Riots in the streets 2008-2013 style.

[fathertime]

People think I am crazy, but I always say that the "car culture" of the US is one of the biggest cancers of this country. And I love cars. But wow, look around. It is absolutely nuts how much money is wasted on cars, gas, insurance, tags, upkeep. Almost every one of my employees have shot themselves in the foot for the next 4-5 years with car purchases. They are virtually financially paralyzed at this time.

i'm going to have to agree with these thoughts regarding cars...when our decline gets worse, i can see our car lifestyle change bigtime....most people don't need large cars...more people should be using motorcycles, it just makes sense....why is it necessary for a single person to drive a large SUV to work?...sure it is comfy, but a motorcycle/scooter gets you there on about 1/4 the gasoline usage...they may be one of those sacrifices many people will have to make


Fathertime!

[fathertime]

there is little doubt in my mind that colleges in the format they are currently running under, are a scam to enrich the colleges, the employees, and the loan providers...there are many people that would be better served to get to work soon after high school...now so many people have college degrees that we are suffering from 'education inflation'   jobs that shouldn't require a college education now require one because it is a way to weed out otherwise good applicants....


student loans for 100k are just another way to enslave people...i definitely think young students are being preyed upon...what the hell do they know, they are only 18 and think they are doing the right thing.





Fathertime!

[benjio]

there is little doubt in my mind that colleges in the format they are currently running under, are a scam to enrich the colleges, the employees, and the loan providers...there are many people that would be better served to get to work soon after high school...now so many people have college degrees that we are suffering from 'education inflation'   jobs that shouldn't require a college education now require one because it is a way to weed out otherwise good applicants....


student loans for 100k are just another way to enslave people...i definitely think young students are being preyed upon...what the hell do they know, they are only 18 and think they are doing the right thing.
 

Fathertime!

Excellent points FT and I fully agree. I tell high school graduates all the time that if they don't have a true desire to get a college degree, there are tons of other opportunities out there. When things started to get really bad a few years back, all of my friends with bachelors and masters degrees were being laid off, while my friends that had gotten trades straight out of high school (mechanics, welders, electricians, machinist, etc.) were doing better than ever.

[Researcher]

   It looks like the unemployment number has dropped to 9.1% from 9.2%.But it seems that is due to .1% gave up looking for jobs.

     Researcher

[Alabamaboy!]

   It looks like the unemployment number has dropped to 9.1% from 9.2%.But it seems that is due to .1% gave up looking for jobs.

     Researcher

I am almost positive the government is lying about this number to prevent further global economic meltdown. I don't see hardly anything in the papers about anyone hiring, but you see every day massive labor cuts, shut downs, etc, all across the country, and across almost all sectors.

[Alabamaboy!]

i'm going to have to agree with these thoughts regarding cars...when our decline gets worse, i can see our car lifestyle change bigtime....most people don't need large cars...more people should be using motorcycles, it just makes sense....why is it necessary for a single person to drive a large SUV to work?...sure it is comfy, but a motorcycle/scooter gets you there on about 1/4 the gasoline usage...they may be one of those sacrifices many people will have to make


Fathertime!

I am watching a lot more tv lately while trying to stay out of trouble until my wife gets here. . A couple shows I like are: "Anthony Bourdain, No Reservations" and "International Home Hunters". It really shows how gluttonous we are as a country when you see all these other countries using mass transit, walking, cycling, using motorcycles, etc. Then you look at us here in the States. I am in one of the most economically hard hit areas of the country and most houses have 3 or more vehicles. They cannot even fit them in their garages!!!! And many of them do not even have jobs. It is a very sick phenomenon that you just don't tend to see anywhere else in the world. And then our country drags the rest of the world down the toilet because of our greed, wastefulness, and outright arrogance. Sure we do a lot of good to provide charity or whatever to other countries, but it is all a scam. A shell game. We cannot even wipe our own ass economically but we are going to give money to Pakistan, Saudis, Israel, any number of countries? That is insane. I mean it is one thing to put factories up in their countries, do joint projects, normal business like things, but to just hand out money.....while we are putting the tab on our Mastercard bill (generations of our children's backs), is absurd.

I hope the stock market has a 50% correction and the whole country gets a slap in the face wake up call before it is too late. There are too many people with their heads in the sand. And I can only hope that with the continued spread of the internet, that more information will be released regarding the absurdities that are happening in this country and that people either do something about it or vote for someone who will.

At the rate we are amassing debt, we are getting close to the point of no return. There are going to be no countries left to do a bailout of anyone. We are dragging down the rest of the world.

I think this is still just the beginning.

I thought Brazil could at least get out of this mess alive, but I don't know. I don't think they will have enough of a middle class consumer base to buy the things they produce. The previously gluttonous US, Europe, Japan will not have enough  cash to buy much of anything very soon, because all cash will be used to service the national debt in one form or another.

[Colgando]

These are good points also worth mentioning, Colgando. But the fact remains, these loans cannot be written off and must be paid back sooner or later. And a graduate can carry these things around for years and years and years ... and all while the interest clock is ticking. Ít's very sad, IMO; because being in debt to that extent is stifling to ambitious and creative efforts it takes to make a fulfilling lifestyle. It wears you down and steals your soul. But there is a better way... take the community college route I mentioned a few posts up ... put off the buying a house for a few years ... get married at the courthouse ... and for god's sake ... buy a used car! Buying a new car on an entry level salary is lethal. I am floored when I hear about some of these people making $500 / month car payments for 5-6 years and are flat broke. It just doesn't make sense.

Hey Euf: I agree with what you are saying, just pushing back against the notion that student loans are similar to mortgage loans and thereby will become another catastrophic bubble burst. A $100,000 loan could probably come in at payments of $700 or so dollars a month, someone with a job could pay that back and they will not be able to get credit for any other large purchases carrying this amount of debt until they do, I think most college students would elect to pay it back, gnashing their teeth while they do it. Purely looking at this from a Finance perspective with my comment. Sure, there are better options than running up $100,000 in debt for a college degree. I had $10,000 in debt when I finished undergrad and went to community college for free with grants in North Carolina and working 25 hours a week as a cashier at the grocery store, I then transferred to the University after I received my 2 year college transfer associate degree. I recommend this path to high school students.

[Colgando]

Colgando, do you know who Brooksley Born is? She was the chairperson of the CTFC from 1996 to 1999.She wanted to be able to monitor off exchange market for derivatives because they were basically unregulated and secretive. She warned that this could cause potential problems and was told to stop pushing the issue. Larry Summers told her that if she didn't stop she would cause the biggest economic crisis since the end of WWII. So she stopped. Now we've had the biggest economic crisis since the Great Depression.

    You say that investment bankers don't deserve blame for the mortgage mess but Alan Greenspan disagrees with you.Here is a quote from a wikipedia article:


"In Congressional testimony on October 23, 2008, Greenspan finally conceded error on regulation. The New York Times wrote, "a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending. ... Mr. Greenspan refused to accept blame for the crisis but acknowledged that his belief in deregulation had been shaken." Although many Republican lawmakers tried to blame the housing bubble on Fannie Mae and Freddie Mac, Greenspan placed far more blame on Wall Street for bundling subprime mortgages into securities."

  Here is an article that this reference was based on:

http://www.nytimes.com/2008/10/24/business economy/24panel.html

    Surely there is enough blame to go around but the size of the mess was fueled by the global demand for these mortgage backed securities that were created so there was a push for more and more of them.But if you really get down to it the government failed to regulate or at least oversee this situation. Too much regulation is very bad because it stifles the free market. No regulation is bad because of situations like the mortgage crisis can happen. I think a "hands off by the government" policy is the best but the government at least needs to be aware of what is going on or we'll end up with more of the same bubbles that we have had.

   Researcher

Hey Rese: Note that I said I agree that Investment Bankers were a part of the problem. Interesting, Greenspan did not take any responsibility for the easy monetary policy he promoted, which spurred record low interest rates and made it easier to borrow money, for everybody in the economy, banks and consumers.


Just pushing back against people who want to blame the fat cats on wall street only, personally, I take issue with the real estate appraisers and real estate agents who helped to drive up the prices, and of coarse, in-sufficient regulation that allowed companies to sell these exploding mortgages to people, sub-prime product, no income verification products, no asset verification products, option to pay mortgages etc. I also look to greedy consumers whose eyes were bigger than their wallet. Sure, Wall Street did provide demand for these assets, so that is a part of the problem. You can also look to investors in the bond market who loaned investment banks money to fund these MBS, greedy, even when the numbers did not support these business models, see Lehman brothers, their creditors are getting pennies on the dollar on the money they loaned Lehman Brothers. There are many people that made billions shorting the mortgage industry, so it was possible to see through the bad numbers on this.

[Colgando]

Student loans are a racket run by and for the benefit of both those providing the product and those providing the financing......If the vendors (colleges) weren't so positive that their customers (students) could borrow $100,000 to finance their product, then their product surely wouldn't cost $100,000, it could only cost how much the students have access to through savings, part time employment or scholarships..........not how much the usurers are willing to lend them.

Current system works great for both the colleges, who can (and do) inflate their prices to consume all available money and those providing the money, with government guarantees and no discharge through bankruptcy protecting them.......doesn't work too awfully well for the students.

Be that as it may, in reference to the Seeking Arrangement article, a word or two to Ms. Jennifer and her ilk: No matter how thin you slice it, it's still bologna, and no matter if you spend your earnings on college expenses, your mother's health care or opium, it's still prostitution and you are a whore.

Well, it is a free country, if someone is going to borrow that kind of money to go to college, then that is on them, I am not shedding any tears for these students. That kind of money is not worth it unless someone goes to a top 10 school in their chosen degree program. IMO, the only College brands worth that kind of money are top 10 schools otherwise, going to a state school seems to be a more economical option.

[Colgando]

I am watching a lot more tv lately while trying to stay out of trouble until my wife gets here. . A couple shows I like are: "Anthony Bourdain, No Reservations" and "International Home Hunters". It really shows how gluttonous we are as a country when you see all these other countries using mass transit, walking, cycling, using motorcycles, etc. Then you look at us here in the States. I am in one of the most economically hard hit areas of the country and most houses have 3 or more vehicles. They cannot even fit them in their garages!!!! And many of them do not even have jobs. It is a very sick phenomenon that you just don't tend to see anywhere else in the world. And then our country drags the rest of the world down the toilet because of our greed, wastefulness, and outright arrogance. Sure we do a lot of good to provide charity or whatever to other countries, but it is all a scam. A shell game. We cannot even wipe our own ass economically but we are going to give money to Pakistan, Saudis, Israel, any number of countries? That is insane. I mean it is one thing to put factories up in their countries, do joint projects, normal business like things, but to just hand out money.....while we are putting the tab on our Mastercard bill (generations of our children's backs), is absurd.

I hope the stock market has a 50% correction and the whole country gets a slap in the face wake up call before it is too late. There are too many people with their heads in the sand. And I can only hope that with the continued spread of the internet, that more information will be released regarding the absurdities that are happening in this country and that people either do something about it or vote for someone who will.

At the rate we are amassing debt, we are getting close to the point of no return. There are going to be no countries left to do a bailout of anyone. We are dragging down the rest of the world.

I think this is still just the beginning.

I thought Brazil could at least get out of this mess alive, but I don't know. I don't think they will have enough of a middle class consumer base to buy the things they produce. The previously gluttonous US, Europe, Japan will not have enough  cash to buy much of anything very soon, because all cash will be used to service the national debt in one form or another.

Well AB, some of the fundamentals are headwinds to your position. There is $8 trillion or so in cash sitting on balance sheets of companies globally. Corporate America is very healthy, that is the reason the markets have run up to the point they are at now, healthy corporate profit cycle. Stocks are cheap from a valuation perspective. We are in uncharted territory and fear is gripping the global economy. Lots of headwinds right now, if corporate america was not so cash strapped, we would already be in a double dip recession heading to a depression with all capitalist on the sidelines. Good support levels right now in the markets with balance sheet strength. Decent job number today relatively speaking, still terrible though in the big scheme of things.


If the ECB cannot get its act together, if Ben Bernanke and the Fed make a mis-step, we would be in for a world of hurt, big time. Right now, it sucks to be unemployed, low skilled, pro-longed unemployment in the US is to be expected I think. If you look at the Private Sector, non-farm job adds in July, they were 150,000, that numbers needs to get up to an average of 200,000 a month.


And yes, the biggest headwind right now is uncertainty, terrible uncertainty, people are not putting excess cash to work right now. Broken, divided govt in the US without a clear position on tax, fiscal, trade and economic policy, the Euro Zone with terrible debt problems with the central Bank not seeming to understand the severity of the situation, although I read today they are buying some of the bad debt. Hopefully, we will muddle along until the 2012 election, maybe the american people will elect a unified govt, maybe the ECB will get its act together, if these things do not happen, the US or the Euro Zone could drag the rest of the world into a global recession. The rest of the world is not quite strong enough yet to survive without a strong US and Euro Zone economic powers.

[Colgando]

Woah, if S&P downgrades the US credit rating, hold on to your seats, it will be pandemonium in the economy.

[euforia51]

Sure, there are better options than running up $100,000 in debt for a college degree. I had $10,000 in debt when I finished undergrad and went to community college for free with grants in North Carolina and working 25 hours a week as a cashier at the grocery store, I then transferred to the University after I received my 2 year college transfer associate degree. I recommend this path to high school students.

Excellent ... you did the very thing I was talking about AND you worked a part time job at a grocery store! This seems like a fabulous plan to me and I'm surprised this option isn't brought to the surface and written about more often. Oh wait ... I do know why ... because the damn media at large wants to make headlines and shock value with horror stories of our young and hopeless drowning in 100K student loan debt.

[fathertime]

Woah, if S&P downgrades the US credit rating, hold on to your seats, it will be pandemonium in the economy.

Well we were just downgraded, so lets see what affect it has.   I must say our nation damn well deserved it.


Fathertime! 

[euforia51]

I also look to greedy consumers whose eyes were bigger than their wallet.

I can tell you I've done a lot of stupid things over the years but buying too much house wasn't one of them, thankfully. I'll be honest, my house is nice but I'm embarrassed of the neighborhood I live in ... lots of rentals, lots of foreclosures, and with people who generally don't have any pride and could give a crap about curb appeal. But on the upside, I've got a serious shot at paying this thing off in 5 more years if I buckle down hard enough. So that is plenty of incentive to tolerate a little riff-raff.
 
I remember one of my coworkers early on who had bought a house, sitting there with a beer in his hand after 4 or 5 already trying to sell me on the fact that once you buy a house, you can get a HELOC and I quote "write yourself a check" on top of that ... and that's when the real money starts rolling in.  He was apparently oblivious to the fact that you had to pay it back some time? To this day, I remember that conversation. And am ecstatic that I never did such a thing.
 
Having credit was marketed to us like snake oil that would get you laid, get you ripped, get you drunk, get you sober, make you happy, make you rich, and most of all, make you matter. And the larger the credit line, the more powerful and successful you would be. And for that reason alone, every damn one of the agencies, fat cats, investment bankers, brokers, and other pit vipers who made a contribution to this mess, no matter where they worked or for what bank or company committed an unforgivable sin. But ultimately when it's all said and done, the responsibility lies with the consumer for not following the age-old saying "buyer beware". Nobody held a gun to their head and forced them to buy the McMansion on an ARM. But they sure made it a difficult proposition to resist...

[Colgando]

Well we were just downgraded, so lets see what affect it has.   I must say our nation damn well deserved it.


Fathertime!

Yeah man, I read S&P is reconsidering after the administration challenged their numbers saying S&P was off by trillions. I doubt S&P was, anyway we look at it, we owe so much money, promised so much money, I do not even think the next generations could pay it off the way the world is headed.

[euforia51]

why is it necessary for a single person to drive a large SUV to work?...sure it is comfy, but a motorcycle/scooter gets you there on about 1/4 the gasoline usage...they may be one of those sacrifices many people will have to make

Way ahead of you there, FT. Í'm seeing big savings with driving my SUV to work just once a week vs. riding the motorcycle 4 days a week even with all of its pitfalls ... summer heat ... idiots texting while they're driving ... etc. It's hard to argue with 40 MPG.

[Colgando]

I can tell you I've done a lot of stupid things over the years but buying too much house wasn't one of them, thankfully. I'll be honest, my house is nice but I'm embarrassed of the neighborhood I live in ... lots of rentals, lots of foreclosures, and with people who generally don't have any pride and could give a crap about curb appeal. But on the upside, I've got a serious shot at paying this thing off in 5 more years if I buckle down hard enough. So that is plenty of incentive to tolerate a little riff-raff.
 
I remember one of my coworkers early on who had bought a house, sitting there with a beer in his hand after 4 or 5 already trying to sell me on the fact that once you buy a house, you can get a HELOC and I quote "write yourself a check" on top of that ... and that's when the real money starts rolling in.  He was apparently oblivious to the fact that you had to pay it back some time? To this day, I remember that conversation. And am ecstatic that I never did such a thing.
 
Having credit was marketed to us like snake oil that would get you laid, get you ripped, get you drunk, get you sober, make you happy, make you rich, and most of all, make you matter. And the larger the credit line, the more powerful and successful you would be. And for that reason alone, every damn one of the agencies, fat cats, investment bankers, brokers, and other pit vipers who made a contribution to this mess, no matter where they worked or for what bank or company committed an unforgivable sin. But ultimately when it's all said and done, the responsibility lies with the consumer for not following the age-old saying "buyer beware". Nobody held a gun to their head and forced them to buy the McMansion on an ARM. But they sure made it a difficult proposition to resist...

Exactly, using houses as ATMs, nuts, yep, hard to resist for some people.


I bought a house right out of college, it is rented out now, thankfully. Got some tax savings from having it, but I wish I could dump it now. I bought it in 2006 right out of college, got a standard loan, 5.35% interest, 1st time home buyer mortgage, got some equity, I am holding on to it now, might make a few grand on it one day, or I may have to dump it, price it to sell. My tenants have paid every month for the past 3 years and they show no signs of wanting to move. They have bad credit, so they cannot buy, they make good income, $100,000 for the household, it is a good family, friendly neighborhood with good schools, they get a good rental rate, I hope they stay for another 2 or 3 years and I can cash out for a nice chunk of change. They are paying down my mortgage right now, kinda like a savings account with my house with my tenants making the deposits.

[euforia51]

Well we were just downgraded, so lets see what affect it has.   I must say our nation damn well deserved it.

I'm going to go out on a limb here because I don't know enough about world finances, but I suspect the downgrade is just another talking point to get the population feeling more helpless and pissed off than they already are. And this will be another much to do about nothing. There's no doubt we are in trouble and we had better get our sh*t together, and quick.
 
There's an old saying by a funny guy that says ... don't smoke more dope when you're already high. You'll just run out of dope quicker. I say that after hearing and reading this morning that "the Great 500 point drop in the market yesterday was a "crash". Hello! A crash?!?! Like the same crash that triggered the Great Depression? I don't know about you guys, but I woke up this morning and went to work like every other responsible person. And I certainly didn't feel like I was involved in a "crash" and I really didn't feel like I wanted to participate in a "crash" with it being Friday and all ... so I just said "No". 

[Colgando]

I'm going to go out on a limb here because I don't know enough about world finances, but I suspect the downgrade is just another talking point to get the population feeling more helpless and pissed off than they already are. And this will be another much to do about nothing. There's no doubt we are in trouble and we had better get our sh*t together, and quick.
 
There's an old saying by a funny guy that says ... don't smoke more dope when you're already high. You'll just run out of dope quicker. I say that after hearing and reading this morning that "the Great 500 point drop in the market yesterday was a "crash". Hello! A crash?!?! Like the same crash that triggered the Great Depression? I don't know about you guys, but I woke up this morning and went to work like every other responsible person. And I certainly didn't feel like I was involved in a "crash" and I really didn't feel like I wanted to participate in a "crash" with it being Friday and all ... so I just said "No". 

Actually, the downgrade is significant in the world of finance. Although the rating agencies are not that credible but nonetheless, their ratings still play a role in investment policies.

[michaelb]

Woah, if S&P downgrades the US credit rating, hold on to your seats, it will be pandemonium in the economy.

They just did.

[Colgando]

They just did.

My office is going to suck on Monday.....


Big sigh.....good thing it is summer and most wealthy people are on vacation not thinking about their portfolios, well, they will be thinking about it now if they weren't before....

[euforia51]

Actually, the downgrade is significant in the world of finance. Although the rating agencies are not that credible but nonetheless, their ratings still play a role in investment policies.

Colgando, you know better than I. But if the downgrade is anything like a FICO score, and maybe it isn't, I call BS. A FICO score is how well you manage debt; and nothing more. It is not an indicator of wealth, it is not an indicator that you are a good person despite the marketing hype and baloney they are feeding us, and perhaps the biggest misconception is a millionaire with the integrity of a saint will most likely have a FICO score of zero because millionaires don't have (or need) debt unless they're idiots.
 
We will sit back and see what happens. But I without a doubt suspect there will be more whirlwinds of media hype, negativity, spin, and talking points.
 
I hate to say this but it's going to take something like another 911 to get us back on track to get serious about solving this mess. It's going to take some serious action and sacrifice to cut the finger-pointing, the politics, the posturing, and the drama. It's going to take a serious effort by the American people to say enough is enough, quit waiting on the government, and actually start doing something about it.

[Colgando]

Colgando, you know better than I. But if the downgrade is anything like a FICO score, and maybe it isn't, I call BS. A FICO score is how well you manage debt; and nothing more. It is not an indicator of wealth, it is not an indicator that you are a good person despite the marketing hype and baloney they are feeding us, and perhaps the biggest misconception is a millionaire with the integrity of a saint will most likely have a FICO score of zero because millionaires don't have (or need) debt.
 
We will sit back and see what happens. But I without a doubt suspect there will be more whirlwinds of media hype, negativity, spin, and talking points.

Yes, it will be irrational pandemonium, the US Treasury is still the safest investment, the US govt will still service its debt. And bond holders will get paid. From a "will they pay" point of view, which is what FICO indicates, the downgrade means nothing in the short to medium term, we will pay. The "can they pay", is not material in the short to medium term however, they downgraded us because they see a day coming when we will not be able to pay. This may be the 1st step in a series of downgrades over the years to come. The biggest problem is that certain money managers can only hold AAA Us Treasury securities, therefore, they may have to dump the treasury securities, which I doubt they will do rather, they may revise their investment policy statements, but still, this will be very disruptive. I suspect that is what we will do at my firm for any accounts where we have a mandate to only invest in AAA US Treasury securities. The US Treasury bonds are still good as far as sovereign debt is concerned. maybe the worse is that is this will further stoke uncertainty and fear in the global economy, which is bad, very bad. Markets probably heading south on Monday.

[euforia51]

Yes, it will be irrational pandemonium, the US Treasury is still the safest investment, the US govt will still service its debt.
...
This may be the 1st step in a series of downgrades over the years to come. The biggest problem is that certain money managers can only hold AAA Us Treasury securities, therefore, they may have to dump the treasury securities, which I doubt they will do rather, they may revise their investment policy statements, but still, this will be very disruptive. I suspect that is what we will do at my firm for any accounts where we have a mandate to only invest in AAA US Treasury securities. The US Treasury bonds are still good as far as sovereign debt is concerned. maybe the worse is that is this will further stoke uncertainty and fear in the global economy, which is bad, very bad. Markets probably heading south on Monday.

Good lord, you can almost see and hear it now ... the media icons in their most dramatic voices and puppy dog eyes as they proclaim the end of the world has officially started. The Dow will plummet ... maybe 1000 points this time.
 
So if I am understanding you correctly, because the US was downgraded to AA+, some money managers will simply revise their policies to allow the AA+ credit rating treasury securities? In other words, they will forgive the downgrade and life will continue to carry on ... because it has to?

[Colgando]

Good lord, you can almost see and hear it now ... the media icons in their most dramatic voices and puppy dog eyes as they proclaim the end of the world has officially started. The Dow will plummet ... maybe 1000 points this time.
 
So if I am understanding you correctly, because the US was downgraded to AA+, some money managers will simply revise their policies to allow the AA+ credit rating treasury securities? In other words, they will forgive the downgrade and life will continue to carry on ... because it has to?

Yeah man, there is not really another viable alternative right now to the US Treasury securities for a risk free investment aside from cash. Dumping treasuries, and where will these managers go, cash and earn nothing, municipals will be even less attractive than the treasuries now. For accounts where there isn't a mandate that hold US treasuries, I suspect these managers will continue to hold them, at least in the medium to short term. Maybe a good thing is that this will be a wake up call to politicians and encourage them to implement austerity measures.