Where is the US economy headed?

@okie,

Quote:

Therefore, the propping up of the bank and your loan, and all loans like yours, isn't it the same as paying for the inflated value of your house, and others like it?

The answer to your question is an obvious "No".

The loan value, once the loan is made, is unaffected by the inflated (or deflated) value of the home. The reason is twofold:

1) The amount of the loan is due regardless of the value of your house.
For example: On the downside - If my house is worth half as much, does that mean I owe twice as much as what I applied for? Or on the upside, if my house doubles in value, does that mean I now owe half as much as what I applied for?
2) The vast majority of mortgages are and were made to people who do not intend to sell simply because the market value went down. They bought their home to be a home. So, if I bought my $100,000 home for $200,000 with a mortgage worth $200,000, I will continue to pay my mortgage today just as I have been since the day I took out my mortgage to begin with. A person wouldn't simply 'walk away" because their house is worth less. They bought it to live in for more than a month and a half.

Banks, however, with mark-to-market accounting and regulated reserve requirements face a different scenario.

If they do a mortgage today for $200,000, transparency accounting will force them to list the actual value of that asset as $120,000 on their books. This is because there is no market for mortgages. So, if they tried to sell that mortgage in the open market, it would be worth 40% less than what they wrote it for. Therefore, they must show (mark) the asset on their books at the current market value.

That now becomes a "writedown of assets" and will require a "cash infusion" (government bailout funds) to bring their capital up to meet minimum reserve requirements.

Hence, no bank has any incentive to make any kind of loan....which leads to what the banks are doing now, hoarding the cash they get from Uncle Sam.

The quandry is that, without access to credit, the economy loses liquidity and stalls. But, if the banks make the loans and then they have the market-to-market accounting force them (on paper anyway) into insolvency.

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@Cycloptichorn,

And if the employers concerned have taken out insurance against the risk of these accusations lawyers will not have to rely on bumps at traffic lights. They will have an unlimited source of income based on what "discrimination" means in relation to work performance in all the multitude of workplaces and, as insurance companies have to pass on the costs, everyone's premiums will rise and without any increase in productive efficiency. Money for arguing.

And Mr Obama is a lawyer.

Meanwhile your competitors will be in clover. Eventually import controls and government approved rates and direction of labour. Is a garbage collector discriminated against for earning less than a TV weathergirl who got her job Stanwyking. So jobs then need grading.

Will this legislation apply in the official sex industry?

Make insurance companies a "buy". The bigger their turnover the bigger their profit. With enough hot air the US might float into the stratosphere.

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@BigTexN,

Quote:

I will continue to pay my mortgage today just as I have been since the day I took out my mortgage to begin with. A person wouldn't simply 'walk away" because their house is worth less.

Of course they would if they could buy a house around the corner for $100,000 or rent one from somebody who buys houses at that price in this new market.

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@spendius,

spendi, You seem to miss some important points made by BTN. He belongs to the majority of mortgage holders who bought their home as a home, not as an "investment." It's also true of stock market investments; those who think they have lost too much sold when the market was at its lowest, and once sold, can never recover what they "lost." Mose people who look at the long-term do not change homes based on what the market is today. If they walk away every time the market goes down, nobody will ever again give them credit to buy another home.

We paid $50,000 for our home, and it's now worth over one million. Yes, we've made many upgrades, but nowhere near what the value is today. We will not sell for many reasons, but the primary reason is that my wife loves it here.

You have learned nothing about responsibility.

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@spendius,

spendius wrote:

And if the employers concerned have taken out insurance against the risk of these accusations lawyers will not have to rely on bumps at traffic lights. They will have an unlimited source of income based on what "discrimination" means in relation to work performance in all the multitude of workplaces and, as insurance companies have to pass on the costs, everyone's premiums will rise and without any increase in productive efficiency. Money for arguing.

You can't get insurance against committing crimes, Spendi. Discrimination is a crime. Companies are not insured against that.

In this case, the act Obama signed refers to Pay discrimination. Other laws deal with other forms of discrimination and are not new.

Quote:

And Mr Obama is a lawyer.

Meanwhile your competitors will be in clover. Eventually import controls and government approved rates and direction of labour. Is a garbage collector discriminated against for earning less than a TV weathergirl who got her job Stanwyking. So jobs then need grading.

That has nothing at all to do with the bill Obama signed.

Quote:

Will this legislation apply in the official sex industry?

Make insurance companies a "buy". The bigger their turnover the bigger their profit. With enough hot air the US might float into the stratosphere.

Stick to drinking, it seems to be the only thing you know anything about at all; for you could not be more wrong about your predictions or your understanding of the basic facts of the situation.

Cycloptichorn

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@spendius,

Quote:

Of course they would if they could buy a house around the corner for $100,000 or rent one from somebody who buys houses at that price in this new market.

Of course they would NOT.

Your foreclosure would show up on your credit report...which is required by landlords and mortgage companies alike.

Abandoning the home runs the risk of not having a home to live in at all...

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@BigTexN,

BigTexN wrote:

Quote:
Of course they would if they could buy a house around the corner for $100,000 or rent one from somebody who buys houses at that price in this new market.

Of course they would NOT.

Your foreclosure would show up on your credit report...which is required by landlords and mortgage companies alike.

Abandoning the home runs the risk of not having a home to live in at all...

To be fair, this is happening quite a bit now; or at least it was until last September. See, you just buy the new house before the old one is 'sold'; then walk away from the old one.

Cycloptichorn

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@Cycloptichorn,

Cyclo, if that's the case, then the argument can't be made that these people can't afford their mortgage in the first place.

A new mortgage would be heavily underwritten (especially now that the scandal is out). So, if they have enough income/assets to be granted a 2nd mortgage on a second property, then they have enough income/assets to be sued for what they walked away from...a zero sum game with negative statements on the credit report to boot.

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@cicerone imposter,

Responsibilty!!!??? Are you kidding. A Darwinist talking about responsibility. Whatever will they think of next?

People are doing now what I suggested. They did it a few years ago in the last negative equity situation. It hardly applies to people who have paid off their mortgages or are well on the way. I was talking about young mortgages which is what most sub-primes are. The banks won't have any toxic debts on your account I shouldn't think.

And commercial property is a big factor too.

There are upper and nether millstones for grinding things up. What is happening to the abandoned or repossessed house and industrial units. If property companies can buy them and charge half last years rents, which they nearly can, they can beat these low interest rates into a frazzle. And stock prices are based on best places for your money because money has to go somewhere.

Your house is neither here nor there.

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A law degree does not indicate that one is a practicing lawyer. They have to practice law and have a record of arguing a case in adjudication. Obama taught constitution law and delivered lectures on public affairs and constitutional law.

1 Reply

@BigTexN,

BigTexN wrote:

Cyclo, if that's the case, then the argument can't be made that these people can't afford their mortgage in the first place.

A new mortgage would be heavily underwritten (especially now that the scandal is out). So, if they have enough income/assets to be granted a 2nd mortgage on a second property, then they have enough income/assets to be sued for what they walked away from...a zero sum game with negative statements on the credit report to boot.

You can't do it any longer; the banks just won't give out the second loans.

But they used to.

You ought to admit that you were incorrect about that other issue; completely incorrect, in fact.

Cycloptichorn

1 Reply

@Cycloptichorn,

You have assumed the crime before the hearing. Who pays an employer's court costs if he wins the case.

Why have you failed to address my point that employers would pay women twice as much as men if the performances justified it? Do you think they wouldn't. And your definition of discrimination is based on a bunch of over-simplified hypotheticals and giving credence to assertions.

Obviously you have a vested interest in giving credence to assertions because they are your only form of discourse.

1 Reply

@Cycloptichorn,

Cyclo, Which bank is funding the second home?

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@Cycloptichorn,

Quote:

You ought to admit that you were incorrect about that other issue; completely incorrect, in fact.

Incorrect about what exactly?

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@spendius,

spendius wrote:

You have assumed the crime before the hearing. Who pays an employer's court costs if he wins the case.

Usually the Plaintiffs, if they are counter-sued. I'm not aware of insurance that you can take out to cover litigation costs for committing a crime.

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Why have you failed to address my point that employers would pay women twice as much as men if the performances justified it?

I don't consider it to be a valid point or pertinent to the conversation.

Quote:

Do you think they wouldn't. And your definition of discrimination is based on a bunch of over-simplified hypotheticals and giving credence to assertions.

It is not my definition but the Law's definition. And it has been in place for some time now. The currently signed Act only allows people who have been discriminated against more time to figure out that they are being discriminated against, and then take action. It doesn't change the law or the definition.

Quote:

Obviously you have a vested interest in giving credence to assertions because they are your only form of discourse.

How ironic that you would say this, being, as you are, unfamiliar with either the laws in question, the definitions in question, or anything outside the bottom of a pint glass, apparently.

Cycloptichorn

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@BigTexN,

BigTexN wrote:

Quote:
You ought to admit that you were incorrect about that other issue; completely incorrect, in fact.

Incorrect about what exactly?

Sorry, that was supposed to go to Spendius, not you. Apologies.

Cycloptichorn

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@BigTexN,

Quote:

Abandoning the home runs the risk of not having a home to live in at all...

Well- that doesn't apply here. We house people. We don't like the unsightly mess the homeless create. If there are any kids the local authorities are duty bound to house them. And in decent accomodation. If none is available they use hotels. And there are inspectors to force landlords to adhere to agreed minimum standards.

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@spendius,

spendi, It's not surprising that what works there doesn't work here. That they even allow you in the local pub says much about "where you live." LOL

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@spendius,

Quote:

Well- that doesn't apply here. We house people. We don't like the unsightly mess the homeless create. If there are any kids the local authorities are duty bound to house them. And in decent accomodation. If none is available they use hotels. And there are inspectors to force landlords to adhere to agreed minimum standards.

Hmm, government housing...thats a good reason to uproot your children, abandon your existing home in a quality neighborhood and crush your credit for...

1 Reply

@spendius,

International Herald Tribune
Irish Central Bank: economy to shrink 4 pct in '09

The Associated Press
Thursday, January 29, 2009

DUBLIN, Ireland: The Irish Central Bank forecast Thursday that the country's economy will shrink 4 percent this year and unemployment will jump to a 13-year high as the collapse of the housing market hurts the wider economy.

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Where is the US economy headed?

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