Why America will not work.

I don't buy it.

It takes a huge amount of political clout to push through something like a major bailout. I seriously doubt that any individuals or companies could ever donate (bribe) enough people to get such legislation passed. There's no way they went into the game planning to buy their way out. They went in planning to win, but weren't smart enough to understand how badly they had screwed up. When it all fell apart, they got lucky.

They may be smart, but they are still idiots. And they are not good capitalists.

Warren Buffet didn't get wealthy by buying political favors. He got wealthy by being a good capitalist, and learning everything there was to learn about every company he ever invested in, and making wise long term decisions.

Some people get wealthy in other ways. Doesn't make them good capitalists. Makes them lucky.

SVreX wrote: Some of you are mistaking "profiteering" for "capitalism". She is a profiteer, not a capitalist. If she were a good capitalist, she would have first done a better job analyzing the situation, understanding her exposure, getting MUCH better counsel, and recognizing a better reason to buy into the investment then, " ...like, 'Wow, you know, I need to have a home...before I'm 40". OK, so did she learn anything?

http://www.investopedia.com/terms/c/capitalism.asp

Being a capitalist dosen't mean you have good acumen or make good deals. It means that the market regulates itself through supply, demand, competition, and a bunch of other stuff you can read about above.

I believe that she is a being a good capitalist by backing out of this deal. She owes $200k more than the house is currently worth, paying more for something than it is worth is insane. So she's leaving.

What did she learn? Tons. She learned a great deal about making good and bad deals. She learned about doing research before walking into a situation.

This discussion is worthless. We're all trying to mix our moral compasses with a purely business decision. While it has been proven that businesses that do the right thing generally do well, it has also been proven that the only moral compass anyone in business needs is the $

The problem here is the lack of responsibility. As has been pointed out, the woman "bought" the house with 0 down. She made a poor decision buying a house at the peak of the market. I called the peak. I told my parents in the PRC to sell their place and rent for a couple years in '07. They didn't want to. This woman bought at the peak. Now, strictly from a personal finance point, I can see the advantage to her for walking out. As long as she isn't in New Jersey, there's not much they can do to her after the fact. She stops paying now, lives in the house 10 months rent free, moves. That's a lot of change in her pocket. She is scamming, stealing, etc., from society, no doubt, and takes zero responsibility for her prior poor decisions.

However, the Clinton's put in place the laws requiring/allowing the zero down loans and undermined the whole banking system doing it. Blame Uncle Bill. Uncle Bill was also at the helm during the last banking fiasco, AKA "The Savings and Loan Disaster."

I hear "capitalist" and "good businessman" thrown about a lot. "Thief" is not capitalism or good business, but some people don't understand the difference.

Oh, and the current world ruler, Mr. Soros, made his money by betting on one currency versus another, then (my theorizing here, evidence is rather difficult to come by) paying off the politicians on both sides to make the market go that way. Now, after raping all of us, he tells us what to do and we are going to live the socialism he has envisioned. All that from a career that started out pushing Jews onto the trains to the gas chambers. I guess he's done really well for himself, huh?

ignorant wrote: I believe that she is a being a good capitalist by backing out of this deal. She owes $200k more than the house is currently worth, paying more for something than it is worth is insane. So she's leaving.

I am still going to be a stickler on one point there... she isn't paying more for something than it's worth. She is paying off a loan. The loan is worth X - the bank doesn't call her back and demand more if the house increases in value - nor should anyone care if it decreases in value. It doesn't work this way with any other loan situation (cars, education) why should housing be any different?

Other than that, I completely agree, it's worthless to discuss this with you.

Dr. Hess wrote: The problem here is the lack of responsibility. As has been pointed out, the woman "bought" the house with 0 down. She made a poor decision buying a house at the peak of the market. I called the peak. I told my parents in the PRC to sell their place and rent for a couple years in '07. They didn't want to. This woman bought at the peak. Now, strictly from a personal finance point, I can see the advantage to her for walking out. As long as she isn't in New Jersey, there's not much they can do to her after the fact. She stops paying now, lives in the house 10 months rent free, moves. That's a lot of change in her pocket. She is scamming, stealing, etc., from society, no doubt, and takes zero responsibility for her prior poor decisions. However, the Clinton's put in place the laws requiring/allowing the zero down loans and undermined the whole banking system doing it. Blame Uncle Bill. Uncle Bill was also at the helm during the last banking fiasco, AKA "The Savings and Loan Disaster." I hear "capitalist" and "good businessman" thrown about a lot. "Thief" is not capitalism or good business, but some people don't understand the difference. Oh, and the current world ruler, Mr. Soros, made his money by betting on one currency versus another, then (my theorizing here, evidence is rather difficult to come by) paying off the politicians on both sides to make the market go that way. Now, after raping all of us, he tells us what to do and we are going to live the socialism he has envisioned. All that from a career that started out pushing Jews onto the trains to the gas chambers. I guess he's done really well for himself, huh?

preach it, brother

Jake wrote: I hope she bought a reliable car before embarking on this scheme, she won't be able to take a loan out to buy a new one any time soon. "Oh wait, aren't you that lady who walked away from her house? I don't think we want to take a risk on you. Sorry."

2 things here... 1: a woman I work with (for ~ 8 yrs) has walked away from at least 3 and maybe 4 car loans since I've known her, ya she has lousy credit, but still gets a new loan a few month later when things are a little better for her...

which just tells me that if you're willing to settle for something not so new, bad credit doesn't stop a car loan...

2: I'm sure plenty of people here can help educate me... first I don't own a home (I'll inherit sometime) but my needed education revolves around what a mortgage is....

If I understand correctly, I negotiate with a lending institution and they give me money to purchase a home, I use the value of that home to guarantee that loan... so if I fail to make the agreed upon payments they will evict me and take my home... correct ?

Nowhere in that agreement does it specify what constitutes acceptable reasons for non payment... correct ?

It seems to me the only 2 things that keep me making payments 1: is my wanting to live in that house and 2: my own sense of worth and integrity.

Now none of the above says anything about what I think of her, but I really can't see where she's broken any laws... and this day-n-age that seems more important to most people than what's actually right...

ignorant wrote: . We're all trying to mix our moral compasses with a purely business decision.

That's exactly what any good businessperson will do; follow their moral compass. Ever notice the Bernie Madoffs are in the minority?

ignorant wrote: While it has been proven that businesses that do the right thing generally do well, it has also been proven that the only moral compass anyone in business needs is the $

You need to get your nose out of the books and go spend a few years in a real life sales position. I'll save you a lot of time and give you the short version: you might screw a few people up front making purely $ based decisions and actually make some pretty good money while doing so, but believe me some of them will find out. Then they tell a BUNCH of their friends how bad they got shafted. Next thing you know the whole town knows what you did and how you conduct business, your clientele is gone and along with that your paycheck.

You want a big example? The Arthur Andersen acounting scandals. One of the biggest accounting firms on the globe went belly up due to hinky bookkeeping in a rather small percentage of their contracts and those clients who weren't part of that took off running. IIRC PriceWaterhouse bought the remains of AA for next to nothing.

THERE is reality.

That woman signed a contract and, just like Dr Hess said, is taking advantage of the current situation to weasel out of her obligations. Yes, I said weasel because that's what she is. She bought a $465,000 house betting it would go up or at least stay stable, it didn't. I have seen plenty of situations where someone bought a pricey car they KNEW they really couldn't afford, they get behind on the payments and it suddenly gets totaled or stolen and burnt. If you get caught that's called 'fraud' but if you walk into the dealership and throw the keys on the sales counter (called a 'voluntary repo') it's okay? I think not. It's just as sleazy.

Call me naive, but I agree. My parents hammered respect and responsibility into me while growing up. Getting ahead isn't the point, the journey is.

When are y'all heading to Galt's gulch? Meet you on the train... if it's still running.

The train's running on tracks of Reardon Steel, Les. If things don't turn around in '10, and I don't mean some BS economic indicators, it's gonna get real ewe-ga-ly here.

My money's on Hank. That's if I have any left. Up here... the multi-generational unemployed, unwashed and uninspired are taking over.

I do agree that what she is doing is wrong. An honest man pays his debts if he can afford to. The only thing that I am pointing out is that if the guys who own the bank are crooked she can justify being crooked as well. It's pretty hard to tell your kid he shouldn't smoke pot when you are pointing to him with one hand and the other hand is holding a syringe filled with heroin.

GlennS wrote: I wonder what the average % of income a person spends on owning a house is today compared to say the 60's. I wouldnt be surprised if its doubled or more.

I actually studied this pretty deeply in a statistics class that I took in my MBA program. In 1975 the median house cost 3.0X what the median income was. By 2005, the median house cost 4.5X what the median income was.

Dave, (OH GOD, ANOTHER MBA, HELP US ALL!!!!), what was the interest rate on that home in 1975? Can you say two percent? Also, what is "median income?" Is it for the household? In 1975, that would be the daddy, as the mommy stayed home and raised the young'ens. By 2005, that mommy was "liberated" to work for The Man. Yeah, burn them bras and get a job. Or something. So, now, both parents have to work, interest rates are double (down from a peak of 7x during Carter), house costs are up and the bankers need bailouts.

Snowdoggie, yes, the bankers are ripping us off. Just because everyone else is a thief, it doesn't make thieving right. Unless you're in politics, where it is the norm.

Jensenman wrote:

ignorant wrote: . We're all trying to mix our moral compasses with a purely business decision.

That's exactly what any good businessperson will do; follow their moral compass. Ever notice the Bernie Madoffs are in the minority?

ignorant wrote: While it has been proven that businesses that do the right thing generally do well, it has also been proven that the only moral compass anyone in business needs is the $

You need to get your nose out of the books and go spend a few years in a real life sales position. I'll save you a lot of time and give you the short version: you might screw a few people up front making purely $ based decisions and actually make some pretty good money while doing so, but believe me some of them will find out. Then they tell a BUNCH of their friends how bad they got shafted. Next thing you know the whole town knows what you did and how you conduct business, your clientele is gone and along with that your paycheck. You want a big example? The Arthur Andersen acounting scandals. One of the biggest accounting firms on the globe went belly up due to hinky bookkeeping in a rather small percentage of their contracts and those clients who weren't part of that took off running. IIRC PriceWaterhouse bought the remains of AA for next to nothing. THERE is reality.

Accounting is pretty cut and dry. There are laws and if you break those laws you lose your license to be an accountant or you can even be on the hook for fraud. What about the guys who are speculating on credit default swaps. It's an unregulated field and the risks are unknowable. The guys on Wall Street who make these create their own reality. These had more to do with our latest financial meltdown than people like the woman who is walking away from a 400K mortgage.

What about the commodities speculators who drove up oil prices to $4 a gallon, using foreign markets not subject to US regulation. They did more damage to our economy than people walking away from mortgages and of course we can't touch them. They might just do it again this year. Again they are creating their own reality apart from the laws of supply and demand.

The difference between the Wall Street high rollers and the guys who depend on repeat sales to the same customers is that they don't have to worry about a bad reputation because they made enough screwing their customers the first time to retire on.

Do you guys really think the robber barons became wealthy because they were nice?!

Sure, they honored a deal...as long as it was profitable.

Dr. Hess wrote: The train's running on tracks of Reardon Steel, Les. If things don't turn around in '10, and I don't mean some BS economic indicators, it's gonna get real ewe-ga-ly here.

Uh oh. Looks like Cuffy Meigs and Mr. Thompson built a collectivist train that blows everything Taggert Transcontinental has right into the weeds. I hear it runs on tracks made from the steel of melted down Pintos and Gremlins that we sold them real cheap.

http://uk.biz.yahoo.com/28122009/399/chinese-high-speed-train-sets-new-record.html

Yeah. I got my Masters in Business from Ski-U

I agree with the prevailing sentiment that the woman is a dirtbag. If you owe something, you should pay it.

However, I also think she's an ignorant and/or stupid dirtbag. "Efficient breach" (what we lawyers call this sort of thing) only works if breaching the contract is more economically beneficial than performing under the contract. I'd be surprised if that's the case here. Putting aside the credit problems (which are surmountable), the mortgage almost certainly includes personal liability for the shortfall. Moreover, most states allow garnishment of wages. I think she will likely come to regret this decision.

She'd be much smarter to negotiate a short sale with the lender that includes a personal release. The lender would be crazy not to play ball because they stand to lose more if it goes to foreclosure. She might have to put some money into the deal, but she'd be off the hook when it's done. I don't think that's going to be the case for her now.

(Good grief, I sound like Dave Ramsey.)

Incidentally, this sort of thing went on a lot in Houston after the oil bust in the early 80s. It was more sensible then because in addition to property values collapsing so did interest rates, meaning people who bought at the peak were getting doubly screwed. Moreover, Texas has fairly generous judgment exemptions and as a general rule doesn't allow wage garnishment. Thus, it wasn't worth it for the bank to go after the deadbeats.

Dr. Hess wrote: Dave, (OH GOD, ANOTHER MBA, HELP US ALL!!!!), what was the interest rate on that home in 1975? Can you say two percent? Also, what is "median income?" Is it for the household? In 1975, that would be the daddy, as the mommy stayed home and raised the young'ens. By 2005, that mommy was "liberated" to work for The Man. Yeah, burn them bras and get a job. Or something. So, now, both parents have to work, interest rates are double (down from a peak of 7x during Carter), house costs are up and the bankers need bailouts. Snowdoggie, yes, the bankers are ripping us off. Just because everyone else is a thief, it doesn't make thieving right. Unless you're in politics, where it is the norm.

I don't know if it's true, but it looks like the intrest rate in 1975 was 7-10 percent, it peaked at 21.5 in 1980. That's just a chart I found, I'm not sure if I'm reading it right. I remember my parents saying the paid like 22 percent interest on their first house, which I think was when I was just being born in 1979.

Joey

It's Joeys iPhone.

John Brown wrote: It's Joeys iPhone.

I blame Canada...the only thing we get from them is bad weather

Jensenman wrote: Then they tell a BUNCH of their friends how bad they got shafted. Next thing you know the whole town knows what you did and how you conduct business, your clientele is gone and along with that your paycheck.

a company I worked for many yrs ago sent even us techs to their sales classes, and one thing I always will remember from those classes is that " a PO'ed customer will tell a hundred different people while a satisfied customer will tell a dozen....

4cylndrfury wrote:

John Brown wrote: It's Joeys iPhone.

I blame Canada...the only thing we get from them is bad weather

oh and socialist health care reform

(runs and hides)

sorry theres already enough bottom dwelling fish flying around in this thread

So where do we put the Gulch? And who rigs up the fancy optics screen thing? I'm there.

Hurray for a new page! My eyes hurt reading the screwed up format.

Jensenman Et all;

You guys sure are looking for a fight.

When you run a business the idea is to continue the business as a profitable concern indefinitely. If a company routinely screws its customers or does illegal/underhanded things constantly, They wil find themselves out of business or scrambling for a new business model after the US court system gets through with them.

The actions of Arthur Andersen (sp?) and Enron were entirely short sighted. Their business is now non-existent or they are defunct. Bad business practices are like steroids for a body builder. They get your instant results that everyone loves, but causes major health problems down the line. People who ignore the long term consequences of their actions are idiots and horrible capitalists.

Lets see some examples of what I meant by companies doing right by the world......

Timberland Stonyfield Yogurt Green Mountain Coffee 1st Solar BP Solar Ben and Jerrys (before they sold out to Unilever) Toms of Maine ( before they sold out to Colgate, even though they still operate independantly) Honest Tea ( before they sold out to Coke)

I'll ignore all the pointed attacks that blatantly attack my schooling or current position. I once worked for a CEO who hated MBA's and booked learned engineers. So all the booked learned people eventually left. Since they all left the company has stopped it's 45 year profit growth and is now stagnating in a sea of waste, poor marketing practices, and bad acquisitions.

got any more questions PM me..