Are we now seeing the beginning of an economic collapse?

[O.S.O.K.]

The whole real estate market is on hold. Has anybody here tried to buy or sell a house? Foreclosures are on-hold... I am seeing reports of financial advisors telling clients to stop paying their mortgage payments... hear of people getting checks along with their foreclosure notices? Weird stuff.

If the real estate market is in state of collapse -which looks likely (no surprise here huh?) then given the tenuous nature of all of the other economic systems, isn't it logical that the market will crash?

I mean, if millions of people stop making their mortgage payments... the banks will go into default. We have no more money to borrow to bail them out - not at the level that would be needed to save them. If the banks go - credit goes, if credit goes, everythng will spiral down down down.

I know this sounds paranoid - and a run for the hills smilie would be appropriate here....

What do you guys think of this?

Tell me I'm missing something.

[tank_monkey]

Tell me I'm missing something.

Well for one, NOT everyone will just STOP paying their mortgages. Even though the number is horrifying, the sheer number of people who are 'in trouble' is still a minority of the homeowners in the U.S. And doing that will fuck your credit forever, so even if they are struggling, lots of people will still try to make their payments. Its only the people who have come to the end of their rope. Now the idiotic 'rubberstamping' of foreclosure papers, even though many could have negotiated with a modified loan, is coming back to bite the banks in the ass. They still won't go under (at least the ones who weren't stupid). I NEVER trusted small no name banks so I am not surprised if they collapse (which many are). Even in GOOD TIMES, I never trust a banking institution that isn't large enough to at least absorb a hit.

What is killing EVERYONE is the complete ANTI-BUSINESS, ANTI-CAPITALIST attitude coming from the current administration and the Democrat majority. People are wising up though. Over taxation and overregulation are killing job and wealth creation, period. And it's a no brainer. But they still don't get it.

[ubersoldate]

The real estate market isnt on hold, I just closed on my house yesterday.
There are alot of people losing their houses for sure, but at the same time, alot of people shouldnt have been living beyond their means.

There are jobs, people are working.
But I think alot of this is bullsh$t knee jerking people who dont know how to work anymore anyway.

People dont want to work, they want to complain. My company would advertise in local paper and craigslist for helpers for home remodeling, 10-15 an hour depending on experience, with OT and parts work on TOP OF THAT. And people call, but dont show up when its time to work.


I think its alot of media bs, pushing people into a frenzy.

I know alot of smart people who are still working, still buying, investing, and havent lost their homes, but I know alot of others who arent doing ANY of the above, and all they do is complain about the economy and the end of the world bullshit.
But they wont go get jobs, the just apply for cushy jobs for high pay, then bitch about too many people all trying for the same job.

In the great depression, people learned a new trade, they hustled, they did what they had to do to feed their family as they didnt think that the government was going to bail out everyone at any minute.
I wish we had more people from that generation around nowdays.

[O.S.O.K.]

Thanks for the feedback. I didn't think it was as bad as I was seeing - but still, if millions of people do stop making payments...

Hope you both are right.

[Altarboy]

And keep in mind, 10% unemployment is really 5% unemployment. 5% of the "employable" populace is unemployable because no one wants them-criminal record, poor work history etc..

[O.S.O.K.]

Well, actually, the total unemployment figure is around 20% - the 10% is only the people getting unemployment checks... those who went past the maximum fall off the list. So you could say 15% if you want to be optomistic...

[samiam]

the housing problem is nationwide but certain areas are much more affected than others until the market readjusts you might buy something just to see its value drop

[ubersoldate]

the housing problem is nationwide but certain areas are much more affected than others until the market readjusts you might buy something just to see its value drop

That right there is the real thing that so many arent understanding when it comes to purchasing and flipping homes.
There really is no telling what it will do, but I have a feeling that in NOV when the dems are run out, that money will start to flow again.
In my situation, I really dont care if it drops or doesnt, as I got a great deal, on a 15 year note, and I plan on living on the property for that amount of time anyway.
It was my dream house, on acreage, in the mountains, so as far as Im concerned, I will most likely be buried on it as the payment is VERY fair.

[samiam]

congrats on your new crib uber . . even though the market is screwed up there are good deals to be had if one keeps their eyes open

[ubersoldate]

congrats on your new crib uber . . even though the market is screwed up there are good deals to be had if one keeps their eyes open

There really is, we had a handfull to choose from...Ours sold in 03 for 297k.
We got it for 100...

[arcangel]

Does Michigan count? My dad was telling me about an article he read that concerned him. A lot of people here that have lost their house are living in the woods and parks.

[swampdragon]

Does Michigan count? My dad was telling me about an article he read that concerned him. A lot of people here that have lost their house are living in the woods and parks.

If they live in the woods, they should make tree houses at night when nobody is watching.

[arcangel]

http://news.yahoo.com/s/yblog_localdtw/20101015/ts_yblog_localdtw/ann-arbor-struggles-with-homeless-influx

[az_paul]

I believe the housing situation hasn't bottomed out yet and will get worse, before it gets better.

I've heard stories of people living in tents in some areas.

[El Jefe]

I believe the housing situation hasn't bottomed out yet and will get worse, before it gets better.

I've heard stories of people living in tents in some areas.

Here in central Missouri the residential market has been bad for about 3 years and will get worse. The commercial market started to slow down two years ago and that downturn seems to be picking up steam. The market needs to adjust to saner cost levels and it is, government just needs to let it correct and stay the hell out of it. The more they dick around the longer it will take.

[HDR]

Any economic failure will be as a result of the government continuing to borrow 37 cents of each dollar it spends.

Very few economists are as concerned about bank failures and foreclosures as much as they fear the government continuing to borrow more and more money. People go under when their debt load increases beyond their cash flow and nations aren't much different.

As they won't stop spending 0bama and the democrats need to go.

[swampdragon]

Tax and Spend -vs- Borrow and Spend?
When you are already in debt as it is, they "both" seem like bad ideas to me.

[O.S.O.K.]

I've long held the opinion that a severe economic collaps (if it is to ocurr) will be pushed by a single crisis or a single major economic system failing in this country. I've held this opinion because in the past we've only had one sick system at a time and the rest of the infrastructure, being healthy was able to absorb, cushion, etc. the problem. This was driven by opportunistic behavior - because problems often beget opportunity.

But you need money to invest or take advantage of such opportunities... and when the credit was available, then people would borrow to invest.

That is simply not the case now - nothing is really healthy and credit is tight - no? I keep hearing that credit is tight... for small businesses and such.

I was just wondering if we are seeing the crisis now - in the form of the real estate market going down in flames....

Seems most are more confident/optomistic about it not being the case. Again, I truely hope so.

I think if mortgages are readily availabe for those with good credit, then investing will ocurr and save the day. Heck, if prices on houses fall to rediculous levels then why wouldn't you snatch them up if you can get the loan? - especially if you can rent them out - like in a college town...

Last I checked, you need 20% down on house - but again, if the prices fall far enough, then 20% won't be what it is now...

:think2:

[swampdragon]

I've long held the opinion that a severe economic collaps (if it is to ocurr) will be pushed by a single crisis or a single major economic system failing in this country. I've held this opinion because in the past we've only had one sick system at a time and the rest of the infrastructure, being healthy was able to absorb, cushion, etc. the problem. This was driven by opportunistic behavior - because problems often beget opportunity.

But you need money to invest or take advantage of such opportunities... and when the credit was available, then people would borrow to invest.

That is simply not the case now - nothing is really healthy and credit is tight - no? I keep hearing that credit is tight... for small businesses and such.

I was just wondering if we are seeing the crisis now - in the form of the real estate market going down in flames....

Seems most are more confident/optomistic about it not being the case. Again, I truely hope so.

I think if mortgages are readily availabe for those with good credit, then investing will ocurr and save the day. Heck, if prices on houses fall to rediculous levels then why wouldn't you snatch them up if you can get the loan? - especially if you can rent them out - like in a college town...

Last I checked, you need 20% down on house - but again, if the prices fall far enough, then 20% won't be what it is now...

:think2:

Around here anyways....people aren't losing homes because they can't pay the low rate mortgage (which is no higher than paying rent someplace)
They lose them because of the property taxes.
A whole lot of people are OK living month to month.
But when that big tax bill shows up at the end of the year, they're screwed.
It's a shame.

[ubersoldate]

Last I checked, you need 20% down on house - but again, if the prices fall far enough, then 20% won't be what it is now...

:think2:

It might sound harsh, but I am a fan of the 20% down.
Its the right way, people should save up for their home, it makes one make sure that the payment can be affordable, and people who have a ton of money in a house tend to want to fight to keep it when it gets hard, instead of the mentallity that Ive seen so much here, with "we dont have that much money in the house, and I cant make the payment, so Im gonna stop paying my note, so the government will help me out"
Wife and I had to save for YEARS to get out down, and we are lucky enough to have family all pitch in to help with alot of the other costs.

[O.S.O.K.]

Uber, first off, I want to say that I am really glad for your good fortune in getting the new place in N Cali - that is awsome! Should be an outstanding place to raise your kids too.
--------
I hear you on the 20% down - and for what you are saying - where it applies to a homestead, I totally agree.

The thing is, not too long ago, one could get a zero down loan on a rental property - so long as the rental in the area was good - that you would easily be able to secure the monthly rent to pay the mortgage. Smart people took advantage of this and bought multiple properties as investments. I wish I had been smart enough to do that. I didn't partly because we moved around so much that I never really settled enough to think about doing something like that. I was aware of it but thought of it as being "risky".... which in retrospect was quite stupid - you just need to be careful where you buy - make it a college town and you are good to go. And there's plenty of incentive to keep the properties up - they are investments.

Now, you can't do this. Its just another thing that the boomers ahead of me (I am on the ass-end of the boomer bulge) have been able to take advantage of that I miss out on - I've seen this over and over through my life - my tough luck for being born in 1961... and not being ahead of the curve...

But I digress :)

[HDR]

Tax and Spend -vs- Borrow and Spend?
When you are already in debt as it is, they "both" seem like bad ideas to me.

True and the bad news is the cash in from taxes doesn't equal what they choose to spend.

If they let the Bush Tax cuts expire for those who make over $250K; tax revenues only increase by a a couple hundred billion. If the Bush tax cuts expire for everyone; it is a few trillion.. So focus people on "class warfare" so they agree with getting screwed... LOL.

Every economic article, even those who are positive about 0bama are also warning about the deficit spending...

[Warthogg]

I didn't think it was as bad as I was seeing - but still, if millions of people do stop making payments...



In the mortgage bidness things ARE as bad as you are seeing....and I expect really considerably worse. Millions of people HAVE stopped paying their mortgages. Several banks have announced they will cease foreclosures (yes u read that right) as those banks have considerable legal problems in the way ( read f***ed up) previous foreclosures were handled.

[Warthogg]

Well, actually, the total unemployment figure is around 20% - the 10% is only the people getting unemployment checks... those who went past the maximum fall off the list. So you could say 15% if you want to be optomistic...


Yup.......and don't forget the under employed......people who have taken any type job to put food on the table.

[swampdragon]

True and the bad news is the cash in from taxes doesn't equal what they choose to spend.

If they let the Bush Tax cuts expire for those who make over $250K; tax revenues only increase by a a couple hundred billion. If the Bush tax cuts expire for everyone; it is a few trillion.. So focus people on "class warfare" so they agree with getting screwed... LOL.

Every economic article, even those who are positive about 0bama are also warning about the deficit spending...

Yep.
It really is the "spending" part on both sides that is killing us.
Granted, the Dems are the worst for sure.

[O.S.O.K.]

In the mortgage bidness things ARE as bad as you are seeing....and I expect really considerably worse. Millions of people HAVE stopped paying their mortgages. Several banks have announced they will cease foreclosures (yes u read that right) as those banks have considerable legal problems in the way ( read f***ed up) previous foreclosures were handled.

If indeed we are there already - what are the ramifications of hundereds of banks getting out of the mortgage business? What are the ramifications of that many properties floating? Those poeple sure as hell aren't going to be paying property tax! And how many more will not be able to pay their property tax?

Just how much can the real estate market absorb? Property taxes are a huge part of the funding process for towns and cities - schools... how long before they "fail"?

The real question: what does this mean to those of us that are still solvent, still paying our bills, etc.? And to the country as a whole?

This is what I'm trying to get my head around...

[matshock]

If indeed we are there already - what are the ramifications of hundereds of banks getting out of the mortgage business? What are the ramifications of that many properties floating? Those poeple sure as hell aren't going to be paying property tax! And how many more will not be able to pay their property tax?

Just how much can the real estate market absorb? Property taxes are a huge part of the funding process for towns and cities - schools... how long before they "fail"?

The real question: what does this mean to those of us that are still solvent, still paying our bills, etc.? And to the country as a whole?

This is what I'm trying to get my head around...

You and a whole bunch of other people.

Re-establishing the rule of law and stopping the money presses would be a good first step IMO.

[Goodman]

What are the ramifications of that many properties floating? Those poeple sure as hell aren't going to be paying property tax! And how many more will not be able to pay their property tax?

Property tax is often tied to an escrow account managed by the lender. If the borrower stops paying on the mortgage the escrow account dries up. If the bank forecloses and becomes the owner of the property I THINK the bank would become responsible for the property taxes (can anyone comment on this?).
Additionally, when a bank forecloses it drives property values down violently. If a bank has to list real estate as an asset they undermine their balance sheet by foreclosing too many properties in a given area. There is a point at which foreclosure becomes a suicide move. If this isn't resolved the solvency of mortgage lenders could lead to bank failures on a scale we haven't seen since the 1930's .

[TEN-32]

It all began in 1977 under Jimmy Carter. The fucking Democrats just love to re-distribute wealth. Now the chickens are coming home to roost and they are blaming GWB. It makes me so mad to listen to these assholes.
http://en.wikipedia.org/wiki/Community_Reinvestment_Act
It was at this point in our history that the American dream (home ownership) changed into a federally insured right. No need for credit or employment verification No need for 20% down. Just be brown. Fucking sad.

Now the rest of us that played by the rules and did everything we were supposed to do are getting ass fucked on our biggest wealth building tool. Home ownership. My house was appraised at less than I paid for it. The American dream has been exploited and stolen and replaced with incentives to walk away from responsibility and hand over the keys to China. I really do believe we need to start hanging these fuckers for treason. Seriously.

[Ruskiegunlover]

1032 I second that. Sometimes, in Bushes last term, I alnmost got the feeling maybe he new something was coming. I am not a tin hatter, or a conspiracy theorist, but the way he was sometimes really made me wonder if he maybe thought that there was nothing we could do to stop this. I know Bush tried to rein it in, several times, to no avail.....

Regardless, we are still screwed.

[HDR]

Yep.
It really is the "spending" part on both sides that is killing us.
Granted, the Dems are the worst for sure.


It is not as much the spending as it is borrowing ~40% of what they are spending. At some time almost everyone borrows money; however, very few borrow 40 cents of every dollar they must spend. None of us borrow ~40% to pay our car payments, electric bills and food etc. When people do the same thing 0bama and the democrats are doing they become part of the foreclosure statistics.

However, your thoughts reminded me that although both the democrats and republicans spend. The democrats were and still are responsible for the most wasteful programs in our history. From Johnson's Great Society to Clinton's CRA (everyone deserves a home) to 0bamacare, whenever there was a huge waste of money on unsuccessful programs we find the fingerprints of democrats.

The Great Society started in the 1960s and after trillions were spent; the only change to the intercity ghettos is the population has grown. After huge profits for some, everyone can see the effects of "everyone deserves a home" brought us. Anyone who believes the published costs of 0bamacare is anything but the tip of the iceberg is foolish.