I might suggest that "ATM" is a better word than "investment" in our current context.

For those who prefer to think that a lack of regulation is the problem, you might as well keep steering clear of the facts. The regulation forced the problem. The most thorough primer on the issue that I've seen was printed in that bastion of right-wing propaganda known as The Village Voice on August 5th of this year. It's a good read if you have the time.

The political football game around this issue is sick, to be honest. The intentions may have been noble, but this whole deal was liberal social engineering run amok, with millions of dollars for a bunch of Washington cronies as a nice side benefit. There is a reason that people without money didn't own a lot of homes before the 1990's. The regulations placed on the two GSE's back then set us on this course. The only way for the companies to comply was to get rid of virtually every prior restriction on home loans. Then the Bush administration picked right up where its predecessors left off, trying to 'advance the cause' of low income housing and whistling past the graveyard until a few years ago.

The whole right/left issue has become tiresome to me, but if you do a little digging (1st hint, 2nd hint) you can figure out who tried to step in and who blocked the efforts to reform the system. Not surprisingly, the money trail tells quite a bit of the story. Lots of R's and lots of D's on the list. People who are paying close attention to a couple of particular Senators these days might get a chuckle out of how they stack up.

I would think that your evening news might point these things out, but we know better than that, don't we?

 

You need to start listening to Jim Cramer of CNBC. The head of the SEC a Clinton apponitee they serve 10 year terms 4 years ago STOPPED the requirement of needing an uptick when short selling. Then the short sellers attack a company and kill it.

 

The housing situation could be solved by offering low cost fixed mortgage rates where people could actually afford to make their payments. The oil problem could be solved by coming up with alternative fuel sources. We already have natural gas readily available. That would at least provide some relief. We have the largest natural gas deposits in the world. Competition will bring oil prices down. The reason why they are so high is lack of competition.

 

I have a feeling that this is where we are eventually headed. I wouldn't be surprised if the government, now that they've bailed out Freddy and Fannie, offers consumers a "one time" fixed rate refinancing option, no questions asked. A "consumer" bailout, if you will.

 

I've been following all of the news and stock market. It's all very scary for the average person. I'm worried sick about how I will heat my house this winter and never mind the price of groceries. One thing I do know, I will ride out the stock market and not panic. Selling what few stocks I own won't do any good. What goes down, will eventually go up. Business runs in cycles.

 

I hope so . I would like to buy a house. I have somewhat marred credit due to divorces, although I work steadily and always have. But I cannot get a home loan. When I moved to Lubbock, I did get financing and picked out a floor plan, had the house built, etc...one month before closing, my bank went under and I lost the financing. I could not find any other financing. The house I had built sat vacant for a year and a half. I moved into a rent house one block over and have to look at it everyday as I drive home. Bittersweet, yes - but, had I taken up an "exotic" loan, I would probably have probably lost it anyway...I pay more in rent than I would for the house payment...and I've done it for 2 years now...I'm not a risky bet.

I never thought it would come to the point that a stable, hard-working person could not afford to buy a shelter for their family. When Obama first started spouting off about his respect for single parents and family first and all of that, it did catch my attention. I had hoped that that there would be some relief for me. But his character makes it so that I cannot believe what he says about so much of the other stuff. All I see now is his lips moving...but all I hear is "meep, meep meep..."

Maybe one day, I'll actually bring home more than half of what I make. I hope that my contributions to my 401K have been worth it (I'm afraid to even ask). I have already been affected by banks closing. Builders would rather claim a loss than owner-finance a home to someone. My landlord is so happy that he has offered to do this in the house we live in right now...but it is way to small. Who knows, Americans are an adaptable bunch...just greedy...we have lost that brotherly love for one another...it's become all about the stupid sh!t.

 

Rev;

I agree with much of your thinking on this matter, and I've wondered the same thing myself; the problem I see is that what you are proposing (and what I have considered, as well) would for the most part, benefit those who really don't need help.

The forclosures are falling upon those who took out ARM's, those who financed their homes through "interest only" financing, (pure insanity!!)and people who borrowed in excess of the homes value.

The problem is further compounded by people who used their homes as piggy banks, borrowed what equity they had, and are now upside down due to declining real estate prices. For thhe first timee since WW11, the average level has actually gone down nationwide.

Even if it were possible to offer such loans as you are suggesting, most people in trouble would still be unable to make their monthly payments. Combine that with the fact that cities, counties, hospital districts, school districts, etc. which rely upon property taxes for funding are going to be forced to increase tax rates to help compensate for declining property values, which will still increase the monthly payments on fixed rate mortgages.

 

I think if the gubberment were to set a "one time only" lower interest rate, and possibly even extend the time period from a 30 year to a 50 year, it could get these monthly payments down to a reasonable level.....for most. I'm sure there would still be those who wouldn't be able to afford the mess they got themselves into, but I would think that a majority would be able to at least get themselves above water.

I hate the idea of bailouts, but again, I think this would be for the greater good of the economy. When you have so many people stuck in loans they can't afford, the only logical outcome is that it will drag the entire market down which is what we are seeing now. At least something like this would stop the hemorrhaging.

If the government were to implement something like this, it likely wouldn't help you as a new buyer. A responsible government would take care of the problem at hand before creating new problems. It would, however, have the added benefit of correcting the existing problem, so that banks would be in a better position to offer responsible loans to new home buyers in the future.

 

Low cost fixed rate mortgages would be exactly the wrong thing right now, if the overall economy is the concern. Whether you feel some social compulsion to keep people in their homes, I won't bother getting into. In a pure macro sense though, the cheap money has been the poison pill. There is absolutely zero chance of finding free market investors to plow billions of dollars into the homes of risky borrowers. Zip. Zilch. Nada.

So we, the taxpayers (mainly the 97% of us who didn't borrow money that we couldn't pay back) will end up footing the bill. I don't guess it's much of a secret, but we don't have the money. Foreigners are already skittish about buying into our economy, so putting an artificially low value on their investment isn't exactly going to entice them. So what do we do? We print more money. Inflationary pressure on retail prices (hurting we the 97%) + downward pressure on new fixed-income investements (hurting we the 97%) --> higher commodity prices due to a weak dollar (hurting we the 97%) + less available credit at the consumer and corporate levels (hurting we the 97%) --> slowed economic expansion in the face of rising costs (hurting 100% of us).

Pols don't have the gonads to tell people "tough luck" and we don't have the gonads to reward them for honesty. So they'll come up with some kind of subsidy, prolonging the slide in home values instead of just ripping off the bandaid in one motion and facing the pain.

 

That didn't stop them a few years ago.....

Which is better than allowing the current fiasco to drag down the entire economy.