investigators continued to investigate alleged accounting irregularities
• In 2006, the OFHEO announced a suit against Raines in order to recover some or all of the $90 million in payments made to Raines based on the overstated earnings
• In an editorial in August 27, 2008 titled "Tough Decision Coming", the Washington Post editorial staff wrote that "Two members of Mr. Obama's political circle, James A. Johnson and Franklin D. Raines, are former chief executives of Fannie Mae."

[Mink Islander]

It there is one thing we should all be able to agree on, it's that the level of partisan bickering and finger pointing in this country is completely debilitating to solving the problems the country faces today. There is no Party and no Party Leader from the President on down, Republican or Democrat who is without blame for the current mess. So rather than try to seek to place blame and light the partisan fires, how about we all seek to rise above that and work together constructively to find a long term solution.

I've been so glad to see this forum revive itself from the depths of extreme nastiness regarding the speed limit debate.

Let's not go down that path on this topic, okay?

[Mee-n-Mac]

Originally Posted by Mink Islander

There is no Party and no Party Leader from the President on down, Republican or Democrat who is without blame for the current mess.

... the above is it. Both parties have had their hand in this cookie jar for years. Just like the upcoming Social Securty mess it's been years in the making. And FWIW the major blame doesn't even go to the pols ... it goes to all those people who decided they'd live beyond what their means and commonsense dictate. You can fault the police for not catching the bank robber but let's not forget who robbed the bank in the first place.

[secondcurve]

Originally Posted by Mink Islander

It there is one thing we should all be able to agree on, it's that the level of partisan bickering and finger pointing in this country is completely debilitating to solving the problems the country faces today. There is no Party and no Party Leader from the President on down, Republican or Democrat who is without blame for the current mess. So rather than try to seek to place blame and light the partisan fires, how about we all seek to rise above that and work together constructively to find a long term solution.

I've been so glad to see this forum revive itself from the depths of extreme nastiness regarding the speed limit debate.

Let's not go down that path on this topic, okay?

Well said. It's time many of us looked in the mirror.