--- In FairfieldLife@yahoogroups.com, "curtisdeltablues" <curtisdeltabl...@...> wrote: > > --- In FairfieldLife@yahoogroups.com, grate.swan <no_reply@> wrote: > > Here is the best shows about the different aspects of the mortgage > crisis that I have seen: > > http://www.hulu.com/watch/59026/cnbc-originals-house-of-cards > > At end of my mortgage career I noticed that homes had outstipped > income. This is a huge social problem and may be the reason that any > attempt to artificially support these unsustainable home prices in > certain markets is shortsighted. It may be that we need to have a > desperately catastrophic correction in home prices to allow for a > future where families can afford home ownership in a metro area like > DC. Of particular interest in the show was Greenspan describing how > these catastrophic market corrections in boom and bust cycles may be > the inevitable result of our self-serving human nature. During the > crazy expansion period congress would never allow the kind of heavy > restraints necessary that would have driven up unemployment during > what people perceived as a boom time.
Anyone with any clue saw that by 2005 median incomes were way too low to support median housing prices in most areas. Either incomes had double or triple overnight -- good luck with that -- or housing prices have to fall 50-60%. Until the two are in synch we will continue to have housing and economic problems. Propping up artificially high housing prices is the worst thing we can -- in my view. What gets little attention is all the people who cannot afford way-puffed up out of synch housing prices -- and who will never be able to afford a home. We crap on these people by propping up artificially high, out of synch (price and income) home prices by subsidizing payments and not letting foreclosures -- an inevitablity of buying far overpriced homes -- take their course. And there are millions who we are permanently locking out of the home market so that many over-spenders can keep their unaffordable homes. And remember, having to move out of a larger house you cannot afford doesn't mean they will become homeless, it means they will move into housing more consistent with their ability to pay. If we don't prop up artificially high home prices, and don't get in the way of letting homes find their true value relative to buyer's incomes (which includes allowing foreclosures to occur), then housing prices will get back to realistic affordable prices. Yet some will become unemployed in this process, thus the huge safety net -- of providing any unemployed worker a 50-100k educational grant -- to get by on and retool themselves for 21st century jobs -- over the normalization period -- 2-4 years. > > How is this plan not better than the current stimulus an bailout bills? > > > > I haven't addressed your many good points but I enjoyed reading them. > From what I can tell nobody has definitive answers on these questions > so we are going to have to try some stuff, evaluate it, and then > change course if we need to. I think we have a president who seems > capable of admitting mistakes so he is committed to this process > despite the inevitable political bloodbath as he changes courses to > find something that works. It may be that we are eating a shit > sandwich here and are only able to negotiate the thickness of our > bread. (Thicker bread doesn't really help that much!) > > > > > > > > > The main reason we are told that we need to bailout the banks is that > > the economy will tank (more) and unemployment will skyrocket. We are > > told we must spend trillions to bail out companies, management, > > investors and imprudent / flipping home buyers. > > > > If we let these complex debt instruments and credit swaps to naturally > > resolve themselves -- giving bad management, bad investment decisions, > > bad loan practices, bad judgments by home-buyers a huge -- but mostly > > deserving hit -- we are told we must instead bail them out and spend > > massively on questionable things that we will be paying back for over > > many decades -- or else unemployment will be at depression levels -- > > and all that cames from that. > > > > A trillion has been committed to the bail-out, and another trillion > > for the stimulus. Potentially 1-3 trillion more to take us home. (And > > a trillion for Iraq -- but that's water under the bridge.) > > > > A trillion dollars could give 20 million people a 50,000 "GI Bill" > > type of educational grants/loans. Or provide 10 million people with a > > $100,000 grant. Enough for 2-4 years of full-tme retraining and > > education. Current unemployment is around 10 million. If it doubles, > > that's 20 million. > > > > Going from incomes obtained in a booming economy to and educational > > grant of $20-30,000 a year is a "sacrifice" -- but only compared to > > previous jobs that no longer exist. Its a quite livable, viable and > > life-saving sum compared to unemployment benefits or no benefits when > > those expire. Add in some "student" health insurance -- and people > > can make a go of it. > > > > Sending the unemployed back to school to train for 21st century jobs > > would provide a quantum leap of productivity to the economy over the > > next 20-40 years - as the GI bill did. This makes sense in any era. > > > > During times of high unemployment, the educational grants will keep > > keeps the unemployed living at a livable level. The unemployed > > neo-students will not end up in soup lines and living on the street -- > > which is the biggest fear and danger of high unemployment. And they > > will be spending their educational stipendd faster than most of the > > items in the stimulus package will be spent -- keeping the economy > > afloat as bad banks fail and new banks enter to fill the vacuum -- a > > process that will take several years. > > > > 1) Let those and the institutions behind i) bad management of > > financial institutions, ii) bad investments in shaky securities and > > way over-priced homes -- let them fail and reap the rewards of their > > stupidity, greed, bad judgement and in some cases borderline-criminal > > actions. > > > > 2) Keep the unemployed -- a result of not bailing out the banks, from > > soup lines and living on the street. > > > > 3) Infuse rapidly spent funds into the economy to keep it afloat > > during this transition. > > > > 4) Enable a quantum leap in national GNP and incomes over the next > > 20-40 years from the massive "GI bill" educational grants. > > > > How is this plan not better than the current stimulus an bailout bills? > > >
