I need to vent -housing bailout, auto industry, share the wealth, and other ramblings

The BBQ Pit
1

Rehashing and venting because I just have to.

I know this has been hashed and rehashed, but today I just had to hammer it out myself.

A few years ago, my wife and I were looking to buy a home. We saved for it, and even though we qualified for a home twice as expensive as the one we eventually purchased, we thought the fiscally responsible thing to do was to buy a house we could comfortably afford. What suckers we were! And all of you that did the same thing? Morons! The lot of you!

This bailout is the biggest cup of wrong I have ever seen. If you are one of the people that are on the brink of losing your home (and I doubt there are many, since this board attracts relatively intelligent people), I don’t care about your bad decision. You have no right to keep your home because you were “pressured” by a “predatory lender”. IDIOTS! Maybe sitting in the rain and/or snow this winter would motivate you to understand the concept of personal money management and responsibility.

If you have kids, that’s tough. Let relatives or CPS handle them. They deserve to be warm. But how bailing out you idiots is going to do anything but continue the irresponsible living on credit this country is addicted to is beyond me. Can’t afford it? HA! Let me get it! Mr. and Ms. Taxpayer takes it up the ass again just for you!

Screw Congress and Bush for bailing out AIG, Fanny and Freddie, and the Wall Street fucks who knew exactly where this was going, made their millions, and got off with a jolly check from Mr. & Ms. Taxpayer to temporarily “fix” the problem.

A red-hot poker up the ass for the Congress and Clinton for deregulating the financial markets and making the housing/banking/loan crisis possible in the first place. Yeah, it’s a nice warm and fuzzy to think that everyone should have a home, but when you lower credit standards to the point where any blithering idiot can borrow 100% of the cost of the home, the closing costs, and any other incidental costs because hey, they DESERVED to have the home, they should reap what they sowed. But we reap it instead. And my ass is still burning.

Why, oh why did I save the 20% down? Why didn’t I take that ARM? Why didn’t I borrow the closing costs? Now, instead of paying what I owe, I could get my lender to renegotiate my loan rate, any late payments and penalties, and any other financial problem I may have. I could be living on that 10 acre horse farm, instead of the house I currently live in. Motherfucker… what was I thinking?

Hey! Here’s an idea! Make yourself a bank and try to get in on the government cash grab! American Express did it today (they are defining themselves as a bank “holding” company) And the list is growing by the minute. Companies trying to get a piece of the endless pie that is the bailout. Each addition to the bailout will come with its own pork, just like the first one. There is no end in sight.

The bailout won’t end here either, folks. Because Detroit can’t build cars that Americans want to buy, the big three automakers are all in danger of going under. So they come hat in hand to Congress and Pelosi and the rest of the Monopoly money morons can write yet another check to save these companies (and more importantly jobs, which means votes.) Screw Ford, GM, and Chrysler. This is supposed to be a capitalistic society. You can’t compete? You lose. Chapter 11 all these fuckers, let them restructure like any other company, roll the dice and take your chances. We make Hondas, Toyotas, and BMW’s in the US. Where is it written that we owe these Detroit clowns an infusion of cash because they build inferior products, have unions that have saddled them with high wages and retirement benefits that are slowly choking the life out of their own companies (no offense to the unions… they won their benefits at the table fair and square, but like a parasite they are just about finished eating their host)? Circuit City just filed for Chapter 11. Where was their bailout?

I fear what America is becoming and is turning into. And I don’t see how rewarding poor decision making is the way to go. Like a CEO who gets a golden parachute after running a company into the ground, Bush and Cheney will leave a country in finalncial tatters, and the rest of us will have to clean up the mess.

I don’t think Obama has a chance to fix much… there is so much broken. And bad decisions are bound to happen. (I don’t think McCain had much of a chance either). But sharing the wealth is a bad idea unless we are moving this country in a socialist direction, and that’s not who we are as a nation… at least, I hope not.

Where to start? To me, a fair tax is a Federal flat tax, a closing of the tax loopholes that benefit those that can afford to find them, and a coherent domestic/foreign policy. The problem is that those that make the laws have no real motivation to change things, because most of the lawmakers benefit from those loopholes. Democrat and Republican alike are richer than most of us. There must be a reason that so many millions of dollars are spent to win an election to a job that pays peanuts to these folks. The answer to any question that seems to be illogical can be answered with one word. Money.

Finally, I am curious how Obama is going to handle the realization that we won’t be leaving Iraq anytime soon, that permanent bases have already been built and continue to be built, and that a unilateral pullout will be almost impossible. And please don’t forget about Afghanistan.

What a nightmare.

I’m tired, but I finally got some of this bile out of my system. Maybe I’ll sleep a little better.

PS Happy Veteran’s Day.

2

The Big Three have been colossal morons for years and years now; there’s no argument about that. But the amount of jobs that are lost if they go under is not just the people working directly for them. You’d have thousands (possibly millions) lose their jobs who worked at parts suppliers, “3rd party” manufacturing, dealerships, bars, restaurants near plants and offices, smaller credit unions, cleaning companies, etc. etc. etc.

When you have corporations become so big, they become a necessary part of the economy. It sucks but you have to balance “too fucking bad, if a corp can’t compete, they should sink” with “if they sink, they’re taking millions of people who weren’t responsible for the non-competitiveness with them”.

3

In the very short term (i.e., two weeks), you are absolutely correct. Over any longer term, this is a very incomplete picture of how things could and probably would play out. Two possible scenarios that don’t lead to permanent job losses are as follows: (i) Joe Blow, a successful businessman who has always had an idea for building the next great American car, buys GM’s assets on the cheap and starts production. In a few years his car is all over the place and Joe has more employees than does GM. (ii) The parts suppliers start working the phones to find others that need parts made and start talking to their engineers to determine what else their plants and workers can make. Soon enough, a plant that used to make air filters for cars is making air filters for houses and a plant that used to make transmissions for cars is making transmissions for tractors.

This isn’t necessarily true. What is true is that the pain caused by a business failure increases as the size of that business increases. But this doesn’t necessarily mean that a business should not be allowed to fail once it reaches a certain size. The moral hazard and other issues with constantly bailing out large businesses may outweigh any short-term negative effect caused by the business’s failure.

4

I’m a moron when it comes to economics but…isn’t that one of the reasons why we used to have anti-monopoly laws? To prevent what’s going on right from happening in the first place?

5

As to the OP’s point about responsibility in home buying: I feel your pain. I’m in exactly the same situation as you with the additional cosmic joke that I moved to the smoldering pit that is Oklahoma in order to leverage higher pay and lower housing prices into something approximating a middle class existence. I could have stayed in a vibrant, beatiful part of the country, kept my easier, crap paying job (with shorter hours and more vacation), and bought an damn near identical house for twice the money and now I’d be able to stick my hand out and get a big fat do-over.

One other thing. Let’s say you (not anyone in particular) bought an overpriced house you couldn’t afford for, say, $500,000 with no down payment, and have made the minimum payments at the teaser rate of, say, 1% for the last three years and now that the rate has adjusted, you cannot afford it anymore and the bank forecloses and you must move out. You have not “lost your home” in any real sense. The only thing you lost is the miniscule amount of principal you paid in those 36 payments. You rented a nice, overpriced house for 3 years. If the only reason you have to move is the interest adjustment (not losing your job or something catastrophic like that), then you are still perfectly able to go rent somewhere affordable. If you lived within your means, you’d still be there. Get over it.

No mortgage originator forced anybody to sign a loan, no bank was forced to buy bad loans and their derivatives from any other bank, and the government never forced anyone to give a loan to people who were bad credit risks. This has been one giant ripoff circle jerk from the beginning and the borrowers and lenders crying uncle now were the same people who were crowing about how smart they were by gaming the system a few years ago. Fuck your giant, energy-wasting, habitat-destroying, golf-course subdivision houses bought with money you could never hope to repay. Fuck your shiny German sports sedans bought with the commissions you made by selling the worthless loans to those morons. Most of all fuck every single one of you dumbfounded dipshits who were perfectly happy to take the short-term gains and now want everybody else to fix the long term disaster that you can’t even accept responsibility for causing. You were not, are not, and will never be the smartest guys in the room, so stop pretending, you are only making it worse for everyone.

And a hearty fuck you to the Big 3 and the UAW. For fucking decades both sides collaborated on plans that were completely untenable in the long term. It didn’t matter though, because the executives and union bosses would be long retired or dead by the time these shit grenades went off. Go to Hell, you deserve each other. Now that the taxpayer is already bailing out your pension and healthcare plans you have the balls to come and ask the drunken sailor Congress for another bailout? Sorry, we’re all out of money and out great grandkids say they won’t take on any more debt obligations until, at least, they are born. You should have asked before the banks did. Come back in 40 years motherfuckers.

6

I’ve already let me opinion be known about the mortgage crisis in other threads, so I’ll refrain from turning this into yet another GD and focus on your “ranting” instead.

To that I say, “there but for the grace of Og go you”. And when I say that, I include your obvious financial insight and education that many people simply don’t possess. It’s very easy to fall into the trap of judging others by our own standards when it comes to intelligence and education. But when you stop and think about how fortunate you are that you have the skills and know-how to avoid the traps that many unsuspecting people fell into, you should be grateful, not resentful.

And I’m sure you realize that you would never in a million years, really want to trade places with any of the people who are at risk of losing their homes and life savings (even if it was a smaller savings than yours). Their lives are filled with stress, anxiety and fear. They aren’t getting one over on you because they get to have their mortgages reviewed and written with terms such as fixed rates in place of ARMs, that will allow them to continue to stay in their homes. Having your neighbors get reasonable loan terms not only doesn’t adversely affect you, but it actually benefits you because you don’t end up with neighborhood blight from all the abandoned, foreclosed homes.

Just count your blessings instead of focusing on being angry. There’s an awful lot of blame to go around, but focusing on that instead of being damn glad you escaped the same fate, will only lead to ulcers.

7

Stuff your reasonablenss, Shayna. :slight_smile:

8

I have a friend with a huge house (5000 sqft - well more than twice what he needs, or even uses) a killer mortgage, and debts around the clock. Despite a good job, he isn’t quite keeping his nose above water. But he’s convinced that Congress will now come to his rescue, and takes the huge bailouts as strong evidence of this.

He’s overjoyed at the recent election results, as he feels that whereas the Pubs might have resisted (something I’m not convinced of) the Dems will dependably rush to his aid. He seems to care little for the long-term implications, so long as he can find a way to keep his house and not have to modify his large lifestyle in any inconvenient way.

I have a house about a quarter the size of his, and no mortgage, auto or credit-card debt - no debt at all, in fact. I will of course be charmed to pay my share of the cost of ensuring that he doesn’t have to actually face the true consequences of his financial decisions. I’m sure that by doing so I’ll be encouraging him to be more careful in future.

9

Fuck the whole thing. All I know about this is that whatever bailout money will be handed out will come out of my taxes. Some days I do a back of the envelope calculation of how much my family has contributed to this financial irresponsibility extravaganza and it makes me want to cry. I know that if I were the one unable to pay for my debts the collectors would come and take everything in a single swoop. Nobody bails me out, but I have to bail out the whole stinking nation of sharks.

10

Beautifully put, Shayna.

But I agree in spirit with the OP. Barring scenarios where people had to cope with astronomical medical bills or unexpected catastrophes that made them unable to keep up on bills, this calls for some tough love.

The bailout will do absolutely nothing to inspire financial literacy. The only thing that will create public consciousness about responsible borrowing is for people to take it on the chin and learn the hard way. (That goes doubly for corporations.) I think this country is long overdue for a little economic suffering, to tell you the truth. I realize it may affect my own standard of living for a while, but that’s okay. We’ll be stronger for it.

I call for relief for the very poor, the homeless, and those who are vulnerable, like the elderly and the sick. But everyone else is going to be a whole lot better off if we just suck it up and carry on with our lives. Renting an apartment for a few years will not kill you. I promise.

11

Shayna: Thank you for trying to be reasonable amid the frothing, but please understand I’ve already well on my way to ulcers from the ongoing realization that every hard decision I sweated over and chose to do the prudent way is evaporating in the nuclear fireball resulting from other people’s short-sightedness, greed, and arrogance. I could have spent the last 5 years living really well and having a blast (by my admittedly plebian standards) and have wound up in the same position I am today. I stand by my assertion that this bailout is primarily aimed at yuppie scum who knew they were running a scam (buying or selling worthless paper) and got in way over their heads.

I don’t see how skills and know-how come into it. I’m not all that smart and I knew fuck-all about the world of finance before I bought my house. The sum total of my education is “Pay whatever you agreed to, or the lender does whatever they say they will do in the contract”. One of the loan documents (several pages long) showed exactly what the payment was every month for the next 30 years, and it even broke down how much went to principal, interest, PMI, etc. No calculus required. It is my understanding that this document is required by law to show people what they are getting into.

People who are being thrown out the homes they paid on for 20 years because they lost their jobs in this economic mess have my pity and I would gladly spend my taxes to help them. They stand to lose a huge amount of money and that’s terrible, they really are victims of the vultures who are getting bailed out. But look at the most recent plan from Fannie and Freddy: to qualify for restructuring, you have to owe more than 90% of the value of your home. That does nothing to help Grandma, who came up short on the second to last payment on a mortgage she’s paid for 29+ years, because she only owes a few percent. It does help my asshole peers who are spectacularly upside down (say, 150% of the value) on a house they had no business “buying” as soon as they got out of college. Screwing up hugely on a major, unforced decision should cause stress, anxiety, and fear. Otherwise people keep doing it.

Please explain how someone could lose their life savings in a foreclosure on a house bought with an ARM 3 years ago. I’m not saying you are wrong, I just don’t get it.

I can see how a neighborhood of foreclosed homes would lower my own house value, but the alternative isn’t much better. When the neighborhood of huge overpriced houses across the street has all or most of its loans adjust, the value of those house decreases, which lowers the value of my hovel, which was already reasonably valued. It’s a proposition of kicking my ass vs. beating the tar out of me. I’m fucked either way, but one hurts less.

12

QFT.

Seven years ago, DH and I had well-paying jobs (for the area). He had two graduate degrees, I had one and was beginning the second. Sure, he had health problems, but we weren’t too worried- his doctors had it under control, he was working a desk job, no reason to think there would be a problem. We sold our house for twice what we’d paid, bought a small parcel of land, and began building our “dream” house. Even did the majority of the work ourselves to save money on supplies and labor. Got a great deal on a fixed-rate mortgage due to our good credit scores, paid cash only for used cars (do all the repair work ourselves), and never “splurged”.

Two years ago DH was diagnosed with cystic fibrosis. He had to quit his job and take a lower-paying one. I had to take him onto my health insurance, cutting my paycheck by over $100 every two weeks. That’s… okay. We just tighten the belts a bit, shop at a slightly lower-end grocery store, and keep going.

This year DH lost his job because he simply wasn’t physically capable of doing it, spent 36 days in the hospital (eight on a ventilator), was given about three years to live if he doesn’t get a double lung transplant pretty damn soon, and- after being rejected twice- is waiting for the SS folks to decide if he’s disabled or not. If he is, his monthly check won’t even cover our mortgage. My job- in the non-profit sector- is decidedly unsafe; reportedly our employer is borrowing money every two weeks just to cover payroll. We owe our pharmacy somewhere in the neighborhood of $1500 for two months of CO-PAYS for medication, and when we called the CCCS folks, they literally laughed at us and told us there was no other choice but bankruptcy.

So yes, we’re filing bankruptcy. Yes, the house is thisclose to foreclosure, but our lawyer is confident we can save it. Of course, I have no clue how we’ll keep paying for the medication, since we won’t be able to have any open accounts, and meds are not something to scrimp on (though we have been). For DH, who has that “weird” male pride thing, this is the most humiliating thing that could happen. My most humiliating moment was having to tell our company president about the situation- this is not a woman I know well, but she’s the one who will be sending the checks to the bankruptcy folks, so I had no choice. AWKward twenty minutes, let me tell you. We did everything we were supposed to- good education, fiscally responsible, etc- but still got screwed by circumstances outside our control.

Sorry we’re fucking you financially. In fact, we’re fucking you twice- once for the house, once again if/when DH goes on disability. I guarantee you that if we had any other choice, we’d take it.

13

Thanks, Inigo and olives.

I spirit, I understand the annoyance as well. I have a sister who is, and has always been, extraordinarily irresponsible with money, buying more than she can afford, racking up tens of thousands of dollars in credit card debt, then expecting people (her father, her ex-husband) to bail her out. She has a sense of entitlement that is unfathomable. And from what I understand, she’s refinanced her home so many times that the bank won’t lend her another penny on it. If she goes into foreclosure, my heart won’t break – she deserves a taste of reality and the consequences of her behavior.

But my understanding isn’t that just anybody who’s in over their heads is going to get “bailed out”. If they have reasonable loan terms and they simply cannot afford their homes on what they make, too bad, so sad, see ya. If they have ARMS, that even when adjusted to current market rates for fixed loans, still will be unaffordable to them, too bad, so sad, see ya. Lots of people will still lose their homes under this scenario.

But if they have ARMS, then when adjusted to conventional fixed-rate loans, are affordable for their income levels, then they get the new loan and stay in their house. I think that’s fair, and I don’t begrudge those people that benefit.

I could be completely wrong, but I have a feeling that there are a LOT more people who fall into the last category than the first two. If we can help the vast majority of folks keep their homes and continue to pay their mortgages, it keeps more monies flowing into the banks, which means we get our bailout money back all the faster. In that regard, it’s a little selfish of me to want this solution, as well.

Those who are irresponsible, trust me, they live lives you wouldn’t want to live, either. I wouldn’t trade places with my sister for all the tea in China. She is a miserable human being. Those like her who have truly bitten off more than they can chew out of greed – it’ll bite them eventually. I have faith in that.

14

I really wish McCain has run on a “fuck the bailout” campaign and painted the dems as the party of bailouts. Instead he pandered to the bailout mentality and got on board himself.

Also. The more I think about GM in particular and the economy and bailout mentality in general, the more the whole situation looks like Atlas Shrugged some to life. The federal government imposes huge costs on GM in the form of fuel-efficiency standards, and the dems support the unions, which impose even bigger costs, all of which cause GM to need to be taken over by the government. In the larger context, a perceived emergency causes support for regulation that worsens the emergency and thus supports more regulation. There are of course lots of differences (namely lack of gross sex scenes in GM plants AFAIK), but the parallel is clearly there in broad strokes.

15

What do economists call it…creative destruction?

Sometimes something has to go away so something new and better can fill the void. What would have happened if Congress had decided to bail out the poor ice delivery men? We wouldn’t have freezers and refrigerators.

Profit means you’re doing something right. I strongly believe this bailout will do nothing more than prolong the agony. Businesses should succeed and fail on their own merits. Gov’t bailouts just mean the businesses can remain lazy and not innovate.

16

So far mortgages have not been re written Everybody who was in over their head has lost their house, their down payment and has trashed their credit. If that is appealing to you, go for it.
We have bailed out huge financial institutions. If you are living in their offices, you are doing well.
We were supposed to make out because we were buying up assets. Paulson changed his mind and has just given them our tax money. So that concept of the taxpayer actually making money in the long run was a Paulson lie. A cash infusion to the banks and companies that suddenly can declare themselves to be banks is just converting it to their money. Some are doing acquisitions. Some are doing big bonuses and salaries. Some are just sitting on it.
What is going on does not serve the country long term. Fanny and Freddy are supposedly going to re write mortgages. That means they will actually have payments coming in. They will have the home for collateral. While not as valuable as it once was, it is a real asset. Therefore it is not a total loss.
Nor is it AIG execs going on another expensive retreat.

17

I guess that’s where I differ, though not with any degree of certainty, just a gut feeling based on what I’m reading about the situation. I suspect there are far fewer “yuppie scum [buyers] who knew they were running a scam”, than scam artist mortgage brokers who were fast-talking and sneaky and screwed unsuspecting people over for their gain. And they aren’t the ones who are losing their homes.

I had no such document included in my loan papers. And in fact, when I ran my own amortization to show our broker how one set of loan terms isn’t really better, as he claimed, compared to another, that he was trying to move me out of, he acted all outraged and (literally) confused by what I was trying to show him. These guys are fancy, wheeler-dealers, and un-savvy people can be easily taken in by them. When I read our loan papers and asked a question about something I didn’t understand, he actually said, “Oh, ignore that, it’s not important.” Uhm, then why is it in the loan docs???

And that’s to say nothing of being provided a “Good Faith Estimate of Closing Costs” that was so egregiously wrong it was stunning. We walked in to closing with a check for $10,000, which is what the GFE showed. In reality, our closing costs were $20,000! And we had $20,000 in earnest money on the line if we walked out! I reserve the bulk of my ire for the mortgage lending scum who passed out these shitty loans like candy, to people who were basically like babies.

The problem lies in the devaluation of their property because of this market fall. We were able to refinance before our ARM went into effect, but that’s because we did so before the market crashed all around us, and our house has maintained its value. For those who thought they’d be able to do what we did, but found out they couldn’t because the appraiser came out and told the bank that the house was no longer worth what the outstanding loan value was, got screwed, and I’m not sure I blame people who got in that position. People who were told, “Oh, just refinance before the 3 year fixed term expires,” believed they’d have no trouble doing so. And if they could have, they’d still be able to afford their homes.

Perhaps they put their savings into the down payment, and have now had to dip into their savings every month to cover the increased mortgage payment that keeps going up month after month after month, because they couldn’t get in under the wire and refi before the ARM kicked in, like we did.

And bobkitty, my “too bad, so sad” comments in my previous post, weren’t directed at people like you and your husband who are in your position because of extraordinary circumstances. I’m not sure I made that clear enough, so wanted to make sure you knew I wasn’t addressing you in any way (plus, your post wasn’t there when I started composing mine, and I didn’t scroll down for new posts when I previewed).

18

Fuck it all. This is unrestrained top-down class war, the likes of which has been going on for a long time. I’m just surprised to see it all so blatant and out in the open now. Fuck this country.

19

Agreed. This is one of my favorite ideas coming from Nietzsche. Destruction is often a form of creation. You have to tear something down before you can build it back up.

Even if we take away the ‘‘we really need to stick it to them for screwing things up’’ emotional angle of it, the bailout seems like a bad idea for everyone. It’s like the government’s way of refusing to acknowledge that we have a truly stagnant economy, one that is not competitive in foreign markets, one that is not innovative or creative. We are trying to save corporations that have no business being saved–note that some of them, such as Chase, are still standing–most likely because they did not take the same risks as others. I think stimulus packages and other sorts of deals are extremely stupid ideas, short term fixes, like trying to administer medicine to someone who is terminally ill. The corporate body is failing. Let it die.

I think deregulation, however, has been a major factor in the collapse of the economy. Alan Greenspan himself acknowledged as much. The truth is these corporations have become so huge, so all-encompassing, that when one fails it takes down a good portion of the American people with it. I don’t think such a large number of otherwise responsible individuals should have to pay for the bad business policies of a single corporation.

We can, with some effort, create a better kind of capitalism, not this bloated, lopsided corporate world which takes so much power away from the people. But neither should we become a society in which people are not held responsible for their poor choices.

I’m a little frustrated because I don’t see that either side of the political fence is on the ball economically. We can create jobs by creating new and innovative industries. We can make capitalism work for us rather than expecting government handouts. Imagine the lessons we could learn from this, and how strong and good a civilization that can be borne from these difficult experiences now.

20

As much as this whole scenario sucks for most everyone, I can’t help but be glad that it happened at this point in my life. We have little to possibly lose and can potentially take advantage of the housing market crash when we look to buy in a few years. That’s not to say that I’m not increasingly pissed as time goes on–I hate what’s happening to people like bobkitty–but I can’t help but feel like we squeaked in under the wire (especially since we bought a car this spring. I somehow doubt we’d get as favourable terms on financing now).