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The Era Of Cheap Money, The Lifeblood Of The Economy, is Over.

washingtonpost.com — Easy credit has been the economy's lifeblood in recent years. It gave people who previously couldn't afford homes a crack at the American dream. It fueled multibillion-dollar takeovers of some of corporate America's biggest names. It buoyed the stock market and propped up the prices of many other assets.

Bury
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  • TheChinaExpat, on 10/10/2007, -4/+54Funny how The Post couldn't see this coming until now...

    It's been obvious this would happen for years.
    • expat001, on 10/10/2007, -18/+5They still think things are going well in Iraq. What do expect from a partisan newspaper that stays in business solely cause they employ hack journalist that appeal to an elite group of Conservatives scum bags.
      • OswaldKenobi, on 10/10/2007, -4/+13This article has nothing to do with Iraq. Nice try, though.
        • expat001, on 10/10/2007, -9/+6It's all one in the same. the economy is rosy, the war is going great, our leader is the decider, we don't lie or distort reality.

          La la la la la

          The WP is a piece of ***** newspaper and I will never dig a story from that paper.
      • Charlotte_Web, on 10/10/2007, -3/+7From the Associate Press today:

        "Economic growth is strongest in a year"

        http://news.yahoo.com/s/ap/20070727/ap_on_bi_go_ec_fi/economy;_ylt=AkiyqhHtzHU7SduH.F9RK.ms0NUE
        • bitORlogic, on 10/10/2007, -3/+0I think this part is interesting:
          "Individuals, however, took a breather as they coped with high gasoline prices and the ill effects of the housing slump, including spiking foreclosures and late mortgage payments. The sour housing market continued to weigh on the economy but not nearly as much as it had in previous quarters."
          How can any economy be said to be _stronger_ if the average individual in it has less economic power? Doesn't this just mean that a small percentage of people are now making lots more money while most of us are effectively making less? Why would that be something for Bush to "crow about" (as per the article)?
      • Charlotte_Web, on 10/10/2007, -7/+8It never ceases to amaze me how liberals salivate for bad news in Iraq and in the economy, simply because they want to smear a Republican administration. The message is clear, for liberals to succeed, America must fail.

        What we have going on in the market is a small correction, nothing more. I mean, good grief, despite 9/11 and the Afghanistan & Iraq wars, the economy, the Dow almost doubled itself within five years. And now we have a correction in the stock market, and here come all the Chicken Liberals to tell us that the sky is falling.
        • thefirstenemy, on 10/10/2007, -4/+6Stay the course!
          • CiXeL, on 10/10/2007, -5/+5its kinda like the republicans are guiding the titanic TOWARDS the iceberg.
        • bitORlogic, on 10/10/2007, -2/+0I guess that's great news for people who are heavily invested in the Dow. For the rest of us ...
    • perish, on 10/10/2007, -7/+2That preposterous! What are you, some kind of Greenspan-domous?
    • joshshu, on 10/10/2007, -6/+2We are in dip ***** now. Dollar is rising, Oil is falling, Gold is falling. It's called Deflation. Your 401k pension plan is in danger, as soon as Wall Street collapse to the ground your assets will cost nothing. Get out of Debt, sell all your Stocks, sell Gold. Cash will be in huge demand. Start saving now as Cash will be the King in the future days.
      Check my submissions on DEFLATION.
      • andy3109, on 10/10/2007, -0/+5Deflation happens every so often...and every time it happens everyone says, "ITS THE END OF AMERICA." At this point the American economy certainly isn't a positive slope, but we aren't as bad as everyone panics about.
        • joshshu, on 10/10/2007, -4/+2Yes, but we are mostly debtors. We have a lot of debt, also who invest in stocks right now will lose all their money as stocks going to collapse. The best thing is invest in US DOLLAR by selling everything like GOLD, STOCKS, HOUSES (ough it's to late) as everything goes down.
          • nakani, on 10/10/2007, -0/+5Digg: the #1 place on the internet for financial advice
        • ryanissuper, on 10/10/2007, -0/+1Uhh...The Dollar is falling, has been for a while now.
  • AlbinoRaven, on 10/10/2007, -2/+33Whatever goes up has to come down sooner or later.

    The blow back will be fairly severe in the emerging markets like India and China. Although China might have enough of a localized economy to take a hit, the lack of consumer trust will eventually catch up as the money evaporates from the system.

    The stupid thing is, what was Freddie Mae thinking when they offered loans to huge credit risks. These are people that can't maintain a $500 credit card. How the hell are they supposed to manage a 200k loan?

    Oh well, everyone get ready for a hot rental market. All those credit risks have to live somewhere and with a shrinking vacancy rate in rental units, supply vs demand will take over soon enough.
    • zarex, on 10/10/2007, -10/+7That's not true at all. There will be some dips along the way, but the stock market has been going straight up (on average) for decades, in an extraordinary fashion. Yes, the market wiggles, but it doesn't have to come crashing down - and it certainly hasn't, and there's no reason to believe it will.
      • Y0tsuya, on 10/10/2007, -0/+3Who said anything about the stock market?
        The rental market is in for some turbulence, as there'll be a significant population shift from home ownership back to rentals. But eventually those empty units will need to be rented out or otherwise lived in else the new owner will lose money. So over time it'll even out.
      • edstate, on 10/10/2007, -0/+2Freddie and Fannie are protected by the Government. That's how they could do this. It's ***** retarded.
      • pedrovoltaire, on 10/10/2007, -1/+3In fact, since a large chunk of credit was created out of "thin air" there is high likelihood that it will evaporate back into "thin air." It seems to us that against the background of rapidly deteriorating real fundamentals the Fed will be forced in the not too distant future to reverse its stance, thus setting in motion the inevitable liquidation of various artificial forms of life that currently comprise bank balance sheets.

        -the master economist

        http://www.mises.org/story/1480
    • totallyAMAZING, on 10/10/2007, -3/+20Yeah, watch rich people buy up all those houses at bargain prices and then rent them out again and get even richer.

      Although, for the other 10 or 15 responsible Americans out there, you're about to get the best deal you've ever seen on a house.
      • Y0tsuya, on 10/10/2007, -7/+7It's simple. The rich got that way by not being stupid with their money. The stupid sheeple who believe (and still do) lies told by the NAR deserve to lose their shirts. You won't believe how many people in Bay Area think they're so smart "investing" in real estate by overpaying for it. Can't wait for them to get their comeuppance.
        • expat001, on 10/10/2007, -5/+3wrong. The bay area real estate market is not going to loose value, it may loose some steam but not value. The only way it would is if all of the dot com and computer based industries move. And they won't. Never mind the bio tech sector.
          • Y0tsuya, on 10/10/2007, -4/+2Yes, keep drinking the kool-aid.
          • hansonc, on 10/10/2007, -1/+9it might not "loose value" but it probably will lose value
          • Y0tsuya, on 10/10/2007, -1/+6Bay Area is Alt-A central, chock full of no-doc, interest-only or neg-am ARMs. The rating agencies are planning to downgrade prime Alt-A tranches in CDO bonds, before they're even finished with subprime. They know what's coming. This has nothing to do with jobs, it has everything to do with affordability. But hey, by all means keep your head in the dirt. Whatever floats your boat. I'll stay out of housing market and preserve my capital.
          • eexlebots, on 10/10/2007, -0/+2I live in the East Bay and I have seen the prices of condos and houses drop and drop over the past year. it's still expensive, but when you see condos originally going for 450k not even selling when dropped to 200k something is terribly wrong.
          • Y0tsuya, on 10/10/2007, -0/+2I live in the East Bay and see nothing wrong with price dropping. It's just the long-awaited correction back to historic inflation-adjusted levels. A REAL normal market is 3x household income for SFH. Bay Area is "special" so people are willing to pay 5-6x income. But that's still different from the "normal" market NAR is trying to sell us.
        • hansonc, on 10/10/2007, -1/+1.
    • catalysis, on 10/10/2007, -3/+7Can't wait for the housing market to crash so I can take my hard-earned money and grab a nice place.
      • truspark, on 10/10/2007, -0/+9Yeah but aren't the rates going to go sky high as well? You'll end up buying a house for 50k less than it's going today but you'll have the exact same payments because rates will jump a couple percentage points. Well, you'll at least be able to refinance in 20 years when rates come back down again.
    • pedrovoltaire, on 10/10/2007, -0/+1when Fannie goes belly up, why not tell the japanese & chinese that FM bonds are in fact NOT moral obligations of the US gov't... (see prospectus)

      let them pay for our houses. screw making the Treasury pay up when the bonds explicitly state "not backed by US govt"
    • cwcentral, on 10/10/2007, -0/+6No it won't be a hot rental market. The rentals already have high rates, especially in big cities. And who's going to want to a rent to a person who just defaulted on a home loan and can't hold a $500 credit card. Not me.

      Rich folks are laughing to the bank. They're skiming off all these scams and we end up paying for it. They in the end lose little.
    • joshshu, on 10/10/2007, -1/+2We are All in troubles right now. Debtors who have a lot of debt are in troubles, DEFLATION make their debt even more valuable as Dollar will be rising. And those stockholders who keep their savings in stocks will lose everything after stocks collapse. Because of DEFLATION US DOLLAR will be much valuable.
  • davidkeithjones, on 10/10/2007, -5/+18Meh, market will cool 1980's style and then rebound. The gov has to stop spending money though.
    • Y0tsuya, on 10/10/2007, -1/+10Back then we didn't have the subprime fiasco and the upcoming Alt-A collapse. Several analysts have already said we're in uncharted territory.
    • mbrane, on 10/10/2007, -4/+8"The gov has to stop spending money though."

      The US government could start by ending its very expensive war of occupation in Iraq, but the military-industrial complex would be the last group to have to feel any pain; the government they purchased will take care of them in tough times.
    • gernblansted, on 10/10/2007, -1/+2Stop spending money? But it's sooo easy - just keep charging the credit cards of the unborn. They're not around yet to be represented, so they can't say anything.

      This is of course Taxation Without Representation, by definition.
    • lcohiomatty86, on 10/10/2007, -1/+1can you please explain how it would help if the government did stop spending so much money? think of all the americans (probably in the millions), that either work for the government, contract to the government, or work for a company that has government contracts. all this money goes back into our economy as those families spend the "governments money".. its not like the taxes we pay is just magically sucked out of the country, it is just recirculated back in, just like when you buy a product from a company. Heck, probably more of the money spent on taxes and to the government goes back to Americans than does say.. buying technology items like the IPOd, where alot of that money goes to foreign workers and foreign companies that supply the parts.
  • dbhaley, on 10/10/2007, -3/+31Subprime lenders have created an avalance. Way to go, assholes. I guess you could blame the people buying ***** they can't afford, too.
    • texpundit, on 10/10/2007, -3/+19"I guess you could blame the people buying ***** they can't afford, too."

      That's why I say credit is probably the single most evil thing ever invented. It encourages people to overspend while not thinking about the consequences. FED credit to the government has jacked out economy all to hell.

      But, the biggest thing about credit is: the poor usually can't manage money very well...so credit hurts them the worst in the long run. Yeah, they can buy that car now, but when they can't make the payments in a year...it gets reposessed and then they don't have a car AND they have a huge debt to the credit lender. Credit *keeps* the Poor poor. Credit is EVIL.

      That's why I only deal with cash now. If I don't have the money to buy something this moment, I don't need it. I'll save until I have the cash to get it. No exceptions.
      • gnilrets, on 10/10/2007, -6/+4Right, because the poor are stupid and can't make decisions on their own. Therefore, we ought to not let them!

        /sarcasm
        • appetite, on 10/10/2007, -2/+5Yea, the only two options are allowing parasitic credit companies to target the poor, exploit their mistakes, and lobby for bankruptcy 'reform' (and give it to them) or to enslave the poor. /sarcasm
      • Y0tsuya, on 10/10/2007, -3/+4Well, you can't keep trying to save the poor from themselves. It's a lost cause. Though I could probably say the same thing about our middle class, many of whom would soon join the ranks of the poor.
        • aukxsona, on 10/10/2007, -1/+2It's called college it saves plenty of poor from poverty.
          • VeganG, on 10/10/2007, -0/+2College causes poverty and decades of debt.
        • sbader, on 10/10/2007, -0/+1which group do you fall in to?
      • Cyberen, on 10/10/2007, -4/+3A penny saved is a penny earned!
      • dracostimpy, on 10/10/2007, -1/+4The problem with saving up to buy something in cash is that by the time you save enough to afford it, it costs twice as much thanks to inflation. I hope you realize that and don't keep your wealth solely in dollars. You're absolutely right that credit is evil, but inflation is equally evil and you have to guard against it by securing your wealth in the form of non-inflatable assets like gold, land, oil futures, etc.
        • texpundit, on 10/10/2007, -2/+6Actually, the majority of my savings is invested in gold. Like I said, I learned from my mistakes.
          • dracostimpy, on 10/10/2007, -1/+1Excellent! Don't go overboard though, because the greenback may very well rally soon if Bernanke wakes up and realizes his printing press will only make matters worse in the long run. 50/50 is the safest bet until the Fed sets a clear course, and even then you have to worry about fakeouts like Greenspan's "irrational exuberance" speech that he followed up by continuing to flood the market with easy cash. In any case, sounds like you and I will fare better than most when financial armageddon hits. +Friend
        • VeganG, on 10/10/2007, -0/+1Except for the multitude of consumer goods that drop in price quickly after they're released. Like electronics, which account for a lot of debt. Everybody wants that nice new TV set.
          • dracostimpy, on 10/10/2007, -0/+1Yeah, the exceptions are those items that exist in a truly free, competitive marketplace, meaning electronics and umm... sunlight. Unfortunately, food, energy and medicine haven't been in a free market since... eh hell I dunno. A long time ago anyhow, and those items tend to be almost as important as TV to keep you living a long and healthy life.
          • dracostimpy, on 10/10/2007, -0/+1(And by energy, I mean from sources OTHER than sunlight. DOH!)
        • BESTenemy, on 10/10/2007, -0/+1Ironically, people that manage their money wisely and keep savings in form of currency are the ones that are getting hit the most through inflation that emerges when FED tries boosting failing economy by printing massive amounts of cash. The people that spend right as they earn and don't keep debts loose the least amount of value.
      • jon3k, on 10/10/2007, -1/+2Yeah keep saving your pennies and one day you can just buy a home outright. I'm not exactly sure where you'll live till then, but it sounds like a good idea anyway.

        For everyone one person with a credit problem there are 10 people that can manage their credit. The reason everyone in this country lives in a home and has 2 cars is because of credit. If you can't admit value in that, then you're just being obtuse.
      • brad3378, on 10/10/2007, -0/+1I disagree with your assertion that credit is evil.
        Without it, there's no way in hell I would have been able to afford my education...... Let alone my house! Who buys a house with cash savings anyway?
    • sacherjj, on 10/10/2007, -2/+14When you have two people that work at Taco Bell, who are convinced that they can afford to buy a $120k home, the lenders are the crooks. They know that the house will be foreclosed on in less than two years, but they will have already sole the bad debt. It should be as illegal as Check into Cash joints.
      • EricAnderton, on 10/10/2007, -8/+4What I want to know is: where can you find a house for as low as 120k that isn't in a slum or a drug-infested neighborhood?
        • EComni, on 10/10/2007, -1/+10Uh, you know houses cost different amounts in different parts of the country, right?
        • hansonc, on 10/10/2007, -1/+7most of the country. you know those "fly over states"
        • Astronutty, on 10/10/2007, -0/+3There are thousands of 4 bedroom homes with two and a half baths and a two car garage with a full basement here in Springfield, MO that are in nice areas and cost less than 120,000.
        • Gaki, on 10/10/2007, -0/+1@ Astronutty

          Well, then. I'm moving to MO. I'm checking into real estate here in Canada and a BACHELOR CONDO goes for 135K CAD and up. Now that Canadian is almost at par with the USD, that's a serious chunk of change for a single room.
        • bitORlogic, on 10/10/2007, -0/+0I've been looking at houses in the southern Minnesota area for the past six months or so. There are plenty of very nice 2/3 bedroom 1/2 bath homes in the $75,000 to $85,000 range. There are also plenty of "not perfect, but definitely adequate" 2+ bed houses in the $65,000 to $70,000 range. If you're willing to go "ghetto", there is a listing in the area for a 5 bedroom, 2 bathroom house for under $60,000. It's in the "bad" part of town where there's probably a minor theft every couple of months and your neighbors probably play their country music too loud. As for drugs, there is likely to be alcohol, and maybe pot. MAYBE meth, but that tends to be more rural.
          What's interesting is that even just in this town of ~19,000 people, there are lake-side homes going for over a million dollars as well as at least two trailer parks.
      • dracostimpy, on 10/10/2007, -0/+2I just went to Taco Bell, and the dude workin the drive thru was wearing some serious bling. Maybe Taco Bell pays better than you think?


        (not)
      • blitzman, on 10/10/2007, -0/+0So, you now want the government to decide who qualifies for a loan? And why can't adults decide for themselves if they want to take the loan or not? They aren't children.
    • andy3109, on 10/10/2007, -1/+5Buying ***** you can't afford is the American way. Everyone wants to appear wealthy.
      • DCMacHead, on 10/10/2007, -0/+2...and it didn't always used to be that way
  • queso74, on 10/10/2007, -17/+14Way to go, Greenspan.
    • MegatonSamurai, on 10/10/2007, -7/+3"This is everything we've worked for Greenspan, change the currency to oak leaves."
    • kazamx, on 10/10/2007, -4/+10I thought Greenspan had been warning about this for years. He has been telling the Government and the people to cut their debt. He was just seen as a party pooper, everyone was having fun, and didn't listen.

      He could only run according to the economy, he had to make sure things ran well while we were spending all that money, keep inflation down etc. He couldn't stop us borrowing
      • dracostimpy, on 10/10/2007, -0/+3Tell that to Paul Volcker, the guy that came before Greenspan. He raised interest rates into the teens in the early 80's to prevent just such a bubble from developing as the Greenspan bubble that is presently bursting. How come Volcker could stop us from borrowing beyond our means, but "the Maestro" couldn't?
  • expat001, on 10/10/2007, -1/+29My favorite story from the subprime problems is a guy who was a janitor making like 22 thousand a year getting a loan for a home, and the loan agent came up with a job description like senior waste removal technician.

    The guy lost his home cause he couldn't afford the payments, and the loan was already sold to a larger institution and they get stuck with the bad loan and the original loan agent makes a cool 5 to 10 grand and is off to sell the next bad loan...
    • pak314, on 10/10/2007, -4/+4Nothing wrong with that in my perspective as long as those loans are privately managed as it will the corporations that will need to learn a lesson. The problem becomes when taxpayers are left to hold the ball somehow. In that case these corporations never learn a lesson because they don't feel the risk.
    • Y0tsuya, on 10/10/2007, -2/+4Don't forget hedge funds, investors, and bond rating agencies. The finger pointing has already begun. This would be so fun to watch if it weren't for the boatload of sob stories soon to appear. Mr. XX on a low income bought a home (that he couldn't afford anyway), lost it to foreclosure (he had no skin in the game anyway what with them no-money-down loans), blames the mortgage broker (but couldn't be bothered to pick up a calculator and look over the loan application in the first place).
  • rudy23, on 10/10/2007, -1/+5The description sounds like someone on the Home Shopping Network wrote it.
    • PrestonM, on 10/10/2007, -1/+1If HSN wrote it there would be comments like "ONE HUNDRED AND TWENTY EIGHT" over and over. Or who could forget "Watch me fly in on that monkey"?

      anyone?
  • husker6294, on 10/10/2007, -2/+24The real concern that I see is that this will continue spreading globally. As America becomes less of an attractive location to park money globally due to rising default rates on loans, (or even the perception of rising rates), investors from overseas will slow down their purchases of dollar denominated assets. Once that happens the dollar will slide even further against foreign currencies as demand for the dollar falls. That means several things, US exports are cheaper to buy overseas but also imported goods become more expensive, ie, inflation will rise. Perhaps more frightening is the risk that the US dollar will no longer be the international vehicle of trade for things such as oil due to it no longer being a good store of value. If that occurs then you are likely to see countries lowering their foreign reserves held in US dollars and that will push the dollar down even further.

    IE We could be up S#$% Creek.
    • texpundit, on 10/10/2007, -2/+17I don't know why people are digging you down. At least the part about overseas switching from the dollar is correct. A whole slew of countries have switched from the Dollar to the Euro for petro dealings. Iran just changed from the Dollar to the Yen. The value of the dollar continues to plummet. Yesterday, it was equal with the Canadian dollar...and it's been a long damned time since that's happened. Throw on top of that: China owning a good chunk of our debt.

      If the dollar continues to plummet and China cashes in their bond debt -- instant depression. We WILL be *****. We'll end up looking like Russia in the 70s and 80s.
      • krusader3z, on 10/10/2007, -4/+8It doesn't work that way. China will not do anything to destabilize the US economy.
        • truspark, on 10/10/2007, -2/+4and that's all we have to go on isn't it? China owns our economy and it's thanks to Clinton and Bush turning a blind eye to corporations outsourcing all of their manufacturing. Aren't these pricks supposed to protect our national security?
        • tehxen3, on 10/10/2007, -0/+2Manufacturing may have been outsourced but it has been replaced by higher quality service sector jobs. For example China assembles iPods but US designs it and does higher value work. It is not governments job to interfere with the free enterprise, it only causes lower economic output and higher unemployment such as in Europe.
          • bitORlogic, on 10/10/2007, -0/+0It is precisely one of government's jobs to interfere with free enterprise. There are good reasons to have groups such as OSHA and the FDA, for example. Just because there are numerous bad examples of government involvement in the economy doesn't mean that such things are bad categorically.
        • jon3k, on 10/10/2007, -1/+3Clinton turning a blind eye? Apparently no one remembers that Clinton is the one who established international trade between the US and China before leaving office.

          http://money.cnn.com/2000/01/29/economy/davos_clinton/
        • gernblansted, on 10/10/2007, -0/+0It is in their best interest at the moment to keep their best customer afloat. They're building a significant military through US consumers.

          However, if our economy tanks (and it's probably just a matter of time unfortunately) then they'll look out for their best interests, including dumping more than a trillion US dollars currently stored up in their banks. Other nations will do the same as they suffer similar economic consequences. That will hurt an already damaged US economy.
      • gernblansted, on 10/10/2007, -0/+5People are digging this stuff down because it bothers them. It's called cognitive dissonance (http://en.wikipedia.org/wiki/Cognitive_dissonance). People will gladly change their belief systems to avoid it. That's why there is so much denial about our economic future, even from otherwise rational financial analysts.
    • tehxen3, on 10/10/2007, -8/+3Actually economy recovered this quarter thanks to lower dollar which increased exports...
      • gernblansted, on 10/10/2007, -0/+1The economy is better because the dollar is weaker! Uh...
    • kazamx, on 10/10/2007, -1/+4Everything you say is true. China has trillions of US debt, if they decide to start switching out of $$$ then the market will become saturated.
    • joshshu, on 10/10/2007, -5/+1US DOLLAR WILL BE RISING !!! And it's already rising:
      FOREX-Dollar gains broadly after strong Q2 GDP data
      http://today.reuters.com/news/articleinvesting.aspx?type=usDollarRpt&storyID=2007-07-27T165447Z_01_N27454965_RTRIDST_0_MARKETS-FOREX-UPDATE-9.XML
      DEFLATION is coming instead of INFLATION. INFLATION is a MYTH that mainstream media taught us all the time.
  • akaeding, on 10/10/2007, -1/+8I remember hearing about this thing that happened in the "roaring 2o's" They called it "buying on the margin" investing huge lumps of money into stocks...but not actually having any money to coever those investments...the hope was...with a huge buy the price will inflate...then you could turn your profit before anyone came looking for the original investment. Someone out there is bound to correct my elementary school interpetation of that process...and I welcome it...but isn't what we are currently seeing sort of similar?

    I mean...can I use my high interest credit card to buy up as many shares of a hot stock as possible...hoping the the ROI is greater than my Interest rate on the card? Genius!! right?
    • LetsGoHawks, on 10/10/2007, -0/+4Buying on margin is different. There is no payment and no interest. As long as the stock climbs, you're fine. The problem is if it falls too far and your margin gets called, then you better have the money to cover it or your in trouble because it's all due NOW!!!

      With a credit card, you're going to have a monthly payment no matter what the stock does.
      • funkywood, on 10/10/2007, -0/+0Actually, there is interest on margin at the discount rate that you can get risk free. Otherwise what's stopping me buying short term government bonds paying 5% on 10% margin and making 50% on my money pretty much risk free?
    • Y0tsuya, on 10/10/2007, -1/+8Many people are already making the comparison. Don't forget the roaring 20's is followed by the Great Depression.
    • aukxsona, on 10/10/2007, -0/+3Actually people were doing that to houses until recently.
  • hokie47, on 10/10/2007, -6/+15What this shows is that most American's are not as rich as they show. Many of us have been living off cheap debt for too long, all thanks to Alan Greenspan's unwise easy money policies that helped make our savings rate the lowest ever. Now we are paying for our spending indiscretions.
    • tehxen3, on 10/10/2007, -8/+7Role of the Federal Reserve is to keep down inflation and maintain economic growth and that is what Greenspan successfully did. Savings rates are low because americans are confident in the economy, your exaggerated conclusions are unfounded.
      • nakani, on 10/10/2007, -1/+1This movie illuminates the role of the Federal Reserve Bank: http://video.google.com/videoplay?docid=-1656880303867390173
      • dracostimpy, on 10/10/2007, -0/+3I'd say our growth in the 90's was more a result of the rise of the internet in conjunction with a president that managed to avoid any major wars or massive new government bureaucracies like the DHS that would have to be paid for via the backdoor tax of inflation.

        Yeah, I just gave Clinton some credit even though I'm a commie hating conservative Ron Paul voting nutjob. It hurts me to say it, but at least he was able to keep his wallet in his pants unlike Smirky the Chimp and FPS Dick.
  • TTURabble, on 10/10/2007, -6/+10Countdown till some asshat says how evil the federal reserve is because he got a creditcard/loan/etc and though "ooo free money" but now hes f*cked because he can't pay it back, but of course its not "HIS" fault, its the system's fault...the credit card companies MADE him get that card and take out that loan to "enslave" him in debt.

    Also, I am not worried about any of this. This readjustment of the market has been a long time comming.
    • 15charmaxwtf, on 10/10/2007, -2/+4I agree people should take responsibility but it is still pretty evil of the Fed and government to mess around with it, and, well, to politicise money.
      • TTURabble, on 10/10/2007, -2/+0I had a reply to this but my browser ate it.
        http://en.wikipedia.org/wiki/Federal_reserve
        The Fed's only real power is the control over how much money is in the market, which only has a indirect effect on interest rates that you and I pay.

        IMO, you can't politicize monetary policy, its more of a trade off between regulation and free market conditions. Most of the time one is "evil" and the other one isn't but the "evil" one changes with market conditions.
    • appetite, on 10/10/2007, -1/+6Yea, credit card companies aren't complicit at all. They are good guys just sending me about 3 letters a day saying "No interest, no payments until 2012", "Transfer Your Balances Now!" "Get a free DVD player when you put $500 on your card!" and hiding all the late fees, transaction fees, finance charges, etc.. Oh, yea, and then lobbying for bankruptcy 'reform'. Yea, we should get them all medals for their service to the country.
      • TTURabble, on 10/10/2007, -1/+2Have you ever thought about, oh I don't know, throwing those letters in the trash?
        No private enterprise is "good" but its up to YOU, whether or not you sign up for that credit card.
        • Gaki, on 10/10/2007, -0/+2There's plenty of blame for BOTH parties. We have laws against fraud precisely because the onus isn't completely on the customer when there was a clear attempt to hide key information from the victim. Credit cards companies stop JUST shy of that line and then pat themselves on the back for not actually crossing it.
        • appetite, on 10/10/2007, -0/+1Well, I don't fall for it. But clearly, people do. The credit card companies shouldn't be called 'bad', you're right. It might hurt their feelings. They have no control over what they do... it's just everyone else that does.
  • wonky73, on 10/10/2007, -1/+34This reminds me of the way people talked before the first dot com bubble. For over a year before the collapse I read everywhere, "It's a bubble. Get out it's gonna burst." Then when it did burst I read everywhere how people where so shocked it was a bubble and burst and were caught off guard.. Huh? everybody knew it was a bubble and would burst... everybody knows this housing market sub prime thin g is a bubble and will burst, but expect shouts of outrage and shock when it happens.

    people are dumb
    • sacherjj, on 10/10/2007, -0/+11"people are dumb" - That about sums it up.
    • catalysis, on 10/10/2007, -1/+2It's not quite the same type of bubble though because there is actual property being sold and the fed can adjust rates to engineer a "soft landing." I'm not saying prices won't decline, it's just a different situation than the tech bubble.
    • hokie47, on 10/10/2007, -1/+2Yep unfortunately many people are either to stupid, don’t care, or can’t think ahead more than their next nail appointment. These are the same people who get loans from ads with that bulging eye woman. Furthermore, we have idiot companies and investors that toss out common business sense. “Oh you have bad credit, that’s Ok”. “No income verification. That’s ok too”
    • Y0tsuya, on 10/10/2007, -2/+1In the SF Bay Area, there's no housing bubble, because this place is "Special". You'd be surprised how many people are still drinking the kool-aid. Fortunately, a few are starting to come around.
  • republicker, on 10/10/2007, -7/+2I hope to God thats true.
  • CaptainDoodie, on 10/10/2007, -1/+7One of the biggest reasons that Americans don't save money is because interest rates have been so low lately that it makes little sense to save money. Higher interest rates means your saved money makes more money.

    In addition, it might mean that the US Government might finally pull it's head from it's ass again and stop spending more money that they make in tax income.
    • Antialias, on 10/10/2007, -2/+5No sound person would save any descent amount in a savings account. When you hear "save your money" people really mean invest it in mutual funds, bonds, real estate, whatever, but don't save a bunch and sit it in a savings account. There are tons of ways to make your savings grow by very descent percentages.
    • joshshu, on 10/10/2007, -0/+1We are All in troubles right now. Debtors who have a lot of debt are in troubles, DEFLATION make their debt even more valuable as Dollar will be rising. And those stockholders who keep their savings in stocks will lose everything after stocks collapse. Because of DEFLATION US DOLLAR will be much valuable.
  • Treoinmypocket, on 10/10/2007, -10/+5As WONKY said - people are dumb.

    Unfortunately, YOU are those people. This will be a mild - if anything - slowdown. The only people who will notice is the Chicken Little's in the media and possibly the Democrats (but when this starts to happen they will have the White House and so will ignore likely ignore it).
    • kazamx, on 10/10/2007, -1/+4I hope your right about a slowdown, but I don't have your confidense. America has been blowing this bubble up for ALONG time. The bigger the bubble the bigger the pop
    • Y0tsuya, on 10/10/2007, -2/+3Your head is so deep in the dirt you could see China.
      • Treoinmypocket, on 10/10/2007, -0/+1actually from the east cost of the United States I would be looking straight down at the ocean... just west of Australia...but thanks for commenting.
      • Y0tsuya, on 10/10/2007, -0/+1Just trying to keep you from drowning.
        • Treoinmypocket, on 10/10/2007, -0/+1LOL - ok. NOw I really DO thank you.....
  • tehxen3, on 10/10/2007, -8/+4If the end of the world is nigh and economy is ruined then why did it grow at a high 3.4% pace... http://www.bloomberg.com/apps/news?pid=20601087&sid=a19LPcy.9iow&refer=home

    Situation isn't as bad as apocalyptical title makes it to be, pace of growth is accelerating and exports are increasing so don't be economic girlie men.
    • kazamx, on 10/10/2007, -1/+9Thats the point. Its growing thanks to debt. People aren't buying things with real money. At some point not only will the money borrowed need to be paid back, but the interest as well. When this is paid back people buy less. If people buy less then companies sell less, they lose money and lay people off. The companies have less money and spend less and the people who lost their jobs have less and spend less. this results in a second round of companies selling less and more people lose their jobs, then a third and a fourth round.

      One of the traditional ways of getting out of a recession is for the Government to increase spending to pump money into the economy and increase buying. A good example of this was the hoover dam being build during the depression. The problem just now is that the Governemt is so deep in debt it won't be able to afford to pump money into the economy. in fact it might have to do the opposite. You see as everyone is earning less (because they lost their jobs) and companies are making less profit and people are buying less the Government has less money coming in as tax, as its already in heavy debt it can't afford to keep spending as much as it does now and has to lay people off and cut spending. this makes the whole cycle worse.

      This is pretty much happened in Japan.
      • tehxen3, on 10/10/2007, -1/+1That's not how current free enterprise economy works, current system has enabled economic growth for the past 70 years (since government caused the great depression) in all free countries, it is unlikely a depression you speak of will occur. US was in a mild recession in 2003 and tax-cuts and decreased government spending helped make it short.

        US debt is at only 60% of GDP same as west Europe and way less than Japan and some other developed countries.
        Government also has more money coming in as tax resulting from a higher economic growth.
      • blitzman, on 10/10/2007, -0/+1"One of the traditional ways of getting out of a recession is for the Government to increase spending to pump money into the economy and increase buying."

        That's the traditional theory, yet it's wrong. The reason it's wrong is because the money the government "pumps" into the economy has to come from somewhere, and the only place it can come from is - the economy! It has a net deleterious effect because it sucks money out of productive endeavors (via taxes) and "pumps" it into unproductive ones, losing the administrative costs on top of that.

        Whenever a government economic program promises something for nothing, you're being sold down the river.
      • ColonelJessup, on 10/10/2007, -0/+0Where is the money to pay off the interest going to come from?
    • joshshu, on 10/10/2007, -3/+2Check my submissions on DEFLATION. It's HAPPENING. Cash out your 401k until it's to late, sell your Gold until it's too late, pay off your debts until it's to late, sell your stocks until it's to late. The HOSING BUBBLE will take everything to the ground.
      Start SAVING just CASH. Because of DEFLATION you will see US Dollar Rising.
      Check my submissions about DEFLATION. Seems like nobody cares about. But it's tottaly opposite to INFLATION.
  • brandonvan, on 10/10/2007, -1/+19ironic that the ads on their sites right next to the article advertise cheap loans.
    • stoanhart, on 10/10/2007, -0/+3what ads?
    • truck87bp, on 10/10/2007, -0/+1If the lenders just reduced their rates just above prime instead of raping the borrower at 18 to 28% they might get there money back and things might stabilize. No they want to bankrupt the people so get get everything the person owns and thats too sick to think about.
  • ccL1, on 10/10/2007, -2/+6The market will definitely recover. It's been on an upward trend since the beginning, but there are inevitable checks to that trend here and there. What we are seeing now is one of them, as was the Depression, late 70s and early 80s fuel crisis, the 1987 crash, Asian (market) flu, and the Tech bubble bursting.

    It couldn't have come at worse time though. Medicare and social security payments are soon going to be due for the huge baby boomer population. It's already underfunded by between 23 to 28 trillion dollars (US Comptroller General figures). Yes, not 28 million, not 28 billion, but 28 trillion! We need that much NOW at treasury rates to fulfill future Medicare promises to the baby boomers.

    Good luck recovering from that, Economy, because I doubt any politicians will do anything. They'll just push it to the next Administration.
    • orlyfactor, on 10/10/2007, -1/+3I am so glad I own my own company and only pay myself a salary of 30k. You'll get little social security from me, old farts! You ain't gettin nothin from me, seeing as how you ***** the Earth with all your industrialization 'n *****.
  • thredden, on 10/10/2007, -5/+5umm im just about to graduate college with no debt. i want to buy a house soon, this article says housing prices are falling?

    freaking sweet.
    • FunkyLlama, on 10/10/2007, -5/+7Some friendly advice: If you want your essays to look impressive, try using capital letters. It makes you look a bit less like a five-year-old.
    • therodersabides, on 10/10/2007, -0/+4I actually did just that :)

      I got a new construction townhouse in a large city with a ton of incentives at a more than reasonable price because of the current market. Just be sure to go with a fixed rate and buy down your points as much as you can.
    • manicallday, on 10/10/2007, -0/+2It depends where you live. Every place is different. Although disagree that you must go with a fixed rate, make sure you do shop around for the best deal. Also make sure you get a decent home inspector. You would be surprised how these crappy new homes are being built.
    • kazamx, on 10/10/2007, -0/+3Lets hope you can find a job though. If the economy goes ***** up then their will be aot of people that not only have your degree but also a few years experience, that could make getting a job to buy your house harder.
    • TTURabble, on 10/10/2007, -0/+0I am also looking forward to buying up one of these foreclosures. A 30 year fixed rate on a cheap house is pretty much comparable to rent where I live (unless I messed up in my calculations, which is a possibility) and I would rather spend money putting value into something instead of renting and throwing that money away.
  • BlacklabelSAR, on 10/10/2007, -3/+11It's all part of the Federal Reserve's cycle of ***** the poor, which now means anyone who isn't ruch enough to buy up the under-priced foreclosures. Here comes the North American Union and the Euro as it's currency. People will be so afraid of being broke that they will go along with the NWO agenda. It's a financial terrorism.
    • kazamx, on 10/10/2007, -2/+5Well people should not have borrowed, if their dumb they deserve everything they get. Maybe people should have been nicer to the smart kids in school
      • spawnfree, on 10/10/2007, -1/+1in other news; its perfectly OK for people to physically rape weaker people.
        the word on the street; if they cant fight back; ***** 'em.

        /satire
      • ColonelJessup, on 10/10/2007, -0/+0If their dumb...... what? Were you one of the "smart" kids in school? If you were, you would know that it is not "their" it's "they're".
      • brad3378, on 10/10/2007, -0/+2People should not have borrowed? WTF?
        How else would you buy a house? Cash?
    • TTURabble, on 10/10/2007, -0/+2Maybe you shouldn't have ruined your credit by going out and spending all your money or getting that "free money" credit card and charging everything. I'm not *****, but then again, I save as much money as I can. (and I am on my first job right out of college, so I'm not "rich" by any standards)
    • blackjack75, on 10/10/2007, -0/+1Oh they would definitely call it the Euro :-)

  • davids1, on 10/10/2007, -5/+2What a load of crap.
    • pb4upoo, on 10/10/2007, -0/+1 If the price of a brick goes up 20% the mob whines about inflation. If the price of stocks go up 20% nobody calls that inflation.Frankly the whole system is more mystic than a Jehova's Witness in a religious swoon.
  • perversatile, on 10/10/2007, -3/+12Ha. I rent.
    • Treoinmypocket, on 10/10/2007, -7/+4HA. ur dumber than u think.
      • orlyfactor, on 10/10/2007, -0/+2Said the man who uses "ur" and "u". Irony, meet treoinmypocket...treeinmypocket, irony.
    • krusader3z, on 10/10/2007, -4/+2Idiot
      • DCMacHead, on 10/10/2007, -0/+1uhh...i think you're going to be the one getting schooled by the time this is all said and done. perhaps you've noticed that credit has tightened, reducing the pool of qualified buyers and supply of homes is increasing...perhaps you should learn about the law of supply and demand. you should also read up on what happens when people buy things on margin...like 100% financing, etc. why don't you poke around on www.markit.com and read up on what the mortgage backed securities indeces are doing...folks are getting annihilated holding their securities...and there's going to be a lot less demand for them. there's gonna be a lot of nice houses with granite countertops at 50% off in the not too distant future.
    • norman619, on 10/10/2007, -1/+6These guys are just ***** becasue their house value is droping into the toilet and you will get a sweet deal on a nice home once you decide to buy. Sour grapes as they say.
    • dracostimpy, on 10/10/2007, -1/+1Not for long. Rent's gonna be goin up up and away as soon as they start clearing the riff raff out of these houses that they never should have bought, so I hope you have good credit and a 20% down payment because the sale of the century is right around the corner.
      • DCMacHead, on 10/10/2007, -0/+1what's happened in the past few years isn't going to blow away like a fart in the wind as most people would hope...it's gonna be very ugly this time around because this time around, zero down loans were common, interest only loans were common, and the borrowers have zero skin in the game. that means when stuff gets foreclosed, the lender's going to puke it in an effort to save their own hide with complete disregard for the borrower.
    • spawnfree, on 10/10/2007, -0/+2the long-term gain of housing value is clear. however there is a 'cycle' of banks getting people into a false sense of security, lending more than people actually can pay back and then raising interest rates and fleecing them. The whole cycle is around 15-20 years.
      the same situation is in effect in England, houses on average cost 200k and average income is 25k per year. (ish)
      people are buying houses with friends or making deals so their kids pay off the morgage after they inherit.

      I'm renting. haha. I will be straight in at the start of the next sucker-cycle.
    • verisof, on 10/10/2007, -0/+3Nope, renting is starting to suck as well. I've seen rental prices here in Houston jump DRASTICALLY in the past year due to all the people who are either having to bail out of their homes or who can't qualify for a housing loan. What was a $1200 a month rental last year at this time will now go for $1800 here. And it is getting worse every day. Bottom line is, renters will feel the pain as well.
      • dracostimpy, on 10/10/2007, -0/+1I think Houston's numbers might be a bit skewed given that whole Katrina-refugee thing, but your point is valid nonetheless.
    • siszam, on 10/10/2007, -0/+1If we have another depression it will affect you too. So you rent. If you become unemployed you can't pay rent. Then you'll learn humility won't you?
  • brianzero, on 10/10/2007, -3/+3When credit is no longer available, will the US officially be in third world country status?
    • pb4upoo, on 10/10/2007, -0/+0 There are times when I think the poorer nations are better off than we are. I talked to a pretty Mexican girl who lives both here and in Mexico. Her view was that life in then two nations was almost identical. She remarked that in Mexico people were happy and had festivals and parties but lacked money. While in the US people had more money but really were sad sacks who did not have fun.
  • IntensePuppy, on 10/10/2007, -4/+4I'm moving to mexico
    • edstate, on 10/10/2007, -0/+7Just don't go illegally. They'll throw your ass in jail.
    • norman619, on 10/10/2007, -1/+8Now THAT would be funny. A mass exidus from the US to Mexico.
    • aukxsona, on 10/10/2007, -2/+1that's uh bit different
  • manicallday, on 10/10/2007, -4/+1Here comes the ohhnnnooesss. Listen, this article is a bunch of doomsday crap. Not everybody with an ARM foreclosed. Most of those people saved a ton of money. The majority of the foreclosures involved those people who would have been foreclosed on no matter what. You really want to know the real reason behind most foreclosures besides sickness? Waves runners and Dubs. I've done some foreclosure work and it never fails that every house that I go to has one of these two things. I just hate to see what effect the actions irresponsible-stupid people, mixed with media hysteria will have on the rest of us.
    • DCMacHead, on 10/10/2007, -0/+1while not everybody with an ARM will be foreclosed, you might want to do a little homework. 1) peak prime mortgage issuance was 2004 and the most popular product was the 3/1 ARM, 2) peak subprime mortgage issuance was 2005 and the most popular product was the 2/1 ARM. so all that ***** from the peak years is resetting in 2007. it's resetting into a yield curve that's higher across the board versus 2004/2005 AND an environment where lenders are pulling the types of loans they used to do. last wek countrywide said no more subprime 2/1 ARMs. this week wells fargo said no more subprime 2/1 ARMs and no more correspondent subprime lending (was the biggest one around). countrywide also said this week they're seeing problems in not only subprime, but in their home equity lines of credit. and people are also coming to the realization that "alt-A" loans are the same, if not worse, than subprime (check the chart on AHM). nobody's talking about the impact of home equity lines of credit which enable people to strip equity and buy depreciating assets like cars, boats, vacations, and plasmas.

      bottom line, the doom and gloom stuff you're hearing isn't opinion. it's cold hard facts. for now, less credit to borrowers + growing inventory of houses = lower prices on houses + serious financial pain for those that bought the top. as recently as a year or so ago, over 1/3 of all homes were purchased by "investors".
  • halligan00, on 10/10/2007, -2/+7This is a necessary and integral result of allowing private banks to control our money supply.

    The total supply of USD has increased $10 Trillion in the last 50 years. That's more than 8% a year. More than $800B a year in recent years. It's not in the federal budget, because it's lent into existence by private banks, who lend it at interest. This, at a time when our federal government is spending $500B of our wages a year on interest. We could have a $1,300 Billion dollar budget swing if we ceased to allow banks to do this, and simply spent this money into existence.

    Set aside 47 minutes while you eat dinner and watch:
    http://video.google.com/videoplay?docid=-9050474362583451279&q=money+is+debt&total=1036&start=0&num=10&so=0&type=search&plindex=0
    • Gaki, on 10/10/2007, -0/+3Fantastic post. Inflating the money supply through interest is a guarantee of a future bust as the desire to maximize this temporary profit incents the banks to lend more and more and more. I've never truly understood why the money creation process was ever given out to private lenders (it happens in Canada, too).
    • ColonelJessup, on 10/10/2007, -0/+2Great vid. I encourage everyone to watch it, it really explains the issue, and makes it easy to understand.
  • jasonkolb, on 10/10/2007, -2/+11The only difference between this and the tech bubble is that people don't live in Web sites.
    • amoutbound, on 10/10/2007, -0/+1Excellent. I bet this will become one of the famous qoutes of the next great depression.
    • macman2k, on 10/10/2007, -0/+1Some people seem to "live" on digg!
  • norman619, on 10/10/2007, -1/+7It's always botherd me that such a large chunk of the population lives on debt. Live beyond their means. I've been told that is what keeps our economy running. If this is true then my god is that sad.
    • pb4upoo, on 10/10/2007, -0/+0 Living in debt is the smartest option for millions of Americans. Lack of universal medical care is one great reason. I have a nephew who has had two liver transplants. Eight years ago if his dad got a 50 cent raise at work he had to quit the job rather than allow the raise or the child would not get care. As the kid's medical bills got close to 2 million dollars a debate over whether $5.50 per hour being too much to receive help for the child was absurd. There are less extreme examples all around us. People who receive Medicaid are warned by those in the know that they need to keep a bare bones bank balance as even one dollar a year in interest has been known to reach the Medicaid toggle point and then all hell breaks loose as they are forced into high co-pays on their medical bills. The solution is to divorce Medicaid from the money available to the recipient and simply give the public they deserve.
  • mambonova, on 10/10/2007, -2/+9Blaming Greenspan and "the invention of Credit" is preposterous. It's like blaming sex for F***ing around and getting STD, unwanted pregnancies, divorce, co-dependency, and an awful lot of lack of self-esteem... People need to learn to be responsible for their actions. Turn off the TV -- stop buying crap you don't need and live a happier life. The Age of Idiocracy has begun (cool movie, too). /pg.

    Ps. I bought my place in DC in 1998 for $150K, price went up to $450K (now down to $390K). Paying $1,300/mo mortgage -- will rent for $2,600. For-rent sign coming tomorrow. Moving to the Caribbean.. Cash out now. Nice...
    • orlyfactor, on 10/10/2007, -0/+5Couldn't agree more man, way too many people driving in cars they can't afford, living in houses they can't afford, and just buying stupid *****. I laugh at them on a daily basis. Common sense FTW!
      • Gaki, on 10/10/2007, -0/+2In defense of the stupid ... have you tried finding a 1000 sq ft. house these days? My family raised 6 people and a couple of dogs in a house exactly that big and we did just fine. My siblings have all purchased homes in the past three years and the smallest was 2800 sq. ft. I regularly comb the real estate mags and I do see the odd smaller house, but there is one of those for every 2500 larger homes.

        If you can't buy a reasonable house because they don't exist, then escaping the rent trap means you buy a house that is out of your league.
  • edstate, on 10/10/2007, -1/+5When they relaxed lending standards they started this ***** about "now EVERYONE can have their piece of the American Dream". AKA, a house. It sounded great, and most people really believed it. But, as simple economics once again prove, the prices shot up because: instead of a) more PEOPLE being able to afford a house, b) people were able to "afford MORE house". And so we have average home prices that are well above the long-term historical percentage of take-home income (for instance in NYC, it's 60%, whereas the historical average is closer to 30%). To put it mildly, this whole thing was ***** stupid. And I hope the people and businesses that perpetuated this mess go ***** bankrupt.
  • daecrist, on 10/10/2007, -2/+1So the housing bubble that was obvious to anyone who was paying attention to the market has finally burst and it's the end of the world? Please.

    On the other hand, I get out of college with minimal student loans at a ridiculously low interest rate thanks to the fed trying to "fix" the dot com burst, and on top of all of that housing prices take a dive so I can buy on the cheap. I suppose "economic crisis" is all a matter of perspective.
    • edstate, on 10/10/2007, -0/+2Good for you. I'm still stuck with a ***** 7.25% student loan rate because of stupid laws that once you consolidate, you can't ever, ever again. :(
      • TTURabble, on 10/10/2007, -0/+2You mean you can't just go out and get another loan at a lower interest rate, then use that money to pay off the current balance on your other loans? They actually have a law against doing that? or just doing something called "consolidating" because thats basically all consolidating is.
        • edstate, on 10/10/2007, -0/+2No, I seriously can't. That's how ***** up the loan industry, and specifically the student loan industry is. When I consolidated (condensed all my pell, staffords, etc into one) in the early 90's, 7.25% was considered historically pretty low. But I watched in horror for the next 15 years as the rates kept sliding. The laws governing student loans are meant to protect lendors against default. Because, on paper, lending 50k to some little ***** with no credit is very "iffy". And, if I'm not mistaken, the default rate on SLs is pretty high. So, to encourage lendors to get into the student loan game they created these little "failsafes". Which I lovingly call "boofoos".
        • TTURabble, on 10/10/2007, -0/+2Student Loans are the only situations where I feel bad for people in debt, because you're using that money to get an education. That sucks dude I would try to game the ***** out of the system. Read up on the law and use every loophole you can find. In fact, I would set up a talk with a lawyer about that because it sounds fishy. Legally they shouldn't be able to tell you that you cant get another general loan at another, unrelated, financial institution and then use the money you borrowed to pay off your student loans.
          • edstate, on 10/10/2007, -0/+1Yeah, everytime I think about it one of my eyelids starts twitching uncontrollably. Actually, I'm thinking about just using my savings to pay the remaining 25k off.
  • norman619, on 10/10/2007, -0/+5I'd like to see how the governemtn plans on realisticly dealing with the out of control national debt. Responsible spending my ass.
    • macman2k, on 10/10/2007, -0/+1Elect Ron Paul and (we the people) will get a significant improvement in spending!
  • norman619, on 10/10/2007, -0/+9Isn't it sad when owning a home is a dream?
  • orlyfactor, on 10/10/2007, -1/+8Same *****, different day. I deal in cold, hard cash. I laugh at all of you who have ARMs and bought houses you really couldn't afford. The idiots will get their comeuppance. Comeuppance, I say!!!
  • andcal, on 10/10/2007, -0/+1manicallday

    Wave runners and dubs, eh? Don't forget satellite dishes and swimming pools!
  • truck87bp, on 10/10/2007, -10/+2You Anti-American Foreign car buys are mostly to blame currently for this situation in the US. You should all leave including some of my friends. 50% of all manufacturing jobs have gone overseas in recent years. American Car Manufactures have now met your Quality and fuel requirements and you ignore them. How Un-American and blind can you people get? You people are full of $hit if you don't believe this is having an huge effect on our economy. ***** off , your being stupid beyond belief.
    • TTURabble, on 10/10/2007, -1/+4Blame pension plans for driving up the cost of American cars. or maybe you can blame the lack of innovation. Because I guarantee that if GM came out with a car that got 50mpg (city...NOT highway) they would sell like hotcakes regardless of cost.
      • truck87bp, on 10/10/2007, -1/+1What other remaining industry pumps billions into the economy other the Cars? Airplanes and tanks are hardly affordable. You can't blame pension plans for jack ***** if you drive a Toyota or Honda. Has nothing to do with buying American. Look, you're the one that thinks health care and pension plans determine the Quality of a car, not me.
    • bullfrawg, on 10/10/2007, -0/+2Look, my Camry got 300k miles before I sold it, in working order. My civic was running sweet at 180k, when I sold it in good working order. American cars haven't been this reliable for years, and it will take years for Ford, GM, and Chrysler to build any kind of reputation for reliability, even if they ever get initial quality up to standards.

      It's not American workers. It's American business types. They're more concerned with "brand image" and whatever they think they learned in B-school than about building good cars. Eventually, American consumers buy something that doesn't break so ridiculously often.

      Especially when the "foreign" cars are built in America anyway.

      I don't see why Detroit auto workers think they are more American than people in Alabama or California or wherever.

      Or, for that matter, why Detroit auto workers think they're more important than foreign auto workers. They're just trying to support their families too. Caring as much about foreigners as Americans isn't anti-American.
      • truck87bp, on 10/10/2007, -0/+1I am going to be the last one that says your Camry or Civic wasn't a great vehicle with high Quality. You demanded Quality, thats why you bought foreign, and now America has responded but you are still ignoring them. Whats your excuse? And excuse me, GM, Ford and Chrysler's are built all over the U.S. very few are built in Detroit. If care more for America because I'm American, not an Illegal like you sound sending our money to your home country. This is a Quality subject and you people drag in the UAW, pensions and the lot. Its the hundreds of billion $$ being sent across the water thats harming America dipstick.
  • IlMagnifico, on 10/10/2007, -4/+4"You Anti-American Foreign car buys are mostly to blame currently for this situation in the US."

    You Idiot, Ford is made in Mexico, GM makes cars in Canada. Honda makes cars in Ohio and Tennessee, Mercedes in Alabama. Toyota in Ohio, California.

    Get a book and learn to READ from pages, eh? Not web pages, the kind you hold in your hand.
    • truck87bp, on 10/10/2007, -1/+1Yes, a few U.S. cars are being built else where the the profits stay in America so that research and development can be done to improve Fuel Economy, Advanced Electronics for Electric cars etc.. But when people like you buy Foreign cars, the profits for research resides at Honda and Toyota, not in the US. As far as your book comment, you can stick that were the sun don't shine. Your kind of thinking is what is dragging this country down. You're the idiot thank you.
    • blackjack75, on 10/10/2007, -0/+2If people don't buy american cars, don't complain: make better cars. They'll sell well in America and elsewhere.
  • OriginalLucid1, on 10/10/2007, -8/+1Is the ***** sky falling again?
  • mseneschal, on 10/10/2007, -0/+8Debt is bizarre - a form of money that makes you poorer. Imagine eating a food that made you hungrier. Yet borrowing is going up and up.

    The effects of this can be devastating, including family breakdown, homelessness and suicide. More, such a culture deemphasises the virtues of thrift and self-control and makes it easier for society to ignore the plight of the most economically vulnerable for whom debt is often the only way they can make ends meet.
    • VeganG, on 10/10/2007, -0/+4Like drinking salt water if you're stranded at sea.
  • VitriolAndAngst, on 10/10/2007, -3/+4America ran out of credit just before the last Great Depression.

    And that one was also caused by having Republicans, who used government as a gravy train for the Rich. Who sacrificed the public interests, to let what was called Lazes Faire economics (the pig was repainted as Reagomics and/or Libertarianism), reign.

    Allowing foreign ownership of vital industries, the outsourcing of jobs, and Unfair -- free trade, while we run a war for profit boondoggle overseas on a credit card without raising taxes -- well, eventually, China and the rest aren't going to be accepting the pretty pieces of paper that the Federal Reserve (actually, its a private corporation that charges us for NOT reserving but printing money), keeps churning out.

    Once this depression kicks in, it may be worse than the one FDR got us out of... because we don't know how to be thrifty like our grandparents, and because, China and other countries own key bits of our infrastructure... how can you really pay of Japan, if you build cars for Toyota, and drive through a tollbooth owned by China while the parts for that car came through a port and shipping magnate owned by Dubai?

    And this is going to happen around the world ... everybody will end up owing Offshore banks -- which is where the real ownership of all these multinationals resides. I've been screaming about this since Bush got in office... who do you think he works for?

    Now I don't think the real bottom will fall until September. So get ready.
    • bullfrawg, on 10/10/2007, -1/+4You should have been screaming about it while Clinton was in office too. Sure, the budget was sort-of balanced, once Republicans got Congress. Best way to a balanced budget = a Democrat president reducing military spending while a Republican congress reigns in domestic spending. (It's almost obvious when put that way.) But the head-in-the-sand American debt culture is not the product of either party. Rather it has produced both parties' platforms. Americans will not elect leaders who will spend thriftily.
      • truck87bp, on 10/10/2007, -0/+1He was screaming and so was I, where were you to help?
      • aukxsona, on 10/10/2007, -0/+1I think Americans could do it. I'm American, my house is paid, my car is paid, I'm a student with debt for that...but that's all. I have 5 children and an income of240 dollars a month to 380 dollars...from my own small business. We are having difficulties, but I am making it barely.
    • geekee, on 10/10/2007, -0/+2Deficit spending to finance WWII is what got us out of the great depression. FDR just happened to be in charge at the time. All his New Deal policy did was move money from rich to poor though taxes and govt projects.
  • fuzzmello, on 10/10/2007, -5/+2good. i hope 90% of the assholes - and they're entire families - who've been raping the system for the last fifteen years wind up in a salvation army shelter. god knows they've sent more than a few good families there already.
    • truck87bp, on 10/10/2007, -1/+2Thats a terrible thing to say about anyone, especially when you use the words "good families" in the same sentence. Too bad you don't love anyone, thats very sad.
  • nakani, on 10/10/2007, -1/+6The bankers are laughing about this all the way to well... the bank :P
    http://video.google.com/videoplay?docid=-1656880303867390173
  • redthirteen, on 10/10/2007, -1/+4We will have a long and cold winter....
  • hokie47, on 10/10/2007, -0/+5We have been living off cheap debt for too long, in part thanks to Alan Greenspan’s unwise easy money policies, our foolish lending practices, and dumb sheepish Americans.

    “Bad credit, that’s ok!” “No money down, that’s fine” “No income verification, that’s ok too” “Don’t save, spend, spend, and spend some more, it is all good you can get a home equity loan and get even more into debt.”

    (5 Years later)
    “Oh *****, what do you mean I can’t get my home refinanced anymore?” “Well, see your credit sucks, the value of your house is worth less than your mortgage, I can’t lend you any more money.” “Also, by the way no one will buy your home for what you paid for it.” “Overall, you are ***** out of luck.”

    “That is ok our government will bail us out, Right?” “Well normally they might, but our dollar is ***** because of our out of control spending, and inflation is ready to take off, so there is little they can do.”

    “*****” “Yeah, I know”
  • MickGyver, on 10/10/2007, -0/+2Start buying Ameros!
  • digomatica, on 10/10/2007, -0/+1misplaced title! credit has actually been too cheap as a result of low interest rates in order to get the post 911 economy back on its feet again. what's happening is just some repricing in the market. but it is true that interest rates in the future will go up because of an external source of inflation called bioflation as a result of ethanol economies and lower food production

    http://weekendeconomist.blogspot.com/2007/07/truth-relativity-and-markets.html

    its a blog but good points for any economist
  • siszam, on 10/10/2007, -0/+1Americans with good credit were in danger of losing their homes? No. Wrong. Americans who didn't read and understand the contracts they signed their names to are losing their homes and screwing up their credit. People who just had to have a home right away and took out ARMS when interest rates were at record lows are losing their homes. What use to be common sense says that historically low rates have nowhere to go but up, so ARMS are going to adjust upwards into huge payments. Someone with elementary level math skills knows they can't afford a home if their payment jumps several hundred dollars when their credit wasn't good enough to get a fixed mortgage. Stop making excuses for fools. No one put a gun to these peoples heads and forced them to do stupid things. I feel for them but hey, a fool and his money are soon parted.

    We are all going down when the economy crashes but some people took themselves down. If you don't have a good down payment, can't get a 15 yr. fixed mortgage and don't get a mortgage that is a reasonable percentage of your income, don't buy a house.
  • LordSalisbury, on 10/10/2007, -0/+1Welcome to reality. Just follow the trail, most of us figured this out years ago.

    and buy gold.
  • joshshu, on 10/10/2007, -0/+2Don't buy GOLD. Gold prices will crash together with the stock market and oil. Why do you think Gold is getting cheaper these days? Because stocks going down!!!
    US Dollar is getting stronger vs all world currencies.
    Be prepare for DEFLATION. It will make you think totally opposite to inflation.
  •  

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