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Sunday, September 09, 2007

Politics - Sorry We Totaled The Car

Can we have a new one?

I can't believe the cheek of Wall Street.

For years, those of us who weren't completely blinded by greed kept warning that the house was made of cards and built on quicksand - the entire fucking economy was built on credit, and flimsy credit at that - and sooner or later it was all going to come crashing down around our ears.

Wall Street has been raking in the profits for years on sheer flimflammery. Liar loans, rebundled ARMs, no-down mortgages for people who should have been saving to buy that house. Practically forcing credit cards with huge lines of credit down the throats of college students who hadn't even found their first job yet. Convincing homeowners to refi and refi and take out a second and a third and a fourth line of credit, not for any creation of wealth, but to buy a new car every four years, or put yet another unnecessary extension on a house or refurbish one's home entirely.

Even as U.S. corporations kept shipping good jobs overseas, leaving older people "outsourced" and looking for service jobs. Even as they kept cramming "free trade agreements" down our collective throat. Even as the idiots in charge cut taxes because if people don't pay their taxes, money will automagically appear in the government coffers, trust me. Even as they lied us into a war costing half a trillion dollars - that they don't have - and manufacturers all around the country shut down factories, so that we no longer even produce our own food.

And now, AFP tells us:
Bruised Wall Street investors, facing a suddenly weaker economic outlook, pinned their hopes on a Federal Reserve rescue, even as some analysts warn of considerable uncertainty ahead.


The key action came Friday after markets were stunned by a drop of 4,000 payroll jobs in the US economy in August, the first decline in four years and far below market expectations. The government also revised down job growth estimates for June and July by 81,000.
The fact is, if you've been paying attention at all, you know that the economy is not growing. Far from it, it's been shrinking every year since 2000. In order to keep up with population grown and immigration, the economy needs to generate approximately 200,000 new jobs each month.

Since Bush took office, job growth has been lower than required nearly every month. The government deceptively points to unemployment statistics to counter claims that the economy is sagging. But unemployment statistics only consider workers who are actively looking for work. They do not consider those who have dropped out of the work force, the self-employed, the underemployed, and those who have simply given up hope.

Now, of course, Wall Street is shocked! Simply shocked! that the economy is sliding towards recession.

Let's hope Bernanke refuses them a bailout. Cheap credit got us into this mess in the first place, and it sure as hell ain't getting us out.


Stumble It!


At 10:44 PM, Blogger Brian said...

You seem to be saying that it would have been better if these home owners had *not* refinanced and just kept paying interest to the bank. Because regular people don't deserve a nicer house or a new car, damn it! The bankers should be spending their money on a second vacation home.

Hmm... which side are you on, anyway?

At 11:11 PM, Blogger ThePoliticalCat said...

You misinterpret me. There is nothing wrong with pulling a certain portion of your equity out of a house - in order to do which one must have equity. A zero-down loan, especially an ARM, especially one with balloon payments, is a very dangerous situation for any homeowner who doesn't have significant assets. In other words, it's a poor financial instrument for all but the wealthy who might need greater liquidity and are willing to accept temporary risk in exchange. It would have been better for first-time homeowners to reduce the amount of interest they have to pay to the bank by sticking to fixed-rate 20-30-year loans with a 20 percent down (so as to avoid the PMI) and no prepayment penalty; they could then pay down the outstanding loan amount more quickly, reducing the total amount paid out. And if you pay attention to what makes sense, rather than frivolous spending, a consumer gets the most value out of a car that they own/drive for up to 15 years. Trading in your car every five years for a new model is nothing but throwing money away.

As for regular people, they deserve everything they can afford. Nothing more or less. If you can't afford to buy a new car without taking a $3-5K loss every five years, then just gather the money together and set it on fire. Otherwise, invest sensibly and drive as much car as you can afford.

I'm on the side of common sense. Bri, is that YOU?


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