FHA: Ready for the Mother Of All Bailouts?
posted at 2:00 pm on September 5, 2009 by The Other McCain
The FHA is on the hook for lots of “underwater” loans, taken out by low-income homeowners who got special low down-payment deals and — in case you didn’t notice — unemployment hit a 26-year high in August, with no prospect the 9.7% jobless rate will go down any time this year. Dave Hogberg of Investors Business Daily reports:
FHA-insured loans have more than tripled from 530,000 in fiscal year 2007 to 1.7 million thus far in 2009. The Government National Mortgage Association, which securitizes FHA loans, has boosted its mortgage-related issuance to $287 billion from $85 billion. Yet during that same period, the FHA’s loan delinquency rate has climbed to 14.4% in Q2 from 12.6% two years earlier.
OK, so guess what the consequences are now?
As job losses continue to mount, why would someone facing economic difficulties try to keep a home that is worth less than the money owed on it?
One expert explained to the Wall Street Journal what this means:
“They’re probably going to need a bailout at some point because they’re making loans in a riskier environment,” says Edward Pinto, a mortgage-industry consultant and former chief credit officer at Fannie Mae. “I’ve never seen an entity successfully outrun a situation like this.”
Read all about it at NTCNews.com. The revolution will not be televised, but the apocalypse will be blogged.
This post was promoted from GreenRoom to HotAir.com.
To see the comments on the original post, look here.
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With this and the upcoming commercial real estate bust I keep hearing about Early 2011 should be about the time we get another “too big to fail” bailout rammed down our throats.
catlady on September 5, 2009 at 2:07 PM
oh. dear. God.
Mommypundit on September 5, 2009 at 2:09 PM
Goody. What could possibly go wrong….?
JoeinTX on September 5, 2009 at 2:09 PM
MOAB= Massive Ordnance Air Blast
-or-
Mother Of All Bailouts
–same same–
ted c on September 5, 2009 at 2:11 PM
Where the heck is all this money friggin’ coming from to pay for all of these damn bailouts? Besides all of our pockets…
JetBoy on September 5, 2009 at 2:13 PM
Feeling like an indentured servant, yet? Because I am. All to Caesar.
Mommypundit on September 5, 2009 at 2:17 PM
Yes, the end result is our pockets, but in the short term it is just like an IOU to a loanshark. A bunch of finance ministers sit around a crack pipe and decide which IOUs get accepted and which IOU holders get their knees busted.
Limerick on September 5, 2009 at 2:17 PM
The jig is up. The pyramid is collapsing fast.
The Calibur on September 5, 2009 at 2:18 PM
I realize I just mixed my eras. You get the point. :P
Mommypundit on September 5, 2009 at 2:19 PM
Great line. More to the point, this is pretty crappy.
Weight of Glory on September 5, 2009 at 2:21 PM
Its OK, in Rome you could be sold into slavery to pay your debts… so… same same…
Romeo13 on September 5, 2009 at 2:22 PM
It is amazing to watch, isn’t it Jet? Keep this story in mind when Obama trys to sell his Obamacare.
Weight of Glory on September 5, 2009 at 2:23 PM
I sure hope Chicken Little is wearing a helmet.
Limerick on September 5, 2009 at 2:24 PM
Don’t forget how this will hit Fannie and Freddie as well… which are also owned by the Government…
Thay have artificialy inflated the GDP through giving Taxpayer money away to first time homebuyers, and Cash for Clunker types of programs… makes the economy look better than it is… its one problem of using straight GDP to measure economic success, instead of using PRODUCTION.
Romeo13 on September 5, 2009 at 2:24 PM
Yes it is good to see the Giants of Economics tackle with there intellect the issues of our economy. They have solved Freddie Mac and Fannie Mae so well we can now solve FHA with the same policy: Mommy when I wake up in the morning will everything be O.K.?
Sanmon on September 5, 2009 at 2:25 PM
Another crisis another day — we need health care reform before it’s to late – I mean mortgage reform – or something like that anyway …
wheels on September 5, 2009 at 2:27 PM
Chappaquidic-o-nomics.
http://market-ticker.org/archives/1410-The-Next-Boom-FHA.html
the_nile on September 5, 2009 at 2:29 PM
FHA loans are tied to GinnieMae’s, the favorite inv. vehicle of widows and orphans. So if you think Fannie and Freddie were bad, the gov’t is in process of destroying Ginnie as we speak. The bottom line unfortunately is that most of the debt gteed by the US gov’t is now crap, as well as the gov’ts pension, SS and Medicare obligations. My take is that only a few things can happen at this point, or some combination:
-massive tax hikes
-massive printing of money to pay the debts and debasement of the currency
-massive interest rate hikes
-massive service/benefits/safety net cuts
-permanently high unemployment
-massive reduction in the Am. standard of living (although it has been artificially raised for two decades by out of control borrowing on the part of gov’t AND consumers.)
-re/schedule/repudiation of the debt and default.
There are NO GOOD OPTIONS. You better like rice and beans, or beans and rice.
( I suppose HUGE productivity increases, new discoveries/inventions, POLITICAL CHANGE, could lessen the blow. For ex. if we drilled for oil everywhere, built nuclear plants everywhere, and used our coal and NG, we could cut our energy imports dramatically. That would help.)
JiangxiDad on September 5, 2009 at 2:30 PM
The kids , will inherit the debt.
the_nile on September 5, 2009 at 2:30 PM
Government owned auto manufacturers.
Government owned banks.
Government owned mortgages.
Government owned insurance industry.
Government owned media.
What is so un-American about that?
Limerick on September 5, 2009 at 2:30 PM
Hey! Obama! Yeah, you, dummy! I think I just discovered your problem!
In a free market–you know, the kind where you have to sink or swim–you would not be cheerfully extending loans to people who clearly cannot pay the money back.
__________
RJGatorEsq. on September 5, 2009 at 2:31 PM
NO! Dammit. If they need money take it back from ACORN and the unions.
darwin on September 5, 2009 at 2:35 PM
Also, keep in mind that several hundred more banks are expected to fail, and the FDIC has nowhere near the money to cover it. Do what you can now to secure what you’ll need for several months. And begin to think about how we can respond politically at a state level to a federal government that will be more than happy to take advantage of a panicked public. Keep guard.
Weight of Glory on September 5, 2009 at 2:39 PM
This is not coming from our pockets (we passed that point already) but from the Full Faith and Credit of The United States. This is nothing less than the intentional destruction of our monetary system, and therefore, of America. This is the process of turning currency into paper.
progressoverpeace on September 5, 2009 at 2:39 PM
If they do, as seems likely, they will repudiate it. They will not be willing/able to reduce their lifestyle any more than “we” are to re-pay it now. Our creditors have much to worry about.
A couple years back, when Argentina defaulted on it’s sovereign debt, many in Italy lost their shirts. It was paid back at only a few cents on the dollar if I remember correctly.
Think of the US as a house, for which the citizens “paid to much” and now we’re underwater. At some point, looking ahead at a lifetime of debt repayment with no chance of getting out from under it, the borrower just walks away from the debt. The creditor gets left holding the bag. That’s capitalism too. If I were the Chinese/Japanese et.al, I’d be very worried.
JiangxiDad on September 5, 2009 at 2:41 PM
No problem. We can get a bunch of the funds back by selling Bell Helicopter, Boeing, and Lockheed to the Putins of the world.
Limerick on September 5, 2009 at 2:43 PM
The Chinese are purchasing commodities and companies all over the world to try to get rid of their mountains of dollar that they worry about. I wouldn’t be surprised to see asset purchases here in the US–they could buy all our companies and real estate and shopping malls. Then they’d own the production facilities, the distribution and retail outlets, be our landlords, run our ports and airports, etc. It would be like visiting a foreign country w/out having to go anywhere. Our gov’t has done a great job of preparing America for the future.
JiangxiDad on September 5, 2009 at 2:47 PM
NO MORE BAIL-OUTS
Let FHA fail if it’s too incompetent to function properly.
Quit feeding the Beast.
maverick muse on September 5, 2009 at 2:48 PM
JiangxiDad on September 5, 2009 at 2:41 PM
But that’s when the big guns come out to settle differences.
maverick muse on September 5, 2009 at 2:49 PM
OT:
Is this the first R.S. McCain post promoted here from the Green Room? I was going to comment that you can no longer use the “Allahpundit hates me!” line.
Then I noticed it was Ed that promoted the post.
Heh.
cs89 on September 5, 2009 at 2:51 PM
The gov’t buys votes and voters. There can be no failure in Am. capitalism, only successes, as the pol. class will pay a pol. price. The pols are corrupt, the voters are corrupt, the society is corrupt. It will fall apart later than w/out the bailouts imo, but it will be worse when it finally happens. But it’s human nature to avoid hard and painful decisions until there’s no other choice. That’s what we’ll do as well.
JiangxiDad on September 5, 2009 at 2:52 PM
On topic:
The economic crisis is clearly not over, and nothing the DC idiots can do is going to get the problems fixed in time to save Obama’s rep in short order. To my non-economist eyes, it looks like massive inflation is pretty much the only way out of this mess without a total economic meltdown.
Time will tell.
cs89 on September 5, 2009 at 2:52 PM
(looks around) I’m assuming you’re referring to me, so, do you want the cuddly, kissy answer or the I’ve-put-the-kids-to-bed-and-been-drinking-imports-answer? Or, both? I can do both.
Mommypundit on September 5, 2009 at 2:53 PM
Forget economic meltdowns. Massive inflation will be death, as it will be uncontrollable. We can survive economic depressions, but we cannot survive monetary destruction.
progressoverpeace on September 5, 2009 at 2:55 PM
Very possible. I’m still hoping of course that sanity returns in 2010, that Obama is hamstringed, and that the new “gov’t” talks austerity 24/7. That might satisfy our creditors and give us a chance for a new Pres. in 2012, and a return to the path of fiscal conservatism, if not the reality of it yet.
JiangxiDad on September 5, 2009 at 2:55 PM
“Mr.Ponzi, please phone your office.”
oldleprechaun on September 5, 2009 at 2:56 PM
The economic problem is solvable. The political will and leadership is lacking.
JiangxiDad on September 5, 2009 at 2:57 PM
I do mortgages and FHA are about the only loans out there right now. Move up buyers are gone due to low values and concern about jobs, so FHA is the only way to go, plus all the repo’s and short sales are making home affordability at a 40 year low. The good news is that FHA is underwriting stricter than it has in years.
momof2 on September 5, 2009 at 2:58 PM
Measuring the economy by production causes fare more problems (such as thinking East German had a higher PCI than West Germany).
I agree with the first part, I think clawing our way back to a fully sound economy is going to take 20 years and a permanent 30% reduction in American living standards (well, and more elsewhere). I also agree we should do all the things listed, I just wanted to point out those are medium to long term fixes. It’ll take a decade before we can have oil wells, nuclear power plants, and new mines operational.
It’s a key part to getting back to a sound economy by it won’t do much for the short-term. It’ll actually force even lower living standards as all that has to be paid for now while they won’t produce wealth for a while. It could also have an effect by convincing global investors we are serious and by helping to stabilize commodity prices, but I have no idea how much it would do so.
The Chinese are also starting to be blocked from doing so by more countries. That’ll increase as China expands purchases (if they do, they seem to realize they simply have too many dollars for that to be a viable method of getting rid of them, it’s also not safer than bonds), and as more of the world gets upset with China increasing its protectionist practices, the EU just produced a report about it, and things like its decision to stop rare earth metal exports after buying/driving the rest of the world’s rare eath mines out of business (another reason resistance is growing to allowing China to buy more companies).
jarodea on September 5, 2009 at 2:58 PM
please,please,please give me health care now or we will all go bankrupt!!!!!!!!!!
david kumbera on September 5, 2009 at 3:00 PM
“Heh,” indeed.
The Other McCain on September 5, 2009 at 3:01 PM
Monetary destruction is just another form of economic crisis, it can and has been survived by many countries including the young Unites States. It’ll be painful, no doubt about it, but it can be fixed.
jarodea on September 5, 2009 at 3:01 PM
Yes. Economic problems are always solvable. But we need a monetary system to have an economic system built on.
This is beyond political will and leadership. This goes to the population, too, who have already repressed memories of Oct 2008 and are happy to pretend that it never happened and cannot be revisited. Further, they don’t seem to understand what it really means.
The discussion needs to move from the idea of “too big to fail” to the coming reality of “too big to be able to rescue“, which describes the US monetary system and the difference between the dollar and every other currency in the world, and in world history. That is what has been missing from this whole discussion.
progressoverpeace on September 5, 2009 at 3:04 PM
Agree with all you said. There are no quick fixes for anyone, but we can still save our kids and grandkids if we wish. That is not too late to do. We are in desperate need of leadership. America is a great jewel just crying out for someone to appreciate its value. I don’t think we’ve seen that person yet.
JiangxiDad on September 5, 2009 at 3:04 PM
Sorry, but you are sadly mistaken. Look at my post after yours (I was typing as you posted so I didn’t see yours).
progressoverpeace on September 5, 2009 at 3:05 PM
JiangxiDad on September 5, 2009 at 3:06 PM
Mommypundit Or, both? I can do both.
I think we will all have to be multi-talented. Or we could just sing a song from Annie.
Sanmon on September 5, 2009 at 3:06 PM
Remember, most people don’t learn in advance, only after a bad outcome happens. It remains to be seen what the Am. people are made of once catastrophe reaches home. We have some inkling of that after the Katrina storm, and the floods in the mid-west, and Texas coasts. It’s not all good news, but it’s not uniformly bad either.
JiangxiDad on September 5, 2009 at 3:09 PM
In a democracy there is only one reason for that. The primary problem I think is most voters want a better economy, who wouldn’t, but I don’t think you can form a majority who are willing to pay the necessary sacrifice to do it. The only time I can think of a people accepting that level of sacrifice has been during a major war or immediately after a particularly destructive one.
Even without the political (ie, voter) will though, the economy will fix things eventually. It’ll just take longer and be more painful.
jarodea on September 5, 2009 at 3:10 PM
If you mean in a generation or two, after this current set of voters departs for the great granite countertop sale in the sky, then I’m with you. In the long run, we’re all dead(been waiting to use that line.)
JiangxiDad on September 5, 2009 at 3:13 PM
To be more specific, other monetary disasters have only been mitigated by the existence of larger, stable currencies to take up the slack and by bailouts from from wealthy nations (usually the US). There is no currency that is large enough to take up the slack of a destroyed dollar and there are no nations even nearly wealthy enough to bail us out. When the dollar ceases to be a usable currency, it’s all over.
The US dollar is a totally fiat currency that is too large to be saved and, once set on the spiral of inflationary destruction, cannot be rescued. The world has never been presented with such a situation.
progressoverpeace on September 5, 2009 at 3:13 PM
Well, I’ll stick with what my economic history books say I’m afraid. Monetary collapse due to hyperinflation has been survived by the US, West Germany, Russia, and a handful of Latin American states amongst others. That is not to say it wasn’t very painful, that the US suffering it wouldn’t be far more so, or that the US public will allow it to be fixed (I wouldn’t be surprised if it caused a collective freakout), just that it can and has been survived before.
jarodea on September 5, 2009 at 3:14 PM
The world will readjust to a new system. It’ll be painful, and it could lead to a total societal collapse, but it’s not pre-ordained.
jarodea on September 5, 2009 at 3:16 PM
That’s why our creditors are still willing, albeit reluctantly, to go along with our fiscal shenanigans. No alternative is in place. But that can change, and those changes are starting to happen. Once or twice a century it seems the world’s currency regimes change. We’re starting to see the beginnings of the next change. Surely the US dollar alone won’t be the “reserve” currency of the second half of the 21st C
JiangxiDad on September 5, 2009 at 3:18 PM
Keep Spendin’, spendin’, spendin’
Though the taxpayers are disapprovin,
Keep them bailout billions movin’ Porkhide!
Don’t try to understand ‘em,
They’ll be free so just grab ‘em
Soon they’ll be living high and wide
Boy their heart’s are calculatin’
All their new graft will be waitin’, be waiting at the end of their ride
Spendin’, spendin’, spendin’
Spendin’, spendin’, spendin’
Spendin’, spendin’, spendin’
Spendin’, spendin’, spendin’
Porkhide!
Spendin’, spendin’, spendin’
Borrowin’ borrowin’, borrowin’,
Printin’, printin’, printin’
Though the deficit is swollen
Keep them bailouts rollin’
Porkhide!
MB4 on September 5, 2009 at 3:18 PM
Don’t look up….
lovingmyUSA on September 5, 2009 at 3:18 PM
I’m with you on that.
JiangxiDad on September 5, 2009 at 3:19 PM
Look at your books more closely, because the US dollar is in a position that no other currency has ever been in, in terms of its size and scope – the world’s trade and reserve currency. On top of that, the US currency is a totally fiat currency, which adds another wrinkle.
This is not a situation that history has seen. Not even close. We are not Argentina. We are not Albania. We are not Iceland. We (our dollar) are too big to be rescued.
progressoverpeace on September 5, 2009 at 3:19 PM
Have started doing one (*glances at whiskey bottle)–will do other when I tuck grandson in tonight…definitely will do more drinking then, while contemplating his future…
lovingmyUSA on September 5, 2009 at 3:20 PM
Good point. The change to the next regime will likely be much worse than the last. But end of the world bad, or just end of the world as we know it? I think the latter.
JiangxiDad on September 5, 2009 at 3:21 PM
*Grandson is not here–hence the whiskey bottle–he will be over tonight. *Drink responsibly–heh.
lovingmyUSA on September 5, 2009 at 3:21 PM
Scary tho…it actually makes perfect sense in today’s America.
JetBoy on September 5, 2009 at 3:24 PM
The only currency that can replace the dollar is a basket or different currencies. i.e. world currency. i.e. world government. Count on it.
The Calibur on September 5, 2009 at 3:24 PM
Agreed, but when the time comes for it to be ditched, something will be there to take its place. If we continue on this path of destroying our currency, until an alternative is in place for nations who don’t want to go down with us, they will go down with us. I suspect as our std. of living goes down, so will theirs. We all go down together as the dollar decays, but there’s a floor, and people can stand back up, over time.
JiangxiDad on September 5, 2009 at 3:25 PM
It’s an “all bets are off” sort of situation. No one knows. Add in our just-in-time inventories supplying the bulk of the population and you can see how vulnerable our whole society is to any monetary disruption, let alone devastation. And any minor disruptions in the US cascade out to huge problems for the rest of the world, as they all live off of the engine of our economy (not to mention our dollar).
progressoverpeace on September 5, 2009 at 3:26 PM
It would have been a hard hat if the Stimulus were actually funding our nation’s nuclear energy plants, natural gas pipeline from Alaska, and refurbishing of public highways, waterways, power and communication wiring.
maverick muse on September 5, 2009 at 3:27 PM
Ich habe meinen Sturzhelm an.
Kleines Huhn on September 5, 2009 at 3:28 PM
We’ve had a world currency (gold, British pound, US dollar) before w/out necessarily having a world gov’t. But you may be right. Without a strong US, there’s a power vacuum, and the bad guys will fill it. The rest of the world childishly played with fire with their moronic “anti-Americanism.” They’re now finding out (Honduras, for ex.) what the price of that stupidity was. The world wanted Obama, they got Obama.
JiangxiDad on September 5, 2009 at 3:28 PM
That won’t even be available, as the other currencies will suffer from our dollar problems, too. The economies of those nations will suffer tremendously without the US economic engine helping them and their central banks’ reserves (mostly dollars) will be wiped out. Interenational trade will come to a standstill without the dollar. This is why people were proposing zany ideas such as “wiping out all debt and starting over” in discussions of OCt 2008 and the possibility of the sudden destruction of the dollar (though no one really knew what the situation actually was – and we still don’t).
progressoverpeace on September 5, 2009 at 3:30 PM
The world wanted Obama, they got Obama.
JiangxiDad on September 5, 2009 at 3:28 PM
If it’s all that simple, then “reset” and undo.
maverick muse on September 5, 2009 at 3:31 PM
I wouldn’t be so sure. It’s an interesting exercise to ponder, since for all we know we could be using the Quebcois Franc in 50-100 years, but I would have to give the greenback decent odds. There isn’t anything that can seriously replace it. The euro and yen are both heading down (we’ll see if the euro even survives).
No other currency represents a sufficiently large share of the global economy to really work except the yuan, but that would require China giving up some control over it and being less opaque about it’s finances (there’s some concern that China’s debt maybe bigger than every country except Japan), and it requires China to avoid collapse between now and then. We could use a global currency or a commodity based one but both have serious issues which have prevented them recently and will in the future.
So we return to the dollar, though of course I could be completely wrong, maybe Japan’s robots take off and they take over the global economy, who knows.
All of which can be survived, just like the Roman inflation was, which again is not to say it will be. It’ll be like Tulip mania, wealth will be destroyed, banks will close, businesses will shutter, people will panic and suffer. Then though, food needs to be grown, roads need to be maintained, clothes need to be woven, life can begin again at a lower level but since the knowledge and skill base is still there it can quickly grow to where it was.
jarodea on September 5, 2009 at 3:31 PM
+1.
Fletch54 on September 5, 2009 at 3:35 PM
Yeah, in the short run, really bad shit can happen, and likely will for the adults in Am. today. I think the kids still have a fighting chance. Luckily, they won’t have to work to hard to do better than we did.
JiangxiDad on September 5, 2009 at 3:37 PM
“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
- Ludwig von Mises
The Calibur on September 5, 2009 at 3:38 PM
LOL. First they gotta “unwant” him. My family still thinks he’s the cat’s meow. I’d bet most of the world still does. But give him a little more time. He has that effect on people :)
JiangxiDad on September 5, 2009 at 3:40 PM
That’s what I tried to say before. hey, who’s this Ludwig guy :)
JiangxiDad on September 5, 2009 at 3:41 PM
I mean…we were already running in a deficit when Obama took over. And in less than one year, we’ve seen the mega-bucks “extras” like the stimulus, C4C, bank bailouts, GM bailouts, etc etc etc…and now, this.
So really, where IS all this money…money we didn’t have…all of a sudden coming from? It boggles my mind.
JetBoy on September 5, 2009 at 3:41 PM
Now you tell me! I’ve been trying to get rid of them as fast as possible. Yikes.
JiangxiDad on September 5, 2009 at 3:42 PM
AMEN. Since Plugs said that the stimulus worked and only 2% of it has been spent, then repeal the effin’ Porkulus package and return our wealth to its rightful owners. The TAXPAYERS!
This administration is going down.
Key West Reader on September 5, 2009 at 3:48 PM
The gov’t funds itself through taxes, and by the Treasury Dept(an exec. branch dept) selling debt(issuing bills, notes and bonds), mostly to foreigners, but lately our own central bank (The Fed) buys them as well. The Fed also buys a lot of other “debt” held by banks and corporations that have crap on their books and want real dollars instead.
So the real question is how much of the money that the gov’t spends comes from
-tax collections
-selling treasury debt to people who have real cash to buy it.
-the Fed PRINTING THE MONEY AND GIVING IT TO THE TREASURY IN EXCHANGE FOR CRAP, CRAP DEBT, AND BAD DEBT.
How much $ can a central bank print, out of thin air, before what they print has no value? Will people with real cash to spend continue to buy Tres. bonds if they know that the FED will continue to print money? Can a country print it’s way out of Debt????? (hint: no)
That’s the basics. sooner or later, the piper has to be paid. If you’re under 90, you’ll prob. pay it.
JiangxiDad on September 5, 2009 at 3:48 PM
And then there is the other shoe about to drop too?
KentAllard on September 5, 2009 at 3:49 PM
The unfolding train wreck continues to pile up cars one upon another. Think for a minute what we’ve seen in the past couple of years – unprecedented failures in companies, markets, government entities, and economic infrastructure. There is almost no economic failure remaining that will shock Joe 6P- with maybe one exception: hyperinflation and currency meltdown. And that will be the end-all of the country as we knew it.
We have pumped BILLIONS into failed govt agencies, just to see them return and ask for BILLIONS more. State budgets continue to deteriorate in light of falling tax revenues, leaving people in dire need behind. The storyline keeps repeating itself, manifesting itself in record bankruptcies – with bailouts only delaying the inevitable. Record unemployment, record food stamp recipients, record numbers of foreclosures and soon-to-be record bank failures. Each quarter worse than the last as the train cars pile up on one another.
Think things will turn around just because we want them to, or b/c some convicts in DC have doled out street money to make it look like things are progressing? Pissing up a downspout is what that amounts to.
Need some introspection? Try to recall ANY time in your life that you’ve seen even 1% of of the catastrophes you’ve seen in the past 2 years. Ask your parents to do the same. My 92 yr old Grandmother is the only person I know who can – and she trembles when speaks of the Great Depression. She begs The Lord will take her before she ever has to see that again.
How much longer will it continue? Hard to say really, but the key thing is to prepare for the end game, and be charitable as it unfolds. There are many people already taking the hurt, and we need to make sure we have not lost the one thing that makes this country great – our compassion for our fellow citizens.
IT is at the front door looking in. The worst will be coming sooner rather than later/never. This period in time will go down as the most trying economic time in this country’s history – as it approaches the magnitude of the GD, and then surpasses it. There is no cushion this time – no savings to tide us over, no production base to rekindle the fire.
The effort to rebuild will be enormous; but worth every bit if it keeps this country from making the same set of mistakes again.
NumberTwo on September 5, 2009 at 3:50 PM
When will they stop giving home loans to low-income people? geez…
Isnt that why we have public housing? I know some are really bad but there are some good facilities to be found.
becki51758 on September 5, 2009 at 3:51 PM
That’s just it…And how long can outstanding debt be shuffled around before someone(s) has to get paid…
JetBoy on September 5, 2009 at 3:53 PM
yes. It would seem to be the case. I sometimes take a moment to stop and look around at the people passing, feel the summer breeze and watch modern Am life going on around me, and try to capture the picture and feel in my memory, in case I don’t see it looking this way again. I try to warn some people, but it’s mostly impossible.
JiangxiDad on September 5, 2009 at 3:54 PM
People are already being paid. Treasury bonds mature every day, and people get their US dollars back. The question is, if the Fed keeps printing them, will the dollars you get back be able to purchase anything? When people lose faith in the purchasing power of their currency, and fear that it will be worth far less tomorrow than today, they get out of that currency if they can, or buy as much as they can today. I think you can see what either of those would do to an economy. In order to restore some value to the currency, the interest rates have to rise enormously to entice people to hold it. Very high int. rates can be disastrous for businesses and people looking for mortgages, prices rise on essentials, unemployment rises, it’s a total nightmare.
JiangxiDad on September 5, 2009 at 3:59 PM
I’ve just started following you on Twitter and am soliciting friends. Yes?
(I’m so shameless.)
Mommypundit on September 5, 2009 at 4:00 PM
Yep, this might be the one that finally kills us.
Dave R. on September 5, 2009 at 4:01 PM
Fixed, you’ll never be able to keep people from making the same mistakes because people who didn’t live through it can only be taught about it (given the state of our public education we’re not even doing that). That will dissuade a few but most will just assume those old fogies didn’t know what they were doing, their brilliant generation will do it right. It’s not like any of our current economic problems are new or special, we’re just repeating our grandfather and great-great grandfathers’ mistakes.
jarodea on September 5, 2009 at 4:03 PM
The loan needs to match the income. Banks used to hold the mortgages they wrote, so the lending stds. were strict. For the past decade or so, banks sold the loans immediately where they became co-mingled with others as some fancy new debt instrument that other financial institutions bought. So the orig. bank didn’t really care any longer about the creditworthiness of the borrower, because the loan wasn’t going to stay in the originating bank. Also, the gov’t made it difficult for banks to say NO, and accused the banks of racism.
I think the society seems to be debating whether we still want to live in a meritocracy, where the best and brightest get the most stuff. Should poorer people have crappier educations, cars, food, houses, health care, etc than richer people, or should we all have the same, or should some things be the same and some different? When those fundamental questions get answered, we’ll know whether or not the gov’t should be encouraging home ownership for all.
Also, if we don’t want equality of outcomes, only equality of opportunity, can everyone have the vote?
JiangxiDad on September 5, 2009 at 4:07 PM
“Honey, what’s up with that new sign out front?” http://optoons.blogspot.com/2009/02/honey-whats-up-with-that-new-sign-on.html
Mervis Winter on September 5, 2009 at 4:09 PM
Hyperinflation is very painful, but survivable:
Hyperinflation is (not completely) a Black Hole
In short, stock up on commodities, mostly food and ammo. Buy gold and silver if you can.
The high-risk play is, if your dollar-based income rises with hyperinflation, to pay off all your debts really quickly.
ZenDraken on September 5, 2009 at 4:09 PM
So true. Very few people learn history, and more importantly, learn from it. But as you’ve just stated, it’s always been so. And we’re not unique at all, and so we will generally fall in the same holes as others have, and as future generations will. Now we’re no longer living in caves, so some forward progress is evident, so it’s not all bleak. But there are some downsides I imagine to living to a ripe old age. It must become unbearable sometimes to watch.
JiangxiDad on September 5, 2009 at 4:15 PM
The new motto: Buy a house that is no longer worth what you owe on it, taxpayers have to help out.
How long before people that bought a new car and financed it for 6 years realize they owe more than it is currently worth will then get taxpayer help?
Oleta on September 5, 2009 at 4:17 PM
Ive always believed that the rewards go to those who work the hardest, studied the hardest. That you need to do this to make it in this world. At least, thats what I always taught my daughters.
My feeling is we have too many on welfare raising children and it creates a generation that will stay on welfare. I have no solution for this problem tho.
becki51758 on September 5, 2009 at 4:18 PM
Statement of the Year!
Yikes!
cmsinaz on September 5, 2009 at 4:19 PM
The general problem is that the system does not allow for full employment, therefore, full motivation is not possible.
The Calibur on September 5, 2009 at 4:21 PM
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