September 22, 2008

What fresh hell is this?

In July 2005 while in Vegas during our last Kid Free Vacation shortly before Arun was born, X and I had a fabulous steak dinner with my friend J and her husband J at the Wynn. As we enjoyed our lovely meal, we discussed the ridiculous state of real estate and subprime mortgages. You see, J and J are in the "mortgage business". That is what they do. Furthermore, X and I had just sold our townhouse in the DC/VA area because we suspected that a real estate bubble was at hand with the silly manner in which our townhouse had appreciated in value.

I think that first paragraph should illustrate an important point. If four yokels such as X, J, her husband and I knew about the impending disaster three years ago, then it is safe to assume that others were privy to such information. Perhaps. Bear with me on this vein of thinking, folks. Let us say that, hypothetically, of course, that maybe, just maybe, Senator Obama, Senator McCain and Senator Biden had an inkling that maybe, perhaps, banks should possibly rethink their policies regarding subprime lending. (Palin gets a pass on this one because at the time, she was most likely up in the frozen tundra hunting moose and teaching her children that the word "Trojan" is Greek for "sin" and is synonymous with "a bridge to nowhere but hell".)

The response from the Obama and McCain campaigns is disappointing, to say the least. What a joke. Or rather, I wish they were joking. Let us just hand over 700 billion Big Ones with no restrictions. No salary caps, nothing. Awesome!

Do not even get me started on BeelzeBush.

Furthermore, let us not only jab our fingers in the direction of the Fat Cats running these banks. How about the folks who signed the dotted line for all these loans? No one forced these folks to take out loans even though in many, many cases, they had no business commiting to such debts (particularly those with "interest-only" payments which makes me want to blow a gasket even contemplating why on Earth anyone would take such a loan, much less give it.)

Even more sad? Nothing I have said thus far is profound, for sure. Everyone is pretty much saying that same damned things as I am.

I have included such a few resourceful links about all of this that do a more eloquent job, for sure:

A great explanation using Tickle Me Elmo as an example.
Interesting article on why we may not be in a recession.
A nice little diddy on Bubblenomics.

Now, please excuse me while I go bang my head on the nearest wall.


Anjali said...

Right on.

I've no doubt that many people in the finance sector as well as state and federal governments knew that the potential for absolute disaster was certain, and didn't do horseshit (except cash out their own investments before the bubble burst).

Dooneybug said...

People who take out interest only loans baffle me - BAFFLE ME. My own SIL and her husband did that on part of their mortgage a few years ago. SO dumb.

When my husband and I were looking to buy a house 9 years ago, he alone qualified for a $250,000 loan (we married a year after that so I didn't get counted in on all the numbers). There is NO POSSIBLE WAY we could have afforded that kind of loan. Not even eating Mac n' cheese for every meal. NO WAY. Basically we told our agent what we were willing to spend per month and worked backwards to figure out our budget. But there are actually people out there that think because they qualify for a particular amount that they can actually go out and spend that much. INSANE.

And now? We all have to help all the people that made such a stupid decision. BTW, about 90% of home owners are making their monthly payments just fine. This "bail out" situation is a bit overblown, but that's what our country is like nowadays.

The squeaky wheel gets the oil, didn't you know?

Monkey McWearingChaps said...

Remember when I blogged about this 2 years ago to the day (almost?) I believe the post is still on my blogspot blog for all of posterity to read.

Since I work in the industry I'll concur-most of us knew it was coming. The ones who did were simply ignored.

Christine said...

We bought our house 9 years ago, too, and the amount they were willing to lend us was insane. We kept trying to rework our budget based on Paul's salary (I couldn't work until I was licensed), and we could not figure out where they were coming up with that number.

We bought a house that was $100,000 cheaper than what they were willing to give us.

The best description I've heard about this was that we were living like it was one big frat party and now it's time for the hangover.

kristen said...

It is so frustrating for financially responsible people to have to bail out the ignorant (or greedy, I'm not sure which is closer to the truth). My husband and I have some debt but it is well within our means to pay each month. We pay more than the minimum on our secure debt each month and never carry a balance on our credit cards.

My boss makes 3 times what I do and lives paycheck to paycheck and is constantly whining about not having enough money. Oh and she is building a "fabulous" new house in an exclusive subdivision.

I agree that if I could see the housing bubble about to burst with no financial education at all that the politicians should have seen it first. But the lack of personal responsibility really makes me sad.

elizasmom said...

We had a similar experience to dooneybug and christine — we qualified for a loan about $100,000 higher than we knew we could afford. We made compromises (live in a solidly-built gorgeous house that has some old-house quirks in a friendly neighborhood in an iffy school system) but we can still afford the payments and we can even do crazy stuff like buy groceries! As a quasi-tree-hugger my heart hurts to see all these plastic McMansions on deforested lots that are just sitting there empty, for no good reason. The whole thing drives me crazy. If a financial idiot like me could figure out that interest-only loans were stupid 5 years ago when my friends described it to me... Ah well, no one has ever gone broke overestimating people's capacity to put their heads in the sand.

Bryan said...

I'm sorry...what was that...I'm to broke to pay attention...
I hate money...or just the lack there of.
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