I didn't go to College for Economics. In retrospect, perhaps I should of. I didn't go to College for Political Science. In hindsight, perhaps I should of. Instead, I graduated with a major in Psychology & minor in Philosophy. Something in me wanted to spend the rest of my life on top of a mountain handing out Prozac like it was candy at a Parade.
FED RATE CUTS ARE NOT GOING TO SOLVE THE CREDIT CRUNCH!
That's my opinion at least. I could be wrong, mislead, irrational, off-base, & off of my proverbial rocker. But I could be right. Time is the only teller...
A FEW THOUGHTS
- In its most simplistic terms, when the FED cuts the rate, they are essentially charging Banks & Lending Institutions less of a Rate from which to borrow money. This has happened on occasions in hopes of nipping all the volatility of what's going on in the bud. It won't though. The interest rates Banks & Lending Institutions are charging consumers has remained pretty stable, if not going down from time to time. Smart Money would be to raise the rates after these FED rate cuts to increase the loss reserves (shielding themselves from the default on loans gone bad). Think about it like this, the FED cuts the Rate and Bank A decides to increase the rates they charge consumers by 1/4% to 1/2% to maintain a healthy loss reserve. While that's probably the smart thing to do, it won't work across the board. Why? One word, Greed. Banks B, C, & D will keep their rates the same and Bank A will price themselves right out of the market. Losses will continue and the reserves will continue to deplete and the crunch will continue to be taking a bite out of our economy.
- Raise Prime Rate & Bank Rates! I know, I know, that very sentence is going to make me about as popular as dressing in drag at a Lewis Farrackhan pep rally. However, I'm not quite sure the Banks can continually operate at such minimal profit margins considering the ongoing losses and rising delinquencies in portfolios of Mortgage Loans. For the consumer, increased Prime Rates and Bank Rates would make more capital available and products would be more aggressive, simply because the profit margins would get back to where Banks & Lending Institutions were used too back in the early 2000's. Home affordability would decrease, so instead of being able to afford a $350,000 house, perhaps you only will be able to afford a $275,000 home.
- You want more consumer spending? How about having Interest Deduction on interest paid on Credit Cards and Installment Loans (such as car loans) which is how it was before Ronald Reagan took office. (Of note, I still liked Mr. Reagan). That would allow consumers increased deductions, increased refunds, give us more money to spend rather than giving us an occasional $600.00 refund that will hopefully cover my Heating Oil Bill, being the unmarried male with no kids that I am.
Bottom line, there are no short-cuts to life. Sometimes solutions aren't easy and maybe even a tad hard at first. If I open a wound on my arm, I'll be the first to pour Hydrogen Peroxide on the cut. It stings at first, most things do before the healing begins......
I both agree and disagree. Can you guess why?? :)
You have an inspired perspective here Sardiboy, but... why would you want to reward consumers for even more overspending? Racking up more debt? Isn't that one of the catalysts for our current housing crises?
Thought provoking Blog to say the least Sarde'! Jennifer, I don't believe that allowing a tax deduction for consumer credit again would be a reward for overspending at all. However, it would slow the frenzy to refinance a mortgage to lets say, consolidate based purely on tax benefits, or utilization of a mortgage for a mid range purchase, lets say new appliances throughout ones home. An interest deduction for consumer credit would put more money back in the average Joe's pocket to spend within our economy. That would help allot more than lets say sending me 600.00 for no real good reason. Or, on a higher profile, bailing out any investment firm that put themselves in the position they were in in the first place through poor decisions based purely on greed. And the cycle continues! Guess who was first at the discount windows today???
As for increasing rates and letting the sting begin, I'm all for it! Not too long ago a 7.5% interest rate on a mortgage was not too shabby. Said today, that rate sounds ridiculous to most. However, historically it may be average, if not a tad lower. Just looking at the landscape of our economy, I can't believe we continue to tread water, rather than making the decision's we need to make. It's time to bite the bullet!
Interesting perspective. These fed cuts seem like more of a band-aid than a long term solution to the issues we are facing. We (Americans) have a bitter pill to swallow over the next 3-5 years before we can get back on track which we are simply delaying. I think the economy would be better served to find solutions to issues like oil dependence, trade deficit, loss of manufacturing jobs & outsourcing, etc. Just my opinion
I was commenting on this very issue on an AR post yesterday. These FED rate cuts will not effect home mortgage rates (unless you mean HELOCS) except perhaps to drive them up. These cuts help to fuel positive stock growth which oftentimes has a negative effect on bond prices which are the key to determining residential mortgage rates. These cuts may help to fuel spending (because they directly effect credit card and auto loan rates) but just as Stephen commented above, we can't fuel the economy with spending while simultaneously lecturing the consumer to be more frugal. Makes one feel a little like Sally Field in Sybil!
Jason -- You don't have to be a Political Science major or an Econ major to understand what's going on in the economy, just like you don't need to be a farmer to recognize the aroma of manure.
The Federal Reserve has to answer to pressure from our foreign investment partners too. I'm not sure raising rates will help the economy right now, but it will probably happen in the future anyway.
I agree with you that restoring the tax deduction for consumer credit would help. I don't agree with the comment that we'd be rewarding the wicked. What is that "avenging angel" thing about the fear that we'd be rewarding people for overspending, anyway? Let's PUNISH everyone..that will make things better LOL! It's time we stopped looking for people to blame and penalties to hand out, and started looking for solutions instead.
Jennifer - Shoot, Mr. Geary beat me to it but I do understand your point. I guess though the same could be said for some of these ridiculously high car payments that people get themselves into. There's nothing that makes me cringe more than seeing somebody's car payment being so close to being as high, or higher, than their mortgage payment.
Stephen - ...fuel the economy, seems to me fuel is a major part of any economic woes that we are experiencing. You make an interesting and very valid point. Thanks.
Patricia- LOL, that's classic! Thanks for your input.
Mr. Geary - Very well put, I can add nothing more.
Kevin - I tend to side with you there Kevin, I'm tired of short-cuts to thinking and short-term thinking for that matter. It's a recipe for disaster in my opinion.
Rich - You know, I think I should finally watch that freaking movie. That could be a post in of itself:-)
Eric - "just like you don't need to be a farmer to recognize the aroma of manure." Well, I think you just wrote my favorite quote of the week my friend. In regards to solutions, long-term ones, are the only thing I'm concerned with. The band-aids are out there, it's the REAL solutions that need to be addressed and implemented.
Jason...while consumer loans do not really come down like most people would expect, corporate loans tied to prime do! Many larger investors have these index driven loans, and this year has been a boon to them. In fact, we have a client who was waiting on this last cut to lock in the first stage of the loan at a lower level before any resets should the rates start to rise again.This last rate cut made a 30k difference in interest by deferring the start date of the loan...its all realtive I guess
Most people look for knee jerk reactions to news like this, and don't have a bigger picture view of what this is designed to do, which is to stabilze the BANKS>> You are absolutley correct in the way to create a better margin is to raise rates to consumers while the Fed rates are dropping..The real issue is how this does not really increase the liquidity of the secondary markets due to an oversaturation of portfolio loans being held with no place to get them off the books.. SO this will allow some breathing room for th ones who play it smart, and take care of the reserves as needed.
I remember when my auto business hit the million dollar mark in sales. With 4 stores, I had reached the point of doing enough business with my venders to again negotiate better terms on my parts costs...I never even considered lowering my prices just because my costs dropped nearly 6%...That was for OUR reserves and Profit...Good Post..and keep on keeping on!!
Sardi...
Geesh. I came all the way over here just to see if you found "Booger Flicker" :)
He has the greatest images :)
TLW...ROAR!
Missy - Exactly and I see no reason to tie up an asset such as your home with a Car Loan of all things...unless absolutely necessary.
Diane - Hey, I loved philosophy!!
Mike - Good points and very astute comment my friend.
TLW - I actually went to Flicker and then got confused as to how to add images.....I need to work on that. And mark these words I write, my 'Booger' post will be out here soon:-)
Jason,
EESH!...I hope it's not just another smoke screen and I hope it helps us.
Oh Man...
You just gotta email me when you do that :)
A Booger Blog...We need one of those :)
TLW...ROAR!
Neal - The smoke screen is boring and cloudy, real solutions are what we need. I think there is some legit merit here in what I laid out to do just that.
TLW - You know I will:-) I'm a sucker for
advocatingreadingwriting A Booger Blog:)Carol - Speaking of oil....
....that's another post in of itself....
I know that I am completely off the reservation, but they won't let me back on any more. So, from far right field...
The government needs to really shake things up. And they aren't going to be willing to do it. I think that of the tools available, lowering the target rate is a good thing. If the banks slice down their margins, ok. If that means that the money is moving into the consumer market, that is what is going to fix the problem. The $600 (or $1500 for my married with kids family) won't accomplish anything, but it makes for good sound bites.
A real shake up would be to completely kill corporate taxation. Gone. Adopt the FairTax and spur economic growth AND savings. Currently the US has one of the highest corporate tax rates... and we tax corporations for profits from outside our borders... if it is an American company. So, business flees the taxation when they can. Instead, make the US the largest corporate tax haven in the world, and corporations would kick each other in the shin to locate here. What follows? Jobs. Job competition. Increased wages. But, costs don't get to rise as much because the companies don't have to price in taxes. I think it would actually make companies want to build and export... leads to a stronger dollar.
It would also build savings for individuals because taxation would be based on consumption. Savings would be rewarded with no taxation.
Try the link...
I vote for Lane as president!!
(I am having a mental explosion envisioning Sardi as White House Spokesperson!!)
Lane - I most certainly will try the link. I see some loopholes, though narrow, but I like where you are going with what you wrote. Bottom line, "taxation would be based on consumption." Heck, sounds pretty fair to me...
D. Bass - Do they? To me, they already did. It's up to us to figure it out from here. I'm not a 'Big Government' type of guy. Nobody knows Real Estate better than the ones still around...
Jennifer - He wouldn't win. Yet, I may vote for him as well. Lane is astute and honest in my estimation and I love to read his contributions here. As far as me being White House Spokesperson, I cite my first sentence to this comment if I was Lane's....:-)
Jason,
A Philosophical Psychologist, that's scarry!
I can hear you now: "after months of analiss, I've determined the patincient is a bi-poller, sikitsofrenetic, so what!"
Bill
"....so what!" Or they just shouldn't be running this country or ecomony Mr. Bill. Besides, the term 'crazy' is something we've ill-defined for some time now.
Sardi
Jason,
I looked, I didn't say "crazy" :-)!
Regarding running the country: you'd have to add: bi-poller, sikitsofrenetic, manic-depressive, sadistic, egotistic, sadist! In addition to the three candidates you'd add with an unjustified superiority syndrome, not to mention two major bigots!
Bill
I did!
Some of us vote for them...
I'm no different. I need to change that.
And I like links...
Sardi
Money Magazine put together this neat little article entitled Just how fair is the 'Fair Tax' on the CNN Money.com website.
Among other things, the article suggests that the plan "has a lot of holes". And Money Magazine writes, "The trouble with a pure consumption tax is that it can put a hideous burden on poor and middle-class people".
Can you smell what the Feds are cooking... is as phony as the pro wrestler that coined the expression (and I like the Rock)
Maybe it should be what the Feds are smoking... yikes
What a great time to be foreign investor in the United States...
Eric, I have seen that article. Read the Fair Tax book, or the second one, that specifically answers the critics. This article. like many others, changes the specifics of the plan, and then attacks it based on the changes. And, as for the poor... no taxes, via the prebate. Middle class, lower taxes, again via the prebate. And there is more research behind this thing that ANY other bill... ever.
I understand the skepticism, but read both sides.
Jason,
Nice try! I think our whole income tax system needs to be revamped...it's time to look at alternatives...like a federal sales tax...!!! Thanks, Fran
Jason,
Great stuff " as popular as dressing in drag at a Lewis Farrackhan pep rally " . This economic problem we are dealing with right now should come as no suprise to any who lived through the former Bush years. Economy is not that familys strong suit.
How can it be, when their main focus has been on helping Business CEO's put more money in their pockets there by encouraging those same CEO's to line the coffers of the Republican Political Machine.
Economic prosperity does not spring from CEO's earning mult-million dollar bonuses and salaries. Reagan's trickle down theory is probably the greatest economic catastrophy of the 20th century.
Economies prosper and thrive when the working class feels good about its self and has money in their pockets to spend. Pay the workers a living wage, stop flooding the market with cheap imports, and the economy will improve.
Eric - I'll check out that link. It is always prudent to check out both sides of issues, actually it is absolutely necessary. Thanks.
Sis - I'm a man of many talents:-)
Rick - I like the Rock as well. Ironically, I was going to tie in what is happening in the Market to what happened in Pro-Wrestling in the eighties. I'll leave that for another post:-)
Sandra - Now that's not nice. I think I'd be a good fit and the Media would have a field day with me, Letterman & Leno's ratings would go through the roof:-)
Matthew - Thank you kind sir!
Joe - Hey Joe, thanks for stopping by fellow Lehigh Valley Mortgage Professional!
Lane - You are a smart cookie Lane.
Fran - I love it! Policy changes right here in the Rain!! Free speech and expression is a beautiful thing.
Herb - I think you are correct. If our core (Middle-Class America) is in good shape, our over-all economy follows suit.
Diane- I actually think that if Mortgage Rates went up across the board, that would be a good thing. It would loosen up the purse strings and more product would be available to those that can't do anything right now. There are a lot of quality borrowers who have impeccable payment histories on their mortgages that are stuck in stagnation as of now.
Cree- Absolutely, I'd be sure to get all of my skeletons out of the way from the get go. I'm sure the 'Big Boys' would love little old me:-)
LOL!! You could be as popular as dressing in drag at a Lewis Farrackhan pep rally!! Good one, put a smile on my face!
But, as you know, when the prime rate is lowered, it really does help homeowners with HELOC's tied to the prime rate. Based the rates cuts since they started, if a homeowners owes $100,000 or so on their HELOC, they are probably now saving about $200 a month due to the reductions......I am sure there are many thousands of homeowners in this position......the savings adds up much more than Bush's recent economic package.
So let me see if I have this right. Raise interest rates so banks can get healthy. That doesn't quite compute for me.
Don't you think if rates go up and housing affordability goes down we will see even more foreclosures and financial institutions and investors will see even bigger losses than they would if they kept their rates somewhat affordable.
I'm not an economist either, I'm just playing one on Active Rain. ;o) Thanks for making me think today!
Rick- Glad you liked that Rick. Homeowners with HELOC's have benefited from the savings that the lowering of the Prime Rate afforded them, yet I think that's just a temporary fix to a situation that demands a long-term solution. As far as the Economic Stimulus Plan initiated by the Bush Administration, while I appreciate the extra buck or two, I think you'll stand a better chance of shooting pool with a rope than you will of that plan stimulating anything.
Greg - I'm glad you brought that up. Increased rates would bring affordability down, instead of buying that $400,000 Single Family, perhaps you'll only buy a $300,000 Single Family. So many have become Mortgage Poor, I think the increased rates will bring home a sense of reality again in what folks truly can afford. How many people took 'Teaser Rates' just to get into a home? Even more important though, increased rates would actually loosen up the purse strings so more individuals would be able to refinance and buy a home that don't have 20% and 750 credit scores. The reason being, as I pointed out in the post, the loss reserves would be boosted and would give banks and lending institutions the ability and confidence to loosen up guidelines for quality borrowers who are now adversely affected by overly stringent product guidelines. While the FHA will pick up some of the slack, that's not going to help as many as some may believe in my opinion.
Well Lane, how could anyone possibly argue with a proposal that has had "more research behind this thing that ANY other bill... ever"?
If you "understand the skepticism", then you will understand why I am skeptical about the pronouncement that no other piece of legislation in history has ever had as much research behind it as the so-called "fair tax" concept.
Please document for us what evidence exists to support that very enthusiastic claim.
Is everyone aware of the changes to the credit guidelines???
Look for my post..it is going to be a big one. After 15 years of lending, I have NEVER seen as much confusion as now. I feel that the media really needs to do a story everyday of the changes, but alas...
go to my blog later on tonight or tomorrow and check out the misery :(
Larry Bailey
www.GRMandYOU.com
Larry - Yes, I'm aware of those changes and they have been happening very fast. I probably have more of a positive outlook on this than you, though your opinion is one I can identify with to an extent.
Mike - Thanks Mike, time is the only teller....
Thump...
Ooops! Please excuse me.
I tripped and fell down while booger hunting :)
P.S. I love that word :)
TLW...ROAR!
Lowering the interest rate on mortgage instruments will not, IMO, fuel a buying frenzy or cause much of a ripple.
The lower the interest rate, the more the premium, the harder the credit becomes, etc.
Two steps forward and three steps backward.
The fed and others keep trying to fix what can't be fixed by financing. Prices are still the problem. With the price of everything else rising, real estate is becoming less and less affordable.
Mountain top. Prozac. Has a certain ring to it. Might want to take a sitar up there with you. Think you're right about the FED too. It's a mess and nobody is in charge.
cheers
TLW - You are a freaking riot! No worries, grab your Kleenax, boogies will fly in the near future:-)
Lenn - We agree there, the Mortgage Rates lowering aren't the answer. I believe though, if the FED rate cut coupled with Mortgage Rates actually going up a notch or two, it will loosen up purse strings. I also agree Prices are still a problem, an in-depth and analysis of our economy is drastically needed and no stone can be left unturned. I don't think there's an easy answer or even a specific one that will correct things, it's going to be a multitude of factors that help fix this ailing vehicle we call 'Our Economy.'
Greg - Good question and good point, I was actually going to make mention to this in my comment to Lenn. I think a reduction in Purchase Power may help bring prices back down, This would affect those who owe a high % of what their home is worth to begin with but I don't think it will necessarily increase foreclosures, especially if the purse strings are loosened up with it. Loosened Purse Strings = More Financing Options which could broaden the spectrum of people's ablity to get financing to get back on track. By no means do I mean that we go back to some of the ridiculous loans that were being made though. I think we as an Industry need to take on a Robin Hood approach and reach out to help & educate as much as we can. I hope we'll never get away from that again.
Gary - Great, now I need to go look up the word, sitar. Cheers amigo, thanks for stopping by!
Eric... There is over $20m in studies (not government studies, so the money goes further...
At no other point has the Congress been presented a tax bill that was more researched.
Answering the "burden to the poor and middle class." The other point they brought up was that a 23% (inclusive) tax couldn't be revenue neutral.
The income tax is broken. Flattening it only delays it a little. Each time it is flattened... it unflattens itself with the special interest groups in DC lining up with ways to "help." And there is no doubt that the current system is so broken it isn't funny. The IRS doesn't know what the rules mean. there are rules that are contrary to other rules. Figuring taxes should not be an art form.
*Jason, thank you for letting me steal a little of your bandwidth...
LOL Grossman, I concur. This thread is one of my favorites that broke out on anything I've ever written here. As far as that gold mine, I don't want any part of that particular rush.....
Christy - You've got yourself a deal. You make it, I'll dish it out. We'll make a freaking fortune! Now, after this thread...I may need some Prozac just to get back to status quo:-)
Hi Jason, This post certainly warrants being a featured post. You perspective and thought on this are both refreshing and yet remain optimistic in your rationalizations. But I fear that the very same culture that allowed the financial crisis to manifest itself like a virus spread on airplane, is still alive and well and seems to have gained even more of a foothold in this country. Well done!
PS, I remain optomistic inspite of the difficulty to do so.
I didn't read of all of the comments but maybe someone already said this.. As far as writing off interest you pay on your car for example, you should be able to write a percentage of it off. Since you use the car for business purposes. Right?
Sardi...
Step awaaaaaaaaaaaay from the "status quo"...
Don't make me use my booger blaster on you :)
TLW...ROAR!
I don't think you have a grasp of what the FED is really for nor understand why we have the problems today. Many of the problems banks are having are liquidity problems. There is no doubt greed is there or has been there but thegreed is not only at the bank but also over the last five years buyers buying and they should not have. "Want to be investors" and those that lied in order to get loans about their incomes when they got "stated" loans.
The situstaion is much more complex then this.
Jason, I didn't go to school for economics either but probably should have myself. Graduated in Aviation Flight and now a Senior Mortgage Consultant. Thanks for the blog as it was very informative and interesting. Take care and have a great Easter weekend!
Jacob Webster...Sagamore Home Mortgage...866-905-6555
William - I'm optimistic at the end of the day as well.
Christopher - That's an especially good point, I need to get myself a good accountant:-)
TLW - Oh you again! I have an analogy I'd use but I fear my parents are reading the comments:-)
Richard - You should note that it's mandated you say what's really on your mind when visiting my blog:-) That said, I agree fully with you that the situation is much more complex than a few hundred words I typed in about 10 minutes. There are a plethora of variables and avenues that need to be scrutinized, it was not my attempt for this particular post to be the 'End All' in regards to explaining the remedy of the situation. It was only a few ideas. As far as me not having a grasp on 'what the FED is really for nor understand why we have the problems today' I respectfully disagree. I have more of a 'grasp' than you think. I just don't have all the answers.
Jacob - (I hope you aren't licensed in Pennsylvania:-) Aviation Flight huh, pretty cool. You have a good Easter Weekend as well.
Rich - Fair enough, thank you for that. You are exactly right, we should all form our own, informed opinion. I appreciate your contribution.
Jason,
Are you sure you didn't major in finance?:)
The Fed cutting the rates is not going to solve the credit crunch. However it is going to facilitate liquidity - very important in such a crisis. Also it has (to an extend) the psychological effect to prop up the stock market, which in turn helps restore some confidence in the system. The big beneficiary of course will be the financial sector, consumers and small businesses will not see any short term benefit other than if the financial system crashes it will be really bad for everybody.
You are right though - there is not short-term fix. It will be ugly for a while (I am surprised there hasn't been major bankruptcies yet) and unfortunately it doesn't help much the real estate market as a whole.
Ivan Tchakarov
Jason...great post. I know I'm late to the party, but I tend to agree. It seems that the Fed is solely concerned with liquidity in regards to the stock market. And I tend to think that the stocks and bonds are overvalued.
Life is seasonal. Why is it that when we have spring and summer (economically speaking), it's expected to last forever? There is fall and there is winter. That is part of the seasons of life. Over time, healthy things grow.
I guess better minds believe that we were less in Fall then in Freefall and that we needed to artificially slow economic downturn. I could be wrong...but might it be better to take our medicine and get better faster? I don't want a 10-yr fall and winter, like Japan in the 90s. Let's let things drop, then let regular Joes invest in real estate and stock at bargain prices. That's a good thing...no?
Brian - A lot more needs to be done, and not necessarily by the Government. I believe there are issues that need their attention that are being vastly overlooked outside of our Industry. Besides, while I don't mind their input, I don't trust their methods to a Real Estate Turn-Around. That's largely up to us...
Ivan - Positive. Though I did go into College majoring in accounting. I soon after changed my tune though, numbers bored me at the time. Imagine that:-) I noticed you are new to AR, I must say that is a very astute comment amigo. I'll be looking forward to your contributions, I hope they are many.
Deanna - How low do the rates have to go? I'm talking Mortgage Rates here. While it makes my job somewhat ideal offering fixed rates that begin with single digits lower than 6%, I do believe we've become spoiled and lost the concept of true affordability. While I like that cheaper money allowed us to afford more, it has gotten to the point that now we can afford much less...
Joey - Every 'Boom' has its 'Bust'. Nature of the phenomenon. Good summation, sometimes you have to let things drop, the ball will eventually be picked up by those who are willing to run with it all over again.
Jason- Like Joey I'm a little late ...must be the CA thing since Joey is only 20 minutes from me. Is there a point here, well, maybe....LOL :) somewhere I read on here about Prozac...and many times I wonder if those in charge have been getting their own doses, because they appear to be very out of touch with mainstream America and "Our Economy".
Ok, and really I just wanted to wish you a good week-end, but heck I had to read all this money stuff just to get here....so, Happy Easter Jason :)
Jason.....
I feel way removed from this entire conversation, but as you always do, another great post.....I summarized everything with your last sentence, which everyone seems to want to duck and weave....
It stings at first, most things do before the healing begins......
Let's lick our wounds and move on....far easier to treat the cancer when you see it, rather than when you try to overmedicate it.
I agree with your entire premise; I simply don't agree that the greed can be assigned merely to the banks. We've now created an entire cross-section of 'new investors' that think offering 40 to 50 cents on the dollar to 10 properties simulataneously to different banks somehow makes things better in the hopes of landing but one of them. Talk about creating a backlog that takes the focus away from real loss mitigation strategies. Greed is evident in the countless homeowners that are simply walking away from their obligations, preventing the families that need assistance from getting it.
Can you say, "Don't get me started?' :)
Ron - Thank you sir, I think we are on the same page.
Kathy - Am I not making sense again:-) You bring up a good point, in that the 'Big Boys' seem very out of touch with Mainstream America and the Economy. I couldn't agree more. You have a wonderful weekend as well.
Bill- Preventive measures, what a concept! I believe you are right, Greed extends far beyond just the banks. Mr. Nazur, I would love to get you started, why the heck am I not subscribed to you at this point? That's being changed right about now...
Jason-You made perfect sense....I was referring to myself having, or not having a point :) :) I like the way you talk about the Mortgage Mess...it's enlightening and entertaining at the same time, and you get some of the best comments on AR :)
Sardi...
This post needs a little something and I have just the thing...
I have no idea where I got this image from :)
TLW...ROAR!
What I do know...
Is that you deserve for me to share it on your post...Seeing as how you have the best comments and all :)
TLW...ROAR!
Kathy - Thank you my dear. I truly love when the comment thread turns out better than the post itself...
TLW - You keep this up, Lenn's going to be right about that straight jacket thing:-)
TLW Once Again - Gee thanks, where's Bryant when I need him:-))
Jason - we keep looking out for a fix that is only in. we live in a capitalist society. we lament the large sums of money paid to those in high corporate positions. we cringe when we here the money made on junk bonds and hedge funds. we want to prosecute anyone and everyone. we are slammed with an economy that is reeling and now we want the government to fix it.
well, the government did not break it.
everything monetary is ruled by supply and demand.
somewhere the message of value has been lost. people that drive suv's scream over the rising cost of gas and demand that the government step in and do something about those excess profits. there is no such thing as an excess profit. business are created to earn profits. gas price too high...don't buy. get a car that gets better mileage. accept responsiblity for your actions.
house cost too much. don't buy it. don't take a loan you can not repay. qualifications on the credit app too shaky. don't lend the money. wait for a more qualified consumer.
greed and lack of self control created the mess we are in. if we expect the government to fix it, it will just simmer some more and explode like a imprisoned boil down the road.
banks need to charge enough money to cover their costs and make a profit. mortgage rates are not tied to any government rate that i know of. i am not sure, but i believe they are tied to a bond market. at this point who knows. but they are too low.
fixing this mess will begin in your kitchen and my kitchen and everyone elses kitchen when we sit down to determine our budget. we will have to do what has been recommended for years...save money.
the market will sort out our current dilema. some will lose. bad decisions often have bad results. good decisions turn out bad sometimes as well.
just thought i would ramble on for awhile...give my best to the correct Jen.
Jason,
When I read headlines about people converting their cars to running on rice oil to save a few cents at the pump, I know that they are truly not worried about the feds lowering rates. Like other have said the rate lowering in my opinion is not being done to benefit the consumer but more to benefit big banking. Until inflation is checked, real estate becomes affordable and we have a working energy policy in this country, we will continue to see these problems in our economy.
Great Post by the way.
John - Shoot man, that very comment may have inspired another post! I'll give the correct Jen your best. As far as the nature of your comment and its context, you make some inspired points to say the least. Thanks.
Gary - Thanks Gary. A working energy policy is so key, that's a heck of a point. As far as economy, I think we are on the same page...yet I will continue to learn and try to enlighten myself to better help from my end.
Doug - Thanks man, much appreciated.
David - Interesting....I have a more optimistic view than that and feel that WE can be a part of the solution. Bottom line, we need to take action to help do our part and grasp that which is within our control.
Doug - Thank you:-)
Jennifer - It certainly seems like a quasi-luxury at this point. Luckily for me, I am not a big fan of driving so I will never be Exxon's 'Consumer of the Month':-)
Ha! I did major in both Econ and Poli Sci. For all the good it did me since I'm sitting here hustling loans from brokers like you! It is too soon to tell if the Fed rate cuts will help or hurt our enconmy as a whole. Likely we won't have the answer to that for a number of years to come. The rate cuts do not help the average consumer nor are they designed to. Our economy is a bit like religion. It's faith based. If there is no faith in the system, there is no system. These cuts are to help big banks and their liquidity. You may be thinking BS and so am I. If banks and investment firms go under there will be a general lack of faith in the system and you'll have runs on depository accounts, people unwilling to invest etc. Talk about financial turmoil. I would assume that the recent cuts were made in efforts to keep those scenarios from happening. Of course those benefits must be weighed against the weakening of the dollar and a lot of other nasty side effects.
I'm not sure that allowing interest deductions on non mortgage debt would be a great economic stimulus. I personally think spending the time and effort to figure that out would be better spent figuring out a way to regulate oil prices. Of course that's just 'cause i'm po'd that it now costs $75 to fill my gas tank up.
As an aside, I keep telling people I'm going to use my $600 to get my concealed carry and a nice Glock. This is bothersome to a few.
This mess all starts with the fools in Congress caring more about their jobs than the economy. You want to be truly frightened? Go sniff around on the GAO's website for a few hours. It's much, much worse than you think!
Jason - Brilliant! What a way to move the masses. You lucked out buddy, good post and great comments. Having your cake and eating it, too.
I like your style very much. Balls to the wall.
And honest. Honest. I like that. Good tool in any profession.
I am educating myself on exactly what you do (so that I can help me clients even better). I seem to have picked a good teacher :)
Beth - You don't know how much I wish you were more of an active contributor here. You are truly one of the smartest individuals I know, in many facets. I agree with the oil/gas crap going on, I'm not sure anybody can rationalize what's going on there. As far as filling up your tank, trade in that gas guzzler for a 'Shaggin Wagon'. Ahhh, the memories of my first beater....
Joe - LMAO. I guess I shouldn't laugh, but you hit my funny bone. I'll go sniffing Mr. Hayden, will probably leave work early with a bloody nose...
Douglas - You again:-) I don't eat cake but it's nice to look at once in awhile. I'd be happy to help and/or guide you in the right direction along the way. We all have a bit to learn from each-other.
Jason, Great post. I just hope the housing market gets back to normal soon.
Jacki & Jerry - That's very true. That lack of faith will also prove to be a reason folks miss out on golden opportunities.
Jason, you made some valid points back in March and isn't it wierd how they are still relevant to the moves or lack of moves the Fed is making right now. I saw the Democratic National Convention Parties on a special follow the money report on CBS, and guess what lobbies were setting up the most amazing spreads for the Congressmen and women. You guessed it, I saw UBS and Credit Suisse. Point is, our government is being lobbied to death to save these investment companies that lost their butt on speculative lending, when they should be allowed to die and put responsible lending institutions in their place...Sorry, I am ranting this morning...God Bless...Jason
Jason - Yeah, I was looking at this today... I too watched the convention last night. The government doesn't even seem to have the slightest pulse about our business, which simply means I hope they stay out of things as much as possible.