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How much of it is our faults??

I have this lingering thought in the back of my head that this economic turmoil is being blamed on the Government and the Oil companies more than it should be.

How much of it is our faults as citizens?? Wouldn't it be better if we changed our ways from the bottom up, wouldn't it be better if we stopped doing all the stupid things we do financially and quit pointing the finger at the Government?? Is it Exxons fault they just had their best quarter ever or is it ours for giving them all that money.

Ok that's all I got, just a thought that I am relying on my informed pack of readers to expand on!!!
Cody Heitschmidt
www.codytalks.com
www.whatsuphutch.com
Sent from my BlackBerry

9 comments:

  1. Wow are you really suggesting that people take responsibility for their own actions?? Are you trying to say that the people that bought more home than they could afford and now find themselves in foreclosure bear some responsibility? Next thing you know, you will suggest that people who run up massive credit card debt in order to have instant gratification should be responsible for paying off those mean old banks that gave them credit. Cmon Cody, its Halloween, not April Fool's day!

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  2. We (as a country) are the reason this mess is going on. I'll first start with the mortgage mess. I'm sure you have read about how there are over 7 million homeowners that are in a financial crisis. They won't say why they are in a financial crisis. #1 reason! Buying above their means! When people buy a home, and spend more than 30% of their gross income on the house payment, they are only leaving themselves 10% for car payments, credit card bills, other loan obligations. The other 60% is for living expenses and savings. #2 reason! Spending more money on your house than it's worth. I'm going to let you in on a little secret. If you spend $20,000 on a home improvement, your house will not improve in value by $20,000. Your house may improve 50% of what you spent, it may not improve at all. Also, if you bought a home over 100% LTV (loan to value) your sitting on negative equity. #3 reason, a lot of mortgage lenders let it happen! I'll add a little disclaimer that Hutchinson area lenders have, overall, done a respectable job.

    The mortgage lending industry was in a big push to get people into home. ARM loans and excess of 100% LTV loans were made available so anyone could get a home. Those loan products have a purpose, and are useful for the right person. Truth is, not everyone needs to be a homeowner. Some people are better off renting.

    Credit card mess is what I'll hit on next! People are abusing credit cards. It's not uncommon to see $20,000+++ in credit card debt. It's sickening! People will never pay that off because chances are people continue adding to that debt! Credit cards and high limits are available for almost everyone, and a lot of people are not responsible enough to manage that debt.

    So we have people that owe more than their home is worth, have credit card debt that will never be able to be paid off, and are living pay check to pay check because their monthly obligations are to high!

    Again, we are responsible for all of this, but why!!!

    Education! I firmly believe that instead of teaching advanced algebra, and trig and other useless math classes, our young students should be taught how to balance a check book. How to maintain a monthly budget. How to be prepared to apply for a loan, and when to need a loan.

    It's starts with education. We have not been educated enough to be responsible for our lifestyles. And now, we are suffering the consequences for our lack of education.

    Just my 2 cents.

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  3. Of course there is some personal, individual responsibility in this mess, but to blame your average homeowner out there who didn’t properly understand his or her confusing sub-prime mortgage while allowing a free pass to Wall Street Execs is insane. These self described “Masters of the Universes” were celebrating the Gramm-Leach-Bliley Act, which allowed banks to work with mortgage origination companies to write loans to people without proper collateral and then sell the loans to investors. The loans were pooled together to create mortgage-backed securities and collateralized debt obligations. These UNREGULATED Mortgaged Backed Securities were pooled together, broken up and traded. Wall Street made billions even though they had no idea of what these MBS were actually worth. That is the heart of this problem, and something some defaulting homeowner who signed an ill conceived 5 year ARM had no responsibility for. Wall Street claimed to be geniuses, made a ton of money and now that they f’ed up are walking away with a bailout. Wall Street is to blame, and Government is too, as it should have known better and regulated these Mortgage Backed Securities, never passed Gramm-Leach, and instead of allowing this “self regulation” of investment houses the regulating Agency’s should have clamped down. There is plenty of blame to share for this mess, from Wall Street to the Clinton Administration, from predatory lenders to the Republican Congress, from W. to the average homeowner. But to say this is somehow all the fault of the individual is absolute bullsh*t.

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  4. Sorry you disagree, but if we ultimately had the knowledge of what we were getting ourselves into instead of just seeing the house, buying then house, then worrying about making the payments, we would be better off.

    Lenders played a big role in this because it's their job to educate the customer, and even if you get an approval, use your judgment to properly underwrite the loan.

    I'm in the mortgage industry, and I pride myself, and my department for not allowing us to fall into that "trap" of "everyone can get an approval". I've denied many loans that got approvals, but had no business getting approved. In denying those loans, I used that as a way to educate those borrowers and to explain their situation and help them improve their situation so they could get that home they want in the future. Sadly to say, the majority of them didn't listen and found a dot com lender that did it.

    But it all comes down to education. We are responsible for ourselves. If someone is going to take an obligation for 30 years, they need to be comfortable not only with their own understanding of the loan, but with the way the person that is helping them get a loan is handling it. If your at my desk and I'm explaining a loan to you and I ask you if you have any questions, and you say no, I will assume you know what I'm trying to explain. I also make sure my department maintains their integrity and not get someone into a loan they will not be able to afford because to many people just sign the papers without knowledge of what they are signing.

    Ultimately what I was trying to say was... If we were taught about how to be a functioning adult living in the real world instead of learning a bunch of useless math that 99% of us will never use, this may not be as big as a problem.

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  5. I like Mlizaldes education comments.

    I also agree with Dave that there are lotsa people to blame.

    I kinda wanna reword my point from the post...

    Think of this as a variant to the post.

    "How much can we do individually to help get the country out of this mess, learn from it, and prevent a reoccurrnece later?

    I really didnt mean for it to be a blame laying thing as much as i wanted to discuss a kinda grassroots part of the solution.

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  6. The solution is a lot harder than pointing fingers! LOL

    I disagree with bailing out big business. I say let them implode, and let the american dream of entrepreneurship take hold!

    I think cutting our losses and moving on is probably the best solution. Financial institutions that made loans to people that are over 100% LTV, need to have that loan modified, loss taken by the interested parties, and payment re-amortized.

    The mortgage industry has already started making stricter underwriting requirements such as down payment, credit, assets ect... It's much harder to get a loan now that it was 8 months ago, as it should have been.

    Credit card companies and car dealerships need to be hit next! It's amazing how far upside down someone can be on their car. The values of cars depreciate so much, and negative equity is flopped from one car loan to the next that paying off a car is a distant reality for a lot of people.

    100% LTV car loans are pushing it. Not very long ago, down payments were required on homes and cars, and I feel that they need to go back that way.

    That leads into credit cards, or unsecured debt. It's ridiculous for someone to have in excess of $20,000+++ in credit card debt. For some people it's ok, but for the average working american, it's a hammer driving the nail, only then hammer keeps getting smaller and smaller until the nail breaks the hammer!

    Credit card companies need to be more accountable for allowing such high limits. Again, I say cut the losses and allow the people to pay what they can afford. Cut off people with to much debt, lower limits.

    None of these will be popular fixes because that will require massive change and the big business with big pockets won't allow congress to pass those changes.

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  7. I've gotta tell you Cody, posts and topics like this are the reason I love reading your blog.

    People with a well-defined sense of "how do we fix it" are wonderful to come across.

    IMHO, the first thing we have to do is quit preaching that the "American Dream" is this grand and glorious keeping-up-with-the-neighbors way of living.

    Many people have completely lost that the American dream wasn't a big house and maxed out consumerism. The American Dream is freedom and liberty.

    There's absolutely no freedom and liberty in being in debt that you'll never escape. Ironically, so many of the first settlers who came to this country from England left to escape crushing debt. Then we fought the Revolutionary War so we weren't forced to pay massive taxation for the enrichment of others.

    The American dream is freedom.

    I think we need that paradigm shift.

    From there, I think we need to be realistic and to teach realism.

    From a What's Up Hutch standpoint, I can see Pam or you (Cody) or your lovely bride doing a column on basic budgeting guidelines. Things like your housing costs shouldn't exceed a third of your net income (though when I went to high school it was 25%).

    From a Hutch in general perspective, it'd be great if local media incorporated some basic budgeting guidelines so that message is reinforced.

    I think people also find it entertaining and helpful, especially in times of stress when money is tight, to have those who cheerfully call themselves "tightwads" or "frugal" speak about their enjoyment of simple things and events.

    IMHO, the way to begin to reverse the whole "keeping up the Jones'" monetarily is to change the standard to wanting to be part of this cool thing that folks are loving - frugality.

    I've seen it over and over again on tightwad boards on the internet. People do it to varying degrees but there's some very inspirational (even though I'll never do this) about having a real person be enthused about making their own solar stove and cooking their supper without using a drop of energy other than the sun.

    That's just so cool on a number of levels.

    To me, it's all about being creative.

    Just today, I cleaned out the closet in our son's room and pulled out a couple of Coach purses that my mother-in-law gave me years ago. She'd had them for 30 years before that. As I was looking at them today, loving the leather (which could use some attention) and the weight and shape of the purses, I asked myself why I hadn't been working on that leather and getting them back into shape.

    My point isn't the purses at all. It's more basic than that. Somehow we've largely adopted the idea that "renovation" means a big budget rather than elbow grease.

    All the stuff mlizalde said about people being overextended I agree with.

    I'm speaking of baby steps to a different way of thinking and living. Sometimes baby steps are the easiest to take and then people get really into how cool it is to spend less and to reach for the goal of being debt free.

    ReplyDelete

I love the discussion in the comments.. so... GO FOR IT!

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