The Next Mortgage Meltdown
The subprime mortgage crisis in just about over. Those whose loans came with usurious interest rates have, if they got behind or lost their jobs, already been foreclosed upon. Now the issue is negative equity, the fact that real estate is depreciating so fast that homes are no longer worth the price paid, even with prime interest rates. Being “upside down” and expecting a higher rate to kick in on the original price is causing more and more people to simply walk away from their mortgages.
And indeed, walking away from the debt may be the best option for people who purchased during the “bubble” of inflated valuation. Because the underlying problem the bubble was based upon – ever-increasing wages for the working classes – has dismally failed to materialize.
We’re all paying for the bubble and the ridiculous amount of side-bets that got made by financial pyramid schemers who artificially produced and inflated that bubble. When the “average” price of a below “average” home (say, 50 years old, in need of repair, in a bad neighborhood and too small for a family) rises above $120,000 in one of America’s “Officially Depressed Regions” where a majority of citizens are chronically out of work and wages hover right around minimum, you know something’s got to give. That’s how it is in my nearest county with an actual city in it – Buncombe County, NC, home to the city of Asheville (pop. less than 100,000).
Filed under Bankruptcy, Debt, Economic Depression, Housing | Comment (1)Confidence Games
One of my favorite series bloggers sarahnity has a weekly series at Daily Kos called “Frugal Fridays” that offers different tips and ideas every week, by her and a number of volunteer authors, on how to make your money go farther, how to earn money on the side, and how to hang on to what you’ve got. Last Friday the theme was frauds and scams geared toward those being most harmed by the current economy, entitled Don’t Get Fooled Again.
I’m just going to list the major confidence games going around in recent weeks/months, and the several resources and good advice offered to help people determine if something’s on the up-and-up or just more grifters targeting the weak to make themselves strong. The series is awesome, definitely worth bookmarking by all readers of this blog and checked every Friday afternoon for the latest in resources for the frugal.
The major scams making the rounds these days – particularly via the internet – are sometimes old and sometimes new. There’s the standard Work from Home sting where you have to pay to find out who’s hiring. If someone wants your money before showing you the want ads, it’s likely a scam. Real employers aren’t looking for you to pay them, they’re seeking people to pay for good work.
Then there’s the new-ish trick of Facebook identity theft where a clever grifter assumes an identity from among your networking ‘friends’ (often a relative) to beg for money. Be suspicious if someone on your Facebook page suddenly asks for money. Often the real person knows nothing about it – so check on regular email before sending anything.
There are also property tax scams going around where someone tells you you’re paying too much for property recently devalued. All you have to do is send money and the scammers won’t do anything for you. These can come in the regular mail too, so always do your homework and check with your real property tax officials about what’s what. If you really do pay too much, they’ll let you know for free. In line with this there are also housing and mortgage frauds, where someone offers you a “special rate” to refinance, take your money and disappear. Don’t fall for it.
There are more, of course. Please click on Sarah’s linked diary and check them out, there is good advice on how not to be victimized and who to report suspected scams to in your state and locality.
Filed under Debt, Government Bailouts, Housing, Pirates, Taxes | Comment (1)Taxes, “Socialism” & Political Reality
We’ve seen a lot of desperation as the world (and US) economy tanks in the wake of the mortgage-loss pyramid scheme crash. We’ve heard a lot of hyperbole and rhetoric from the candidates who want to replace Bush-Cheney as President and Vice-President of the United States. This is The Week That Was, votes will be counted tomorrow night, and we should know sometime in the wee hours of Wednesday which of the contestants gets the erstwhile “prize.”
As Wall Street began its precipitous fall, Republican candidate John McCain was busy informing the nation that the ‘fundamentals’ of our economy are strong. No, they aren’t strong, they’re utter failures after years of massive tax cuts to the wealthy, heavy borrowing to support two wars, and the “Unfettered Free Market” [TM] frenzy allowed by blanket de-regulation of the banking and investment sectors.
To get an idea of just how outrageous things had gotten, consider the so-called “Mortgage Meltdown” that took so many once-staid capitalist houses into ruin. We all know that housing prices had ballooned in most urban areas of the country, a ‘bubble’ sustained by the practice of lending to workers whose incomes haven’t seen even a minimal rise in more than 30 years, for houses that cost easily twice as much as they could hope to afford and three times what they were actually worth. Many of these loans were made with specific criminal intent to skim fees off the top, and saddled with adjustable interest rates that worked just like time bombs to force people into bankruptcy.
Filed under Bankruptcy, Economic Depression, Economic Recession, Education, Elitism, Government Bailouts, Housing, Income Inequality, Politics, Taxes | Comment (0)A Tragi-Comedy of Greed
Watching Treasury’s Paulson on Meet the Press Sunday made me sick. That pitiful, pleading look, the bizarre non-logic, the reversion to fear, fear, fear… the guy’s a cheap crook in an expensive suit and no, the whole world isn’t going to self-detonate if we let the greedheads take their lumps for being so damned greedy. Let ‘em fail.
Meanwhile, I’ve a fine plan to salvage the housing market as well as the business and jobs outlook. Instead of giving up to $3 trillion dollars (the price goes up hourly) to the crooks who got us into this mess, why not give every citizen $3,000 dollars? They’ll catch up on their mortgages, then FHA (the receiver for Fannie Mae and Freddie Mac) can refinance at lower rates and more realistic selling prices. Voila! the mortgage market is no longer “bad debt.” And if we’ve got an extra couple of trillion laying around to spend on these greedheads, why don’t we spend it on something useful – like universal health care?
That price tag is less than a third of the price tag the Fed, Treasury or Wall Street has come up with to bail themselves out of the hole they dug, and it would completely solve the asset valuation problem for regular Americans who don’t earn $5 million a year. And it lets the Wall Street failures fail. They earned it, they deserve it. Screw ‘em. The rest of us will be fine with our dividend.
Filed under Alternatives, Bank Failures, Economic Depression, Government Bailouts, Housing | Comment (0)“…the Government is Broke and Broken”
That’s what Angry Bear says about the government bailout of mortgage giants Fannie Mae and Freddie Mac, announced on Sunday, September 7. It will cost the American taxpayers tens of billions of dollars we don’t have. Why? Because more than 1.3 trillion dollars’ worth of those mortgage bonds are held by foreign countries, primarily China, Japan, the Cayman Islands, Luxembourg and Belgium, and they want to know if their holdings are any good.
Now, you might be struck by some of those listed ‘foreigners’. Cayman Islands? Luxembourg? Belgium? Well known for hosting questionably legal accounts for some questionable characters, I suspect we’d find a lot of Americans on those lists. Americans don’t count as “foreigners.” Unfortunately, we’d also find a lot of Russian front companies and Middle Eastern Sheiks as well.
We’ve once again been robbed blind by wanton corporate and individual greed, and we are expected once again to bail out the wealthy speculators whose greed led to the failures.
Predictions for what happens now aren’t pretty. The dollar will plunge, inflation will zoom, regular Americans will have an even more difficult time keeping up. While the richest 1% will have their taxes cut and get their bad investments paid off so they can go speculate on other nifty things like food and water.
So buckle up, fellow shoestring budget enthusiasts! We’re going to get our chance to put all our alternative survival strategies to work. If we do it right, what will arise from the ashes of the late, once-great American economy might be strong enough to last awhile.
Links:
Bonddad: Our Foreign Masters Have Spoken
Fannie Mae and Freddie Mac: A Broader View
The Fannie/Freddie Bail-Out: The Plan and Why Now?
Oh, For Heaven’s Sake!
Does this guy really need OUR house?
Mere days after causing a regular knee-slapping laugh riot with his claim that the average middle class American probably brings home something around $2.5 million a year (by way of being “rich” if you make $5 million a year), Republican Presidential Candidate John McCain told Politico that he’s not sure how many houses he owns. “I’ll have my staff get to you,” he said, since some of those houses are condos, and all condos look alike apparently. The correct answer, by the way, is at least seven, maybe ten.
By the way, if you’re feeling a little low because of that foreclosure notice you just got in the mail, here’s a slide show of McCain’s home (the one pictured above) from Architectural Digest, 2005. They may have sold it by now, but I don’t think it’s because they couldn’t afford the payments plus jet fuel for ‘getting around Arizona’ at the same time.
Filed under Bulk Buying, Elitism, Housing, Humor, Politics, Transportation | Comment (1)The Loan Shark Bailout Bill
…er, Housing & Economic Recovery Act
The US Congress, both House and Senate, finally cleared the Housing and Economic Recovery Act of 2008 today, after nearly a year’s worth of hemming and hawing and slipping goodies into the legalese in the middle of the night. A regular miracle of modern political tug of war and a bill that’s changed its name and focus so many times nobody’s quite sure what’s in it other than a trillion or two to bail out Fannie Mae and Freddie Mac. Having weathered a total of seven [7] Senate cloture votes, President Bush is likely to sign it into law.
No one expects a handout from this bill unless they’re 1. a robber baron, or 2. a loan shark, or 3. a speculator and/or house-flipper (buys real estate only to flip it immediately at inflated price), or 4. an fossil fuels dealer. Thus not surprisingly, the stock market opened low this morning [7-28-08], down more than 134 points at noon. Though Fannie and Freddie were on the upswing on that promise of taxpayer trillions.
Filed under Debt, Economic Recession, Housing | Comment (0)Mortgage ‘Crisis’ Got You Down?
Consider Squatting in Your Own Home
Today the New York Times reports that governmental expectations that Fannie Mae and Freddie Mac will somehow keep the housing market afloat is starting to look like a pipe dream. With defaults and foreclosures rising drastically, administration officials, regulators and lawmakers are starting to get very nervous…
Will the next big taxpayer bailout have to go to these government-guaranteed mortgage giants? Well, since we got to bail out private investment bank Bear-Stearns, I’d guess so. Too bad we can’t bail out the families losing their homes.
Speaking of which, I got to wondering what happens to the people who lose their homes, given that the rental market is in just the same trouble. Is anybody keeping track of the homeless population? And if the person who used to own the home is now homeless because it’s been foreclosed, what’s the new designation for that family if they decide to simply stay where they are?
I did a little searching and found lots of news and opinion about how neighborhoods decimated by the mortgage crisis are now hosting increasing numbers of “squatters”. Here’s a CBS News video on that issue:
Filed under Alternatives, Economic Recession, Housing, Surviving | Comment (1)Wall Street “Crisis” Double-Speak
What it Means to the Home Mortgage “Crisis”
Many of us watched with serious confusion the strange financial market machinations that led to the Fed bailout of investment bank Bear-Stearns, taxpayers taking on bad debt paper held by speculators rather than any actual member of the central banking community. JP Morgan bought B-S for mere pennies on the dollar, ending up buying for just a 5th of what B-S’s Madison Avenue headquarters building is worth – the rich folks have taken their hit. What matters now is how much of a hit the average cash-strapped citizen will have to take.
Government bailouts of junk paper speculators is outrageous, and does not a thing to help homeowners whose mortgages far outstrip the current reduced value of their homes – while the price of every necessity is going through the roof. Yet at the same time Fed chair Ben Bernanke pledged to “do all that is possible” to help struggling homeowners. There actually may be hope on the horizon, though nobody should bank on Fed “pledges.”
Filed under Brand New Used, Debt, Economic Recession, Housing, Resale | Comment (1)Ways to Live On Almost Nothing – 2
Part 2: Items 6-10
This is the second installment of the 20 ways to live on little-to-nothing. Obviously, not all of these alternatives will appeal to everyone. But perhaps some will appeal to some.
6. Personal Housing for the Gypsy Tread-Lightly
If your lifestyle doesn’t require thousands of square footage consider the advantages of an RV or travel trailer. No, not one of those $200,000 new fancy jobs, but one just “big enough” and in desperate need of some handy TLC.
Getting “free” will take more ingenuity that most people have to spend, but getting “cheap” is entirely possible. Unless you’re a serious mechanic, travel trailers are a much better option than RVs or old city buses that probably need totally rebuilt engines. A trailer can be moved as regularly as necessary (many state and national forest sites have 2-week limits) so long as you’ve something to haul them with.
Filed under Alternative economics, Alternatives, Conscious Living, Economic Recession, Energy, Housing, Staple Foods, Surviving | Comments (2)