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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: Gary Mohilner who wrote (15006)	11/26/2008 11:04:33 AM
From: Don Earl	5 Recommendations Read Replies (1) \| Respond to of 71484

A lot of what you say would be reasonable if your only source of information was the mainstream media. Unfortunately, and as hard as it likely is to believe for those who still think we live in a free country, you would probably find the state run media in China more reliable. If nothing else, at least in China the state is open and honest about the media being an unabashed propaganda machine. It would be nearly impossible for hedge funds to play much of a role in the recent stock market crashes. By definition, they tend not to be big holders in equities. You don't get one week drops on the order of 20% because of hedge fund activity. You get it from retail inventors and mutual fund managers beating feet for the exits as fast as they can pick 'em up and put 'em down. If you have good credit, you can get an interest only ELOC right now for around 3%, with an 80% LTV. If you have good credit. That's not the problem. The problem is with the sub prime crowd that took out the loans, with little or no intent of ever paying them back. How could it be otherwise? Their demonstrated credit history told the lenders that, before the money was ever dispersed. It was a numbers game. Loan a bunch of money to Joe Deadbeat at a rate likely to be attractive to investors, mix Joe Deadbeat's loan in with some other better stuff to rate the bundled loans higher than they deserve, and as long as housing prices are going up 25% per year, Joe will keep paying the predatory interest rates as long as it keeps looking like easy money for Joe. Joe Deadbeat didn't buy the house because he's the kind of guy to make payments for ten years while waiting to break even on the investment. Joe bought the house because it cost him a fraction of what he'd have to put down up front to rent, and because he was subjected to less scrutiny than what he'd have to put up with from a potential landlord. Joe didn't buy a house. He got a house for free. You're probably right that Joe will keep the house as long as you keep giving Joe free stuff. If you let Joe stay in the house for free, or at least for less than what Joe would have to pay for rent, he might even stay there for awhile - even with negative equity in the house. That's just the kind of guy Joe is. And, what if the market does recover in 10 years and Joe can sell the place at break even? Will the house be in marketable condition, or will the house be in the same kind of condition as Joe's credit rating? I spent last weekend cleaning my gutters and spraying the roof for traces of moss that were starting to show up. I also spent half a day on yard work so the landscaping will look good come Spring. What do you suppose Joe did last weekend? There ain't no such thing as a free lunch. I bought my house. I don't want to buy a house for Joe. I don't want to cover the losses of those who gave money to Joe. I want to keep what's mine and be left alone.