Under Obama your 401k and IRA ist Kaput

[kingbee]

... 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.

[kingbee]

... 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. 

[kathyp]

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.

[kingbee]

... 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?

[kathyp]

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...........

[BlueBee]

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?

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 

[BlueBee]

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     

[kathyp]

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.

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.

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?

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.

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   

[kingbee]

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.