[SGVLUG] OT: housing and bear stearns

Tue Mar 18 10:04:12 PST 2008

Good question.  I heard a news report last week (CBS I think) that stated
that a large percentage of those poor people who are currently going through
foreclosure are speculators who used other people's money to purchase
properties and are just walking away from them now that the value is upside
down.  These are the people our tax dollars are going to bail out?

Matt

From: sgvlug-bounces at sgvlug.net [mailto:sgvlug-bounces at sgvlug.net] On Behalf
Of Zack, James
Sent: Tuesday, March 18, 2008 10:14 AM
To: SGVLUG Discussion List.
Subject: RE: [SGVLUG] OT: housing and bear stearns

We bought our place last fall and are perfectly happy.  We bought in
Alhambra near SouthPas, we got a good deal on the place (about 10k below
similar units in the area).  The price we paid has held pretty much over the
last few months.  I think the real problem areas are those long commuter
communities, the 909 if you will, that will have the biggest drops in home
values.  I never thought those houses out there were worth what people were
shelling out for them to begin with.  We might take a loss short term on our
place but we would be happy living here for 10+ years so no complaints here.

Personally, I don't think we should be bailing anyone out, banks or people.
What sort of lesson does that send?  If we bail out all those who got into
those situations, what benefit is there for those of us who are responsible?
I'll take another stim check  :)

  _____  

From: sgvlug-bounces at sgvlug.net [mailto:sgvlug-bounces at sgvlug.net] On Behalf
Of Miguel Hernandez
Sent: Tuesday, March 18, 2008 10:04 AM
To: SGVLUG Discussion List.; sgvlug at sgvlug.org
Subject: Re: [SGVLUG] OT: housing and bear stearns

Yea, it's a bad omen looming on the horizon. Too many key things were done
incorrectly, imho. You had banks & banking institutions pushing sub-prime
loans on people who qualified for the better loans. That sounds odd until
you find out that the banks didn't care because if (when) people defaulted,
they could re-sell that debt on wall street. Adding insult to injury to the
beleaguered consumer was that the government went to the aid of the banking
institutions (partially understandable as the banks are a large part of the
economic backbone), not the folks who lost their homes or are still stuck in
bad loans.

I feel bad for those who bought recently, as Matti said. :(

--miguel

On Mon, Mar 17, 2008 at 6:28 PM, David Lawyer <dave at lafn.org> wrote:

On Mon, Mar 17, 2008 at 01:45:08PM -0700, matti wrote:
> Hi,
>
> this is off topic...

[snip]

> I'm guessing we will see what some people like to politely call a
> "market adjustment" is coming to the socal housing prices as credit
> tightens and some more banks fail
>
> glad I didn't buy a house in the last year or 2...

This is part of a much larger problem: possible financial collapse of
the U.S. gov't but it may be years away.  With the gov't bailing out
companies who took undue risk, it may wind up that the gov't itself
can't keep going into debt anymore and has to go thru default itself.
No country has every gone into debt as much as the US (including all
forms of debt such as private debt) and not suffered financial
collapse.  It used to be that a way to default was via hyperinflation
so as to make the real value of debts nearly worthless.  Old postage
stamps of Russia and Germany illustrate hyperinflation.  In Germany in
the 1920's it took billions of Marks to buy some of the postage stamps
(in my stamp collection) when inflation hit it's peak.  But now the
U.S gov't has issued a lot of debt in "inflation protected securities"
that can't be made to go away via hyperinflation.  The only way to
default on this debt is just to not pay it back.

So while house prices in real terms may drop, in term of dollars they
may hyperinflate along with hyperinflation of everything else.  If you
would like to read some hyperbole (that is often humorous) on these
and related problems  see Kunstler's (author of "The Long Emergency")
site:
http://jameshowardkunstler.typepad.com/clusterfuck_nation/2007/12/forecast-f
or-20.html

Linux both helps and hurts our current account balance of trade.  It
hurts since it reduces the monopoly profits that MS can bring into the
U.S. from other countries.  But at the same time, the fact that Linux
was mainly a U.S. phenomena helps improve the public opinion the U.S.
worldwide and this may help the U.S. get more sympathetic treatment in
economic matters.  For example, will the oil trade switch to euros
from dollars?  Iran has already switched and wants others to do so
also.  Iran may win this since outside of Linux (and some other
things), world public opinion of the US is pretty low, and the Bear
Stearns bailout (and related gov't loans of "liquidity" to Wall
Street, etc.) makes it worse resulting in a falling value of dollar
which leads to inflation as the prices of imported goods rise.

I wrote about the problem of free trade years ago and did
nothing for years with what I wrote.  It's now on my website and while
I've added to it but it's not up-to-date.  Many of the things I
predicted are happening now, but others predicted the same (see
the list of books on the subject).
http://www.lafn.org/~dave/gov/collapse.html
<http://www.lafn.org/%7Edave/gov/collapse.html> 
                       David Lawyer

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