A country of money idiots?

[UncleHoney]

After reading a number of news articles this week about subprime mortgages and the investigations involving the credit card industry I've come to the conclusion we live in a country of idiots when it comes to money.

How can these people function in everyday life and get into so much hot water when it comes to their finances? Is the lure of the good life so blinding they can't see their empty wallets?

This brings to mind a story about one of my nieces seveal years ago. She joined a health club and paid monthly for her membership. After several months she moved and didn't use the club, so she stopped sending in her monthly dues. It didn't take long for the creditors to find her and demand payment on her loan. Loan? Yea a loan, she signed up to pay the annual membership in monthly installments and either didn't know it or conveniently forgot about it. I wonder what she was thinking, if anything?

I think the financial industry in the US has found an unlimited supply of suckers that are ripe for picking. Unfortunatly most of the suckers are poor to start with and getting poorer by the day.

 

[MasterBlaster]

So just what do you propose UncleHenry ? Keep in mind that some people live very well servicing the needs of not-too bright people.

Should we bring back deptors prison ?

Should we severly tighten credit access and credit requirements ?

Can we or should we save people from themselves if possible ? Some people just need to learn through the school of hard knocks.

 

[d]

unfortunately, "we" don't restrict "our" idiocy to money

 

[newyorklady]

this is an instant gratification culture. it really does sicken me. people bring it upon themselves. when you think you deserve what you have not earned there are going to be ramifications

 

[Cut-Throat]

After reading a number of news articles this week about subprime mortgages and the investigations involving the credit card industry I've come to the conclusion we live in a country of idiots when it comes to money.

You mean these same people selected our current president? - How could that be?

 

[UncleHoney]

You mean these same people selected our current president? - How could that be?

Maybe it was the promise of a chicken in every pot and and the fear of WMD's, who knows.

 

[UncleHoney]

So just what do you propose UncleHenry ? Keep in mind that some people live very well servicing the needs of not-too bright people.

Should we bring back deptors prison ?

Should we severly tighten credit access and credit requirements ?

Can we or should we save people from themselves if possible ? Some people just need to learn through the school of hard knocks.

You got me on this one. Maybe a license to spend money?

The big problem is that most of us will end up paying for all their mistakes after the government figures out they need to fix the problem.

 

[Warthog]

One thing we can do is make it much harder to declare bankrupcy, or at least make it a lifetime penalty.

If somone is fiscally irrresponsable, that's it, game over, no second chances. It should be a permanent blackmark on their credit record.

I went from 50k in debt to six-figure positive net worth (including my home mortgage...which is offset by significant equity in investment properties) in less than 10 years. So I really don't want to hear about 'how hard it is' from someone in the hole.

Call me a mean bastard, but I'm getting really tired of paying for everyone else.

I'm working on my taxes...can you tell

-Warthog

 

[wabmester]

What problem are you guys trying to solve?

The subprime borrowers got to live in a big house.

The seller of the house got top dollar.

The brokers made a killing.

The lender sold the loan to somebody else.

The only loser in this scenario is the investor who bought the CMO and mispriced the risk. So are we calling investors idiots?

 

[newyorklady]

One thing we can do is make it much harder to declare bankrupcy, or at least make it a lifetime penalty.

If somone is fiscally irrresponsable, that's it, game over, no second chances. It should be a permanent blackmark on their credit record.

I went from 50k in debt to six-figure positive net worth (including my home mortgage...which is offset by significant equity in investment properties) in less than 10 years. So I really don't want to hear about 'how hard it is' from someone in the hole.

Call me a mean bastard, but I'm getting really tired of paying for everyone else.

I'm working on my taxes...can you tell

-Warthog

the laws were already changed. much harder now. good thing in my opinion, but a shame that the media pushes material goods and makes credit easy with no financial education.

 

[UncleHoney]

What problem are you guys trying to solve?

The subprime borrowers got to live in a big house.

The seller of the house got top dollar.

The brokers made a killing.

The lender sold the loan to somebody else.

The only loser in this scenario is the investor who bought the CMO and mispriced the risk. So are we calling investors idiots?

I guess if you look at from the point of view that the buyer was just paying rent for the time they lived there then that's true.

But it sure looks like a setup from the get-go as far as passing the buck, or should we say the nonexistent buck.

The other losers are the people that bought into neighborhoods only to find out after a year that 30%-40% of the homes are in foreclosure and their home values are going down by the day.

 

[Olav23]

What about lenders offering 500k interest-only mortgages to people who make 15k a year? But it is okay, they can just collect a check when the going is good, and when the going gets bad, sell off the loans, and declare bankruptcy just like the "homeowner".

Or, how about state farm. Let's collect an insurance payment monthly, and if you are ever late, we're coming after your ass or dropping your coverage.

Oh crap, a hurricane just hit your house! I know we collected a check for 10 years that if we even invested in govt bonds, we could cover all your damages, but instead, we'll just declare bankruptcy as well and expect a bail out from the govt! We can pay you out with government money, and then become solvent again and begin collecting checks once more!

I think the irresponsibility works at every level. Dumb homeowner, dumb lender, dumb insurance company, All money is dumb money! Or wait, maybe it is genius. One or the other

Either way, sounds like a nice racket!

 

[Texas Proud]

When I was living in London there were many people who lived on overdrafts.. no savings at all... much more than people here IMO..

But, people here are taught that it is the payment, not the price that is important... I have heard many times from people "I can afford $500 per month for a car".... well, if that is what you think, they got you...

What is also so surprising... a lot of these people are SMART... so why do they get brain freeze when it comes to money

 

[newyorklady]

well, i lived in london too, and the new laws haven't catched up there yet. cheers.

 

[ShokWaveRider]

A country of money idiots?

How can these people function in everyday life and get into so much hot water when it comes to their finances?

Good Job Breathing isinvoluntary, otherwise 80% of the population would be dead!

SWR

 

[MasterBlaster]

What problem are you guys trying to solve?

The subprime borrowers got to live in a big house.

The seller of the house got top dollar.

The brokers made a killing.

The lender sold the loan to somebody else.

The only loser in this scenario is the investor who bought the CMO and mispriced the risk. So are we calling investors idiots?

The real loser(s) is(are) the people who get up and go to work everyday that pay their bills on time and who think that if they borrow money from someone then they have an obligation to pay iy back.

Those people lose in that the interest rate they are charged and the built in price they pay has a hidden tax on it to support the deadbeats. So the people who pay their bills are living less well so that Jonny Deadbeat can live "the good life".

That in a nutshell is the inherent unfairness of the current system.

 

[yakers]

The real loser(s) is(are) the people who get up and go to work everyday that pay their bills on time and who think that if they borrow money from someone then they have an obligation to pay iy back.

Those people lose in that the interest rate they are charged and the built in price they pay has a hidden tax on it to support the deadbeats. So the people who pay their bills are living less well so that Jonny Deadbeat can live "the good life"..

I certainly understand the sentiment and I personally hate debt. But the business system is *supposed* to address this by having lower loan rates for good borrowers. A lifetime ago, B&W movies & small towns, the local banker made loans where the character of the borrower was a major component of the loan decision. Now, in our rational world its all numbers & charts. But that is where we are and for the folks lending out money, they have to deal with the market and hope to get a good return.

 

[perinova]

I certainly understand the sentiment and I personally hate debt. But the business system is *supposed* to address this by having lower loan rates for good borrowers. A lifetime ago, B&W movies & small towns, the local banker made loans where the character of the borrower was a major component of the loan decision. Now, in our rational world its all numbers & charts. But that is where we are and for the folks lending out money, they have to deal with the market and hope to get a good return.

Yep ethics plays a role in the problem too. YOu would not want to lend to crooks. But also you shouldn't lend money to an idiot who doesn't realize he won't be able to pay it back.
Or lending money on bad terms is another example. IMHO interest only loans are simply extortion: same as renting but all the liability!!! The house belong to the bank all the time. WTF.

 

[Sam]

How can these people function in everyday life and get into so much hot water when it comes to their finances? Is the lure of the good life so blinding they can't see their empty wallets?

My question is why are you upset about other people sloppy finances? I can understand it if your ultimate motive is to help them better themselves. If so, start helping, it will be very rewarding, imo.

 

[tryan]

Is the lure of the good life so blinding they can't see

Short answer ... YES.

Long answer ... It took a whole circus of "performers" to get to this point.

The ring leader is the realtor(s) who called upon the clowns (lawyers, mortgage broker and underwriter, appraiser, and finally the home inspector) to entertain the buyer so they will sign away thier lives without reading any of the print (large OR small).

On the bright side, I read Freddy is forcing tougher standards. For example a borrower will have to qualify at the UPPER end of the ARM before they'll buy the loan. WOW ... finally ... it's not rocket science, people!

 

[genghis]

With all these idiots wandering around, I'm disappointed that I'm not richer!!!!!

 

[Bikerdude]

You mean these same people selected our current president? - How could that be?

Actually it’s the people who voted for Kerry. Some of the smartest dumb people I know.

Just had to add some balance.

 

[bssc]

With all these idiots wandering around, I'm disappointed that I'm not richer!!!!!

That's because the idiots have driven up the price of everything with their borrowed money.

 

[sgeeeee]

It seems to me that rather than try to "get tough" on people who go bankrupt, we would be better off if we "got tough" on stupid lenders. Make the laws punish credit card companies and lenders when they loaned money to people who were clearly fiscal idiots. Let idiot consumers off the hook from rediculous debt and watch how fast lenders get smart. Once lenders begin to act rationally, borrowers will be forced to get smart or be broke.

 

[lswswein]

It seems to me that rather than try to "get tough" on people who go bankrupt, we would be better off if we "got tough" on stupid lenders. Make the laws punish credit card companies and lenders when they loaned money to people who were clearly fiscal idiots. Let idiot consumers off the hook from rediculous debt and watch how fast lenders get smart. Once lenders begin to act rationally, borrowers will be forced to get smart or be broke.

You don't need the govt to pass any laws for this to happen. The free market is taking care of it right now.

-h