Jan 21, 2001 the federal deficit was $5.7 trillion dollars.

With this new proposal, the debt will be somewhere around $10.5 trillion dollars.

That comes out to around $35,000 per person.

Somewhere the government is going to someday have to pull $105,000 (plus compounding interest) from my little family.

It's no wonder the country is so fascinated with the non-issues surrounding the election.

All that driftwood need to burn somehow.

I am an economist back-chair coach here but I think that It would be simpler to let a couple of banks ending in a funeral pyre than having to rescue irresponsible people once again. This would clean a lot of dead wood in one shot while rewarding those who acted wisely.

Life for me is a huge "Buyer, Beware!" experience. Those who succeed are those acting with reason. Why should they pay for the fools?

Yyyyyyyeah... my husband and I bought our house ten years ago, back when I was in grad school and he had a state government job making less than 20k per year. We got pre-approved for a 7 percent fixed-rate mortgage of 57,000 dollars. A pittance, yes-- but GUESS WHAT!!! We found and bought a 60,000 dollar house! And lived in it! And still live there! And have never, ever defaulted on a loan, because we (*GASP*) live WITHIN OUR MEANS!!!! We even refinanced it down to 6 percent, fixed rate. Two jobs and several raises later, we are still making a go of our cute little house, and our mortgage payments are about half what small apartments in our area cost to rent. I just... wonder why we have to bail out the overextended, after making a lifeplan of frugality?

Why do we have to bail them out?

Because of our political class's need to appease special interests, and to pad their pocketbooks.

What happened here is that in order to continue to grant loans to appease the CRA, the banks had to come up with ever more creative ways to hide the bad loans they were giving.

Of course, when there's easy money available, it's not just the intended targets of the largesse that show up. No, we had people who were solidly middle-class, and who could have bought a modest home with a traditional mortgage and paid it nicely.

What we got instead was mortgage brokers and realtors colluding to ramp up the price of housing beyond reason, and putting people into complex loans that they neither understood nor could ultimately afford once they matured.

Unfortunately for us, those bad loan packages were sold to investment houses as "mortgage-backed securities". So, what ultimately happened was totally predictable: banks were giving out loans, using the future value of other loans as their collateral. When the housing bubble burst and people started abandoning their (now underwater) homes, the value of those MBSs tanked.

Once the value of the MBSs tanked (mostly because of poor transparency - if you don't know how many loans in a given bundle are compromised, you assume ALL of them are) the banks that were relying upon them for their liquidity found themselves dry.

Which means that if we don't have some kind of organized bailout that allows some or all of these banks to raise capital for an organized shutdown, the effect is essentially to tank every institution that has ever touched an MBS.

In simpler terms, you, me, and everyone else that didn't overextend themselves were used to underwrite all those who did.

And now the collection agency is coming for the collateral - and that's us.

No, we didn't agree to be co-signers to all this shit. But because of corrupt politicians and criminal lenders, we wound up that way.

I'm just hoping against hope that the bank doesn't call my loan. I don't have the cash to be able to refi from my low-down mortgage to a 20% down.

Friends, it's important to remember that the financial services are the biggest sector of our economy nowadays. More people are trying to make a living by fussing with your money than by doing anything else.

> I don't have the cash to
> be able to refi

If you can insure your own health, you can certainly roll with this.

Offtopic-

Can we acknowledge that Sarah Palin is not just causing derangement here in the United States, but in other nations as well? (Two links from Reynolds just today.)

I am seriously, seriously, thinking of voting for McCain just to vote for Palin and all out of simple cussedness. Anyone who causes this much irrationality in people who's judgment I find questionable is probably kicking the ball forward in some important ways. Palin 2008.

Oh, it's gonna get worse, people! Anyone else besides me heard the rumour about Biden bailing? I heard tell he's waiting until after the Oct. 2 debates, and then will announce that he has to resign from the vice-president-elect spot due to health reasons. They're saying he'll claim an aneurysm. And who's ready to step up and take his place? You got it folks, none other than Shrillary herself! She's taking one for the team, doncha know. Gonna bring the party together and make a GO of this! They're gonna WIN WIN WIN. And that's when I'm taking my gun, my bow, and my sword, my children, and my BF, and moving to the hills. Off the grid, baby. Fuck that shit. o_O

When people in this country are literally hungry, there will be a change. Until then we will argue about Dumbocrats Vs Repugs until we are blue in the face. But it won't change.

The only thing you can do as an individual is take care of your own ass and family. You can do this when you stop living beyond your means. Spend less than you take in. Just because our asshole government doesn't follow these rules doesn't mean that you shouldn't. And it SUCKS DONKEYS that my frugal living causes me to give up my tax dollars for those that didn't. However, bitching about it does nothing.

We are a consumer society in the US and debt is about the only thing we make these days. Sad but true. And the federal government is more a corporatocracy than anything, if that is a word.

I have no mortgage, but I own my house. I paid cash for it. Back in the 1990's, I was making literally millions working for Microsoft. My best year, 1998, made $1.2 million, and my income tax on that was $478,000. I used my net income after expenses to invest in land in Texas during those years. And yep, for about 5 years I always drove a brand new Jaguar XJR or XK8. But when I got married and my ex wife doctor became an addict, and the dot com bubble shit on me at the same time, I took it on the chin and, well in the ass. And I have subsequently adjusted back to living like a frugal middle class person.

After several years of divorce and hell, I was able to pay all my bills, sell my property and pay off those divorce bills, setup a generous trust account for my son, and pay cash for a house. I now drive a Hyundai and as of yet I don't own an HDTV. My income, at about 1/20 of that maximum ten years ago, pays my property taxes and living expenses. And allows me to save for emergencies and for (one day) that big flat screen TV. Oh, and teacher retirement to aid with that shrinking 401k from the glory days.

I could bitch about 'how good it was' in the nineties. But when I get together with my old high tech colleagues from Microsoft, Dell, HP and the other firms, we usually have a drink and a laugh. We all had fun at the party, and therefore there is no complaining about the hangover afterwards. And I bailed myself out, I didn't ask for taxpayers money. And I despise that our government can't get their shit together.

The crowd here at Amy's blog all seem like folks who take care of themselves. While I am by far not a doom and gloom person, Ike had no affect on me as it rolled thru. Because I live that way: prepared. While our little college town north of Houston was spared major damage and power outages, the aftermath was irritating to most inhabitants of this 200k person community when hundreds of thousands of people came here to buy our gas and take our cheese over the next week. I was actually disappointed that the power stayed on, because I had a dozen books lined up to read, including Amy and Friend's Free Advice from back in the 90s.

I have work to do, as our community begins housing and teaching about 1200 students who have come up from Galveston to complete the semester. But BE and LIVE prepared, regardless of which sock puppet ends up in the white house.

Hear, hear, Amy.

It seems that the public is mostly a mix of the apathetic and the parasites who prey on responsible Americans.

It seems there are too few involved and responsible Americans to turn things around.

Off-gridding sounds promising, my idea is to retire in another country. But countries that are parasite[-entitlement] free -and- encourage & reward productivity -and- have the muscle to defend themselves against aggressors are hard to come by.

I am a member of a frugal living chatgroup. Someone posted a little blurb about the economy problems, and asked what ways we were all preparing. I posted my tips, and tagged on at the end how ticked off I was that my money was going to bail out people who got in trouble from their own stupidity and greed. And BOY did some people go off on me for being unsympathetic, and harsh, and that we don't all have the same life experiences, some people aren't taught not to live off credit, blah blah blah. I always thought the idiots were a relatively small portion of the country. I was wrong. They have taken over with their nonjudgemental progressive wishy-washyness. I'm going off-grid too!!! I hear it only takes about $20,000 to take your house solar......
I just cashed out all non-retirement and paid off debt with it. Better to get something from it than watch it disappear. Not that we had a great amount of debt, or savings.

After our small business closed, we rented. We're still renting, and feel fine about it.

And without getting flamed for being a racist, insensitive jerk--what % of foreclosures were houses bought by recent immigrants--legal or not?

I'm gonna check out your book when I get a chance Sterling. It look pretty fascinating.

Kate- Yours is the first time I have seen anyone tie illegal immigrants to the housing foreclosure problem. I think you are wayyyyyyyyyy off base. Most of the abuse came from small time speculators who simply walked away from risky mortgages when the values of the homes behind them dropped.

Sic semper evello mortem Tyrannis. Is the time nigh?

The Last American Virginian strikes!

Thus always (or eventually?) death to tyrants, or something like that.

I use the Spanish colloquialism quite often 'A Dios Rogando, e con el mazo dando' . Roughly translated, 'Put your faith in God, but keep your powder dry (gun powder)'. Less literal translation is 'Praise the Lord and pass the ammunition'.

I really think we are at a crossroads in this country. In fact, we have already passed that point. We all look for someone to blame, but ultimately we can only blame ourselves. I have seen too many respectable people within the last few months and few years lose 'faith' in the US as a nation, its government and economy. And I'm not talking about movie stars or entertainers announcing they will leave this country if blah blah is elected.

When I see very intelligent people worried about what is happening, that sets a big alarm off. When I see people throwing away their political bias during a HUGE election (which really means nothing anyway), something bad is brewing.

Informed people know that elections are just a cock fight (or now maybe a coochie fight). So they play the game and do the job and then when it's all over, it is business as usual. And we all participate happily out there thinking that we make a difference.

Elaine (on her first meeting with J Peterman:
I don't know where I'm going.

J Peterman:
That's a good way to get somewhere you have never been.

Quando el gato va a sus devociones, bailen los ratones.

I don't know what makes me more nervous - the liquidity problem, the bailout, or all the people from both political fringes asking if it's time to start shooting.

What the fuck?

I'm not sure that a bailout is even going to work at this point. But something needs to be done to prevent a run on the banks.

Open insurrection is certainly not on the list.

It takes at least 2 parties to make a bad loan. In the case of these unrealistic mortgages, those 2 parties are your average citizen, probably unable to comprehend a 300+ page legal document, if they even bothered to read half of what they signed; and the banks, run by armies of lawyers and MBAs who drafted those agreements and are paid to know better. The people our taxes are bailing out are the MBAs, lawyers, CEO, etc., not the homeowners. And the funny part is, if Phil Gramm (McCain's "unofficial" financial advisor) gets his way, we'll be bailing out foreign banks as well. All the while, John McCain hasn't said boo about all this since declaring our economic fundamentals to be strong.

If you're planning to vote for the Republican ticket to go in and clean up this Republican mess, I really don't want any of what you've been smoking.

http://talkingpointsmemo.com/archives/218587.php

Franko - I'm going to say this as politely as I can:

Shove your attitude and your opinion up your fucking ass.

I didn't see anything about foreclosures in the "bailout", in fact one of the selling points (that I disagree vehemently with) is that the people who got these fucked up loans in the first place are keeping their houses because they are worth less then the remaining amount on the loan.

If you had even the remotest clue about what an economy is, you'd know that absent the bullshit with Fannie and Freddie (which the Democrats caused, fuckface - I know, MY FUCKING LOSER SENATOR DODD IS THE BIGGEST FANNIE-SUCKER OF THEM ALL) the economy IS SOUND.

In fact, if it weren't for Obama's friends at ACORN constantly bleating about how the banking system is racist and classist and why can't poor people get loans even though they can't pay them back and you've got to do something about it because it's unfair, we would not be talking about Bear Stearns and Merrill-Lynch in the past fucking tense.

Chris Dodd, Barney Frank, and all their other little compromised buddies on either side of the aisle were living high off the hog on account of Fannie Mae and Freddie Mac.

You know who tried to stop that shit?

John McCain. 2005. Look it up.

Then eat shit and die.

No. Eat shit and live. It's a worse fate.

See, this is what I'm on about. I get told that I "can't listen to other people's opinions".

Franko is why. See, what Franko has is an opinion that is based on a serious of outright lies. And I see no reason why I ought to argue in good faith with imbeciles and/or liars.

Fuck them to hell. They are the reason that any of us outside of Wall Street have had to spend even one second learning what "liquidity crisis" means.

And here's what I get for posting at 0100.

:s/serious/series

Good night.

> And I see no reason why I ought
> to argue

Snap out of it, man! We need you!

Oh, I'll still argue with you, Crid, and the rest of the regulars.

But I'm not going to be nice, in cyberspace OR meatspace to the idiots that are spending their time believing all these stupid lies that are being put out trying to pin the mortgage problems on anyone other than who caused them.

It's like these assholes think that Bush has a time machine in the garage next to the machine he uses to steer hurricanes into New Orleans or something.

Wait, wait, wait - brian are you saying that up until now you have been being nice?!?

Well the next few months should be more entertaining to say the least

With the latest series of nationalizations and bailouts, we are now, apparently, more French than France (sans Frenchmen):

http://www.time.com/time/nation/article/0,8599,1843168,00.html?cnn=yes

My plan is to get my condo paid for within the next few years, leave my investments alone where they are, and then only work enough to make ends meet. No saving money, no getting ahead - just live in a paid-for house and work enough to keep the fridge stocked and the lights on. There is simply no reason for me to keep busting my ass when the government is only going to reach in and take it all.

$35,000 per person? Do you really think all the knuckledragging morons who live in this country are going to have $35,000 to cough up in order to pay off the government's debts? A huge chunk of people in the USA won't end up paying for any of it, and the weight will come down that much harder on the responsible, hard-working ones.

I'm going to keep being responsible, but am going to become a lot less hard-working. My plan is to not have much income left for them to tax. With my free time I'm going to ride my bike a lot.

>>...the economy IS SOUND.

Personally, I believe you're not correct, brian.

And I'm not flinging partisan poo - so save your curses.

I simply don't see how these bailouts and mergers are going to fix the real problem of too much debt. It's on that basis - and it applies to the UK too, fwiw - that "the economy is SOUND" rings false.

Jody -

The economy is made up of many parts.

The bad loans and the subsequent liquidity crisis are THREATENING the other sectors of the economy which ARE sound.

Manufacturing is up. Retail sales are at least holding steady.

See?

The point here is that we've got a bunch of people trying to figure out how to stop one sector of the economy that bubbled (the housing sector) and another that engaged in outright fraud to enable that bubble (finance) from harming the overall economy.

Somehow, we managed to absorb the collapse of the dot com bubble and the 9/11 attacks in 2000-2001.

We can either find a way to manage this (and I'm not saying that the present proposal is it, I'm not educated enough to know that), or we can watch the entire world economy spiral down the toilet for the same reason it did in 1928 - J. Random Citizen panics and tries to take all his money out of the bank.

Sure, it "rings" false, if the only people you listen to are the New York Times.

Lujlp -

You haven't seen me get angry yet. You wouldn't like me when I'm angry.

I don't like you anytime. I think you are a know-it-all-idiot, a supposed expert on everything whose only real opinion is that the Democrats are responsible for everything bad in the world. It's boring.

Due to my background, I keenly remember about 25 years ago how Europeans were upset that North American banks and institutions were buying land, real estate in Europe and flooding the market with North American products. The usual North American response was "well, that how open markets work, we've got the money and we're gonna use it". It's interesting to see whats happening when the tables are turned...who would've thunk twice about Barclay's bank?

Brian,
Thanks for your courtesy.

>>The economy is made up of many parts.
The bad loans and the subsequent liquidity crisis are THREATENING the other sectors of the economy which ARE sound.

My (genuine) problem is this (& I quoted that bit of your response because it connects to my genuine problem): it seems to be grudgingly acknowledged in the UK that behind the current mortgage crisis is the dismal, chronic truth that household debts - that is, money owed apart from mortgage commitments - are also at an all-time high - and poised to topple into crisis.

To get away from my UK focus, a US hedge fund titan I know was saying very recently (in paraphrase): "Americans are all hocked to the ears too, basically...". He then went on to chat about the Chinese - whom he characterized as the world's last great savers because there's no cushioning welfare and - for many reasons - a national allergy to living on credit. (He was making the 'cheerful' point that they represent a ripe challenge to his colleagues. I.e., get the Chinese to start spending instead of saving, and some savvy financial speculators will be in hog heaven...)

This (the hidden iceberg portion of not-yet-calculated household debt)makes me question how discrete the "bad" sectors of the economy - here and in the UK - really are. I get the impression many crucial parts of the western economies are saturated with dangerous debt - not just the bits we currently can't ignore?

I'd love to think we will all be looking back on these months with a shaky laugh - maybe sometime after November. I just don't know...but I do know I can't see the basis for economic confidence?

I don't like you anytime. I think you are a know-it-all-idiot, a supposed expert on everything whose only real opinion is that the Democrats are responsible for everything bad in the world. It's boring.

Like I give a fuck about you.

Can you prove me wrong? No, you can't.

Why? Because just about every fucked up policy in the last 40 years WAS WRITTEN BY A FUCKING DEMOCRAT.

Every supposedly bad thing that Bush did pales in comparison to the organized graft foisted upon the American people by the Democratic party from 1968 onward.

Hell, every bad thing that the Republicans did from that time forward pales in comparison.

You've got some unpleasant facts to face, Eric.

And one of those is that I am right.

Jody -

It is true that a good bit of the present growth in the economy is fueled by credit.

It's also true that a very large number of individuals are highly leveraged for all the toys they own.

Having a large mortgage by itself isn't bad.

Having a large mortgage, two luxury-car leases, and 25 grand in credit card debt to fill the house with toys, on the other hand...

It seems to me that having a small house is conducive to limiting spending for lack of a place to PUT new toys. Whereas having a 5,000 sq. ft. McMansion kinda entices one to fill it up.

I'm sorry but werent fast food jobs reclassified as manufacturing?

Its been a few yrs but i remember reading that somewhere

Well, I'm not so off base, according to the Washington Post.

Foreclosure Wave Bears Down on Immigrants
Economic Success Story Turns Sour as Thousands May Face Losing Homes

"Nationally, 375,000 high-interest-rate loans were made to Hispanics in 2005, and nearly 73,000 of them are likely to go into foreclosure, said Aracely Paname?o, director of Latino affairs for the Center for Responsible Lending. About 1.1 million homes in the United States are expected to go into foreclosure in the next six years, and many native-born Americans are likely to be stuck with burdensome loans. But immigrants are getting hit first in part because their incomes tend to be lower and many have lost construction jobs."

http://www.washingtonpost.com/wp-dyn/content/article/2007/03/25/AR2007032501323.html

> Oh, I'll still argue with you

Don't bother, I was being facetious. As noted above ("roll with this"), seeing a guy so small-minded with his personal finances get distressed about big-picture economics is awfully silly. Even within the flexible, encompassing boundaries of the form, Brian, your recent comments have been pompous and deranged...

> You wouldn't like me when
> I'm angry.

Do we like you anyway?

You come back with that, but I'm the one that resorts to ad hominem?

please.