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Author Topic: Under Obama your 401k and IRA ist Kaput  (Read 3603 times)
kingbee
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« on: July 23, 2012, 10:06:22 PM »

After almost 40 years of hard work and self denial, Americans have managed to save or squirrel away ALMOST 9 Trillion Dollars in IRA and 401k accounts.  In only the past 3.5 years President Obama has managed to squander over 2/3 of that amount or 6 Trillion dollars in new government debt, green jobs stimulus, and bailouts for his cronies, this does not even count the President’s greens fees and Teller-Prompter rentals.  They could run billions more.

During the Bush Administration an argument raged over privatizing Social Security accounts with Republics generally favoring private or “Privatized” Social Security Accounts that would allow Americans to own outright their retirement accounts and be able to use their retirement money in almost anyway they wished, including willing it to their heirs.

On the other hand the Democrat Party generally opposed individual or “Privatized” Social Security Accounts.  The reason for this partisan split is now becoming clear.  The Democrat Party was planning on  STEALING your already PRIVATE retirement funds, so why would they want more private accounts?  That would just create un-necessary work for the party of the working man. 

401(k) IRA Nationalization *** Quietly Moves Forward


We are speaking here of both government and private pensions, savings accounts, IRAs, 401k accounts, stock portfolios, and annuities.  This can be the only logical reason that the Democrat Party can give for opposing private Social Security Accounts, they want to nationalization, or steal your Pension, your 401k, your IRA etc. it would just be too much of an invasion of YOUR? privacy,  for a Democrat President and Congress to beat the hiding place of every last red cent out of you. 

The Affordable Health Care or Trojan Horse Tax Act slipped the 3.5% Sales Tax on the proceeds of every used and new private home sale into the Federal record.  This tax is set to go into effect in 2013 and will further decrease the value of every home in America at least another 3.5% or almost a 10% further loss.  No wonder former Speaker of the US House Nancy Pelosi wanted Obama Care passed before we knew what was in it.

Now Obama’s new stick it to the middle class tax, that seizes all public, & private pensions is awaiting passage in the House and Senate.  The re-election of the President will be the only signal that this Democrat President needs to deem this tax enacted.  This is what you SMALL business men and women get for making the poor President work so hard on your behalf to create your success for you!!  Shame on you!!
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kathyp
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« Reply #1 on: July 24, 2012, 09:06:51 AM »

nationalizing the pensions/retirement accounts has been long talked about.  it's another source of ready cash for the government to spend...in the name of "protecting" your retirement....with another IOU.


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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #2 on: July 24, 2012, 08:41:56 PM »

Take everything we have, then make us dependent on them for everything.   Basically penalize us for trying to be self sufficient and successful in life. 

But the idea has been around for a while. 
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BlueBee
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« Reply #3 on: July 25, 2012, 12:15:25 AM »

Oh yeah the Republicans had a brilliant idea for social security (retirement funds) in the 1990s, invest in the tech bubble.  How would that have turned out?  Anybody still remember Netscape?

As for Obama squandering 6 trillion, keep in mind that it is getting more and more expensive to buy things like fighter jets at 200 MILLION a pop.  You don’t like F-35 planes Kingbee?  Luckily we don’t have a nut job in office like Newt trying to spend trillions to build a moon base.   Where do they come up with their priorities huh 

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This can be the only logical reason that the Democrat Party can give for opposing private Social Security Accounts, they want to nationalization, or steal your Pension, your 401k, your IRA etc.
No, the reason the dems don’t want to privatize Social Security is because the Gamblers on Wall Street with make those accounts go to zero faster than you can say; Madoff.  Then what happens?  We would have to raise taxes and bailout social security along with the banks.  Dems aren’t in favor of bailouts; that’s the Republicans specialty.
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kathyp
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« Reply #4 on: July 25, 2012, 10:35:55 AM »

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Oh yeah the Republicans had a brilliant idea for social security (retirement funds) in the 1990s, invest in the tech bubble. 

for most of us, to have had that money to invest on our own, would have worked out very well.  even putting it in time accounts in the bank would have given a nice return.  i know that the left has an aversion to trusting people to take care of their own lives....but i think we do a better job of it.

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As for Obama squandering 6 trillion, keep in mind that it is getting more and more expensive to buy things like fighter jets at 200 MILLION a pop.  You don’t like F-35 planes Kingbee?  Luckily we don’t have a nut job in office like Newt trying to spend trillions to build a moon base.   Where do they come up with their priorities

you do remember from prior conversations that one of the few jobs of the federal government is the defense of the nation? 

as for nut jobs...Kennedy built an entire space program in the middle of a crappy economy...and cut taxes!!  the better question:  where did all our big thinkers and risk takers go?  perhaps they are on food stamps and welfare having lost the will to innovate in this climate??  just a thought..........

or they are in Colorado  grin
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #5 on: July 25, 2012, 01:00:37 PM »

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i know that the left has an aversion to trusting people to take care of their own lives....but i think we do a better job of it.
Not really, but did you ever observe that most people live beyond their means?  

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for most of us, to have had that money to invest on our own, would have worked out very well.
This is HIGHLY doubtful.  The bankers would have made out like bandits, but most individuals buy high and sell low.  If it’s not your job 24-7 to manage money, the odds of you making money over the long run is very slim.  It’s like most things in life, if you don’t have expertise at something you make a LOT of mistakes along the road.  Those mistakes are very costly to society when people gamble away their retirement.

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where did all our big thinkers and risk takers go?  perhaps they are on food stamps and welfare having lost the will to innovate in this climate??
Most of the real innovators in our history did not start out rich, they started out broke.  How many rich people can you list that were real innovators?  The poor indigents are the ones that come up with the big ideas; they also need to eat.
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kathyp
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« Reply #6 on: July 25, 2012, 01:56:09 PM »

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Not really, but did you ever observe that most people live beyond their means?

sure, and why not?  there are no consequences.

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This is HIGHLY doubtful.  The bankers would have made out like bandits, but most individuals buy high and sell low.  If it’s not your job 24-7 to manage money, the odds of you making money over the long run is very slim.  It’s like most things in life, if you don’t have expertise at something you make a LOT of mistakes along the road.  Those mistakes are very costly to society when people gamble away their retirement.

1st, why is it not my job to manage my investments? if not my job, who's is it?  2nd, that's why we have companies that manage investments.  if you have a 401k, you are familiar with them.  if you have had a retirement investment for the last 20 years, it's not hard to see how your SSI and Medicare money could have been better managed and grown with private investment.

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Most of the real innovators in our history did not start out rich, they started out broke.  How many rich people can you list that were real innovators?  The poor indigents are the ones that come up with the big ideas; they also need to eat.

no kidding.  i think, folks, we have had a breakthrough!!!   grin  i do think you might have come to that by accident while missing my real point......
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
ApalacheeRiverFarms
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« Reply #7 on: July 25, 2012, 05:15:28 PM »

how many innovators do we have on food stamps?  yeah... The innovators worked their butts off and made their own way, they didn't wait for the government to.
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ApalacheeRiverFarms
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« Reply #8 on: July 25, 2012, 05:17:53 PM »

Trust the gov to manage your money?  Postal Service... no need to say more. they make you buy a box and then make it illegal for anyone but them to put anything in that box you purchased.
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buzzbee
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« Reply #9 on: July 26, 2012, 05:28:58 PM »

I can probably say with certainty that if I would have stuck 15 percent of every paycheck in the bank,I would have more and be able to heir on whats left than the deal Uncle Sam will have at retirement time.If my wife and I die in a car crash tomorrow,my 15 percent goes to Uncle Sam as well as part of my estate which they did not pay anything for,goes too.

Sad thing is,not only are a lot of people thinking they deserve entitlements they never invested a dime in,our government also thinks it is entitled to the fruits of my labor.
Using the logic of the market being a losing proposition, all the rich would probably be poor at this point.
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BlueBee
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« Reply #10 on: July 26, 2012, 07:02:17 PM »

How is putting money in the bank a good investment huh  Their interest rates are below the rate of inflation.  So if you put your 15 percent in the bank every paycheck, you lose at least a couple percent of your money every year.

As for the “rich” beating the market, no they don’t “beat” the market.  Nobody beats a random gambling game in the long run.  They make their money off stock GRANTS and option GRANTS and/or transaction fees if they’re in investment banking.  That’s what we call welfare for the super rich.

Stock and option grants are essentially taking the money for middle class investors (who don’t know any better) and putting their dollars in the pockets of the super rich.     
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kathyp
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« Reply #11 on: July 26, 2012, 07:52:24 PM »

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So if you put your 15 percent in the bank every paycheck, you lose at least a couple percent of your money every year.

right now, but over the course of the years you could have made safe investments through the bank and done quite well.  we had only a very little to save in the '70's, but that little ended up being the down payment on our first house.

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As for the “rich” beating the market, no they don’t “beat” the market.  Nobody beats a random gambling game in the long run.

there is risk in the market, but it is not a game of chance.  if it were, people would not invest in those 401K plans toward retirement.  if you are going to invest, you either hire an expert, or you get educated.  this doesn't remove all risk, but it makes the risk less.  i take it you never invested?
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #12 on: July 28, 2012, 12:39:21 PM »

I didn't say it was a good investment. I said it would have been better than giving it to the government to invest wisely. I do not know if you noticed,but the federal government is beyond broke.
My local owned bank still manages a profit.
If I would have put the money in a can in the back yard,at least I would own the savings.The same can not be said for the Social Security investment.
That term Social Security investment is kinda oxymoronic isn't it?
Perhaps Social Security would still be solvent if the do gooders would not have so expanded the pool of people entitled to that money.
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kathyp
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« Reply #13 on: July 28, 2012, 03:03:52 PM »

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would not have so expanded the pool of people entitled to that money.

that's pretty much the key.  you do not need to have paid into the program, despite what many will tell you, to draw out.  if it was meant to keep granny from starving, it should have been left at that. 
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #14 on: July 28, 2012, 11:59:04 PM »

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there is risk in the market, but it is not a game of chance.  if it were, people would not invest in those 401K plans toward retirement.
OK Dorothy, it’s time to click your heels 3 times and wake up now……

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My local owned bank still manages a profit.
Right….and how are we sure of that?  That’s what the bankers tell us?  And what about marking to market their assets?  LOL.  Are they solvent then?  What is the credit rating of your local bank?  What is the credit rating of the US Government?  Banks fail all the time, the US Government has never defaulted. 
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kathyp
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« Reply #15 on: July 29, 2012, 12:24:34 AM »

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the US Government has never defaulted. 

this is a young country.  because a thing has never happened does not mean it will never happen.  watch what happens with the next round of QE.  even if the country doesn't default, it won't matter to much to the average citizen.  add to that the fact that europe has already gone over the edge even if they don't realize it yet, and those counties like china, who appeared to be doing really well, are now facing a slow down. 

now we face a grain shortage world wide...and i am predicting very bad times before us.  the government will not be able to support people and pay it's debt.  money will be printed and the value will go down even farther.  all those people now used to government support will suddenly find that the well has dried up.  those with money...or land, will be able to survive, but in the comfort to which most of us have become accustomed. 

i give us less than a year to a serious crash and depression.....world wide.  and the sad thing?  it didn't have to happen. those in power around the world did the same things that led to the great depression/made the great depression worse,  and are now facing the same result.
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #16 on: July 29, 2012, 06:13:47 PM »

The Government has not defaulted because it has continued borrowing against our childrens and grandchildrens future to pay current debts. The banks do not have that option. They sell stocks which people willingly buy,as do most corporations. The last I knew,taxes were not willful purchase of stock in the US government. Try getting Americans to buy a bond anymore. That is a measure of confidence in Uncle Sam.
This house of cards is also on the precipice.
I don't know if you realize it,but for the first time in 70 years this nations credit rating has been reduced:
http://en.wikipedia.org/wiki/United_States_federal_government_credit-rating_downgrade,_2011
The federal government cannot spend other peoples money to generate prosperity.At some point it needs to be repaid.And this government can not even generate a one year budget without a deficit,let alone repay what is already on the books.
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AllenF
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« Reply #17 on: July 29, 2012, 06:23:01 PM »

That's for reminding me that my 6 year old is already 40 something thousand dollars in debt.   Or is it 50 something now?
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kingbee
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« Reply #18 on: August 05, 2012, 03:35:05 PM »

... the reason the dems don’t [didn't] want to privatize Social Security is because... Wall Street with make those accounts go to zero...

Didn't you mean that the Democrat Party and Barney Fife... (Sorry I meant to type Barney Frank) the Bank of American, AIG and Century 21 has already stolen the equity out of every family home in America.  

Remember Blue, the roof over their heads are most peoples' largest and most secure investment.  What did the Demorat Party, and Barny Frank's sub-Prime mortgages do to that investment?  They ate your investment to the ground, chewed it up and spat it out the other end, like a cut worm eats a tomato vine.   angry  

You can smear lipstick on a pig all day long.  However when the Sun goes down it still smells like a hog.

« Last Edit: August 05, 2012, 05:12:04 PM by kingbee » Logged
BlueBee
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« Reply #19 on: August 05, 2012, 04:08:53 PM »

Kingbee, you make a good point.  People have lost a ton of home equity value in my area; it really is sad.  A lot of people have been completely wiped out when they had to sell, or got foreclosed on, for various reasons (health, job loss, ect).  I really wonder how all this is going to ripple through the economy and society in the years to come.  Where are these people/families going to live?  I know some people put all the blame on the individual for their circumstances, but tomorrow is hard to predict for any of us.  We could get run over by a bus at any moment; we don’t know the good lords plans in advance.  

This really should be an American problem as opposed to us vs them.  I think there is plenty of blame to go around:  Greenspan, Dems, and Republicans.  Honestly I don’t have a good solution in my bag of tricks.  
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kingbee
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« Reply #20 on: August 05, 2012, 05:10:54 PM »

... You don’t like F-35 planes Kingbee?...

No I don't.  I view it like the Germans during WWII building about 1,000 of the most powerful tanks in the world, the Tiger.  It took for ever and a day to manufacture just one tiger tank, they were difficult to make, and hard to maintain, especially in the mud, dust, smoke, heat and cold of armored combat, and (your gonna like this next part Blue) the Tiger gulped fuel like it was going out of style.  Yet while the Germans were building a super tank the USSR and the USA together, likely produced over 125,000 Sherman and T34 tanks to counter the German's 1,000 Tiger tanks.  We are forgetting history (I fear) and are emulating the loosing side.

All this BS started when we abandoned the draft and started depending on (I fear) to expensive, to hard to maintain, and to fragile hi-tec weapons, inorder to make up for insufficient man power.
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kingbee
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« Reply #21 on: August 05, 2012, 08:13:32 PM »

... my 6 year old is already 40 something thousand dollars in debt.  Or is it 50 something now?

About 45k.  This does not include what Uncle Sugar is on the hook for in future retirement, pension and health costs.  Multiply the 45k by at least 1000% and hit the add key for a clearer picture. 

Oh, unless Unk Sugar hit the pick 3 down at the local beer joint Friday night, the United States Postal Service defaulted on their pention payments by 5 billions of dollars last week. 
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kathyp
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« Reply #22 on: August 05, 2012, 10:03:58 PM »

the solution is simple and hard.  it is simply for the government to get out of the way and let these houses be liquidated.  those people will be renters in the homes bought by investors.  as it is now, the market has no chance to bottom out and recover.

people are not in trouble because they owe more than the house is worth.  unless you are taking equity from your home to support yourself, the sale value of the home means nothing until you try to sell the house.

people are in trouble because they can't pay for what they bought...or took out a 2nd and 3rd mortgage on.  this may or may not be their fault, but it is what it is.   in addition, if you bought a house and put nothing down, you not only probably bought more than you could afford, but you also have no equity interest in keeping that home.  when you find out it's not going to be a gold mine, you live in it until the bank kicks you out (rent/payment free) and whine about it occasionally so that you can have an extension.

sounds harsh, i know, but SH.  in the end, it doesn't matter whos fault it is.  it's still your responsibility.
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #23 on: August 05, 2012, 10:24:13 PM »

... people are in trouble because they can't pay for what they bought...

You know kathyp, I do seem to remember people paying big bucks to attend simirars where slick talking snake oil salesmen would teach others how to buy a new house for less than nothing down and in the bargain show you how to turn it over and  make 10s of thousands of dollars in profits all before the grass came up.  How's that working out now?
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kathyp
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« Reply #24 on: August 05, 2012, 10:41:59 PM »

worked fine for those who got in and out.  not so good for those who held on...no different than any other market.  gold, silver, etc....get in and out at the right time and you do well.  miscalculate and...........
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #25 on: August 05, 2012, 11:02:11 PM »

the solution is simple and hard.  it is simply for the government to get out of the way and let these houses be liquidated.  those people will be renters in the homes bought by investors.  as it is now, the market has no chance to bottom out and recover.

No chance to bottom out you say?  Are you kidding?  You can buy descent homes in my area for as little as 20K.  I know, I bought one.  Are you saying that 20K homes are no where close to a bottom and that the government should just force the banks to DUMP everything they’re sitting on right now?  What happens in economics when you have a sudden glut of sellers but few buyers?  In my area, the banks are sitting on a HUGE, and I mean HUGE, backlog of foreclosed homes.  Liquidating all those would instantly make the banks insolvent AGAIN because once they're sold that loss shows up on the bankers balance sheet.  

When I say 20K homes, I’m NOT talking about the inner cities of Flint, Detroit, etc.   In those places the supply vs demand curve has pushed prices down under $2500 in some cases.  That results in a net LOSS to HUD when they sell such homes since the realtor commission on HUD homes is $2500.  In other words, if we do what you say and prices of homes drops below $2500, then we (the tax payers) end up paying for other people’s new homes.  That and all the banks would immediately be insolvent again.  Is that the solution you seek?

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people are in trouble because they can't pay for what they bought...or took out a 2nd and 3rd mortgage on.
Most of the foreclosures I’ve seen in Michigan seem to be more a result of a job loss or a health issue than an over extended flipper.  I don’t have a lot of sympathy for the later either.  I think we agree on that point  Smiley
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« Reply #26 on: August 05, 2012, 11:25:18 PM »

You know kathyp, I do seem to remember people paying big bucks to attend simirars where slick talking snake oil salesmen would teach others how to buy a new house for less than nothing down and in the bargain show you how to turn it over and  make 10s of thousands of dollars in profits all before the grass came up.  How's that working out now?

Kingbee, those dream sellers are still making a killing with their seminars.  They’ve just “retuned” their sales pitch to the new real estate reality.  I recently went to one of their seminars.  Won’t mention the name of the TV guy doing them here to protect the bee master. 

They’ve now got salesmen telling the gathered flock of “investors” (ie you and me) how now is the best time in history to be flipping houses!  They have their own hard luck stories about how hard they’ve worked their whole lives and had nothing to show for it, UNTIL they learned the SECRETS from their TV real estate Guru.  Now they live a life of luxury and only have to spend about 10 hours a week to make 6 to 7 figures from flipping.  They get to spend the rest of their time on the important things in life; their family, or so they claim.  You know, the usual set of claims to separate fools from their money  Sad   
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« Reply #27 on: August 06, 2012, 12:39:37 AM »

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What happens in economics when you have a sudden glut of sellers but few buyers?

i am talking about those homes that are in or near foreclosure.  it is true that in some markets, they may have hit bottom, but until the excess sells, the market won't recover.  as long as there are still people being "helped" by the government to delay the inevitable, the market can't clear because it doesn't know what it has.  add to that, builders are building again.  this is a bad thing.  this leaves previously owned homes sitting in favor of new homes and leaves an excess out there. 

in the short term, contractors will work, but in the long term, if the market has not recovered, those builders may find that they can't recover costs and this will further depress the market.

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Liquidating all those would instantly make the banks insolvent AGAIN because once they're sold that loss shows up on the bankers balance sheet.   

to some extent this is true, but the cost of maintaining those homes, even if all they do is hold them, is not helping the banks either.  one way or another, they will take a loss and the faster it's done, the faster it's over.

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That results in a net LOSS to HUD when they sell such homes since the realtor commission on HUD homes is $2500.
makes a good argument for getting rid of HUD, doesn't it?
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if we do what you say and prices of homes drops below $2500, then we (the tax payers) end up paying for other people’s new homes.

we are anyway.  we are paying for the eternal refinancing and all the other government programs that they keep coming up with.  again...what is the government doing in the housing business?  if they were not there, we would not take a loss.  regardless, the above holds true.  better a feast deep pain that is felt and then done with.


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Now they live a life of luxury and only have to spend about 10 hours a week to make 6 to 7 figures from flipping.

don't think i'd get into flipping, but it's a great time to become a slum lord   Wink
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« Reply #28 on: August 06, 2012, 12:49:47 AM »

If a bank repossesses a 200 grand home that home usually becomes an asset on the banks books.  That asset allows the bank to lend (by creating with just a few computer key strokes and out of thin air) 1.8 million dollars in new loans, otherwise known as principle, INTREST is added on top of this just created principle.  Neat, Huh?  Where else can you literally MAKE 1.6 million dollars out of thin air during your lunch hour and without breaking a sweat?  Don't forget the banks' interest, but it's simply the cherry on top of the whiped cream, on top of the icing on top of your banks' cup cake.  Banks do not want to dispose of these properties because doing so is not usually in the banks best interest.  'Yhairs' gold in them thair homes' as long as they sit there.  

Only Government's banking rules "encourage" banks to divest themselves of these white elephants from time to time, mostly to shore up confidence in our fiat money system by holding down the money supply and hindering inflation.  The banks could not normally pass muster on the cash reserve requirements by selling at a loss.  A falling real estate market however forces the banks' hand which means the bank must either call in more loans (in the most extreme case) with the bank loosing principle in case its customer can't pay it all back in one lump sum and defaults.  Either way the bank forgoes interest payments.  Or the bank can liquidate declining assets (in the least extreme case) to raise capital so the bank can meet its "cash" reserve requirements.  
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