Conquer Club

heres a question for you, I am 41 years old, and i guess i must admit to being apart of the sheeple, i never trusted the govt. but things were economically going along fine in my little world up until 3 years ago, so i kept my head in the sand, went to work and got paid well for it, i'm in construction as you may well know. whenever i needed more money, i simply worked more hours, be it overtime, or side work, things were so good i started a business 7 years ago bought land built houses, sold them and repeated, then the bottom fell out, and i got stuck with my pants down, sold my last house 2 years ago and am still repaying debt.

so with the official unemployment rate at over 10% the unofficial rate at 15% and the construction unemployment rate at 30% or higher just how do things get better?

It seems to me that since 2000 the "smart guys" or at least the powers that be, who call the shots, have creatively reinvented the wheel for their own good. I'm talking about truely smart people, people with the power to move markets, stocks soared to record levels, hedge funds, the housing market, etc.

my limited knowledge is that of the housing market, the banks were giving loans to people who didnt deserve them, even without documentation to suggest that they might be qualified, but then they sold the loans to someone else so they wouldnt get screwed when the loans went bad.
this housing scam was not an accident, the nubers were crunched, they knew that they would have "x" number of good years b4 things would crash, they got rich beyond their wildest dreams and let pension funds get screwed, small banks collapsed, and people have and continue to lose their homes, and its not over, counties, and states have and continue to be in debt and continue to raise taxes, people who once could afford their mortgages now cant afford their property taxes, and its not like they can just sell their houses and move because their houses are now worth less than what they owe.

so the million dollar economic question is how is the U.S. economy going to turn around?
I dont mean to be a pessimist but i dont believe things are going to turn around any time soon,
I would drive up to canada tomorrow if i could to get a job, but i have to wait for an fbi background check to come back, if they have the work, I may not want to come back to the u.s.

as i understand it canada's unemployment rate is at 7% , and i'm guessing that they dont have the problem that the U.S. has with illegal immigrants taking jobs, nor do i think they allow as many legal immigrants into the country to work.

seriously, please tell me how the U.S. economy goes back to boom times for the working man, since 9/11 and enron the economy has slowly steadily gotten worse, creating increased demands on increased worker productivity, which equates to fewer jobs because now 2 workers are doing the work of 3 and now to keep those jobs not only are you doing more work but the employers are asking for pay cuts in salaries and are getting them.

so a working man is doing more for less money and then that dollar doesnt buy as much as it used to.

I think I'm gonna stay in my house untill i get foreclosed on, then move my family to hawaii and be homeless on the beach, doing day labor jobs, i hear they have tent communities on the beaches with public washrooms with showers, I always wanted to learn to surf.

we, through borrowing, can live beyond our means.....but only for a short period of time.

and now, on friday Obama told us that we need jobs, well Duh, and trying to unite both democrats and republicans to push forward a jobs bill he said that he felt the republicans had some good ideas and that they should be acted upon, so what happens, an hour later the republicans slammed obama, fucking partisan politics will do nothing to fix things. I realize that its politics as usual, but F.F.S. how high does the national unemployment rate need to go?

Phatscotty wrote:we, through borrowing, can live beyond our means.....but only for a short period of time.

Well said,
I am 40 myself and was in construction all my life, went through all the borrowing beyond my means etc in my 1st marriage, piled up a ton of debt. Spent 10 years paying it all back and will never borrow again.

For 10 year if I didn't absolutely need it, I didn't buy it.
Yes I use credit cards, but for convenience of online shopping only & they get payed off in full every month. If I dont have the cash to cover it, I don't buy it.
My house, New truck, new bike. I payed cash for all. If I don't have the cash then I don't need it.

While I agree these so called smart people have done some damage, it's self control of the people who are borrowing beyond their means is what the real problem is. I know too many people who refinanced in the 90's for better mortgage rates but also borrowed "Equity" on their house & now owe more then what the house is worth. That is nobody's fault but their own. The same as it was my fault for accepting every credit card that came in the mail.

The first order of business to help fix this mess is the Borrowers need to be smarter with their finances. Impulse buying will get you every time.

If that white picket fence, 4 bedroom 2.5 bath house is your dream home but the price is too high, the mortgage rates are too high or the terms are not right, then don't buy it.
Paying a price more the current market value or a higher interest rate because you "Love" the house is absurd and a very bad financial decision.
Yet how many times do you hear "we were willing to pay more because" <insert reason here> For every dream home you find there's 100 more out there and probably at a better price.

mgconstruction wrote:While I agree these so called smart people have done some damage, it's self control of the people who are borrowing beyond their means is what the real problem is.

Yes! Too many people, when they go to buy a new home, do their "shopping" based on what they think they can afford, rather than what they NEED. They look at what sort of top-end payment they can stand and QUITE FREQUENTLY buy more house than they really need or even want.

Some people buying houses beyond their means, or borrowing beyond their means, did not bring this economy down. Those cases would normally be handled by bankruptcy. What brought the system to the edge was the investment firms using other people's money to speculate, to gamble, on extraordinarily risky forms of financial instruments. They did it because they knew they were too big to fail, and they were correct, we saved their lousy asses. AIG's management even sent out memos admitting the risk was too high, but that they were just too big to fail.

It is not your fault, it is not your inexperience with finance, it is not your incompetence that brought us down. It is the corporate lords whose butts we are forced to kiss with our tax dollars.

Think about it. You can be an excellent carpenter, a master carpenter, yet you are being help accountable (by the disappearance of you job) for the incompetence of wall street dips. You didn't cause that.

Time to kick ass.

mpjh wrote:Some people buying houses beyond their means, or borrowing beyond their means, did not bring this economy down. Those cases would normally be handled by bankruptcy.

Even it if was the cause, it was the responsibility of the banks and such to not hand out loans. They shouldve known better, and they actually did but they didn't care because they were getting filthy rich.

Snorri1234 wrote:

mpjh wrote:Some people buying houses beyond their means, or borrowing beyond their means, did not bring this economy down. Those cases would normally be handled by bankruptcy.

Even it if was the cause, it was the responsibility of the banks and such to not hand out loans. They shouldve known better, and they actually did but they didn't care because they were getting filthy rich.

Btw, a large part of the crisis was actually caused by people borrowing beyond their means. In the sense that the loans they made were what the bankers and such traded with.

People started to default more frequently on those loans they made, which wouldn't have been such a problem if those loans had remained within their own market instead of being sold as low-risk loans.

All that would've happened if the banks weren't being greedy and dumb is the housing bubble.

Snorri1234 wrote:

mpjh wrote:Some people buying houses beyond their means, or borrowing beyond their means, did not bring this economy down. Those cases would normally be handled by bankruptcy.

Even it if was the cause, it was the responsibility of the banks and such to not hand out loans. They shouldve known better, and they actually did but they didn't care because they were getting filthy rich.

Are you really that dumb that you think the banks did this of their own volition? The politicians forced them to when as White House Chief of staff Rahm Emanuel put it "We are discconnecting the ability to repay a loan with the ability to obtain one!"

Its this shit that sends me into a rage every time I hear polticians blaming the banks. Yes, some bankers from Goldman and the like make ridiculous money. Most don't, but human offal like Barney Frank paint all bankers with the same brush...hmmm its ok to do that but God forbid you stereotype other professions or other types of people...

rockfist wrote:

Snorri1234 wrote:

mpjh wrote:Some people buying houses beyond their means, or borrowing beyond their means, did not bring this economy down. Those cases would normally be handled by bankruptcy.

Even it if was the cause, it was the responsibility of the banks and such to not hand out loans. They shouldve known better, and they actually did but they didn't care because they were getting filthy rich.

Are you really that dumb that you think the banks did this of their own volition? The politicians forced them to when as White House Chief of staff Rahm Emanuel put it "We are discconnecting the ability to repay a loan with the ability to obtain one!"

Oh yes that's totally forcing them.


Bullshit, the banks weren't forced to give people loans. Yes, Congress and politicians pressured banks and such to try and get more people into houses but they never forced them. You are probably referring to the CRA which really only meant that the institutions couldn't discriminate based on the neighborhoods where people came from. It specifically mentions that the institutions should still make sound decisions and they're not forced to make risky loans.

Honestly, you could only make this argument have any kind of sense if you consider CRA-credits to "force" banks to loan to poor people instead of it merely giving them an incentive to not discount them simply because they were from poor neighborhoods.

Shit, even Franklin Raines said the law might have encouraged bad behaviour.

Added to that is the fact that real subprime loans vastly outnumbered the CRA-loans and that those were the loans on which most of the defaults happened.

azezzo wrote:and now, on friday Obama told us that we need jobs, well Duh, and trying to unite both democrats and republicans to push forward a jobs bill he said that he felt the republicans had some good ideas and that they should be acted upon, so what happens, an hour later the republicans slammed obama, fucking partisan politics will do nothing to fix things. I realize that its politics as usual, but F.F.S. how high does the national unemployment rate need to go?

That is the conveinient thing about politics - Presidents/Prime Ministers/ etc only need to worry about their term on office, so as long as it sounds like they are doing something, and they keep their vote, that is all that matters. They won't still be in power in twenty years, so it won't come back to them, it'll be on whoever is in power at that time - Politicians are rarely in the game to actually fix anything -

snorri,

"Pressure" is force when it comes from the government. The government can shut a bank down - period. They can literally tell a bank it can't make ANY loans.

rockfist wrote:snorri,

"Pressure" is force when it comes from the government. The government can shut a bank down - period. They can literally tell a bank it can't make ANY loans.

OH NOES THE GOVERNMENT!

Nobody was forced. You're not living in communist russia, the government only gave incentives to a bunch of banks to not discredit people based on their neighborhood. The government asked companies to try harder to find good investments.


But that doesn't even fucking matter, because the loans that got defaulted on and which mostly caused the housing bubble to collapse were from companies not regulated by the CRA and what made this into a crisis was the risky trading of loans and the selling of risky loans as not risky.

Well for sure, you are on the right page , Just imagine what would have happened if Privatizing Social Security would have passed under bush a few years back. Basically i can sum it up like this. The rich people run the Gov`t and the only difference between the repubs and the dems is simply this. The repubs take longer to f*ck you (8 years) then do the dems . Obama and his cronies have done far more damage in just 1 year.

I personally like glenn beck , although at times he`s really digging deep and spinning heads , he is right on target in trying to restore the constitution .

But any historian knows that THE NEW WORLD ORDER is what rules and has for CENTURIES. and although we are just pawns , the order is what allows the human race and civiliation to live on.


well i hope this non sense makes some sense . GoodLuck

danfrank wrote: Obama and his cronies have done far more damage in just 1 year.

Whut?

I personally like glenn beck

That's because you're an idiot.

But any historian knows that THE NEW WORLD ORDER is what rules and has for CENTURIES. and although we are just pawns , the order is what allows the human race and civiliation to live on.

All historians are conspiracy theorists?

All this does not answer the OP's question: "What, if anything, can be done to fix it?"

For the record, I don't claim to be able to answer it; economics is definitely not my area of expertise, and would like to hear the answer of those here more knowledgeable then I on the subject.

One observation that may help focus the debate is that the economic problem, as far as I can see, didn't begin with this recent crisis that seems to have taken over the discussion, neither for the US, nor for the world in general. Pretty much since the onset of "stagflation" in the late 60's, we have been on a downhill slide, with only a few short, minor interruptions. Those small, short times of upturn seem to be pretty evenly distributed between Democratic and Republican presidencies and congressional majorities, though I may be wrong about that.

So how about it? Is there a solution, and what would it be?

Snorri1234 wrote:

rockfist wrote:snorri,

"Pressure" is force when it comes from the government. The government can shut a bank down - period. They can literally tell a bank it can't make ANY loans.

OH NOES THE GOVERNMENT!

Nobody was forced. You're not living in communist russia, the government only gave incentives to a bunch of banks to not discredit people based on their neighborhood. The government asked companies to try harder to find good investments.


But that doesn't even fucking matter, because the loans that got defaulted on and which mostly caused the housing bubble to collapse were from companies not regulated by the CRA and what made this into a crisis was the risky trading of loans and the selling of risky loans as not risky.

Loans = revenue to a bank. When the government has the power to tell a business it can't obtain any future revenue, you are forced to do what they "pressure you" to do. There are good loans in lower income areas to lower income people, but they are not easy to find. Telling a bank to make more loans in those areas puts staffing pressure on the bank to look for good loans in those areas and credit pressure on the bank.

BTW: All banks that obtain FDIC insurance are and were subject to CRA.

The finance institutions that took us to the brink were not banks and were not FDIC insured. Goldman Sacks, for example, did not become a bank until after it received the TARP money, and only so that is could borrow at 0% at the fed window and buy U.S. treasuries at 3%. Great deal use our money to make money leading our government money. They then made a pile, post TARP, trading stocks in the sugar high of a market we have now. No where in that did Goldman Sacks do anything to help resolve the mortgage crisis.

They are economic scum.

danfrank wrote:The repubs take longer to f*ck you (8 years) then do the dems . Obama and his cronies have done far more damage in just 1 year.

You are an idiot.

danfrank wrote:But any historian knows that THE NEW WORLD ORDER is what rules and has for CENTURIES. and although we are just pawns , the order is what allows the human race and civiliation to live on.

I was wrong. You're not an idiot. You're mentally incapacitated.

radiojake wrote:
That is the conveinient thing about politics - Presidents/Prime Ministers/ etc only need to worry about their term on office, so as long as it sounds like they are doing something, and they keep their vote, that is all that matters. They won't still be in power in twenty years, so it won't come back to them, it'll be on whoever is in power at that time - Politicians are rarely in the game to actually fix anything -

Nice post Jake, and bang on the money.

you have to bear in mind throughout all of this current shit about who is in it for the long term.
The politicians aren't.
The Corporations are.
The Corporations support whatever political party will get in. (In fact it's smarter to support both parties to ensure that they have power over political decisions)

Banks and other huge companies were onto a winner either way the market went and the guys at the top of the food chain were pulling all the strings.

The only way for things to change is a change of government. And I'm not talking republicans or Conservatives / Democrats or Labour. This is a two horse race between two huge parties that aren't that much different from each other and are financially supported by some greedy fuckers, who don't give a rats arse about me and you.

mpjh wrote:The finance institutions that took us to the brink were not banks and were not FDIC insured. Goldman Sacks, for example, did not become a bank until after it received the TARP money, and only so that is could borrow at 0% at the fed window and buy U.S. treasuries at 3%. Great deal use our money to make money leading our government money. They then made a pile, post TARP, trading stocks in the sugar high of a market we have now. No where in that did Goldman Sacks do anything to help resolve the mortgage crisis.

They are economic scum.

It was the mainstreet banks and mortgage companies that the politicians said needed to make more loans to low income people. They designed products to make this possible and wall street realized they could sell those products to more than just low income people and that is the roots of the problem.

Politicians make no distinction between the local commerical or retail banker and wall street when they bash "bankers" and that is as bad as any kind of sterotyping that the left rages against.

Snorri1234 wrote:

mpjh wrote:Some people buying houses beyond their means, or borrowing beyond their means, did not bring this economy down. Those cases would normally be handled by bankruptcy.

Even it if was the cause, it was the responsibility of the banks and such to not hand out loans. They shouldve known better, and they actually did but they didn't care because they were getting filthy rich.

the banks packaged subprime loans together(the best were no income verification loans) and played hot potato with them, they sold them off to mutual funds, pension funds, etc. the banks were more guilty than the ignorant (and i mean dumb)people who applied for those loans trying to get their piece of the american dream, yes there were people that dumb buying houses they couldnt afford, i saw this 1st hand, as i built spec homes.

another aspect of this was plain old fraud. some builders were selling their homes to under-qualified people, they had the appraisers appraising the homes for lets say $100,000 over market value, they had mortgage brokers drooling to get these loans pushed thru, n then the builder would kick back the buyer 6 months of mortgage payments at closing, then the banks sold the loans as fast as possible. subdivisions that should have taken 3 years to sell out were getting sold out in less than 1 year. it was the next enron, and the ceo's got richer, and the lobbyists continue to line the politicians pockets, i guess i'm a pessimist, i do not believe things are going to get better any time soon.

rockfist wrote:
Loans = revenue to a bank. When the government has the power to tell a business it can't obtain any future revenue, you are forced to do what they "pressure you" to do. There are good loans in lower income areas to lower income people, but they are not easy to find. Telling a bank to make more loans in those areas puts staffing pressure on the bank to look for good loans in those areas and credit pressure on the bank.

BTW: All banks that obtain FDIC insurance are and were subject to CRA.

The point was that those banks didn't even bother to look for good loans there previously. The "pressure" was that the gov told them to stop doing that and treat everyone fairly. To consider that forcing is dumb.

But anyway, the subprime mortgages that sucked mostly came from independent mortgage companies unregulated by the CRA. Research has shown this, CRA loans were mostly stable and not that high of a risk.
You know, it's kind of weird to blame CRA for this crisis, considering it was passed in 1977.

The "own more homes" mentality was perhaps a factor in the crisis, but only insofar as it made people want houses they couldn't afford. The banks should've told them no, they aren't obligated to give you a loan if your credit sucks.

If you really want to blame politicians, blame them for deregulating the industry. http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act for example. Dumb policy supported by lots of politicians.