Borrowers Are Out In the Cold

The only way the bailout could work for tax payers is if the assets are purchased at a bargain rate. The current market rate if very low: maybe 20 cents on the dollar. If the treasury overpay, then I would question the sincerity of the deal.

Thank's very much for this article. Its explanatory language, sans-technicallity made me comprehend way economy's in spiralling downturn. Now, God has all my 'credo'!

Thank's very much for making things more understandable to me. This article was very helpful to me. Its language used, san-technicallity and direct approach it is educational, in-sightfull. I just pray things get better. GOD has all my 'credo'!!

Correction, my income is $80k, not 40...

Everyone will end up feeling the results of the over lending and overspending. Me, I have never had a line of credit in my life. I make $40k a year, have no debt and save for those important buys like car repairs, food, you know...the necessities. As far as my standard of living. I live in an apartment, am saving my pennies for a house or condo for when I get married. I am not stupid enough to risk getting a woman pregnant, I would really love a new computer, but mine gets the job done just fine. I still have a CRT television. The issue here is that people are not taught to develop responsible spending practices in childhood, adolescence, and young adulthood. I was, and I will buy my next car (probably a fuel efficient car with cool toys at $36k) without a loan. PS- I don't have a college degree. I couldn't afford college and learned how to work in IT and do programming by myself....I made a portfolio and got my career the old old fashioned way...very rough considering most companies won't even interview you if you don't have a degree...I'm doing just fine. I took on only as much responsibility as my income would allow without debt. It's a simple concept. LIVE WITHIN YOUR MEANS...And when all the fools out there end up weakening our great nation's infrastructure because they needed help to get bailed out, and all the prices of everything goes up because the government is posting up to handle the incredible burden, I will be extremely angry, but I will do what is responsible and adapt, and it won't phase my standard of living one bit...

What happens to students like me who went to private college for their undergraduate studies and now pursuing a Master's degree with two classes left only to find that they have reached their aggregate lifetime loan limits? As a single mother I have no resources and am trying to better my life by ensuring that I have a worthwhile education behind my belt so that I can remain successful in this competitive job market. I am two classes away from earning my MBA and college has very expensive for me especially since I have had to pay for housing, book, etc. totally off loans. I do not have family or friends who are able to co-sign for me to get private loans and my credit score is no where near high enough. I have searched and searched through 1000's of resources only to find that a person in my position is completely out of luck. My regret is that the school nor the lender informed me that the aggregate limits applied to both undergraduate and graduate combined as I was under the impression from my Stafford entrance information that it would be seperate amounts. With 2 classes left this whole situation has left me truly desperate for any and all forms of help. Any suggestions?

stupid americans? that's a short sighted statement. who has the cash to buy cars and homes outright? credit creates the middle class. unless you want everyone storing all of their cash in banks and not putting it in the economy.

Stupid americans living beyond their means and whining as victims of their own stupidity. Serves you right. JayMM is right on all counts.

Jaymm is right, most americans

Listen....Home inventories (new and existing) are falling. The estimated time to turn the existing inventory is also falling. This means that, everything else constant, the US housing market will come back to equilibrium eventually. Of course, foreclosures will add more inventory and push prices down. This could extend the time to equilibrium, but its about time and price. Today, foreclosed homes are selling at prices below the cost to build the house. At that level, new homes are not competitively priced. Consequently, the supply of new homes will continue to contract, causing remaining demand to switch to existing homes.

There are several facts about his whole mess.....First, Americans have lived well beyond their means for a long time and this is exactly how the problem corrects itself. Quit complaining....you did it to yourself!!! Second, Americans live very well, beyond their means. This should indicate they wont be too bad off if they are forced to downsize. Its OK to live in a 2000 square foot house (or even an apartment), without a boat and Hummer!!!!! Third, the media does little to suggest that people act stupidly, living way beyond their means. Rather, the media tends to describe everybody, both the truly unfortunate and truly stupid, as victims. Yet, both arent true victims. Fourth, corporations are vultures and look to take advantage of both the unfortunate and stupid. As such, corporate vultures should be taken to the wood shed, or worse. Fifth, nobody likes to take the blame and everybody, unfortunate/stupid/media/vultures, will turn to Government to bail everybody out. This will further destabilize our Government and economy, causing additional problems in the future. Pathetic politicians will actually force Government to borrow to bail us out (borrow to bail out the borrowers?). Sixth, there is plenty of blame to go around. We are all at fault (well, most of us anyway) and must endure the pain of our excesses and stupidity.

I don't think it's going to turn around any time soon. Don't forget the glut of baby boom housing that's hitting the market for the next 20 years. A lot of these folks figured they'd cash in on their houses when the time came to retire, which is starting . . . now. I cashed out my REIT in 2006 when RE was still the place to have your investment money. As for my personal house, I bought it with my partner, on a 15-year 4.5% fixed mortgage, with the expectation of staying put for the long term. The sad truth is that all bubbles eventually burst, and, like you say, camelot12, the candy eventually comes home to roost!

The real estate market will turn around again, it always has and always will. The only question is when. If I was a betting man I would say for the worst areas of the country we will hit bottom the later part of this year. HOWEVER it may take another 4-5 years before REAL appreciation (not speculation) get's housing prices closer to where they were two-three years ago
The problem is accentuated by not only a housing bubble (all investment vehicles go through bubbles brought on my greed) but we are also experiencing a credit bubble and THAT makes it tougher to figure out when the bottom hits. Most lenders at this time don't even know what kind of bad debt is on their books,or what they are liable for when they packaged CMD's and sold them to other institutions and large investment firms that got caught up in the greed of "churning money". Heck, even the three major rating services were involved and encouraged risky investments and derivities.
I've been a commercial real estate broker/syndicator/investor for over 30 years and these cycles ALWAYS occur......always have and always will. Homes will always be good investments and tax shelters as long as they aren't uses as "candy machines" or as some folks like to say an "atm machine". At some point the candy has to be replaced!

I got a great Loan... my fico had dipped since 2006....., but thankfully the folks at MoneyStuck.com
understood my situation and worked me through my debt consolidation. THey worked with me and
cut the redtape and now I have one easy payment.

well, when you have to go to sleep at night wondering if there will be oil in the tank for your shower in the morning or better yet...going out in the middle of the night to get a 5 gallon tank of diesel fuel to tie you over well, a very sad statement of affairs indeed....and guess what....neighborhood is your typical perhaps even upscale one....not once but many times....oil @ 3.50 plus a gallon has ripped this country to shreds.... and me too....and no i do not live off a line of credit ... I don't have credit cards...I work two jobs.... please don't judge...I just cannot afford to live on the salaries I make....and i simply cannot work another job....oh and by the way...the thermostat is at 55 most nights....pretty chilly

Honestly, I can't even understand how one can use his house as an ATM machine (a very good expression). How does it work? Let me think. You bought your house for $100k, with $10k down. Since its market value is up to $130k. So now you refinance it, and get a mortgage of $120k. You paid the first mortgage company $90k, and pocket $30k. Free money? Eh? Basically, you are spending the appreciation before you receive it. What if you don't get $30k's profit when you sell it? It makes me shiver to even think about this.

I don't understand the way Americans live. Why do college students have such high debts? Perhaps most of it goes to his living expenses. When I was in graduate school I lived in a poor house shared by many international students. I did not have a car. While my American counterparts lived in their own apartments and drove cars. However, I left graduate school with no debts, because I was paid $4000 a year as a teaching assistant (out of which I mailed my parents $500)

In 1988, eight years after I left my graduate school, my husband and I paid off our first house, which cost $120k in those days. It was a GREAT victory, as our mortgage rate was 13.75% - and the loan officer had raised it by 0.25% while I was signing the mortgage!!

I never had a mortgage again - and I always live in nice homes (I am on my third one.) I am not rich. I just know how to manage my finance. My mother always says no matter how much money you make, if you live beyond your means, you are always poor. In other words, she believes if you are in debt, you are poor.

Today I heard that someone has $10k in credit card loan, and $10k in the bank. I couldn't understand. Credit card loan rate is much higher than the saving rate. Even a 3rd grader would know paying off the loan is a better deal. But I think this is just American culture. A life is not fun without credit card loans.

what's coming will be known as "the great recession"

lol at all the comments about Bush or greedy corporations, blah blah blah.

It is pretty simple people. Don't buy what you can not afford. You don't need that new shiny car. You don't need that big screen plasma tv when your old tv works just fine. You don't need to use credit cards and loans to keep up with Joneses.

People want to blame Bush or the corporations, but reality is that there is no one to blame but themselves. American's are greedy fools for the most part. They just have to have what their friend or neighbor has. They can't be driving around in an 8 year old economy car. Nope they need to be driving a gas guzzling SUV with leather interior and a flip down lcd displays so they can keep their kids quiet instead of conversing with them. It would be way to embarrassing to have friends over and have them watch the football game on a 32 inch non HD TV right? Yeah we need to go open that Best Buy credit line up and get the 50 inc flat screen plasma TV and mount it on the wall right? Our wives can't just use a $30.00 purse bought from Target or Walmart right? Heck no they need to have some silly designer handbag that costs $600.00, which is put on the Macy's card of course and they certainly cant be seen with last season's handbag so they need to get a new one every 4-6 months right?

And finally we can't be in a modest 2 bedroom, 2 bath home which may require some work to fix up a liitle, which we can afford the monthly payments with 30% of our monthly income on a 30 year fixed. No we need to the 4 bedroom, 4 bath, 3 car garage monster in an affluent neighborhood that we can only afford when put on an ARM loan that we can only afford with with 75% of our monthly income and that is on an ARM loan that will reset in 3 years.

If you want someone to blame, blame all the friends and family who are doing exactly as I describe above.

it wasn't hard to get a loan, my fico had dipped since 2006, but thankfully the folks at MoneyStuck.com understood my situation and worked me through my debt consolidation.

They were a blessing. Now I can breath easier.

The author states the fuel of this mega economy is credit, when in reality it is "cash"...The solution to the current economic downturn is actually quite simple...DOnt spend more than you make...If you cant pay for it with cash you cant afford it...It really is not more complicated than that...If you cant get a fixed rate mortgage at a decent rate then you cant afford to buy a house; rent for a while and save some CASH...Cash is KING