"I lost my house. Nobody's bailing me out."

[Xyun]

Cue the violins. Yes, I lost my home. I didn't think I was being irresponsible. I didn't buy out of my price range. I didn't take a seductive low intro APR. In fact, my story is quite common . .

Finally got a decent job about seven years ago. Bought a little bungalow. Car died. Bought a used compact (with a loan). Old house needed work, lots of work. Used my credit cards. Then my job was sent to India. Couldn't get another making even close what I earned before. Tried to sell the house with no luck. I now owed more on it than it was worth. Couldn't even get a short sale. I had to beg the mortgage company let me do a "friendly foreclosure". They agreed since it was already on the market and (now)in good condition (They sent somebody to check it out with a fine-tooth comb). I signed it back over to them and moved out. Whatever they lost on the final sale, they would write off, and the IRS would add it to my income and tax me on it.

It still didn't sell for months. I'd drive buy hoping to see a new family there. I think they finally auctioned it off a month or so ago. I have no idea how much I'll get hit for next tax season. I'd originally hoped no more than 30K, but now I'm afraid it may 60K or more.

Looking back, it could be argued I made some bad decisions. I shouldn't have assumed my job would last forever. I should have had the house checked out better before buying it. Whatever it was I did wrong, I'll have to pay for it. I'll be sending those payments directly to Uncle Sam, in installments, for years to come.

And finally I come to the point. About these big companies my tax dollars are bailing out now, how much are these failed CEOs going to pay, the ones who made much worse decisions than I'll ever make, the ones who received golden parachutes and will retire in obscenely wealthy obscurity while my 401K fades away, how much money will they have to pay the government for bailing their sorry asses out?

http://www.dailykos.com/story/2008/9/17 ... 285/601797

[Canelek]

A sad, but all too true story of people like me, like you. This is the sad state of things. Of course, this is capitalism, which is fine. We understand this. We accept this. However, is it wrong to wonder at the whole thing? This isn't some small fraction of people. This is a HUGE chunk of Americans who are totally fucked by seemingly small risks.

Small risks....

Stan O'Neal, my former CEO... yeah, well, his risktaking was not so small. He was one of the biggest sub-prime buyers. Now look where my company is. Hell, I may be out of work myself in a few months (well, small chance, unless BofA is tarded). Also, there are more than 50,000 other employees who work globally for ML.

Stan O'Neal? He got over 30 million worth of parachute and is having a lovely time playing golf, which was what he was doing when the mortgage crisis started. Fair? No. And it isn't that 1 person is fucked while another thrives. That is part of our society. The galling part is that, like Xyun had posted... In these cases, the rich risk everyone and lose little, and the regular folks risk lightly and get ruined. Who does our government really work for?


edit: slight monetary misstep.. ><

[masteen]

Who does our government really work for?

That's a rhetorical question, right?

[Kilmoll the Sexy]

I said it long ago.....but CEO's of companies across the entire country should not be making anywhere near what they are paid. When you have companies going under whose "leaders" make millions, it makes you wonder why that cash was not invested in the company instead of sitting across a few old white guys who have generally kissed ass and waited for other old white guys to die.

[cadalano]

EVISCERATE THE PROLETARIAT!

[Keverian FireCry]

I said it long ago.....but CEO's of companies across the entire country should not be making anywhere near what they are paid. When you have companies going under whose "leaders" make millions, it makes you wonder why that cash was not invested in the company instead of sitting across a few old white guys who have generally kissed ass and waited for other old white guys to die.

It's a good thing you support McCain, whose economic policies feed this problem.

[Ashur]

Really? Since you made this about politics, how, specifically, is Obama planning to address this? By forcing legislation to make companies penalize their executives financially if their companies impact the economy? By jailing them? I'm very interested on how this will be addressed.

Specifics only please... generic promises of "change hallelujah" can get bent.

[Fash]

change hallelujah!! Obama is going to bail us all out!

I'm with you guys on executive pay... it really doesn't make any sense at all... some people make too much. If the business is profitable, it could make sense, but when a business is tanking and the executives are profiting it no longer does. Despite my rampant capitalistic nature, I am amenable to some possible reform or regulation when it comes to how high salaries can go... possibly tied to a businesses actual performance.

No one should be bailed out, since we have the freedom to fail, but some of these businesses do contribute to the economy positively. The guy with the house, not so much. That's the only way it makes sense.

[Spang]

If there were no guys with houses, there'd be no businesses making millions and billions.

[Fash]

If there were no guys with houses, there'd be no businesses making millions and billions.

Luckily, not everyone fails... It's actually a very small percentage.

I just put an offer in for my first house. Despite the allegedly 'terrible economy,' I'm doing better than ever.

[Canelek]

Well, it is certainly a good time to buy a house--not so good a time to sell, in general. I have seen more and more people sitting on two mortgages or attempting to rent in the last year. Of course, that has driven rent prices up. Fun times!

I would totally buy now, but I am still rebuilding my credit and want to be over 720 FICO. Hopefully next year.

[Xyun]

Really? Since you made this about politics, how, specifically, is Obama planning to address this? By forcing legislation to make companies penalize their executives financially if their companies impact the economy? By jailing them? I'm very interested on how this will be addressed.

Specifics only please... generic promises of "change hallelujah" can get bent.

Obama calls for a hearing on his bill: "Shareholder Vote on Executive Compensation Act of 2007"

S.1181 neither caps nor limits CEO pay but merely requires that firms discuss and debate pay packages for CEOs on a case-by-case basis with their shareholders. If a board of directors disagrees with the nonbinding vote of shareholders, the board can still go forward with the pay package. But at the very least, shareholders would have had the opportunity to voice their opinions about whether the pay package is appropriate.

The actual bill

I agree that it's not a whole lot, and it is non-binding. But it is the first step, it is the minimum that needs to be done. Obama does address this issue substantively.

[Ashur]

Wow, that bill made law would have prevented... nothing.

That said, I appreciate you taking the time to answer.

[Zaelath]

Wow, that bill made law would have prevented... nothing.

That said, I appreciate you taking the time to answer.

Depends on your view, it prevents boards granting CEO salaries without advising their shareholders first.

I actually agree that the government has no place in telling companies what they can pay anyone... but I think it should be an open process, so at least the shareholders are aware if they're getting fucked.

If you actually limited CEO salaries, they'd go off-shore, plenty of them do already...

[Xyun]

Wow, that bill made law would have prevented... nothing.

That said, I appreciate you taking the time to answer.

Maybe. It is possible in probably rare circumstances where the shareholders would sell their stock in that company if they felt they were being fucked, thereby decreasing the value of the company. Maybe this has a snowball's chance in hell of happening, but at least the transparency would be there and would have to be considered when the board is deliberating on the compensation. But I ask you, if it would change nothing in your opinion, would you be willing to give it a try?

[Kilmoll the Sexy]

I firmly believe that CEO's should be held financially responsible for the companies they are running. If you are going to be paid 20-30 times what you are actually worth, then you should be held completely liable for the performance of that company.

[Siji]

Always fun watching people demand to know what a politician is going to do about some business.. and when they come up with something it's always too far to the left or the right. If you do something like Obama suggests, it's doing nothing. If Obama were to try to enforce some government control on it, you'd complain that the government shouldn't be involved. How about telling us what McCain's solution is.. oh that's right, cutting taxes for the rich. Perfect!

[Fash]

Dear Friends:

The financial meltdown the economists of the Austrian School predicted has arrived.

We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.

Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what I've been saying over and over - not just for the past several days, but for years and even decades.

Still, at least a few observations are necessary.

The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?

We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.

Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).

Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."

Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?

Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.

It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.

The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.

F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own:

Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.

To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.

The only thing we learn from history, I am afraid, is that we do not learn from history.

The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?

Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.

The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you're supposed to have a voice in all this actually seems to annoy them.

I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects - the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.

H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.

In liberty,

Ron Paul

I miss this guy...

[Aardor]

I miss this guy...

I saw him on the Colbert Report a few weeks ago, and I was really impressed with his charisma. He's still a hatemonger, but a hatemonger with great charisma.

[Forthe]

If there were no guys with houses, there'd be no businesses making millions and billions.

Luckily, not everyone fails... It's actually a very small percentage.

I just put an offer in for my first house. Despite the allegedly 'terrible economy,' I'm doing better than ever.

Fixed rate mortgage I hope.

[Fash]

If there were no guys with houses, there'd be no businesses making millions and billions.

Luckily, not everyone fails... It's actually a very small percentage.

I just put an offer in for my first house. Despite the allegedly 'terrible economy,' I'm doing better than ever.

Fixed rate mortgage I hope.

15 year fixed 5.5%.. 17% down..

[Forthe]

If there were no guys with houses, there'd be no businesses making millions and billions.

Luckily, not everyone fails... It's actually a very small percentage.

I just put an offer in for my first house. Despite the allegedly 'terrible economy,' I'm doing better than ever.

Fixed rate mortgage I hope.

15 year fixed 5.5%.. 17% down..

Smart terms.

I'm not sure if I would be buying right now tho, at least until the current credit issues are resolved. If the worst does happen things can go bad fast. You could be stuck trying to dump a house, in which you have negative equity, in a market where selling will be extremely difficult. I recall your earlier post where you believe the 17% down insulates you from losses but be aware median prices dropped 5.5% just last month.

I hope everything works out, be prepared to become a handyman heh (new or existing home?).

[Fash]

I hope everything works out, be prepared to become a handyman heh (new or existing home?).

Thanks. I feel pretty good about it, even considering the circumstances. Everything in the house is brand new from the basement to the wiring, plumbing, floors, walls, siding, roof, windows, etc. I saw nothing even remotely comparable in the price range, and this place was only on the market for 8 days before I scooped it up.

[Canelek]

I agree. Good terms. Also, despite the market "issues" at the moment, I like the risk. Now is a good time to buy.

I still need about 60 more FICO points before I will bother with buying. Also, my company is not exactly stable right now.....and who knows what BofA has in store. Just had another riff today. ><

[Tyek]

The market may drop a bit more on housing, but I think it is a safe bet, unless you plan on moving in the next year or 2.

Hope you get your house.

[Fash]

Bush, Obama, and McCain all met at the White House today... http://news.yahoo.com/s/ap/20080925/ap_ ... ouse_scene

At the meeting, Obama, wearing an American flag pin, and McCain, sans lapel adornment, sat with hands folded on the shiny table top. Neither nodded or showed any emotion as the president spoke. McCain smiled widely and nodded to reporters who tried to ask questions. Bush advisers said Vice President Dick Cheney was mum the entire meeting.

Lol @ the flag pin.. and Cheney, his lips might not have been moving, but he is a ventriloquist after all.

[Forthe]

Some of you don't seem to be taking this situation seriously. I would encourage you to do a quick google of the causes of the great depression. Until this is worked out I would be very cautious.

[Spang]

History repeats itself. The Great Depression II will happen.

[Forthe]

Washington Mutual collapsed. Assets purchased by JPMorgan Chase.

Tomorrow is probably going to be a very ugly day.

[cadalano]

a year and a half ago i worked for WaMu.. almost surreal


feeling pretty bad for my ex-coworkers.. although virtually all of them were already laid off.. but many of em stayed w/ the company and moved to San Antonio just weeks ago.





pretty sad really, one of the nation's oldest banks and the first mortgage, iirc. its their own damn fault.

[Canelek]

Hooray for FDIC I guess. I have WaMu accounts.

And I agree, Forthe. This is very serious. Irony is, my company not only survived, but profitted during the Great Depression.

I am sure there will be some interesting office chatter around JPMC tomorrow.

[Winnow]

Lol @ the flag pin.

Pretty funny that Obama caved in on the flag pin.

As for this current situation...how long have I been saying it...

Here's another tip. My current Credit Card expires 6/2112

No need to ever renew that one!

You non U.S. peeps will also suffer. You can't remove the heart of the Western World without the rest of it dying as well. I know this is serious and we're fucked. Three more years of our current standard of living left. I wouldn't worry too much about retirement. Don't know why anyone's having kids.

Don't stress over this too much Forthe. Anyone could see this coming for years if they really wanted to look.

[Zaelath]

You non U.S. peeps will also suffer. You can't remove the heart of the Western World without the rest of it dying as well. I know this is serious and we're fucked. Three more years of our current standard of living left. I wouldn't worry too much about retirement. Don't know why anyone's having kids.

Why do you think the non US peeps have been so interested in your elections?

[Forthe]

You non U.S. peeps will also suffer. You can't remove the heart of the Western World without the rest of it dying as well. I know this is serious and we're fucked. Three more years of our current standard of living left. I wouldn't worry too much about retirement. Don't know why anyone's having kids.

Don't stress over this too much Forthe. Anyone could see this coming for years if they really wanted to look.

If the U.S. economy cratters nobody is screwed worse than Canada. I'm not as down as you are, but I wouldn't be adding any debt right now.

I saw the housing bubble coming but I didn't see the credit\foreclosure issue being as big as it is. This subprime thing is FUBAR, over half of the suckers that took a subprime mortgage qualified for standard fixed rate mortgages.

[Forthe]

Looks like Wachovia is next.

[Canelek]

Wachovia eh? Hmmm. That is who Stan O'Neal (former Merrill CEO) was trying to broker a deal with before he was ousted last year. Not a big surprise I guess...

[Forthe]

Wachovia avoided failure but it is no longer a bank, banking assets sold to citi.

[Ashur]

Hooray for FDIC I guess. I have WaMu accounts.

Welcome to Chase, Lizard-Boy!

[Canelek]

Talk about confusing....

It took my almost a month a couple of years ago to finally cancel my BofA accounts...this is mostly since my account had originated in CA. When I moved to OR, they took their sweet ass time letting me know their networks really did not have interstate communication. Smart, eh?

So, I got a couple WaMu accounts and all is fine and dandy.

Now, my company is now pwned by BofA, and my bank is owned by Chase. Does this mean I should get a job with Chase? Ain't no fucking way I am getting a BofA account again, unless they have overhauled their infrastructure.

[Winnow]

Hmmm, no issues with BofA here. My account was originally Security Pacific but BofA took them over in 1992. Give them another chance! Can't have them fail!

[Canelek]

I dunno man, I think they are too big for proper personal account management and customer service. However, I kind of like the option to dump the rounded-up change into a savings account form debit transactions.

I have been happy with WaMu. Also, they have the best branch service, imo (not to mention free Notary). BofA costs money to go into a branch, or at least they used to charge extra.

[Ashur]

http://www.chase.com/welcomewamu/

Your people/branches shouldn't be changing. Within the next year JPMC convert the account information over onto Chase systems and eventually your Wamu branches will be re-branded Chase.

[Canelek]

Will the rebrand my WaMu spatula? I received it as a gift last year.

[Ashur]

No. You're stuck with that.

[Winnow]

Gotta love the market today.

While the DJIA was dipping down more than 600 points, I put a market order in. It just sat there for like five minutes. That never happens. Usually it's within a second or two. I finally canceled the order.

nasty market!

DJIA is still down -550 as I type this


EDIT: Apple today

AAPL 107.69 -20.55 -16.02%

[Forthe]

Lets hope Bush and the bailout supporting economists are proven wrong.

[Winnow]

Front page of CNN

Token face palm guy



Bad day on market or he had Favre on his FF bench this weekend.

[Canelek]

Unless they get that transparency on the bailout spending, it ain't going to happen. There is also no contingency plan.

[Winnow]

Looks like DJIA is determined to drop to 10,000. -666!

[Canelek]

Ugh. Very ugly. They have 33 minutes for a miracle rally! Go go go good guys!


Today at 03:25pm ET (delayed )

MER 23.65 -3.71
DJIA 10563.05 -580.08
S&P 500 1132.11 -81.16
NASDAQ 2032.53 -150.81
FTSE 100 4818.77 -269.70
NIKKEI 11743.61 -149.55
HSI 17880.68 -801.41