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$700B Bailout is MY fault America - 9/29/2008 9:32:26 AM
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edrummer
Posts: 11
Joined: 9/19/2006
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I’ve come to the conclusion that this financial mess our country is in is just as every bit my fault as it is Wall Street’s. After all, I really wanted to get my growing family out of that small townhouse and into a single family home and with the prices increasing at the speed of light, I needed to act quickly. But, holy cow, with the houses in my area so dang expensive how could I afford it? I knew one thing for certain, if I didn’t act fast I would have been priced out of my local market and would have had to either live in my tiny townhouse or move a couple of hours away.
So, when my loan guy introduced me to the interest-only loans available, it made sense. I could buy some time hoping that my income would increase over the next three years to the point where I could either refi to a fixed rate or just let the IO loan convert to the market rate. Either way, I had three years.
We bought a house that, without the IO loan, I knew we couldn’t afford or at best barely afford. We were, for the first time in seven years of our marriage, living above our means.
Well, the county board of supervisors made sure that their property tax increases out-paced my income gains and the expenses of a growing family and those associated with owning a single family home were too immediate so we starting charging more and more to the credit cards. A lot more.
There we were, living above our means with a load of credit card debt and a 4.875% IO loan about to convert to a 6.875% fixed rate. The pressure was on.
At this point I will stop and make my point that this scenario is what I believe caused this whole mess. Americans have been living above their means for a decade or more and now the party is over. Americans, through foreclosures and short sales, have pushed their personal financial malfeasance onto Wall Street instead of “manning up”. I don’t accept that “predatory” loan officers are to blame. It’s time for greedy, materialistic Americans to accept the responsibility for the devaluation of mortgage backed securities because, well, they defaulted. Who did you blame for the collapse of Enron? Well, Mr. and Mrs. Homeowner, you took out a mortgage with the promise to make payments and Wall Street invested in your promise. You mismanaged your finances, made bad decisions and defaulted on your promise to make mortgage payments. Your “company” went belly up, just like Enron. You are the President and CEO of your “company” and you failed, but not without foisting your debt onto your investors. Nice work. Don’t you wish you had that Golden Parachute?
The above scenario is my story, but I think it reflects the story of many Americans. I decided, before my rate converted, to refinance into another IO loan, but only to buy time while I sold my house and moved back into a townhouse. We are now in the process of paying off our debts and delaying gratification (i.e. paying cash). When it hit me we had to sell our home, it was tough to accept. I felt like a failure and went into a funk. Some may even call it depression. Whatever you call it, it sucked. But, I knew it was God telling me to man up and do what was right. I couldn’t pass my problems onto someone else. More importantly, I had to deal with my materialism and false views of success.
So, you see, the bailout proposed by Paulson and Bernanke is not just a Wall Street bailout; it is indeed a Main Street bailout, too. Main Street dumped their trash on Wall Street and washed its hands.
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RE: $700B Bailout is MY fault America - 9/29/2008 11:57:10 AM
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coolfamily6
Posts: 232
Joined: 4/18/2005
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Amen to that. During the boom, we kept our modest house and bucked the trend. We will have our home paid off in 5 yrs MAX but we are paying for the greed of our neighbors not just in the Wall Street end but also because they cannot pay the mortgage, so they are not paying HOA fees as well. We will have to eat the loss as a community sooner or later...
_____________________________
If your bible is a mess; your life won't be.
~Encouragement a mom gave to our children at our First Grader's Bible Ceremony!
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RE: $700B Bailout is MY fault America - 9/29/2008 1:16:16 PM
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GroupW
Posts: 2911
Joined: 11/16/2007
From: Up in the hills of Colorado (very BIG hills...)
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Nicely written edrummer. In truth, all of us are complicit in this to some degree or another. The mess is way too big to lay at any one person's feet. Here's how I break down the guilt.
- consumers: got caught up in the buying frenzy and took out too much loan without assessing the risk appropriately.
- banks: got caught up on the profits on subprime mortgages and were too complacent on the risk of prime mortgages. Failed to underwrite risk appropriately.
- Wall St. dealers: missed the obvious warning signs that the party would eventually end. Personally, the Wall Street crowd was probably the LEAST complicit in all of this. They just put greedy investors in touch with greedy mortgage firms and took out a small fee in the process.
- Mortgage bankers: got caught up in the greed and failed to recognize that the lending that was going on was irresponsible and couldn't be sustained. Had no thought for their clients' ability to pay the mortgage over the long run.
Ratings agencies - issued AAA ratings on investments despite the fact that they did not have the capabilities to accurately guage the risk. Allowed themselves to be manipulated by banks & Wall Street dealers in exchange for profit.
- The Fed: held interest rates too low for too long in 2003-2004.
- The SEC: failed to adequately guage the risk of the dealer community they supervised.
- Treasury: failed to adequately supervise the banks it regulates
- Insurance companies - issued bond and credit insurance policies that they couldn't pay off in a downturn.
That's the short list. There are other parties complicit in this as well, including FASB, international central bankers & regulators, etc.
It's important to note that this is NOT an American phenomenon alone. England has a housing problem that is as bad or even worse than ours. So does Spain.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: $700B Bailout is MY fault America - 9/29/2008 4:08:17 PM
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TheosCentric
Posts: 1904
Joined: 2/26/2006
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quote:
ORIGINAL: GroupW
Nicely written edrummer. In truth, all of us are complicit in this to some degree or another. The mess is way too big to lay at any one person's feet. Here's how I break down the guilt.
- consumers: got caught up in the buying frenzy and took out too much loan without assessing the risk appropriately.
- banks: got caught up on the profits on subprime mortgages and were too complacent on the risk of prime mortgages. Failed to underwrite risk appropriately.
- Wall St. dealers: missed the obvious warning signs that the party would eventually end. Personally, the Wall Street crowd was probably the LEAST complicit in all of this. They just put greedy investors in touch with greedy mortgage firms and took out a small fee in the process.
- Mortgage bankers: got caught up in the greed and failed to recognize that the lending that was going on was irresponsible and couldn't be sustained. Had no thought for their clients' ability to pay the mortgage over the long run.
Ratings agencies - issued AAA ratings on investments despite the fact that they did not have the capabilities to accurately guage the risk. Allowed themselves to be manipulated by banks & Wall Street dealers in exchange for profit.
- The Fed: held interest rates too low for too long in 2003-2004.
- The SEC: failed to adequately guage the risk of the dealer community they supervised.
- Treasury: failed to adequately supervise the banks it regulates
- Insurance companies - issued bond and credit insurance policies that they couldn't pay off in a downturn.
That's the short list. There are other parties complicit in this as well, including FASB, international central bankers & regulators, etc.
It's important to note that this is NOT an American phenomenon alone. England has a housing problem that is as bad or even worse than ours. So does Spain.
Be careful about saying "all of us."
I don't own a home. I rent, pretty cheaply too. We have one credit card, which we pay off monthly. I graduated from both college and seminary with no debt. We have one car payment. And during all that time, we had two children.
_____________________________
"Missions exists because worship doesn't." -- John Piper, Let the Nations be Glad
God at the Center - Latest post - John 3:16 conference?
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RE: $700B Bailout is MY fault America - 9/29/2008 4:11:56 PM
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GroupW
Posts: 2911
Joined: 11/16/2007
From: Up in the hills of Colorado (very BIG hills...)
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quote:
ORIGINAL: TheosCentricBe careful about saying "all of us."
I don't own a home. I rent, pretty cheaply too. We have one credit card, which we pay off monthly. I graduated from both college and seminary with no debt. We have one car payment. And during all that time, we had two children.
The "all of us" is more of the general collective "we". Thank you for being a happy exception to the general rule. Now if we can get about another few tens of millions of other people like you, we'll have a much sounder economy.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: $700B Bailout is MY fault America - 9/29/2008 4:16:22 PM
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TheosCentric
Posts: 1904
Joined: 2/26/2006
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quote:
ORIGINAL: GroupW
quote:
ORIGINAL: TheosCentricBe careful about saying "all of us."
I don't own a home. I rent, pretty cheaply too. We have one credit card, which we pay off monthly. I graduated from both college and seminary with no debt. We have one car payment. And during all that time, we had two children.
The "all of us" is more of the general collective "we". Thank you for being a happy exception to the general rule. Now if we can get about another few tens of millions of other people like you, we'll have a much sounder economy.
Sort of my point, really. Perhaps as an example of frugal living?
Nevertheless, my bank happened to get bought out in all this process, but seeing as how I don't have any loans with them, I'm not affected, I just get a new name on my statements.
_____________________________
"Missions exists because worship doesn't." -- John Piper, Let the Nations be Glad
God at the Center - Latest post - John 3:16 conference?
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RE: $700B Bailout is MY fault America - 9/29/2008 4:18:39 PM
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csl7037
Posts: 1628
Joined: 3/24/2008
Status: online
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quote:
ORIGINAL: TheosCentric
Be careful about saying "all of us."
I don't own a home. I rent, pretty cheaply too. We have one credit card, which we pay off monthly. I graduated from both college and seminary with no debt. We have one car payment. And during all that time, we had two children.
Whether you're complicit or not as he was saying, you're paying the price. That's certainly an "all of us", unfortunately.
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RE: $700B Bailout is MY fault America - 9/29/2008 4:32:58 PM
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Leslie_JnJs_mom
Posts: 898
Joined: 9/6/2007
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Wow!!! I cannot believe the price of houses in some places! I have a 3 bedroom 2 bath home that is really nice at least for me. It only has 1200 sq feet but I have always liked it. I owe less then 20,000 on it. We re financed for a lower rate and knocked about a hundred dollars off my monthly payment. On the down side though is my husband has an hour commute to work everyday. We tried to move closer knowing that near Springfield we would have to find a house that was at least 70,000 and a much higher payment. We could never sell our house no one has sold their homes except a few for-closers around here that went for next to nothing. I was annoyed for a while that we were not able to move but in light of all that has happened this month it is for the best that we stay put.
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<------- Jessica and I had so much fun with grandma!
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RE: $700B Bailout is MY fault America - 9/29/2008 4:34:45 PM
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NoShow
Posts: 462
Joined: 5/10/2005
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quote:
ORIGINAL: radiorobert
Good points above.
Yes, when it boils down to it. Mr. and Mrs. Joe Q American have alot more to do with this than you are hearing about. It's sickening how the media and our leaders won't tell us the hard truth about ourselves, because they profit and feed off of our stupidity too much. 
I agree. Regardless of how "tricky" some of the loans were, it still boils down to the purchase price of the homes. And bidding the prices up were a function of demand. And the demand was the public's, not the bank's or the mortgage broker's or Wall Street's or the government's, but the people's.
I know so many people that bought, two, three years ago, 100% positive that they had to buy at that time, because prices were going to a place where they would never be able to buy. Here we are a few dozen months later, if they had waited, they pretty much could have the house of their choice at the price of their choice.
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RE: $700B Bailout is MY fault America - 9/29/2008 4:49:34 PM
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rlj
Posts: 2138
Joined: 4/14/2005
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quote:
Yes, when it boils down to it. Mr. and Mrs. Joe Q American have alot more to do with this than you are hearing about. It's sickening how the media and our leaders won't tell us the hard truth about ourselves, because they profit and feed off of our stupidity too much.
Get real. The one who had the money and made the loans is the one responsible.
quote:
And bidding the prices up were a function of demand. And the demand was the public's, not the bank's or the mortgage broker's or Wall Street's or the government's, but the people's.
The price would never have gone up had the people not been able to get the capital. No capital no price increase.
_____________________________
-Roger
This is who I'm voting for. He is from the same party I voted for last time. This is consistent with my belief in the failure of the two party system and my disgust with it.
http://www.baldwin08.com/#
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RE: $700B Bailout is MY fault America - 9/29/2008 5:02:17 PM
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mrtigger
Posts: 292
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quote:
ORIGINAL: radiorobert
Bottom line, I think in the end, WE gave our leaders permission and our banks permission to spend like crazy until they couldn't anymore. We quit teaching fiscal responsibility b/c that just isn't any fun. We quit trying to save money and make more money to actually HAVE b/c that took too long and was too hard. We want everything right now without thought to the future.
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Not WE.
Banks did not ask my permission to do this. My representatives did not ask my permission and in fact, I voted for the other guy. And in any event, what I have is a vote and not direct control over whatever stupidity the politicers decide to allow. The home flippers did not ask me, mortgage brokers did not ask me. I warned a few potential homebuyers back then that housing prices will probably crash. They looked at me like that's just crazy talk.
I have always lived below my means. I have always paid my bills, I have never been foreclosed on. I did not buy a house that I could not afford. I did not buy 10 houses hoping to flip them for instant wealth. I did not rip off a bank by getting a 125% LTV cash back loan on a house that I had no intention of ever even trying to pay for. I did not pocket fat fees by scamming buyers into predatory loans. I did not dishonestly rate any securities as AAA..... And so forth.
Nothing particular against you -- But I've heard the 'we all caused this' garbage from several sources now. Apparently I have to pay for it. Oh well.. But I'm not accepting blame for it.
_____________________________
mr tigger
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RE: $700B Bailout is MY fault America - 9/29/2008 5:12:18 PM
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GroupW
Posts: 2911
Joined: 11/16/2007
From: Up in the hills of Colorado (very BIG hills...)
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Mr Tigger-
Thanks for not contributing to the mess. There is a subset of the population that's completely innocent (and yes, they still get to pay for it.)
I think the point to take away though is that the mess is far larger than what can be laid at one person's door. There's a lot of blame to go around and there are few innocent parties.
BT
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: $700B Bailout is MY fault America - 9/29/2008 5:13:23 PM
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radiorobert
Posts: 59
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No rlj...you get real! Knock off the little guy vs. big guy mentality for 2 seconds and humble yourself enough to consider that WE the little people make up the market and that WE the little people share blame as well. Nobody said the big guys weren't at fault either, but don't try to sway blame onto only them so as to continue to fuel division between people based on financial status.
Sorry but I'm a little hot right now, don't mean to be snapping, but the posts above really drove to the heart of a matter that we all need to consider more often.
quote:
Not WE.
Banks did not ask my permission to do this. My representatives did not ask my permission and in fact, I voted for the other guy. And in any event, what I have is a vote and not direct control over whatever stupidity the politicers decide to allow. The home flippers did not ask me, mortgage brokers did not ask me. I warned a few potential homebuyers back then that housing prices will probably crash. They looked at me like that's just crazy talk.
I have always lived below my means. I have always paid my bills, I have never been foreclosed on. I did not buy a house that I could not afford. I did not buy 10 houses hoping to flip them for instant wealth. I did not rip off a bank by getting a 125% LTV cash back loan on a house that I had no intention of ever even trying to pay for. I did not pocket fat fees by scamming buyers into predatory loans. I did not dishonestly rate any securities as AAA..... And so forth.
Nothing particular against you -- But I've heard the 'we all caused this' garbage from several sources now. Apparently I have to pay for it. Oh well.. But I'm not accepting blame for it.
I understand. I didn't give them permission to either. But I'll be the first to admit, I long for the same material things, have used my credit card when I shouldn't have. Good for you for being smart about things. I try to live within my means as well. The sadest thing about all this is that people may in fact lose jobs b/c of things that they didn't have a hand in doing at all.
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RE: $700B Bailout is MY fault America - 9/29/2008 5:17:16 PM
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rgsoundguy
Posts: 401
Joined: 4/12/2005
From: Pottstown, PA
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Edrummer,
Thank you for your brutal honesty and taking responsibility for your part in this. However, truth be told, you are not responsible for this mess, only your own situation. You did not let your mortgage go into forclosure. You realized you were in over your head and stuck with it until you could get the place sold. You may still be paying for it now, but you are paying for it which is more than a lot of people are doing. I admire your honesty and I admire your determination to do the right thing. I believe you will be blessed for this. Keep paying your debts and get your savings going. Also, look at it this way, your determination has put you in a better position than a lot of people. Where do you think those people who were forclosed on ended up going? Many probably had to move in with other family members. Take the wife and kids and move back to Mom and Dads house. Keep working those baby steps and before you know it you will be building that wealth.
_____________________________
Albert Einstein said that insanity is doing the same thing over and over again and expecting different results. That convinces me that our nation is insane because we continually elect republicans and democrats expecting change and get none.
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RE: $700B Bailout is MY fault America - 9/29/2008 5:54:16 PM
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redeemedsaint
Posts: 517
Joined: 12/5/2005
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I think the whole house needs to be cleaned and we just start over again with some new people. This whole thing is outrageous.
_____________________________
Woody
Get off the track cause the freight train is coming - Coach Bobby Lee Duke from Facing the Giants
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RE: $700B Bailout is MY fault America - 9/29/2008 7:27:41 PM
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rlj
Posts: 2138
Joined: 4/14/2005
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quote:
No rlj...you get real! Knock off the little guy vs. big guy mentality for 2 seconds and humble yourself enough to consider that WE the little people make up the market and that WE the little people share blame as well. Nobody said the big guys weren't at fault either, but don't try to sway blame onto only them so as to continue to fuel division between people based on financial status.
I'm not going to be the martyr. I rent and I stay within the means we have as a family. There is no we.
Once again though who made the loans? Who got the big stock dividends for those loans? Who got the big bonus' for those loans? This isn't class warfare this is what happened.
I'll give you the answer. Those who are getting $700,000,000,000 in money. : )
_____________________________
-Roger
This is who I'm voting for. He is from the same party I voted for last time. This is consistent with my belief in the failure of the two party system and my disgust with it.
http://www.baldwin08.com/#
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RE: $700B Bailout is MY fault America - 9/30/2008 6:27:16 AM
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Birdiecat
Posts: 49
Joined: 5/2/2008
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I blame Pres. Woodrow Wilson for signing the Federal Reserve Act in 1913. I believe this financial fiasco is being orchestrated by the Federal Reserve. I admit we're in trouble. Will this little bail out classify us as a socialist country now? Wilson said signing the 1913 Act was the biggest mistake he ever made, making America the most controlled country on the planet!!
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Come, Lord Jesus!
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RE: $700B Bailout is MY fault America - 9/30/2008 6:59:38 AM
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edrummer
Posts: 11
Joined: 9/19/2006
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I think I pretty much agree with all of the responses. People who have been responsible with their finances are getting stuck with the debris left by those who weren't at all levels and all aspects of this mess. [BTW, a similar, but not exact, scenario has happened before....does 1929-1930 ring a bell? Back then, the debt wasn't associated with housing so much.]
Yes, I got out when I could and for that I am thankful. But, I still need to keep my materialism in check. I don't have a lot of stuff. Heck, I just got cable for the first time in 7 years and only because it's included in the HOA. However, I yearned for more. It's the yearning that revealed the problem. I no longer yearn for the big house. I had a smallish house (for my area) and I hated it; it turned out to be bigger than I could handle. The never ending yard work and maintenance (oy). Anyway. I love the simplicity now. However, now I have to watch how much I yearn for being out of debt. (that's a problem?) Yes. It may cause me to be stingy towards God's work.
Thanks for letting me talk. May the Lord bless you.
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RE: $700B Bailout is MY fault America - 9/30/2008 8:27:58 AM
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Giulia
Posts: 862
Joined: 9/29/2005
From: Giulia
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quote:
Every single govt. official that voted for lenient lending practices needs to be voted out of office, republican or democrat, it doesn't matter they need to go.
I apreciate your honesty, however I do think that not only gov officials, but also those pushing loans to people who can't afford it should be wearing some of this flack! Don't ask me how!
So what happened? Why did they pull out of this 700B bailout? Is it because it is a socialist ideal which shouldn't be a govt responsibility and the deficit is largely connected to capitalist ideals?
_____________________________
Rejected by the world but loved by heaven
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RE: $700B Bailout is MY fault America - 9/30/2008 11:13:19 AM
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stampinlady
Posts: 1572
Joined: 4/12/2005
From: Northern IL
Status: online
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As Whoopi said this morning, "The parties over folks and now it's time to clean up!!!"
Interesting OP.
I was listening to MSNBC the other day and they were talking about some of the lenders and they were actually lending to people without verifying income!!!!! Who does this??
_____________________________
Deb
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RE: $700B Bailout is MY fault America - 9/30/2008 11:16:36 AM
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GroupW
Posts: 2911
Joined: 11/16/2007
From: Up in the hills of Colorado (very BIG hills...)
Status: offline
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quote:
ORIGINAL: stampinlady
As Whoopi said this morning, "The parties over folks and now it's time to clean up!!!"
Interesting OP.
I was listening to MSNBC the other day and they were talking about some of the lenders and they were actually lending to people without verifying income!!!!! Who does this??
Nobody anymore! Seriously, something like 20% of all the subprime originations done in the last couple of years were no-doc loans. There's always a few people that can't verify income, so a no-doc product is a good thing. It should only be a very small portion of one's production though. There was no reason for 20% of the loans being no-doc.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: $700B Bailout is MY fault America - 9/30/2008 11:29:18 AM
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GroupW
Posts: 2911
Joined: 11/16/2007
From: Up in the hills of Colorado (very BIG hills...)
Status: offline
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quote:
ORIGINAL: stellaluna
I saw a newspaper picture yesterday of a man holding up a sign that said "Don't bail out Wall Street, bail out people." And I thought to myself, that's essentially what they're trying to do. 
True. The issue though is that the average person doesn't understand how the financial infrastructure impacts them. They think that this is a Wall Street problem that can be contained there. In reality, what impacts Wall Street today impacts Main Street about a day later.
It's kind of amazing that people don't get it. People benefitted from Wall Street's financial engineering acumen when the market was on its way up - getting a loan was easy, incomes were up, jobs were aplenty. Somehow when Wall Street heads down, people don't think they'll pay that cost.
One way or another, Main Street always pays.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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