Here We Go Again!!

Discussion in 'Economy' started by Orange_Juice, Aug 4, 2008.

  1. Orange_Juice
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    Orange_Juice Senior Member

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    Hold onto your ankles! When and where will this all end? :eusa_eh:

    The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is quickly building.

    Homeowners with good credit are falling behind on their payments in growing numbers, even as the problems with mortgages made to people with weak, or subprime, credit are showing their first, tentative signs of leveling off after two years of spiraling defaults.

    The percentage of mortgages in arrears in the category of loans one rung above subprime, so-called alternative-A mortgages, quadrupled to 12 percent in April from a year earlier. Delinquencies among prime loans, which account for most of the $12 trillion market, doubled to 2.7 percent in that time.

    The mortgage troubles have been exacerbated by an economy that is still struggling. Reports last week showed another drop in home prices, slower-than-expected economic growth and a huge loss at General Motors. On Friday, the Labor Department reported that the unemployment rate in July climbed to a four-year high.

    While it is difficult to draw precise parallels among various segments of the mortgage market, the arc of the crisis in subprime loans suggests that the problems in the broader market may not peak for another year or two, analysts said.

    Defaults are likely to accelerate because many homeowners’ monthly payments are rising rapidly. The higher bills come as home prices continue to decline and banks tighten their lending standards, making it harder for people to refinance loans or sell their homes. Of particular concern are “alt-A” loans, many of which were made to people with good credit scores without proof of their income or assets.

    “Subprime was the tip of the iceberg,” said Thomas H. Atteberry, president of First Pacific Advisors, a investment firm in Los Angeles that trades mortgage securities. “Prime will be far bigger in its impact.”

    In a conference call with analysts last month, James Dimon, the chairman and chief executive of JPMorgan Chase, said he expected losses on prime loans at his bank to triple in the coming months and described the outlook for them as “terrible.”

    http://www.nytimes.com/2008/08/04/business/04lend.html?_r=1&th&emc=th&oref=slogin
     
  2. RetiredGySgt
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    RetiredGySgt Platinum Member

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    Anyone STUPID enough to have gotten a loan that has "adjustable" rates deserves the trouble they are having. Balloon payments are another one of those really STUPID ways to buy a house.

    Now I know the conventional wisdom was if you planned to sell in 5 years it was ok to buy houses with these idiotic payment plans. But guess what? Anyone with half a brain should have considered what happens when the market crashes.

    I personally have a 30 year FIXED loan. The only thing that changes is insurance and property tax. No guess work or Voodoo market crap to worry about. One saved no "Interest" with the other loans when now they are stuck with them and can not unload or refinance them. That is called speculation. Lots of people got sucked in to speculating on the Housing Market. No different then if they were sucked into the Stock Market and lost their shirt, well except then they would only lose what they invested and not be stuck with ever increasing payments they can not make.
     
  3. Paulie
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    Paulie Platinum Member

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    What's your position on the Housing Bill, and the other bail-outs that have taken place so far?

    Taking into consideration of course, what the alternative probably would be, i.e. an economic collapse, most likely.
     
  4. RetiredGySgt
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    RetiredGySgt Platinum Member

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    We survived the 29 crash.
     
  5. sealybobo
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    sealybobo Diamond Member

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    States are losing tax revenues because companies are leaving the country or leaving their states, so even though property values are going down, states and cities are raising taxes. If you lost your job and could only find another job that paid half what you were making and this happens, you could lose your home because you can't afford the taxes.

    Just admit the GOP fucked up and the economy sucks. McCain admitted it in a speech I heard him make on CNN. It was funny, well not really funny, but he said, "when you lose your job, I'm going to....." WHEN? Not IF?

    I have a 15 yr mortgage and I put 20% down to avoid the insurance. I'm about 4 years from having my place paid off. And even though the value of my home went down $30K, I will still make $17K if I sell it. Minus what i still owe of course. But it sucks that I could have sold it and made $47K profit at one point. The GOP sucks!
     
  6. Paulie
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    Paulie Platinum Member

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    Look what we got out of it, too. Ironically, what we got out of it is something that is contributing to TODAY'S problems.

    Now, instead of the crash happening BEFORE more socialism is instilled, it's being done pre-emptively. We can't win for losing.
     
  7. RetiredGySgt
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    RetiredGySgt Platinum Member

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    So one can assume that since a lot of the housing speculation occurred on the Democrats watch in both houses of Congress that you actually blame the Democrats?

    Retard.
     
  8. Orange_Juice
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    Orange_Juice Senior Member

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    an ounce of prevetion or a pound of cure? Take your pick. The Conservative "die in the ditchers" don't have any idea of what they would be getting into if we just let the global economy go in the toilet. Hitler came to power in the depression. That's just one example.
     
  9. Paulie
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    Paulie Platinum Member

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    You don't have any idea what the repercussions are going to be for this intervention. You think the international community is going to suck the US teet forever?

    Your narrow minded view of the whole situation is what is REALLY scary. You can't look past the immediate "relief" far enough to see the writing on the wall.

    I'm sure my children will thank you for the debt you advocated passing along to them.
     
  10. Orange_Juice
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    Orange_Juice Senior Member

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    Fair enough. The debt is going to be bad, no doubt. As a suggestion I think increasing the levels of taxation on upper income Americans to pay for this mess would be a good idea. And since tax cuts have given us a lot of the debt we have now it only seems fair
     

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