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Non-Tech : Deflation -- Ignore unavailable to you. Want to Upgrade?

To: Ilaine who wrote (343)	3/4/2007 9:50:37 AM
From: Maurice Winn	Read Replies (1) \| Respond to of 621

Ilaine, what I don't understand is the financial MADness of two high income people [not that they would think they are] living so beyond their means that they get into such muck. I do understand it really, but it always baffles me that people are so badly developed intellectually and emotionally that they do that. I doubt that it's bad luck other than them taking spending risks which are then topped off with normal life volatility, which one should reasonably expect over a period of time, so they are unable to cope with the unknown known risk when it arrives. It's like banging one's head against a brick wall. It seems so silly to inflict pain on oneself. It's the opposite of how I have always lived, so it seems absurd to me. Most of the planet's human population, who live happily enough on a tiny fraction of that $150,000 income, can't understand it either. $600,000 debt at 8% = $48,000 a year. Why don't they pay $100,000 a year to their creditors? Maybe the loan is $100,000 at 12% = $12,000 a year and $500,000 at 7% = $35,000. That's about the same. That must be all they are paying in interest. $150,000 less 30% tax = $100,000 - $20,000 living expenses = they can pay $80,000 a year towards principal and interest. Sell the SUV. Buy an old bicycle and repair it. Buy rice, cabbage, carrots, peas, beans, pumpkin, onions, garlic, eggs, bananas, grape seed oil. People throw away clothes by the truck-full = find out where they are throwing them. No booze. No smokes. No talking about food, including which restaurant to go to. Go to bed at 10pm. Get up at 6am. Turn off all the lights, heating, contraptions and drama. Stop taking Prozac and going to "therapy". Be Happy, Mqurice

To: Ilaine who wrote (343)	3/5/2007 10:38:40 PM
From: JF Quinnelly	Read Replies (1) \| Respond to of 621

That sounds just like Orange County. There will be many Wile E Coyote homeowners in showing up, hanging in space before the fall- They can't afford their reset payment. They can't refi their loan. They can't sell their house to cover their debt. You're in a growth business. Better start hiring help.

To: Ilaine who wrote (343)	3/10/2007 3:44:55 AM
From: Maurice Winn	Read Replies (1) \| Respond to of 621

The couple lose their "equity" and go bankrupt, so will be keen to keep working to earn grocery money and rent [when they have to rent]. The credit card company loses their money. That's a bank. Maybe the bank has insurance for such a loss, which I doubt as that seems such a dopey idea. Banks issuing credit card loans are probably not a good bet to invest in. Not paying debts is traditional when push comes to shove. Creditors are usually looked on by courts and others as usurious wealthy people who can afford to take the hit a lot better than the poor debtor and their hungry children who are suffering. The mortgagee loses their money. They get to own a house and probably sell it for what they can get in a mortgagee auction. That's some joint like Freddie Mac, or Fannie Mae, or some such financial institution, aka a bank. So banks and other mortgagees are generally not likely to be good investments until the rebalancing of house capital values, rents, interest rates and incomes is complete. I note that TOL and HOV are well down in price already, so maybe the losses are built in. I considered shorting them at their peaks but didn't get around to it - there are so many investment opportunities it's hard to know what to do [I went for my old favourite Globalstar instead in the end]. FRE and FNM are steady enough finance.yahoo.com If FRE and FNM and JPM and C etc go broke, should I care? I could just buy half a dozen houses in sunny southern California and rent them to the existing "owners" who will need somewhere to live. They could cook meals for me when I come on holiday and act as armed guards against marauders. They could chauffeur me in their SUVs which could be sold by the mortgagee/creditor as a going concern = house and transport. All that would change would be ownership papers [and spending patterns by the new butlers/chauffeurs/cleaners/chefs/gardeners]. Traffic jams would be thinned out. Air pollution would drop. Mqurice