I am really agnry about the stock market

[question everything]

For the past several years, many of us, on DU, in newspapers, in the news were talking about the creative mortgages. We knew that at some point this would explode.

We blamed the borrowers but mostly the lenders and the brokers who promised the skies to people who wanted to own their own homes; believed Bush's "ownership society." Even the ones who were warned, hoped that a better job, or a promotion would come around before the new payments would become due.

And it was clear even then, that once the bubble would burst, that not only the borrowers would be affected. These mortgages are sold and bought and it was clear that the impact would spread.

But no one would do anything and it finally came.

And don't think that you are not affected if you do not invest in the stock market.

If you have any retirement funds, either in 401K, IRA, or employer provided one; if you carry insurance - life, home, car - you are affected.

So now we hear about financial institutions tightening their guidelines. Where were they in 2004 and 2005 and 2006?

[Donnachaidh]

1. they were busy lining their pockets and contributing to republicans silly!

Far too busy going through the Hammacher Schlemmer catalogs for toys to pay attention. What the hell did it have to do with THEM? It's the little guy who'll bite the big one on this.

[poverlay]

2. I actually heard Maria Bartiromo just mention that no one could have imagined this

sort of instability in the market and I just about sprayed milk out of my nose. At least I would have if I had been drinking milk...

Note to self:
Get some milk...

[question everything]

4. And she is supposed to be the expert?

I am glad I did not see this. I would have grabbed the TV and throw it out..

[Double T]

5. MB is a GIANT CORPORATE SHILL A-HOLE!

[tabasco]

29. Of course she is. That's why she's on the telescreen.

The corporate media doesn't do objectivity.

[Virginia Dare]

6. Nope, nobody could have imagined it...

like nobody could have imagined a hurrican hitting New Orleans, and Condi Rich couldn't have imagined airplanes being flown into buildings. These people have terrible imaginations don't they?:eyes:

[wryter2000]

16. No one could have anticipated

Is she stupid, or does she think I'm stupid?

[Jackpine Radical]

18. That's it--that's the fundamental Republican psychiatric disorder.

A lack of imagination. Like Condi couldn't imagine that anybody would fly a plane into a building, and the Neocons couldn't imagine that the exuberant Iraqis wouldn't greet us with rose petals to strew in our path...

Bullshit. Every one of these things was foreseen. The neocons knew they were starting a hundred years' war, and chose to do it because chaos fit their plans. Condi not only knew about the possibility, but at the very least LIHOP. And the impending Wall Street tribulations are just one more scheme to defraud the American public.

To quote Charles Fort (Book of the Damned, for you too young to remember it), "We are owned. We are cattle."

[rodeodance]

20. I think LAZY, GREEDY people when I hear that phase.

[WorseBeforeBetter]

22. You have GOT to be kidding me.

I've been spouting off about this for years. The people who play by the rules, live within their means, and don't let greed rule their lives are getting screwed.

As I type this, two commercials just ran for 0% financing (Chevy and a crappy local furniture store) through 2009. How quaint that my parents taught me not to buy it unless I could afford it, and to use credit cards only for emergencies. Ha ha.

You might want to stock up on some other things besides milk. Between crumbling infrastructure, financial markets imploding, Cheney gunnin' for Eye-ran, and Dim Son taking off to Australia two days earlier than planned, I get the sickening feeling that something pretty horrendous is in store. But I'm no Chertoff. ;-)

[yardwork]

32. If I hear one more idiot talking head paid-off White House shill say

"nobody could have imagined..." something that 90% of us have been jumping up and down saying for years I am truly going to shoot the nearest TV.

[Matariki]

3. I could be hopelessly naive, but....

wouldn't it have been to the benefit of all these sub-prime lenders to simply refinance those loans at a reasonable rate? I mean wouldn't many people have been less likely to default if their loans hadn't suddenly raised by hundreds of dollars a month?

[Double T]

8. And give up the opportunity to SCREW the HELL out of the consumer????

Not in our life!!!

[Horse with no Name]

10. Except if they did that

They lose their insane profits and have no chance at a government bailout on the bad paper they created.
Oh...and they still have the houses...just none of those pesky families living in them.
They'll finance those at reasonable prices to qualified buyers.

[question everything]

11. The rates went up quickly

and for them to settle on a "reasonable rate" would have hurt both.

Also, I suspect, that it first started with a few delinquent loans and then it spread like an avalanche. For example, buyers with good credit can still get good loans, however they are waiting for prices to fall.

At first people thought that they would just sell their homes if they could not pay but as so many did the same and with mortgage rate rising there were too many housed and not enough buyers and it just detriorated.

Plus, many lenders no longer own the loans that they initiated so the loans became lost in a mass of commodity.

[BlooInBloo]

7. Irresponsible lending, irresponsible borrowing.

[CountAllVotes]

15. yep, that is it

If you can't afford it, you can't afford it. So you borrow a bunch of money that you can't realistically afford to pay back and then they repossess you house.

Oh well ...

[BlooInBloo]

21. Yup. Chickens coming home to roost...

... Unfortunately, the lenders have a get-out-of-jail-free card in the government - so they can AFFORD to be irresponsible. You would think that the borrowers, who have no such card, would look after their own well-being a bit better.

[WorseBeforeBetter]

31. You would think...

but many don't seem to grasp the basic concept of variable v. fixed, let alone risk.

There's plenty of blame to go around on this, and I'll add Corporate Media (cable TV shows) to what you stated above. Somehow, many Americans think they're suffering if they don't have $100K dream kitchens. Celebrity glorification as well. I worked with college students who could barely pay their rent, yet they had to have $300 sunglasses and $20 martinis. How? Plastic.

My attitude toward many of these people is "you brought this shit on yourselves, so tough," but unfortunately, they're bringing others down with them.

[BlooInBloo]

33. Yuppers. Apple-tinis and sushi for all of my indigent friends! lol!

[nini]

9. I took my 401k out of stocks when W was 're-elected'

and I'm damned glad I did. I knew this was coming.


:grr:

[question everything]

13. Our 401Ks and IRAs performed well until recently

and one of them I did manage to move some into money market fund.

[nini]

17. yea.. I probably lost a bit.. but my peace of mind meant more and still does

I simply do not trust that admin and their careless spending, etc..

[question everything]

40. I don't turst the adminsitration either

for social security to be around, so making sure that our 401Ks and IRAs grow is important. But it is important to watch them carefully and as we grow older to shift to safer but with smaller return funds. Certainly keeping all the funds in saving account will not even beat inflation.

Whenever I read about how new scientific findings can make people live longer I think: and how will we support ourselves for this longevity?

[northzax]

12. honestly?

because it was mostly foreign money being invested, and that incoming cash was the only thing keeping the dollar afloat and interest rates anywhere close to affordable. Given that, no one wants to turn off the spigot. With the hundreds of billions of dollars being made outside the US, all that money has to go somewhere, and the most transparent place to invest (still) is the US. Foreign money was buying bundled mortgages, propping up real estate in New York, DC, Miami and LA, and funding the Private Equity boom. All that apparent stability lead to increased foreign investment in Treasury Bills, keeping interest rates down for the government.

who wants to be the one to tell the rest of the world they are investing in a chimera?

[question everything]

24. Actually all that foreign investment kept the government afloat

after all, this is what allows them to keep increasing the deficit, while selling IOUs to foreign investors.

I don't think that the low interest rates per se that are behind what is happening. Rather, the creative financing.

I think that many of us refinanced in the past few years, but we did for a standard 30 yr fixed mortgage, or with well defined variables. The problem was with the "interest only" loans that enticed so many and that, yes, even "experts" said that it could be appropriate for certain buyers.

And then there was another "expert" who claimed that anyone who has his house free and clear is a "fool" since this asset can be refinanced and the proceeds invested.

And the sad reality is that whenever prices are going up - of houses or of stock - more people want to jump into the game, feeling suckered for not doing so just as it was... in 1929.

[northzax]

35. actually, in many cases

having too much equity in your house is not the best financial plan you can have, for a couple of reasons. First, if your interest rate is fairly low, you can almost always outperform that in other investments, especially when you take the mortgage tax deduction into count, (if you qualify) I know many people who, with the mortgage tax deduction, are in reality paying about 3.5-4% on their mortgages, in real terms. you can beat that with a good savings account, over 30 years, historically, you are almost (almost) certain to beat that in the stock market.

say, in an idealized case, you took $150,000 worth of equity out of your house with a mortgage at 6.5%. your payments are $948.10. Your annual payment is $11,377.22. The first year, your interest costs are $9700.64. if that's your only deduction, you subtract the standard deduction of $6400 and clear $3300.64 on the deduction alone. Say you put that $150,000 into an interest bearing savings account paying 4.5% (available at ING.com, for instance) after 12 months, that account is worth $156,890.97, it paid interest of $6,890.97. you subtract the $3300.64 deduction, and you are now paying taxes on $3590.33 of additional income. put it at the 35% rate, roughly, you increase your tax burden by $1,256 on income of $6,891, or 18%. If you had simply saved that same money, in the same account, you would have had to pay a higher tax rate, without the added deduction.

[question everything]

43. Facinating analysis, but I lost the conclusion

Are you saying that the additional deduction of $3300.64 - from the mortgage interest - beats the additional tax of $1,256 of the interest earned from the saving account?

The way I look at having the house free and clear, though, is as people are getting close to retirement, with a more limited income, that not having a mortgage payment can make life easier. I don't know that we will achieve this goal but at least are trying with adding to the principal with each monthly payment.

[northzax]

46. yes, in the first year

you make roughly equivalent money on both, but you get a higher deduction on the mortgage money, due to interest payments, so your tax burden on the equivalent income is significantly lower. Would you rather pay 35% tax or 18% tax? And then compounding makes the mortgage plan pay even higher returns, even as your interest deduction diminishes.

and obviously, this is not an investment strategy for just anyone, but then no investment strategy is for everyone, right? it's a long term deal, for people with 10-15 years, minimum, of expected income coming forward, and who have this type of equity in their house in the first place. it's especially valuable for anyone who might assume another form of debt, instead of the mortgage (student loans for the kids, etc) Talk to your financial advisor for more details. Static assets are not always the best plan.

[Robson]

14. And the big money will expect the government to bail them out again

Of course it was expected. That's why they the corporate big money and banks revised the bankruptcy laws for individuals several years ago. They knew the bubble would break and they wanted to be assured that the debtors wil become indentured servants.

But they didn't touch corporate bankruptcy laws that have hurt shareholders and taxpaying Americans while making CEOs and the private equity folks that pick up the pieces for penneys on the dollar very wealthy.

For anyone with an ounce of common sense you could see the results of such lax credit.

[northzax]

36. and they are

the Fed is now apparently buying mortgage backed securities: http://delong.typepad.com/sdj/2007/08/the-fed-is-buyi.html

[lazer47]

19. I don't want anyone one to get hurt, However

the best thing that can happen to this ill based economy is for the stock market to right itself out of this delusional trend that has been super imposed by fake money.

[Greyhound]

23. All of this, and far more to come, is the direct result of Raygun's "deregulation"

of the finance industries. Every safeguard put in place after the "Crash of '29" was removed in order to recreate the opportunity for massive looting by insiders.

We ain't seen nothin' yet...:scared:

[Warpy]

25. It's worse elsewhere

I just tuned into a bit of the English language newscast from Germany, and it's been a real bloodbath on their exchange. He talked about panicky investors leaving the market in droves.

We're nowhere near a panic in real estate or in the market, which is above 13,000 still.

If creditors overreact, we may soon be in a panic situation, but that's a big "if."

Brokerages and funds are taking huge hits right now. Just be careful out there, it's a cold world.

[karlrschneider]

26. Don't be agnry, get hpaay!

:evilgrin:

[Zywiec]

27. The market isn't for people with weak stomachs

If you're in for the long term, you should probably not pay any attention to the recent turbulence. After all, I believe the DOW is still up over 6% for the year.

If you panic about every little up and down, it's best you keep your money under the mattress.

[question everything]

41. But that's the problem

It does affect everyone, even those who are not in the market.

First of all, if you are saving in IRA or in 401K - and you should! - you are affected.

If you rely on your employer's pension fund - you may be affected.

And if you carry any type of insurance you can be affected since insurance companies do invest.

No, personally I do not worry. Yet. As you say, the market is still up 6% for the year. But I am angry that it got to this point and it should not have been as so many of us - non economists - could foresee this.

[tammywammy]

45. And we're still in a bull market

Bull markets go up slowly over time with quick downs. Like this week, quick downs, but it's still up overall. The market hasn't peaked yet in this cycle. :shrug:

[Common Sense Party]

28. Angry about the stock market?

Why get angry about something over which you have no control? And something which goes up and down quite capriciously?

Every few years, a new bunch of suckers get swindled by a new bunch of sheisters.

In the long run, it all shakes out, and "the market" will keep chugging along.

[screembloodymurder]

30. What's really scary is the idea that money market funds

could be affected. Imagine your MMF going down 25% in one day due to bad debts.

[Warren Stupidity]

34. Hopefully you learned to diversify.

If you have a large 401K and it is all in stocks you are being way too risky with your retirement savings.

[Zywiec]

37. That depends on when you're going to retire

I'm sure you'll agree that the investment strategy for a 20 year old is different than for a 50 year old.

[Warren Stupidity]

38. A 20 year old is unlikely to have a large 401k

But even if he does, a 100% stocks protfolio is way too much risk for me. Yes of course age matters.

[SoCalDem]

39. where were they? making bank-runs with all the loot they were skimming

Don't forget.. Baby boomers are starting to retire.. They are preparing to start REMOVING money from their investments..gotta have it to live on.. If the money's not THERE, they cannot take it..get it?

Stealing an empty piggy bank gets you nothing..

[question everything]

42. Right. I was not alarmed in 1987

since I knew that our investments would rebound. Was not even alarmed in 2002 when the value of our 401Ks and IRAs took a tumble. But as we are getting older and closer to retirement such volatility can make us nervous.

But what makes me angry is that all of this was expected by "regular folks" and the greed still continued.

And I feel bad for all the employees who were hired to help with the processing of all the mortgage applications and now are the first to lose their jobs while the CEOs, of course, will have their golden parachutes. And when so many people in one community lose their jobs it does have a ripple effect, we all know that.

[SoCalDem]

47. The only good thing going for the 401-k's, is that if the stock market

tumbles a LOT, hopefully most people will have maxxed out their contribution so the boss' share matched theirs, and in a big loss, they will at least recoup their own money, if not their boss' matching amont as well..

Nothing like having your own money given back to you after decades of earning zero interest, eh?

[librechik]

44. No problem. Now the vuktures can sweep in and buy up all our houses

for pennies on the dollar.

Then they'll wait comfortably in their mansions for the market to recover and sell em back to us at PREMIUM rates. It's the eighties all aver again. Except nowadays it's the mutual funds that own the mortgages, not the savings and loans.

Great scam for rich hedge funders like the Bushes and their buddies. Those are crocodile tears you're seeing when they talk about how unfortunate the situation is. They're licking their chops.