Lifelines, bailouts...and some of you (and me). thoughts?

[NRaleighLiberal]

We were listening to Marketplace on NPR yesterday and they were discussing some possibilities with regard to the housing and credit market. One idea that was tossed around was to drastically reduce interest rates, and in some cases, principle, on house loads. They said that for example moving to a 3% annual interest rate - and chopping tens of thousands of dollars off of the principle.

Those ideas had an odd effect on my wife and I. We've always paid all of our bills on time - of course we are fortunate that I've had a good job that allowed us to. We've never gone in over our heads - we keep our purchases minimal, don't run up any credit card debt. This year I was laid off from my job and find myself unemployed at the age of 52, with 8 years still to pay on our house. It is pretty frightening, to tell the truth.

We are also social liberals, and we realize that there are many who through either no fault of their own, or shady deals being pushed on them from banks or brokers, need a hand, and we tend to be generous with helping people out.

But my knee jerk reaction when I heard about a possibility of just converting bad loans and big balances to very favorable terms, to allow people to keep their homes - was, what about us? What about people who work hard, used common sense, played by the rules - but where is the help to us - a better rate, a lowered principal?

I am just tossing ideas around in my head and am sure the dialogue will move on - but it did really help to hit home what an incredible mess we are in, and we do wonder how we will climb out of it. Obama will be able to do many great things, but there are some huge realities facing him....there is no way he isn't going to piss off quite a few people during his presidency as he fights to do the right, and intelligent, things.

Thoughts? Anyone else been through the thought process we are going through?

[amdezurik]

1. wouldn't that conversion help you too?

And when you think about it, tossing a lifeline to those who are drowning around you may also help you a bit...

[NRaleighLiberal]

5. Agree - and I always toss lifelines to those that need it. thanks for your comments -

as I said, it is a conversation I am having in my brain at the moment, so I am sharing knee jerk reactions.

[amdezurik]

11. FYI I was honestly curious

I am a renter and if it could help the property owners not jack my rent up 200% next year i am all for it! :)

[Tansy_Gold]

2. Consider this

You were lucky for a while and then you got unlucky.

I was lucky for a while and then I got unlucky -- my husband died suddenly and we had never been "lucky" enough to prepare for that.

The first thing you need to jettison is your self-righteousness. Yeah, there may be some people who get a little more than you get in any kind of "bail-out," but maybe you've had more all along than they ever had the opportunity to have. Consider all the privileges you have, the advantages you were born with and didn't ever have to earn.

Are you white? Are you male? Are you a native speaker of English? Are you heterosexual? Did you grow up in a two-parent household?

Did your parents have the means to give you an advanced education or at least support you in various ways so you could at least stay in high school and then go to college? Was education even considered important in your family?

Do you come from a long line of home-owners? Did you have family experience to lean on when you were making financial decisions? Did you have family assistance in making major financial decisions such as buying a car or a house or choosing a job? Did you have family connections to get you into a good school or a good job?

If and when the dunderheads running/ruining our economy realize that the key isn't bailouts, the situation should improve for everyone. How long it will take is anyone's guess. In the meantime, try not to be jealous of people who have a lot less than you do.



Tansy Gold

[NRaleighLiberal]

7. Thanks Tansy - your post is just the type of dialogue I hoped to stimulate in this thread.

I could go point by point through your list -there are some yesses and some noes. It has been quite a year - loss of the job, loss of 4 close family members, one of my children going through a few struggles. But I agree with you - my wife and I each day confirm to how blessed/fortunate we've been through the years, which helps us to get through life's challenges.

Your last point - to tell the truth, I've never really been jealous of anyone! Just thinking out loud in this post...that is all.

[Tansy_Gold]

13. And consider this, too

I'm a reasonably intelligent person. I have a college education, even an advanced degree.

Yet I barely averted having my power turned off today because I'm behind on my bills.

I'm not proud of this. Pride kept me from admitting the problem and seeking other solutions, and pride has kept me putting a brave face on life, especially when I'm around people whom I know to have far more financial resources (as well as more petty gripes) than I.

I say this because there is a tendency -- yes, even here on DU -- to think that those who have financial problems are in their pickle because of their own laziness or stupidity or profligacy or whatever, when the truth may very well be that hey, they just didn't have the breaks someone else did. They don't have a wealthy brother to hit up for a couple hundred bucks or a rich uncle or a spouse with a rich ex-wife who's willing to tide them over.

That's why I said don't be jealous of those who have less than you. Don't whine that they're getting something (with the implication that they really don't deserve it) and you're not or not getting as much. Think instead of all the benefits and advantages you've had over the course of your 50+ years.

I'm angry today. I'm angry a little bit at myself but I'm really angry at this system. Really angry. Because like you I played by the rules. But I still didn't get the breaks other people did. And I'm tired of having to defend "the disadvantaged."






Tansy Gold

[ben_meyers]

3. You are absolutely right

the unintended consequence of renegotiation, debt reduction and the like will be more and more people saying to themselves screw it, I want mine too.

Those of us who naively did the right and responsible thing might be tempted to just throw up our hands and quit paying our bills and wait for the bailout.

I'll be damned if I'm going to watch my neighbors get relief and start buying toys again while I'm trying to keep up with my obligations.

[Turbineguy]

4. The lesson from this is:

This is what you get when you put Republicans in charge.

The regulations put in place as a result of the Great Depression were to stop this sort of downward spiral from ever starting.

In addition to the $2 trillion of money from the government, equity holders in the markets have lost another $9 trillion. People who were looking for a modest retirement are having to rethink. This has not just hit people who have lost their homes. A lot of millionaires have lost huge amounts in the investments made possible by repub deregulation.

The complexity of this is incredible with the number of people involved with different and possibly opposing agendas.

In the end, the higher the ultimate cost, the more clear the message will be. We need more people like you why cry out "Hey! What do I get?. I did the right thing!"

[Demobrat]

6. It's hard not to feel that way

after watching people pull equity out of their homes and spend it on vacations and cars - and then walk away when the bills came due. But - I have no problem with reconfiguring loans to help people stay in their homes - as long as the help is limited to purchase loans on primary residences only. If you refinanced and took cash out you had the use of the money and should pay it back. If the payment on your first loan just doubled - sure, cut the interest rate, extend the term, whatever it takes. These decisions need to be made on a case by case basis.

[NRaleighLiberal]

8. I like your point about case by case basis, rather than blanket solutions which

are so easily gamed.

[ben_meyers]

9. Case by case is fine, but at what point do you renegotiate?

So you go through the trouble and expense of a debt forgiveness and renegotiation of terms and 6 months later you are upside down again. Housing values are dropping 15-20% a quarter, are you willing to predict a bottom now?

One inconvenient little truth in the housing industry is that the largest population bubble (baby boomers) are now at an age where they are wanting to downsize in their housing needs. The kids are gone and they want to pull the equity for retirement. Who are they going to sell all those 4 br 2ba 3ga w/pool/spa and media/rm to? Housing has a long way to fall yet, how do you calculate a L/V ratio when you have a moving target.

[Demobrat]

12. The problem isn't really that people are upside-down.

The problem is that they can't make their payments. So you reconfigure the loan without changing the loan amount. That means you lower the rate or lengthen the term, or both. If the borrower owes more than the home is worth it's really only a problem if they want to sell. So this would work only for people who bought homes to live in - not investors. But that's who deserves help, IMO anyway. Investors are another story.

[Mike 03]

10. Like you, I've been fortunate and frugal

I'm not that focused on the unfairness of the program--what perpexes me that it has turned from a noble effort into another band-aid series of measures to prolongue the inevitable. By now turning out attention to the credit card companies, we are making it possible for them to originate more loans to people who will probably accrue even more debt.

The emphasis of the program totally was transformed this morning from a sensible idea into an all out effort to get consumers to keep consuming. My opinion is that consumers need to stop consuming, but so much of our GDP is now dependent upon us buying things that this would result in a (probably global) contraction, and they are now trying to avoid this at all costs.

I think it's a very bad idea.

[Tansy_Gold]

14. Consumers need jobs.

why is no one addressing this?

[NRaleighLiberal]

15. Bingo - that is the key - right now neither my wife, me or our two daughters have decent or any jobs

we will not get out of this mess unless the job situation improves.

[Tansy_Gold]

16. and that's why all the bail-outs will ultimately fail

They (The Powers that Be) aren't addressing the problem, and what they're doing is actually making the situation worse.

But they aren't listening to me.