Originally Posted By fkurucz <<It's going to be hard for the stock market to keep up as people start raiding they 401(K), IRA, and other retirement accounts to pay for lifestyle expenses that used to be paid for by the home equity line of credit.>> FWIW, my observation is that the people who will most need to raid their 401(k)s are the ones who didn't save to begin with. I mean why save when the house is appreciating 20%+ per year, right?
Originally Posted By Dabob2 This also points out why the scheme to privatize social security (which McCain favors too IIRC, though he never talks about it) was such a non-starter, and bad idea. It seems great when the market is going well; not so great when it's like it is now. We need PART of our retirement plan to be predictable and steady. (This, of course, is a separate question from believing as many do that their social security won't be there when they retire. The question is what to do about the shortfall long term. There are a number of possible options, but privatizing is not a good one.)
Originally Posted By DyGDisney fkurucz-- I've noticed you are very bitter toward people who own houses, people who have taken out home equity lines, and people who own big cars. Where does that come from?? I mean, how does it affect you?
Originally Posted By mawnck >>Even the putative leader of the California GOP is frustrated by his own party. Ultimately it's arnold's responsibility to sign a balanced budget, but it's his own party that's being obstructionist. And this has been the case for years.<< If I were Arnold, I'd be phoning up the NATIONAL Republican leadership and telling them that if they don't slap some sense into their troops, I'd be switching my party affiliation between now and November. I don't know if he's that much of a maverick, but it'd be cool.
Originally Posted By Elderp I blame us as a voting public. The people in the offices are only there because we let them. If we as a society are deadlocked, can we expect our officials to be any different?
Originally Posted By fkurucz <<I've noticed you are very bitter toward people who own houses, people who have taken out home equity lines, and people who own big cars. Where does that come from?? I mean, how does it affect you?>> Don't get me wrong. There is nothing wrong with having a million dollar house and a garage full of BMWs, provided that one can actually afford them. The problem is that people were financing these lifestyles by buying houses they couldn't afford with "creative" loans, and then borrowing and spending any equity they had in the house. This scheme works fine as long as there is double digit appreciation year after year, which is impossible, contrary to claims made by the National Association of Realtors in the not too distant past. And yes, David Lereah did actually say thay the boom would never end. So we has a situation where households with 60K incomes were buying $600,000 houses with no money down. Durig the first year or two montjhjly payments would be artificially low as the loans had negative amortization (meaning that instead of slowly paying off the loan, the balance would actually increase). Eventually the payment would "reset" to a value that would actually pay off the house (and consume nearly 100% of the borrowers income). The plan, of course is that once this happened, well, you would just refinance, which was easy since your house might have appreciated 40% during this time. Since the house appreciated 200K or more a lot of people would take some cash out and buy "toys". Now this sounds all good and fun, but what happens when the appreciation stops? People can no longer refinance and often find themselves facing a real monthly payment that exceeds their entire monthly income. The outcome is what have already seen: an unprecedented number of foreclosures. This of course has a chain reaction in the economy. People in the housing sector lose jobs or see commissions vanish. Banks start to fail left and right (there is concern right now that the FDIC could become insolvent). Oh, and don't try to sell your house right now. Mortgages are suddenly very hard to get and there are plenty of foreclosures for sale, which can be a real bummer if you need to relocate for a new job. The bottom line: this crash may drag us into an abyss unseen since the great depression. The cost of bailing out all the bad mortgages will probably be in the trillions of dollars and it is likely that we will see millions of surplus homes bulldozed into the ground. So why am I bitter? Our economy is a wreck because of all this. That's why.
Originally Posted By DyGDisney Right, I can understand why it's upsetting, as it's affecting us all. We put down $120,000 on our home, and currently have no equity because it has dropped that much. We did not buy a huge house (1460 sq. feet) or a new house (it was 15 years old when we bought it), nor have we taken out a home equity line to go on vacations or buy toys (no toys for us, and my car is now 11 years old). But it was in an area of CA that had a huge boom and has been hit with a huge decline. My husband also lost his job, along with 2000 people in his company 3 years ago and we have yet to catch up to where we were. We are all hurting, but we aren't all bitter. That's why I asked, you seem especially, personally upset and affected by decisions others have made.
Originally Posted By Mr X Interesting that this story is absolutely BURIED on CNN.com (you have to delve deep into World Finance to even find it...something that certainly should warrant a mention on the front page I would think). If the "liberal media" hates McCain so much, why aren't they throwing this in his face on the very night of his acceptance speech. Seems they are actually doing the opposite (not that they SHOULD..news is news). Go figure.
Originally Posted By fkurucz <<We put down $120,000 on our home, and currently have no equity because it has dropped that much>> This is why I am upset. Honest people like you lost a fortune because of a bubble market that was created by a bunch of greedy opportunists. Had the lenders put their foot down and said no to this nonsense (via time tested lending standards), this bubble and crash would not have happened and you would still have your $120,000. Instead, there is a good chance that you will never see that money again, and even worse your house may end up being worth much less than what you owe on it (I fear that California is nowhere near the bottom yet). This is the legacy of the housing bubble. It may end up being the greatest involuntary transfer of wealth in history.
