OT economy check

[jgiordano]

more disturbing to me than the gas prices now are the huge amounts of foreclosures, up 36% this year :frown:
when people can't afford to keep their homes, let alone get a loan for one
that's scarier than gas at 3.40 a gallon.

Here is an interesting article breaking down who/what type of mortgages are past due and being foreclosed on. http://www.baltimoresun.com/business/realestate/bal-re.harney16sep16,0,7129974.story

Among the highest percentage were people who took out 2/28 mortgages with low monthly payments for the first 2 years then they balloon up the third. As bad as I feel for them, did these people think they were going hit lotto within the first 2 years?

A lot of the blame is on these mortgage companies (many former pump and dump stock brokers) who allowed people to take out "no income verification" mortgages.

 

[fritz]

jhale and jgiordano are both 100% correct and it's the bad borrowing that has led to the crisis in lending now. Loans are sold in groups, good bad and ugly. So many are ugly that no one wants to buy them. Since there is no one to buy (money) no one wants to sell (money). That is partly why it is so hard to get a loan. As to whose fault is it I place blame equally. Partly on the fault of the predatory lender and partly on the sucker that listened to:
"Prices keep going up! You buy this with no money down, interest only for 2 years then sell it and profit all the equity you've earned during those 2 years!"

Wow that's a great idea because everyone knows that Past performance is an accurate indicator of future performance (sarcasm).

On the other hand though, it is the existence of these ridiculous loans that fueled the Real Estate Boom. Prices were kept down by FHA guidlines and % down requirements. When you took away these lending limits on 1,2,3 and 4 family homes the price could escalate as high as you could qualify a loan for. This created, IMO, an artificial bubble based on inflated prices that had no basis. Just like Yahoo (no real assets) being worth more than coca cola (billions in assets) homes were being sold based on pyramid scheme values.

I was chatting with an accountant friend who used to work in the Mortgage Insurance business and he explained the nature of the beast. Mortgage companies experience exponential growth always. It's a pyramid scheme. A percentage of the loans always go bad and the insurance for it is paid by the new loans. As long as you have new loans all is well, the moment the loans dry up the house of cards crumbles, as insurance doesn't cover the bad loans unless there are new ones to feed the monster.

 

[jhale]

that's a very well laid out explanation and very scary.

 

[ShaunW]

The Fed dropped interest rates yesterday.

The fed had done more to destroy liberty and freedom here in the USA than any other institution.

http://video.google.com/videoplay?docid=-3254488777215293198

Helicopter Ben is now going to sacrifice the dollar to save the hedge fund/bank crowd. We better hope that hyper-inflation or stagflation don't go from the economic text book to reality.

I was chatting with an accountant friend who used to work in the Mortgage Insurance business and he explained the nature of the beast. Mortgage companies experience exponential growth always. It's a pyramid scheme. A percentage of the loans always go bad and the insurance for it is paid by the new loans. As long as you have new loans all is well, the moment the loans dry up the house of cards crumbles, as insurance doesn't cover the bad loans unless there are new ones to feed the monster.

Exactly the irresponsible businesses Ben hopes to save, :grumpy: .

 

[LeslieS]

Helicopter Ben is now going to sacrifice the dollar to save the hedge fund/bank crowd. We better hope that hyper-inflation or stagflation don't go from the economic text book to reality.

Rewarding bad behavior. Now that we know the Fed is going to bail out the stock market every time something bad happens, why should we behave responsibly? Holding cash savings in a time of inflation is a bad thing. So not only are the banks being rewarded, but everyone who has been living beyond their income may also being rewarded. All that money that they owe will worth a lot less if we experience massive inflation.

I think that I am going to go shopping for a big house, a boat, an SUV, and some luxury goods...other than my tank

 

[ShaunW]

Greenspan has been rewarding bad behavior since 1987 market crash. Any stock market jitters means inflate away.

In 2002 Helicoper Ben and Uncle Al (Mr. Magoo! :lol: ) identified the wrong bubble. They dropped interest rates to deal with the stock market and said that was THE bubble. But the real bubble was in credit creation all along (the stock market was just a smaller bubble and a symptom of the bigger bubble), and by dropping interest rates they added fuel to the credit fire. Now the biggest bubble of all, the global credit bubble and interest rate derivative bubble are busting. The fed is directly responsible for the damage yet to come!

 

[VJ&POOPS]

Economics and Politics on a reef site...oh goody...:usa1:..I am no economist and I am still in school but if may;

Since this was a gas price question, I'll limit my response.

We are a nation so dependant on fossil fuel that regardless of the low price we pay compared to the rest of the world, we are not going to lower our demand [oil companies know this] we may be unable to consume once we cannot afford.

I'll stop here [before I write too much....don't how what size is HD on the sever:redface:] but will be happy to entertain/debate such topics [offsite]

 

[muntai]

seeing some of opinions here made me realize y america is the way it has become. the funny thing is some of the "red states" dont even know it yet, the people(top 1%) that r in charge now r just reaping the profits from selling america to the highest bidder. n theres nothing u can do since most r still in denial. just check out how many more billionairs there r this yr.

 

[NYreefNoob]

eco

as someone stated in this thread, there are alternate forms of fuel being designed and built, { chevy is developing hydrogen vehicle's } there is a company that makes a conversion kit for diesel vehicles that it runs off cooking oil, there was a man in africa that developed a engine head for a car that improved fuel mileage by 40% but he came up missing and so did the designs. i work in the autobody field and people will always wreck so my form of work is pretty safe, but realize this the big companies will do what ever it takes { buying stealing killing ect } to continue being big companies, and if you find or design something that will take from them, they will find a way to take from you

 

[jgiordano]

as someone stated in this thread, there are alternate forms of fuel being designed and built, { chevy is developing hydrogen vehicle's } there is a company that makes a conversion kit for diesel vehicles that it runs off cooking oil, there was a man in africa that developed a engine head for a car that improved fuel mileage by 40% but he came up missing and so did the designs. i work in the autobody field and people will always wreck so my form of work is pretty safe, but realize this the big companies will do what ever it takes { buying stealing killing ect } to continue being big companies, and if you find or design something that will take from them, they will find a way to take from you

That may be the case once in a while but there are enough venture capitalists and entrepreneurs that want to make money that some ideas will get out there.

For most of these technologies are not economically feasible YET; thus the reason that ethanol is only worth it at a certain price point. (besides the fact that we also see price impacts to other items like food) That is why the point remains that the only way to reduce our oil consumption is with higher prices, thus making it economically advantageous to change.

Take LED Christmas lights; right now for a 70ct string it is anywhere from $15-$20. A regular 100ct string is $1-$3. 600 led lights will save you $6 for 30days at around 6 hours a night. 600 LED's cost about $128 as opposed to about $18 for the regular. I need 18 years to recoupe the cost, Let's say 10 due to replacement sets, it still doesn't make sense.

No we can say that there are conspiracies that GE and Phillips are not producing LED's in bulk b/c they want you to keep buying sets every year. But the fact of the matter is if someone could make money they will do it thus the engine of capitalism. Just like PFO Solaris and Aqua Illumination, if these companies do OK you will see other vendors follow thus lowering the price. If they fold no one will end up developing LED for the aquarium.

The onus is on consumers to change things not companies.