Economics

I misheard.

Still, 91,000 foreclosures.

Now, homes for sale in Chicago and the collar cities, according to Realtor.com,  is 659,478

Now, if you figure that’s a very small percentage of the total number of homes because it does not include the Suburbs, the Quad City area, the Joliet area, the Peoria area, the St. Louis area (we have suburbs of the city, but not the city itself) the Bourbonaise area, the Champaign area or the Moline area; you know, the other major civilian centers of the state, you can EASILY see how pitiful that number really is.

Best I can guestimate from Realtor.com - because you cannot just to a state search - we have roughly 6,381,686 homes at any given time.  I’m taking that number by taking a 10 mile radius around major metropolitan area, multiplying by 10 and dividing by the number of metropolitan areas to get an average.  (For very large areas like Chicago, I took major areas and averaged those for the city, like Gurnee, Schaumburg, Elgin, Wilmette, Chicago, Chicago Heights, etc.)

91,000 foreclosures / 6,381,000 homes = 1.4%

Wow.  So like 1% of people give or take a few percent in my UNscientific population, in Illinois, lost their home to foreclosures.  We need to change THE ENTIRE banking system, expand government at the highest rate since FDR and give them unprecedented power over our lives to protect 1%?

What’s the High School Graduation Rate in Illinois?  According to the US Dept of Education only 72.2% of Illinois citizens graduate from High School.

Perhaps if the SAME government that screwed up education fixed THAT, the 1% of home owners who can’t do simple arithmetic and thus are losing their homes wouldn’t be in that situation?

@ncscswitch:

STANDARDS of lending are what is required.  And since the banks have chosen to ignore the standards they held for 200+ years in order to gain a quick buck through loopholes in the various debt laws passed by Congress, then it is indeed Congress’s responsibility to FIX those holes they created AND to protect my home value from negative valuation caused by their previous actions that were designed to create fraudulent short term gains by banks.

A) I agree that law abiding citizens that did NOT violate their contractual obligations to the banks and thus are not causing strain to the body republic should NOT be forced to pay for the ones who did violate their contractual obligations to the banks.

B)  I disagree that Congress has to fix anything.  The banks made their own choices.  “You made your bed, now you have to lie in it.”  Anyone with a brain that decided to engage it would have told you half a decade ago that these interest only loans are a very bad idea.  And for generations we’ve known that balloon payments and points and ARMs are bad ideas!  This is not Congress’ fault, it is the consumer’s fault and the bank’s liability.

C)  If we were to get legislation from Congress in this regard, it better be as either an amendment to the constitution giving them the right to even make laws in this regard; or to protect the federal government from the stupid decisions of the people and the banks.  But then, I’m not entirely happy with FDIC.  I’d prefer if banks just gave you the option of more interest or FDIC protection through a private insurance agency.

D)  I still say the best solution to the “housing crisis” (which is barely 20% of the unemployment crisis, which isn’t even a crisis since we have statistical full employment in this nation) is to sit back and watch what happens.  Maybe even raise the federal interest rate to about 6 or 7% so people could invest and make some money.  You cannot earn a return on your money at 1% or 2% (or for savings accounts, I think we are all the way up to 0.005% APR now.  That’s 0.00005 for those who don’t realize the percent sign moves the decimal two spaces to the left.)

If the Fed raised the rates to 7 or 8%, which is NOT that bad really, it’s still WAY lower then the 20-some% we were paying under President Carter, people could invest in US Savings Bonds, US Treasury Bonds, get better rates at the banks for savings and checking accounts, etc.

Today’s Mortgage rates have been fluctuating between 5.5% and 6.5% for about a year.  Meanwhile, the Federal Prime Rate (according to the AP 8 hours ago) is 3%.  That means we can pretty much assume that there’s about a 2.5-3.5% markup on mortgage interest.  So if the Prime was raised to 5% we’d be looking at 8.5-9.5% APR on Mortgages (with zero points, 30 year fixed, no balloon, and not a jumbo loan.)

What’s the difference in monthly between 6.5% and 9.5% (the two upper limits)?

According to Realtor.com, if you have 20% down on a $495,000 home (which is mid range in Chicagoland) at 6.5% APR you will pay $2,503 per month.

and

According to Realtor.com, if you have 20% down on a $495,000 home (which is mid range in Chicagoland) at 9.5% APR you will pay $3,330 per month.

That’s $800 more.  However, your Savings interest, your commercial and governmental bonds will also rise in rates from 1 or 2% to 6 or 7% as well and will make up the difference easily.

Congress controls economic policy.  The liberals promised to take America in a new direction - they accomplished it!

As for Fidelity, I have not been with them for a LONG time because their analysts, in general, do a poor job.  When I was with them, I was getting 5-8%.  Now that I’m with American Funds, I am getting closer to 22-25% annual returns.  And no, it is not all in the pacific, I have a lot of domestic funds as well.

I don’t think the government did it.  I think the auto industry, seeing falling numbers, made their own decisions.  Likewise, banks saw that the standards they were using could be lessoned for potential huge wins.

It’s like going to Vegas and realizing that if you play Poker you have a chance to win a lot more money then if you play Roulette.  However, in Roulette you have a 48% chance to win, in Poker you have a much, MUCH lower chance. (In Roulette you may bet on Red or Black which is 48/100 possible results, assuming two green squares.)

Well, they gambled, ON THEIR OWN, WITHOUT HELP, and lost.  Now, as with the gambler that mortgaged his home to gamble more, they are on their own and should be.  This will help weed out the lesser banks so that the strong banks can grow and prosper.  It’s almost Darwinian.

Presidents have claimed responsibility for everything good for all times.  If they could get away with it, they’d claim they made the sun rise every 24ish hours and that it was they that brought the rain.

Realistically, it was the banks that lowered financing on autos, homes and later credit cards and it is THEIR bed they are now lying in.

I, honestly, don’t feel sorry for them.  If they had just held to their OWN testing procedures instead of opening up the floodgates in hopes of making a quick buck and cashing out on their stocks for early retirement, they wouldn’t be in this mess.  And, you know what, not every bank and mortgage firm IS in this mess.