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United States Heading towards a Depression?

Discussion in 'Politics & Religion' started by decoyjames, Dec 27, 2007.

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  1. wisdomtool

    wisdomtool Moderator Staff

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    #61
    They can impose some housing rent ceiling as it had been done during the depression period. But these are quite drastic measures which acts in contradiction to free market principles. Though for a short time, it can be useful.

     
    wisdomtool, Jan 1, 2008 IP
  2. bogart

    bogart Notable Member

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    #62
    That wouldn't work if the rent wouldn't cover the taxes and mortgage. We will need to bail renters out as well.
     
    bogart, Jan 1, 2008 IP
  3. wisdomtool

    wisdomtool Moderator Staff

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    #63
    I heard that was what happened in the past, and the buildings was not renovated or even maintained because of the low rent making it impossible to maintain those buildings without incurring a loss. But the rational behind it was that the "rich" those who own the houses for rent subsidize the "poor", and there are more poor than rich and hence more votes for the politicians.
     
    wisdomtool, Jan 1, 2008 IP
  4. bogart

    bogart Notable Member

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    #64
    That was true in the past but a lot of those buildings have been converted to condos.

    The thing is that you can't have rents less than the mortgage payments or the owners can take the rent control to court or they will abandon the building.
     
    bogart, Jan 1, 2008 IP
  5. ferret77

    ferret77 Heretic

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    #65
    no it went under because it people defaulted on their mortgages

    http://blogs.usatoday.com/ondeadline/2007/09/feds-shut-down-.html

    Netbank's online services were so much better then any other bank I have used so far , they made other banks look like a joke

    lol, there is no way the extra interest they earned for the year or two is going to cover the 30, 40 hell 50% loss of value they are going to take when they dump the house

    There are houses all over the country selling for hundreds of thousands less then they were a year or two ago, even if the bank is collecting 2k in interest a month, that is only 24k a year coming in VS a house selling for 100k less then a year ago
     
    ferret77, Jan 2, 2008 IP
  6. bogart

    bogart Notable Member

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    #66
    The fault is the Banks. 1) The properties were not appraised properly 2) Loans were make with getter 20% down to cover possible loses

    The same thing happened with the S&L crisis back in the early 90s that started the 1991 recession.
     
    bogart, Jan 2, 2008 IP
  7. wisdomtool

    wisdomtool Moderator Staff

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    #67
    I will add another one, attractive commissions to the agents selling the mortgages, resulting in large number of spams and attracted less than desirable property owners. Greed is the problem!

     
    wisdomtool, Jan 2, 2008 IP
  8. tbarr60

    tbarr60 Notable Member

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    #68
    Greedy owners?
    Greedy brokers?
    Greedy mortgage companies?
    Greedy buyers?
    Greedy sellers?
    Greedy underwriters?
    Greedy appraisers?
    Greedy funders?
    Greedy notaries?
    Greedy tax collectors?

    or

    Greedy all of the above?

    I just read about the latest thing in mortgages is getting a reverse mortgage to make your sub prime payments. Recession avoided! :D
     
    tbarr60, Jan 2, 2008 IP
  9. bogart

    bogart Notable Member

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    #69
    Once a subprime property goes into negative equity 20-30% it's a lost cause.
     
    bogart, Jan 2, 2008 IP
  10. ferret77

    ferret77 Heretic

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    #70
    its starting to not matter if people can make the payments, I have read that people are defaulting before their arms adjust

    people aren't going to keep paying down a house that lost 40% of its value, would you keep paying back a loan that is 100k+ over the value of the house?

    in the next year or so I think people are just going to walk away from those houses, regardless what type of payment plans or interest reductions they can get
     
    ferret77, Jan 3, 2008 IP
  11. guerilla

    guerilla Notable Member

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    #71
    That's not it though. A lot of people took on mortgages for which the payments were 60 or 70% of their income, thinking that they could extract the equity from appreciation to afford the payments.

    It's not that they will walk away from bad investments, it's that they cannot hope to meet the obligations of the bad investment under a bear market.

    I read somewhere (could be incorrect) that several states have laws that prevent people from walking away without honoring the difference between the asset valuation and the mortgage value.

    If this is true, we could see waves of bankruptcies (a good thing) which would purge bad credit from the system.
     
    guerilla, Jan 3, 2008 IP
  12. bogart

    bogart Notable Member

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    #72
    Unemployment climbed to 5 percent in December from 4.7 percent in November.

    That's a badass jump in one month.

    The subprime bailout is a pipe dream.

    How is the government going to makeup the difference for subprimers that paid as much as 50% more for a house than its worth? When at the same time we are going into a recession.
     
    bogart, Jan 4, 2008 IP
  13. guru-seo

    guru-seo Peon

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    #73
    We have not seen anything yet! Brace yourselves! It will get worse. The decline is just getting momentum at this point and its about to pop BIG TIME in about 6-8 months.
     
    guru-seo, Jan 4, 2008 IP
  14. Mia

    Mia R.I.P. STEVE JOBS

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    #74
    Ah yes, let us usher in more Doom and Gloom...
     
    Mia, Jan 4, 2008 IP
  15. guerilla

    guerilla Notable Member

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    #75
    Got this from a poster at the RPForums

    http://www.baltimoresun.com/news/opinion/oped/bal-op.fannie04jan04,0,1654729.story
     
    guerilla, Jan 4, 2008 IP
  16. Mia

    Mia R.I.P. STEVE JOBS

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    #76
    I guess I am mis-understanding.. Am I to understand that if RP is elected there will be no doom and gloom? And if he is not elected, Doom and Gloom will come?

    If it is coming, or upon us, how pray tell will he stop it? Yell at it? Maybe not intervene? Tuck tail and run?

    Only time will tell..
     
    Mia, Jan 4, 2008 IP
  17. guerilla

    guerilla Notable Member

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    #77
    No, it's an analysis of the capitalization situation with Freddie Mac and Fannie Mae.

    I don't think that is the point. If you want to derive something RP-ish from the article, perhaps it's that he's been fighting to protect tax payers from these bailouts for some time. The same legislation that you guys mock for not getting passed, is the stuff he is introducing to protect you. Which should piss you off at all of the Congressmen who don't vote to protect you.

    Indeed.
     
    guerilla, Jan 4, 2008 IP
  18. earlpearl

    earlpearl Well-Known Member

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    #78
    Mia:

    I think the subprime mortgage deals with no or little money down, were only in part the responsability of the buyers. It appears the sellers were selling horsecr@p to them. There is a lot of evidence of a level of scam during the subprime mortgage explosion.

    Incomes were falsely reported. It seems to me there was a game going on to sell the hell out of those deals to people with probably little of the financial sense you seem to portray.

    Regardless it happened. It will contribute an ugly financial chapter over the next year or two as this sh1t plays out.

    The aggregate size of this is astronomical. Its amazing to also see how these scammed bad mortgages were widely distributed around the world and the gross size of it.

    Aside from causing a deep slowdown in new home construction and sales, it will effect the buyers of these homes who will end up fooked, their ability to handle credit and partake in the consumer economy etc.

    Its sort of amazing to see a lot of empty offices around my region with mortgage signs on them. All these brokerage offices closed down.

    As far as a recession....yeah the technical term for it is 2 quarters of negative gdp. We will see what happens in the near future.

    Business stuff is always cyclical. Real estate is deeply cyclical because of the lead time between buying land for development and providing a finished building. Every big industry is cyclical. I'm sure Airbus had to fire lots of people as the development of their huge planned passenger jet met all sorts of problems and lousy lousy sales.

    but recession is 2 straight quarters of neg gdp. its a long way to depression when we haven't even hit recession.
     
    earlpearl, Jan 4, 2008 IP
  19. tesla

    tesla Notable Member

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    #79
    Well, I'm moving into a house by the end of this month, and I got a great deal. :)

    Now is the best time to get into a house, whether you're renting or looking to buy. Since the apartment rental rates are about to go through the roof, moving into a house is strategic. I can't wait to pack my bags and settle in.
     
    tesla, Jan 4, 2008 IP
  20. Mia

    Mia R.I.P. STEVE JOBS

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    #80
    It is certainly a buyers market right now.
     
    Mia, Jan 4, 2008 IP
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