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Old 09-17-2007, 03:33 PM   #41
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These same "ignorant and nave" people also enjoy the right to vote, own firearms, have children, etc. They can't have it both ways.

Either one is a competent adult, with all of the attendant rights and responsibilities; or one is not.
Well said Milton! I could not have put it better...
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Old 09-17-2007, 03:56 PM   #42
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A depressingly large number of people are allowed to vote --- for the candidates I oppose.
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Old 09-21-2007, 01:31 AM   #43
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How many of those mortgages are for typical starter homes in a former cow pasture and how many are for McMansions w/new car or a cash-out refi? I do feel for the familes struggling for their first home, but not for a re-fi or the conspicuous consumers. Recently, a columnist wrote that all those interest dollars that are going to financial institutions would be better spent if they were invested directly into the economy. Paying interest is like taxation, a necessary evil with an ineffcient middleman.
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Old 09-21-2007, 06:13 AM   #44
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Recently, a columnist wrote that all those interest dollars that are going to financial institutions would be better spent if they were invested directly into the economy. Paying interest is like taxation, a necessary evil with an ineffcient middleman.
I would have to disagree. What are the banks, but part of the economy. The interest adds to the bottom line of a company. That company has owners and it adds to the bottom line of those owners. The same as if it were spent at Kmart, Belk, Ford, etc. I would say, though, that paying interest is a waste most of the time.
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Old 09-21-2007, 10:44 AM   #45
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I would have to disagree. What are the banks, but part of the economy.
Yes, I agree. It is not like banks bury money in deep caverns, never to be seen again.
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Old 09-21-2007, 11:41 AM   #46
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I would have to disagree. What are the banks, but part of the economy. The interest adds to the bottom line of a company. That company has owners and it adds to the bottom line of those owners. The same as if it were spent at Kmart, Belk, Ford, etc. I would say, though, that paying interest is a waste most of the time.
I figured most of it was used to fund the obscene pay package(s) for senior management....
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Old 09-21-2007, 12:36 PM   #47
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I figured most of it was used to fund the obscene pay package(s) for senior management....
Which then trickles down to the yacht manufacturers, mansion builders and diamond merchants, or so they say.
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Old 09-21-2007, 01:23 PM   #48
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I prefer it trickle down to the dividend yield, but methinks they don't care what I prefer.
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Old 09-21-2007, 01:52 PM   #49
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I figured most of it was used to fund the obscene pay package(s) for senior management....
I would bet most of the interest paid in is paid back out to bank depositors and goes to bank operations (employee's salaries, bank buildings and ATMs, etc.). All of which subsequently circulates in the economy.

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Old 09-22-2007, 04:37 PM   #50
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Old 09-23-2007, 03:24 PM   #51
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My Simple LBYM plan: For every $10 of income, spend less than $9.99.
That's only 0.1%. Is that enough?
0.10%
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Old 09-23-2007, 03:57 PM   #52
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That's only 0.1%. Is that enough?
0.10%
Well, I'm not married to the concept. I suppose one could save more.
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Old 09-24-2007, 11:32 AM   #53
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I agree with Milton....why would anyone sign away their life for a mortgage worth thousands of dollars, if they didn't understand the loan/terms? It is common sense for god's sake!
As for the bailout....I don't think it is a good idea....what about accountability for your actions? I don't feel bad for the people....not one bit...maybe they need to learn a hard lesson of not over-extending themselves to live like the Jonses!
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Old 09-24-2007, 01:57 PM   #54
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That's only 0.1%. Is that enough?
0.10%
He said "simple", not "sufficient".

Anyway, putting aside as little as 0.1% is still doing better than the average American, who has a negative savings rate [Hooray for the Low Savings Rate!].
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Old 09-24-2007, 08:29 PM   #55
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I feel somewhat bad about the mortgage crisis (not bad enough, necessarily, to jump at the chance to bail out greedy buyers OR greedy banks..), only because I think Americans (and not only) are basically innumerate.

We are talking about people who have to push the button with the hamburger or do a scan rather than ring up a price, and who struggle to make change. They are sold stuff based on the monthly payments because that's a yardstick they can understand, while the fine print may be intentionally obscure. Buying a car for cash makes the salesman's face fall, 'cause they know they make a bundle on the financing. Not exactly the same with a house, but then there's only a select few that can buy a house for cash in the US. Mortgage brokers can screw you; banks can screw you. Few people are mathematically equipped to deal with the most important purchase in their lives despite the fact that most people undertake it. Look at how easily they rack up CC debt at what can become double-digit rates.. they're not gonna be figuring what a 1% or 2% mortgage interest rate rise means until it's too late. Those numbers sound puny until they materialize at some "far-off" possible future date. Who knows that they might be thinking.. at 5% or 6%.. "hey, it could go up.. OR DOWN!!"

As shown on the "Get Rich Fast (You Chump)" thread.. even relatively sane people can get be tempted into thinking they can replicate the Real Estate Winner stories that even the fairly smart folks on the board can't seem to agree about philosophically... (just a matter of numbers? business savvy? dumb luck? location? people skills?).

Dbldoc is right in that the real "culprit" is the liberal secondary market. In Europe, where loans are generally kept in house (and examined more closely for ability to pay), the problem exists to a much lesser degree (and mortgages are harder to obtain). If you're broke, they lose; when instead you shunt the risk onto someone else, the sky is the limit. Everyone in the chain was convinced they could have their cake and eat it, too: the borrowers, the intermediaries, and the secondary debt-purchasers. The Nobel-Prize-winner types goofed up just as much as the high-school dropouts, but somehow I have an idea they'll be feeling less direct pain.

Gumby, I think the analog to Household Finance is Rent-a-Center. Geez, there was one near me, and the stuff was so crappy you could have done far better at the Salvation Army if you invested in some stain remover. They did have wide-screen TVs, though!
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Old 09-24-2007, 09:41 PM   #56
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We are talking about people who have to push the button with the hamburger or do a scan rather than ring up a price, and who struggle to make change.
Sad but true. Only in the good old USA would you find a market for something like this: Koloroo TipKalc: Clever tip calculator widget for your iPod.
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Old 09-24-2007, 11:01 PM   #57
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Sad but true. Only in the good old USA would you find a market for something like this: Koloroo TipKalc: Clever tip calculator widget for your iPod.
Many years ago when the nearby Ernst Hardware store was going out of business they had a clearance with everything marked 90% off. The young female clerk was having a tough time calculating the final price so my DW rattled off the prices to the clerk. The clerk was amazed how DW could figure the price so fast and without the add of a calculator. It is a said state when people don't have basic skills.
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Old 09-24-2007, 11:02 PM   #58
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oohhh Milton.. I thought the damn thing was FREE.. but it's TEN BUCKS!

(You gotta assume, too, that we can all work the iPod in the first place!)

---
I think I told elsewhere here a story my sister recounted: She was in a store and had a purchase at the counter, but there was a power outage or the register didn't work or some such. She wanted to buy the merch. and get out. Because the shop gals couldn't trust themselves to figure out the tax, the change, etc., the (cash) sale was lost. Sis had even offered to help them write down the details of the sale and calculate the tax! No dice. Oh well.

--
also, Gumby, P.S. .. I recall in Jr. High (1970s) going though exercises that mimicked the "Household Finance" scenarios.. with an eye towards giving us some minimal tools and awareness of predatory lending practices. Have they done that in the last 20 years --systematically-- in the schools, or not? I'd be curious to know.
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Old 09-25-2007, 09:32 AM   #59
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Old 09-25-2007, 10:24 AM   #60
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We are talking about people who have to push the button with the hamburger or do a scan rather than ring up a price, and who struggle to make change. They are sold stuff based on the monthly payments because that's a yardstick they can understand, while the fine print may be intentionally obscure. Buying a car for cash makes the salesman's face fall, 'cause they know they make a bundle on the financing. Not exactly the same with a house, but then there's only a select few that can buy a house for cash in the US. Mortgage brokers can screw you; banks can screw you. Few people are mathematically equipped to deal with the most important purchase in their lives despite the fact that most people undertake it. Look at how easily they rack up CC debt at what can become double-digit rates.. they're not gonna be figuring what a 1% or 2% mortgage interest rate rise means until it's too late. Those numbers sound puny until they materialize at some "far-off" possible future date. Who knows that they might be thinking.. at 5% or 6%.. "hey, it could go up.. OR DOWN!!"
An interesting point of view ladelfina. But I guess my question to you would be... do you beleive that these people are truly stupid (meaning of a very low intelligence), or just lazy (able to learn how do things, but just choose not to)? I guess I am a bit more optimistic about people than you are. I believe that most people are capable to earn their own way in the world, and are intelligent enough to govern their own lives. If people are truly stupid (low intelligence), then I guess that these people do need some help, but I would think this is a very low percentage of the population.
I have watched attempts at trying to save people from themselves and it usually does not work, and those that try (while a noble effort) are often hated for interfering. I think the best that anyone can do is offer help and advice when asked, try to point out bad things that could happen, and then just sit back. Most people that seem to get "screwed over" as you put it, are those that were trying to get something for nothing. I mean it is certainly fraud when a con-man offers to sell you the brooklyn bridge. But at the same time, it was the thought of "easy money" that hooked him in the first place. If a man offers to sell you a new BMW for $4000, you should not be shocked and surprised to learn later that the car is stolen, or has some major problems with it. The claim of "well how was I supposed to know that" just does not hold water.
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