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March 31, 2010 at 11:17 AM #534659March 31, 2010 at 12:20 PM #533734
briansd1
Guest[quote=jpinpb]
As far as I’m concerned, I’m more upset w/the government than the people walking. As soon as the government mentioned bailout, they were setting up this situation. It was a given that anyone upside-down would walk.
[/quote][quote=jpinpb]
I think of it as collateral undamage. As a consequence of them not paying their mortgage, they have “extra” income to spend. All these people who are not paying, and there’s a whole lot of them, are going out to dinners and shopping, etc. Consuming. Which pretty much is a major source that drives our economy.[/quote]I understand your frustration at to why the government hasn’t stepped in to rectify the situation promptly or allowed the market to self-correct.
But the mistakes of the past cannot be easily corrected.
I felt the same as you do, but upon further reflection, I’ve come to the realization that the bailouts were necessary.
What would have happened had the correction been allowed to occur unabated without government bailout?
Some areas are down 50%. If those areas were allowed to drop 80%. What would the walking-away and living-for-free rates be?
I can guarantee you that if Carmel Valley dropped 50% to 60%, the walk away rate would skyrocket.
If banks were allowed to fail, leaving employees, depositors and contractors to fend for themselves, the loans portfolios would have been lost in some electronic neverland. And the length of foreclosure would be stretched out even longer.
How could banks foreclose without employees to do the work and retrieve the collateral documents?
Walking away is an economic decision. And so is living for free. Few walk away until the bank actually forecloses, so living for free is a given. As you say, it’s collateral damage.
There isn’t much the government can do but to “lessen the pain”.
Its heartening to see that government policy is now moving in the direction of dealing with the moral hazards.
http://news.yahoo.com/s/afp/20100330/pl_afp/usgovernmentregulatebankingvolcker_20100330181050?source=patrick.netMarch 31, 2010 at 12:20 PM #533861Guest[quote=jpinpb]
As far as I’m concerned, I’m more upset w/the government than the people walking. As soon as the government mentioned bailout, they were setting up this situation. It was a given that anyone upside-down would walk.
[/quote][quote=jpinpb]
I think of it as collateral undamage. As a consequence of them not paying their mortgage, they have “extra” income to spend. All these people who are not paying, and there’s a whole lot of them, are going out to dinners and shopping, etc. Consuming. Which pretty much is a major source that drives our economy.[/quote]I understand your frustration at to why the government hasn’t stepped in to rectify the situation promptly or allowed the market to self-correct.
But the mistakes of the past cannot be easily corrected.
I felt the same as you do, but upon further reflection, I’ve come to the realization that the bailouts were necessary.
What would have happened had the correction been allowed to occur unabated without government bailout?
Some areas are down 50%. If those areas were allowed to drop 80%. What would the walking-away and living-for-free rates be?
I can guarantee you that if Carmel Valley dropped 50% to 60%, the walk away rate would skyrocket.
If banks were allowed to fail, leaving employees, depositors and contractors to fend for themselves, the loans portfolios would have been lost in some electronic neverland. And the length of foreclosure would be stretched out even longer.
How could banks foreclose without employees to do the work and retrieve the collateral documents?
Walking away is an economic decision. And so is living for free. Few walk away until the bank actually forecloses, so living for free is a given. As you say, it’s collateral damage.
There isn’t much the government can do but to “lessen the pain”.
Its heartening to see that government policy is now moving in the direction of dealing with the moral hazards.
http://news.yahoo.com/s/afp/20100330/pl_afp/usgovernmentregulatebankingvolcker_20100330181050?source=patrick.netMarch 31, 2010 at 12:20 PM #534314Guest[quote=jpinpb]
As far as I’m concerned, I’m more upset w/the government than the people walking. As soon as the government mentioned bailout, they were setting up this situation. It was a given that anyone upside-down would walk.
[/quote][quote=jpinpb]
I think of it as collateral undamage. As a consequence of them not paying their mortgage, they have “extra” income to spend. All these people who are not paying, and there’s a whole lot of them, are going out to dinners and shopping, etc. Consuming. Which pretty much is a major source that drives our economy.[/quote]I understand your frustration at to why the government hasn’t stepped in to rectify the situation promptly or allowed the market to self-correct.
But the mistakes of the past cannot be easily corrected.
I felt the same as you do, but upon further reflection, I’ve come to the realization that the bailouts were necessary.
What would have happened had the correction been allowed to occur unabated without government bailout?
Some areas are down 50%. If those areas were allowed to drop 80%. What would the walking-away and living-for-free rates be?
I can guarantee you that if Carmel Valley dropped 50% to 60%, the walk away rate would skyrocket.
If banks were allowed to fail, leaving employees, depositors and contractors to fend for themselves, the loans portfolios would have been lost in some electronic neverland. And the length of foreclosure would be stretched out even longer.
How could banks foreclose without employees to do the work and retrieve the collateral documents?
Walking away is an economic decision. And so is living for free. Few walk away until the bank actually forecloses, so living for free is a given. As you say, it’s collateral damage.
There isn’t much the government can do but to “lessen the pain”.
Its heartening to see that government policy is now moving in the direction of dealing with the moral hazards.
http://news.yahoo.com/s/afp/20100330/pl_afp/usgovernmentregulatebankingvolcker_20100330181050?source=patrick.netMarch 31, 2010 at 12:20 PM #534412Guest[quote=jpinpb]
As far as I’m concerned, I’m more upset w/the government than the people walking. As soon as the government mentioned bailout, they were setting up this situation. It was a given that anyone upside-down would walk.
[/quote][quote=jpinpb]
I think of it as collateral undamage. As a consequence of them not paying their mortgage, they have “extra” income to spend. All these people who are not paying, and there’s a whole lot of them, are going out to dinners and shopping, etc. Consuming. Which pretty much is a major source that drives our economy.[/quote]I understand your frustration at to why the government hasn’t stepped in to rectify the situation promptly or allowed the market to self-correct.
But the mistakes of the past cannot be easily corrected.
I felt the same as you do, but upon further reflection, I’ve come to the realization that the bailouts were necessary.
What would have happened had the correction been allowed to occur unabated without government bailout?
Some areas are down 50%. If those areas were allowed to drop 80%. What would the walking-away and living-for-free rates be?
I can guarantee you that if Carmel Valley dropped 50% to 60%, the walk away rate would skyrocket.
If banks were allowed to fail, leaving employees, depositors and contractors to fend for themselves, the loans portfolios would have been lost in some electronic neverland. And the length of foreclosure would be stretched out even longer.
How could banks foreclose without employees to do the work and retrieve the collateral documents?
Walking away is an economic decision. And so is living for free. Few walk away until the bank actually forecloses, so living for free is a given. As you say, it’s collateral damage.
There isn’t much the government can do but to “lessen the pain”.
Its heartening to see that government policy is now moving in the direction of dealing with the moral hazards.
http://news.yahoo.com/s/afp/20100330/pl_afp/usgovernmentregulatebankingvolcker_20100330181050?source=patrick.netMarch 31, 2010 at 12:20 PM #534674Guest[quote=jpinpb]
As far as I’m concerned, I’m more upset w/the government than the people walking. As soon as the government mentioned bailout, they were setting up this situation. It was a given that anyone upside-down would walk.
[/quote][quote=jpinpb]
I think of it as collateral undamage. As a consequence of them not paying their mortgage, they have “extra” income to spend. All these people who are not paying, and there’s a whole lot of them, are going out to dinners and shopping, etc. Consuming. Which pretty much is a major source that drives our economy.[/quote]I understand your frustration at to why the government hasn’t stepped in to rectify the situation promptly or allowed the market to self-correct.
But the mistakes of the past cannot be easily corrected.
I felt the same as you do, but upon further reflection, I’ve come to the realization that the bailouts were necessary.
What would have happened had the correction been allowed to occur unabated without government bailout?
Some areas are down 50%. If those areas were allowed to drop 80%. What would the walking-away and living-for-free rates be?
I can guarantee you that if Carmel Valley dropped 50% to 60%, the walk away rate would skyrocket.
If banks were allowed to fail, leaving employees, depositors and contractors to fend for themselves, the loans portfolios would have been lost in some electronic neverland. And the length of foreclosure would be stretched out even longer.
How could banks foreclose without employees to do the work and retrieve the collateral documents?
Walking away is an economic decision. And so is living for free. Few walk away until the bank actually forecloses, so living for free is a given. As you say, it’s collateral damage.
There isn’t much the government can do but to “lessen the pain”.
Its heartening to see that government policy is now moving in the direction of dealing with the moral hazards.
http://news.yahoo.com/s/afp/20100330/pl_afp/usgovernmentregulatebankingvolcker_20100330181050?source=patrick.netMarch 31, 2010 at 2:03 PM #533759(former)FormerSanDiegan
Participant[quote=briansd1][quote=FormerSanDiegan]
I gave up making sense of it when in a single thread there was a point made that our economy country runs on debt and a point made that debt repayment adds nothing to the economy.
I figure that I am simply too dense to understand.[/quote]
FSD, look at the context of my responses.
I never said that debt repayment adds nothing to the economy. I was responding to a comment by jpinpb who suggested that if people don’t pay their mortgages and spend the money they save, they are helping immediately the economy.
In this situation, it’s just coincidental that the more money spent up front, now, the bigger the immediate boost to the economy. It’s a short term boost.
I’m not saying that debt payment avoidance should be economic policy either. As you rightly pointed out, in the longer term that would be a problem. Banks would lack capital to lend and people who relied on the money would have to cut back.[/quote]
I guess I misinterpreted your statment that “debt repayment does not contribute to economic activity” as “debt repayment adds nothing to the economy”
I should have interpreted it as “debt repayment adds nothing to economic activity”
So, replace “the economy” with “economic activity” and my point still stands.
In fact there can be short-term negative impacts to people not paying their mortgages. Consider the impact of those who stopped making payments back in 2007 because their subprime mortgage reset. Even though those folks got a free ride for at least 3-6 months, the overall short-term impact to economic activity was negative.
I think jpinpb made a compelling argument from a microeconomic viewpoint which may not hold up in the macro sense, because the overall economy has feedbacks and other complexities.
March 31, 2010 at 2:03 PM #533886Participant[quote=briansd1][quote=FormerSanDiegan]
I gave up making sense of it when in a single thread there was a point made that our economy country runs on debt and a point made that debt repayment adds nothing to the economy.
I figure that I am simply too dense to understand.[/quote]
FSD, look at the context of my responses.
I never said that debt repayment adds nothing to the economy. I was responding to a comment by jpinpb who suggested that if people don’t pay their mortgages and spend the money they save, they are helping immediately the economy.
In this situation, it’s just coincidental that the more money spent up front, now, the bigger the immediate boost to the economy. It’s a short term boost.
I’m not saying that debt payment avoidance should be economic policy either. As you rightly pointed out, in the longer term that would be a problem. Banks would lack capital to lend and people who relied on the money would have to cut back.[/quote]
I guess I misinterpreted your statment that “debt repayment does not contribute to economic activity” as “debt repayment adds nothing to the economy”
I should have interpreted it as “debt repayment adds nothing to economic activity”
So, replace “the economy” with “economic activity” and my point still stands.
In fact there can be short-term negative impacts to people not paying their mortgages. Consider the impact of those who stopped making payments back in 2007 because their subprime mortgage reset. Even though those folks got a free ride for at least 3-6 months, the overall short-term impact to economic activity was negative.
I think jpinpb made a compelling argument from a microeconomic viewpoint which may not hold up in the macro sense, because the overall economy has feedbacks and other complexities.
March 31, 2010 at 2:03 PM #534339Participant[quote=briansd1][quote=FormerSanDiegan]
I gave up making sense of it when in a single thread there was a point made that our economy country runs on debt and a point made that debt repayment adds nothing to the economy.
I figure that I am simply too dense to understand.[/quote]
FSD, look at the context of my responses.
I never said that debt repayment adds nothing to the economy. I was responding to a comment by jpinpb who suggested that if people don’t pay their mortgages and spend the money they save, they are helping immediately the economy.
In this situation, it’s just coincidental that the more money spent up front, now, the bigger the immediate boost to the economy. It’s a short term boost.
I’m not saying that debt payment avoidance should be economic policy either. As you rightly pointed out, in the longer term that would be a problem. Banks would lack capital to lend and people who relied on the money would have to cut back.[/quote]
I guess I misinterpreted your statment that “debt repayment does not contribute to economic activity” as “debt repayment adds nothing to the economy”
I should have interpreted it as “debt repayment adds nothing to economic activity”
So, replace “the economy” with “economic activity” and my point still stands.
In fact there can be short-term negative impacts to people not paying their mortgages. Consider the impact of those who stopped making payments back in 2007 because their subprime mortgage reset. Even though those folks got a free ride for at least 3-6 months, the overall short-term impact to economic activity was negative.
I think jpinpb made a compelling argument from a microeconomic viewpoint which may not hold up in the macro sense, because the overall economy has feedbacks and other complexities.
March 31, 2010 at 2:03 PM #534437Participant[quote=briansd1][quote=FormerSanDiegan]
I gave up making sense of it when in a single thread there was a point made that our economy country runs on debt and a point made that debt repayment adds nothing to the economy.
I figure that I am simply too dense to understand.[/quote]
FSD, look at the context of my responses.
I never said that debt repayment adds nothing to the economy. I was responding to a comment by jpinpb who suggested that if people don’t pay their mortgages and spend the money they save, they are helping immediately the economy.
In this situation, it’s just coincidental that the more money spent up front, now, the bigger the immediate boost to the economy. It’s a short term boost.
I’m not saying that debt payment avoidance should be economic policy either. As you rightly pointed out, in the longer term that would be a problem. Banks would lack capital to lend and people who relied on the money would have to cut back.[/quote]
I guess I misinterpreted your statment that “debt repayment does not contribute to economic activity” as “debt repayment adds nothing to the economy”
I should have interpreted it as “debt repayment adds nothing to economic activity”
So, replace “the economy” with “economic activity” and my point still stands.
In fact there can be short-term negative impacts to people not paying their mortgages. Consider the impact of those who stopped making payments back in 2007 because their subprime mortgage reset. Even though those folks got a free ride for at least 3-6 months, the overall short-term impact to economic activity was negative.
I think jpinpb made a compelling argument from a microeconomic viewpoint which may not hold up in the macro sense, because the overall economy has feedbacks and other complexities.
March 31, 2010 at 2:03 PM #534699Participant[quote=briansd1][quote=FormerSanDiegan]
I gave up making sense of it when in a single thread there was a point made that our economy country runs on debt and a point made that debt repayment adds nothing to the economy.
I figure that I am simply too dense to understand.[/quote]
FSD, look at the context of my responses.
I never said that debt repayment adds nothing to the economy. I was responding to a comment by jpinpb who suggested that if people don’t pay their mortgages and spend the money they save, they are helping immediately the economy.
In this situation, it’s just coincidental that the more money spent up front, now, the bigger the immediate boost to the economy. It’s a short term boost.
I’m not saying that debt payment avoidance should be economic policy either. As you rightly pointed out, in the longer term that would be a problem. Banks would lack capital to lend and people who relied on the money would have to cut back.[/quote]
I guess I misinterpreted your statment that “debt repayment does not contribute to economic activity” as “debt repayment adds nothing to the economy”
I should have interpreted it as “debt repayment adds nothing to economic activity”
So, replace “the economy” with “economic activity” and my point still stands.
In fact there can be short-term negative impacts to people not paying their mortgages. Consider the impact of those who stopped making payments back in 2007 because their subprime mortgage reset. Even though those folks got a free ride for at least 3-6 months, the overall short-term impact to economic activity was negative.
I think jpinpb made a compelling argument from a microeconomic viewpoint which may not hold up in the macro sense, because the overall economy has feedbacks and other complexities.
March 31, 2010 at 2:11 PM #533768ParticipantOn another note, I do not fault BillS78 (whether real or a troll) for operating in what he perceives to be his own self-interest.
March 31, 2010 at 2:11 PM #533895ParticipantOn another note, I do not fault BillS78 (whether real or a troll) for operating in what he perceives to be his own self-interest.
March 31, 2010 at 2:11 PM #534350ParticipantOn another note, I do not fault BillS78 (whether real or a troll) for operating in what he perceives to be his own self-interest.
March 31, 2010 at 2:11 PM #534446ParticipantOn another note, I do not fault BillS78 (whether real or a troll) for operating in what he perceives to be his own self-interest.
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