US situation re mortgages and household debt

[JAMESBJOHNSON]

PURE

My analogy is slipping a dog turd in every box of Cracker Jack. But the whole idea of bundling is to spread the default risk amongst all the buyers.

 

[Huckleman2000]

Ever heard of a little known concept called personal responsibility? You know- something along the lines of "taking responsibility for your actions" or "self reliance." Mother Nature really does abhor morons.

Then, of course, there's that quaint, old-fashioned concept of not buying stuff that you can't afford.

Yes, I'm familiar with the concept of personal responsibility.
As familiar as you apparently are with the concept of being a sanctimonious prick.

Welcome to the ignore list. Between your obnoxious font-manipulation and simplistic analysis of most any subject, I'm sure you're familiar with that concept as well.

 

[JAMESBJOHNSON]

Oh! No! Huck added another name to his ignore list. I know I'll never smile again.

 

[Huckleman2000]

Since the majority of "household debt" would probably be either a house payment or car payment, I don't really see how "disposable income" can be used. Mortgage payments don't come out of "disposible income" and I wouldn't really put car payments in in the disposable income section of the budget either.

WH, you really have no idea what the definition for "disposable income" is in the terms of government statistics, and shouldn't disparage the statistics simply because you don't immediately know what the numbers represent. Even if one doesn't know the definitions of the terms, it's clear that the charts represent a historical anomaly.

Disposable income is generally shrinking as inflation increases the "necessary expense" share of gross income, but while that changes the ratio of "disposable income" to "consumer debt" it doesn't necessarily mean that the "consumer debt" has increased.

Umm, did you even look at the charts? Consumer debt is shown in whole dollars, not as some ratio. "Necessary expense" isn't a term shown on them. You're making up your own terms and definitions and then pointing out possible problems with them, which adds up to a pile of nonsense.

If American consumers are having problems meeting their credit obligations, then the Educational System has failed them yet again and should put a bit more emphasis on mathematics, critical thinking and money management.

Have little sympathy for people who are in financial trouble because they took on more voluntary debt than they could afford.

Banks and financial institutions have continually opposed even such simple disclosure as "How long it will take to pay off a credit card while making minimum payments".
Clearly, an uninformed consumer is part of their business model.

 

[Huckleman2000]

Oh! No! Huck added another name to his ignore list. I know I'll never smile again.

You can smile!??!!

 

[Huckleman2000]

A challenge

It seems to be a given that this 'mortgage/debt crisis' is largely caused by irresponsible people borrowing more than they can afford. Yet I've seen nothing - nothing - in the way of proof. Shanglan (in another thread) mentioned that he saw one couple complaining about the home-equity line that they used for an extravagant vacation, and apparently it sent him over the edge. It's as if 'sub-prime' was a code-word for 'profligate freeloader'.

I know bankruptcies are triggered mostly from such personal tragedies as job loss, health crises, and divorce. The lending industries would have you think otherwise, of course.

Where is the evidence for the repeated assertions that this is largely the fault of irresponsible consumers borrowing more than they can afford?

Why has the Bush administration trumpeted the rise in home ownership as part of its so-called "ownership society"? If so many of the new homeowners are people who shouldn't have bought because of borderline financials, what does that say about Republican economic policies?

 

[rgraham666]

It says they really don't give a shit as long as it doesn't affect them.

 

[Xelebes]

XELEBES

The banks arent keeping the loans. Banks sell their loans to brokers, who bundle various kinds of consumer debt, and sell the bundles to state and local government.

Very well aware of that.

 

[elsol]

It seems to be a given that this 'mortgage/debt crisis' is largely caused by irresponsible people borrowing more than they can afford. Yet I've seen nothing - nothing - in the way of proof. Shanglan (in another thread) mentioned that he saw one couple complaining about the home-equity line that they used for an extravagant vacation, and apparently it sent him over the edge. It's as if 'sub-prime' was a code-word for 'profligate freeloader'.

*shrug*

Do I see a problem with the people who take on these loans?

Fuck yeah! More than once...I've sat there listening to someone with 10 years less work experience than me talk about taking on a variable, interest only for the first five year home loan. I don't want to pay PMI and these people are rolling the dice...

I get that life events can fuck you... but some people just flat out don't know they're rolling the dice.

But I also don't feel bad for any of the entities that got caught in this BS... It's called the sub-prime market for a fucking reason! I don't load the gun for someone who doesn't know how to use it... because the odds are good that they'll shoot themselves or much worse they'll fucking shoot me! I had a coworker who said it best (albeit for a much smaller situation than a mortgage)-- "These people have bad credit for a reason... you can't complain if you let them in the door and they leave you holding the bag."


Everybody in this thing is dirty.

 

[Xelebes]

OK, but Harold. Consider the bundling of subprime mortagages, and offering the bundles--secondary instruments-- as investiments to various entities, e.g. union retirement funds, and so on. do you really think the "character" of the persons who made these decisions is the issue.?

Presumably professionals in investment 'bought' the banks' story that if you bundle a bunch of bad risks together, you have a good risk!

Bond raters (re: Moody's) and bond insurers are the ones at fault for not properly appraising the bond issuances. The pension funds are relying on the insurance backing up the bonds and the rating on the bonds to determine whether or not the bonds are to be bought or not. They are not looking at the actual companies themselves because often times they have bought bonds from them before. The Mortgage bonds had a good history on the bonds market.

 

[trysail]

It seems to be a given that this 'mortgage/debt crisis' is largely caused by irresponsible people borrowing more than they can afford. Yet I've seen nothing - nothing - in the way of proof.

Where is the evidence for the repeated assertions that this is largely the fault of irresponsible consumers borrowing more than they can afford?

Ummm...., errr....., uh......., delinquencies, repossessions and defaults?

 

[Boxlicker101]

WH, you really have no idea what the definition for "disposable income" is in the terms of government statistics, and shouldn't disparage the statistics simply because you don't immediately know what the numbers represent. Even if one doesn't know the definitions of the terms, it's clear that the charts represent a historical anomaly.

Umm, did you even look at the charts? Consumer debt is shown in whole dollars, not as some ratio. "Necessary expense" isn't a term shown on them. You're making up your own terms and definitions and then pointing out possible problems with them, which adds up to a pile of nonsense.


Banks and financial institutions have continually opposed even such simple disclosure as "How long it will take to pay off a credit card while making minimum payments".
Clearly, an uninformed consumer is part of their business model.

Okay, so what is "Disposale Income"? I would have considered it to be whatever is left after required periodical payents are made. These would include rent or mortgage payments, utilities, car payments and taxes. People have to eat also, but there is some discretion in how they spend their food allowance - beans and bread or prime rib. If you include these things as "Disposable Income" you must include virtually all icome to be disposable.

WH wasn't disparaging anything - he and I were questioning Pure's definition. I would question yours too.

I agree whole-heatedly with your last two paragraphs.

 

[Weird Harold]

WH, you really have no idea what the definition for "disposable income" is in the terms of government statistics, and shouldn't disparage the statistics simply because you don't immediately know what the numbers represent. ...

I'm not disparaging the number because I don't know what they mean, I'm disparaging them because I have long experience with "Government Statistics" and the definitions they use -- which almost never have any relationship to reality and every relationship to the needs of the bureacricies budgets.

Banks and financial institutions have continually opposed even such simple disclosure as "How long it will take to pay off a credit card while making minimum payments".
Clearly, an uninformed consumer is part of their business model.

I really could care less if the banks are required to disclose how longit takes to pay off a debt with minimum payments. The point I was trying to make is that the educational system is failing the students by not teaching them how to figure that out for themselves.

If the consumers were a little more knowlegable about basic financial practices, -- or evenbasic mathematics -- the loan sharks, payday loan companies, sub-prime lenders et al would be out of business and there would be far fewer high-risk loans for the banks to bundle.

And, no, I didn't go look at the charts, because I have no doubt that there is a credit crisis on a par with October '29 and for much of the same reasons -- consumers looking for a fast buck and financiers looking to make an even faster buck by catering to the consumer's greed.

 

[cantdog]

cant!!... but isn't that.... communism!

Not AFAIK. Europe, I was thinking of. People in the UK have told me they wouldn't want to live in a society where basic health care was not a human right. Hardly communistic.

Something becomes a human right because humans attach meaning to having it. If people revolt and strike and cause the government to lose any semblance of control, because they no longer have a right to vote, or no longer can organize, or may not freely practice their religion, or whatever it is, then, it becomes recognized as a human right.

It's a human right not to be subject to extrajudicial executions, it's a human right to be secure in one's home from uniformed thugs breaking in without valid warrant-- there's quite a list. And every one of them were not human rights at some point in the past.

They got to be that way because people will not tolerate their lack in their society. They became ungovernable until those rights were granted. Every one is the result of struggle against unlimited authority, and every one written in buckets of blood.

The way is very clear before anyone who wants some principle to be recognized as a human right. You will have to fight for it. But it can be done, because it has been done.

 

[cloudy]

And they dont care about your race or anything that once mattered.

...and race makes a difference in financial responsibility how?????

 

[Huckleman2000]

Okay, so what is "Disposale Income"? I would have considered it to be whatever is left after required periodical payents are made. These would include rent or mortgage payments, utilities, car payments and taxes. People have to eat also, but there is some discretion in how they spend their food allowance - beans and bread or prime rib. If you include these things as "Disposable Income" you must include virtually all icome to be disposable.

WH wasn't disparaging anything - he and I were questioning Pure's definition. I would question yours too.

I agree whole-heatedly with your last two paragraphs.

In terms of Economic Analysis, "disposable income" is basically what's left after taxes. That's not my definition or Pure's, but the definition used by Economists and governments in reporting statistics and analysis.

You know, things like this can be looked up if you don't know what they are...

 

[Huckleman2000]

I'm not disparaging the number because I don't know what they mean, I'm disparaging them because I have long experience with "Government Statistics" and the definitions they use -- which almost never have any relationship to reality and every relationship to the needs of the bureacricies budgets.



I really could care less if the banks are required to disclose how longit takes to pay off a debt with minimum payments. The point I was trying to make is that the educational system is failing the students by not teaching them how to figure that out for themselves.

If the consumers were a little more knowlegable about basic financial practices, -- or evenbasic mathematics -- the loan sharks, payday loan companies, sub-prime lenders et al would be out of business and there would be far fewer high-risk loans for the banks to bundle.

And, no, I didn't go look at the charts, because I have no doubt that there is a credit crisis on a par with October '29 and for much of the same reasons -- consumers looking for a fast buck and financiers looking to make an even faster buck by catering to the consumer's greed.

So you're really just talking out your ass, is that what you're saying?

 

[Weird Harold]

This message is hidden because Huckleman2000 is on your ignore list.

If you ignore the point I'm trying to make, then you're not worth trying to communicate with.

 

[Oblimo]

You'll never see these people waiting at the E/R.

Oh, yes they do.

 

[Oblimo]

Ummm...., errr....., uh......., delinquencies, repossessions and defaults?

That's the risk you take when loaning $ to somebody. Risk of default is part of the business of credit. The creditor takes on the risk of default when it gives me a loan. After all, that's how creditor's really make their money: not directly from debtors, but trading the debt and speculating on risk.

In other words, it's the god damned creditor's fault of giving out too many high risk loans. That and the god-awful bankruptcy reform legislation they lobbied through Congress when the majority was bending over for 'em.

 

[Oblimo]

Very well aware of that.

Explain reinsurance to JBJ, Xelebes. That ought to be fun.

 

[Oblimo]

...and race makes a difference in financial responsibility how?????

You'd be appalled at what goes into some actuarial tables, cloudy.

 

[Xelebes]

Explain reinsurance to JBJ, Xelebes. That ought to be fun.

I've had a weeklong headache that I'm battling. I'll reserve it for a day when my head aches not so.

 

[trysail]

That's the risk you take when loaning $ to somebody. Risk of default is part of the business of credit. The creditor takes on the risk of default when it gives me a loan. After all, that's how creditor's really make their money: not directly from debtors, but trading the debt and speculating on risk.

In other words, it's the god damned creditor's fault of giving out too many high risk loans. That and the god-awful bankruptcy reform legislation they lobbied through Congress when the majority was bending over for 'em.

When in doubt, always check for context:

Originally Posted by Huckleman2000
It seems to be a given that this 'mortgage/debt crisis' is largely caused by irresponsible people borrowing more than they can afford. Yet I've seen nothing - nothing - in the way of proof.

Where is the evidence for the repeated assertions that this is largely the fault of irresponsible consumers borrowing more than they can afford?

Ummm...., errr....., uh......., delinquencies, repossessions and defaults?

 

[Oblimo]

I've had a weeklong headache that I'm battling. I'll reserve it for a day when my head aches not so.

Hm. Head ache reinsurance. How about I cede to you the potential pain of any headaches I might get in the next month, and in return I take your headache now?