The latest round of bailouts - can someone explain?

[Gardnr]

I don't really have any idea how hard it isto get a loan these days. Anyone tried? I was on the phone with Pen Fed earlier today to make sure they got the ACH information I put in on line and they wanted to increase my credit card limit, but that is hardly representative.

USAA FSB threw at me an AMEX rewards card with 0% interest for 12 months, zero fee for balance transfers/convenience checks for 60 days, no annual fee, $25,000 limit, double points for 12 months, 2500 point bonus. How could I resist?

I'm sure I've got stellar credit (I've never bothered to pay for a credit score), and I haven't incurred a finance charge in almost 20 yrs, always paying it off monthly. So it's not necessarily representative, but it's interesting.

 

[FinanceDude]

I have a client with excellent credit who was turned down for a loan because he only wanted to put 10% down on an investment property, and get a mortgage for the rest. Needless to say he's not happy.

 

[ziggy29]

USAA FSB threw at me an AMEX rewards card with 0% interest for 12 months, zero fee for balance transfers/convenience checks for 60 days, no annual fee, $25,000 limit, double points for 12 months, 2500 point bonus. How could I resist?

Same here, a couple years ago. And even now, if I carried a balance from month to month (I don't), the interest rate is set at prime (now 4.5%).

 

[laurence]

Brewer, if I was the lynch mob you were the sheriff that talked me down, but you better keep that guy under lock and key just in case. I will shut up about it, except to say I think the initial thought was the subprime crisis wouldn't spread to Alt-A, so I worry that these purportedly squeaky clean loans may only look that way on the surface.

As far as credit, I could still plant a forest with the weekly offerings, and Home Depot and Lane furniture both gave me huge lines to buy stuff. But DW and I are both at or above 800, so I really think they are tying to get credit moving again for the high 600's crowd. Knew someone who was turned down for a car loan with a ~670 credit score - not really turned down, they just wanted 10% up front which he didn't have (I know, there's your problem).

 

[Hamlet]

My wife just got a 12 month 0% interest no balance transfer offer for a US Bank credit card. I haven't seen one of those for a long time.

Everyone keeps talking about credit markets being frozen, but I don't see it, and I'm not sure that there is a good way to judge that, short of waiting to see the bank 10k's next year.

My personal suspicion is that it is bunk, and that credit is still widely available, just somewhat less available than it was in bubble times.

Having credit availability reduced from "stupid crazy here's a loan if you can fog a mirror" levels is not a "freeze".

I don't really have any idea how hard it isto get a loan these days. Anyone tried? I was on the phone with Pen Fed earlier today to make sure they got the ACH information I put in on line and they wanted to increase my credit card limit, but that is hardly representative.

 

[ziggy29]

My wife just got a 12 month 0% interest no balance transfer offer for a US Bank credit card. I haven't seen one of those for a long time.

Everyone keeps talking about credit markets being frozen, but I don't see it, and I'm not sure that there is a good way to judge that, short of waiting to see the bank 10k's next year.

My personal suspicion is that it is bunk, and that credit is still widely available, just somewhat less available than it was in bubble times.

Having credit availability reduced from "stupid crazy here's a loan if you can fog a mirror" levels is not a "freeze".

I think most of us here are not a good representative sample. I suspect that the nature of most of us here is that we are careful and generally responsible about money (who else could be targeting early retirement in most cases?), so we may not be feeling what the typical consumer is feeling. I would wager that the average FICO score of the contributors on this board would be a lot higher than the population at large.

 

[Zoocat]

The latest from USBank is the "platinum" checking account. Lots of pretty goodies like free money orders and travelers checks, one free overdraft charge, special services on cash advances that I never use. Capital One keeps sending me letters letting me know I am eligible for "special services" if call them up (so they can try to get me to buy more services).

I think that the banks are luring the customers who have excellent FICOs hoping to get them into (more) debt. That's a losing proposition for the banks because this segment has great credit because they are not in debt and manage their money.

I'm wondering if the entire financial industry is undergoing a VERY much needed deleveraging. Do we really need all these banks and credit card companies?

A relative works at a small bank in Calif that is in good shape not having made any "creative" mortgages during the boom. But the bank is still getting a 25 million advance from the government!!!

 

[brewer12345]

I think most of us here are not a good representative sample. I suspect that the nature of most of us here is that we are careful and generally responsible about money (who else could be targeting early retirement in most cases?), so we may not be feeling what the typical consumer is feeling. I would wager that the average FICO score of the contributors on this board would be a lot higher than the population at large.

IIRC the average FICO for the US population is in the high 600s, so we are talking about tons of people affected in the general population. Investment property I am not particularly concerned about: I am thinking more about residential mortgages, auto loans and similarthat underpin much consumer spending.

 

[FinanceDude]

IIRC the average FICO for the US population is in the high 600s, so we are talking about tons of people affected in the general population. Investment property I am not particularly concerned about: I am thinking more about residential mortgages, auto loans and similarthat underpin much consumer spending.

So, is it fair that those of us with FICO scores in the low to mid 800's should bail out the folks that have the 500-600 FICOs, because that's what we're doing.........

 

[kumquat]

It wasn't long ago the pundits predicted that Canada would break up with the west-central provinces joining the USA. Why would northern USA want Canada and why would Canada want them?

 

[Brat]

I am trying to figure out what 'back to work' program Obama's folks will come up with that both targets the skills of the unemployed and invests in infrastructure.

While repair of roads and bridges is badly needed I don't see that addressing un or under employment because a lot of the unemployed are white collar or hammer & nail gun construction workers. However, odds are asphalt is cheaper right now than it has been for a couple years.

Manufacturing solar and windmill electrical generation would create/maintain manufacturing jobs... something like the BPA or TVA for green energy would be a model.

Some white collar workers could be useful to help in schools, our children are our human infastructure.

Now, what to do with all those unemployed Wall Street financiers...

Thoughts folks

 

[Hank]

I don't really have any idea how hard it isto get a loan these days. Anyone tried? .

For the first time ever, I received a direct marketing letter from my credit union telling me that they were still "offering great rates on" car loans, personal loans, etc. Evidently they felt a need to proactively solicit new loan business.

 

[laurence]

So, is it fair that those of us with FICO scores in the low to mid 800's should bail out the folks that have the 500-600 FICOs, because that's what we're doing.........

It's a cafeteria of bad choices. We ragged on people who got in over their head in houses they couldn't afford here in my neighborhood. We told them to eat cake. Now I have a house behind me empty, a house across the street, a house around the corner, and they all look like crap. My property values are in free fall, and crime is up. Neighborhood is quiter, though. So while it may annoy me that my neighbor gets debt forgiven and a 3% mortgage, it's better than wondering what the sound from the empty house was and if you have a crack head squatting 20 feet from your kid.

Same with this credit issue, we'll be hurt a lot more by having the wheels fall off just to spite them. The real problem is we haven't found something that works yet. If we had a crystal ball and knew that $1 Trillion spent on X and Y would make the problems go away, I'd sign up for that. But this shotgun ADHS Bipolar approach is killing us.

 

[brewer12345]

I am trying to figure out what 'back to work' program Obama's folks will come up with that both targets the skills of the unemployed and invests in infrastructure.

While repair of roads and bridges is badly needed I don't see that addressing un or under employment because a lot of the unemployed are white collar or hammer & nail gun construction workers. However, odds are asphalt is cheaper right now than it has been for a couple years.

Manufacturing solar and windmill electrical generation would create/maintain manufacturing jobs... something like the BPA or TVA for green energy would be a model.

Some white collar workers could be useful to help in schools, our children are our human infastructure.

Now, what to do with all those unemployed Wall Street financiers...

Thoughts folks

I think you will see some of all the above. For sure any package will include roads, bridges, dams, levies, etc. simply because so much of this stuff is in terrible shape and the municipalities definately cannot fund it in this environment. I would expect that we will also see energy infrastructure, exploration and research investments. Would also expect investment in education (perhaps some new schools as well as more teachers). Not sure beyond that.

Interesting you should mention asphalt. I actually have bought a piece of a company that produces asphalt because the supply picture has been tightening for the past several years as refiners install equipment that allows them to squeeze every last drop of the "good stuff" from crude, leaving less behind to make asphalt with. It looks to me like the supply side is in no way prepared to cheaply supply a lot more asphalt if we embark on a big program of road building.

 

[brewer12345]

It's a cafeteria of bad choices. We ragged on people who got in over their head in houses they couldn't afford here in my neighborhood. We told them to eat cake. Now I have a house behind me empty, a house across the street, a house around the corner, and they all look like crap. My property values are in free fall, and crime is up. Neighborhood is quiter, though. So while it may annoy me that my neighbor gets debt forgiven and a 3% mortgage, it's better than wondering what the sound from the empty house was and if you have a crack head squatting 20 feet from your kid.

Same with this credit issue, we'll be hurt a lot more by having the wheels fall off just to spite them. The real problem is we haven't found something that works yet. If we had a crystal ball and knew that $1 Trillion spent on X and Y would make the problems go away, I'd sign up for that. But this shotgun ADHS Bipolar approach is killing us.

A nice summary of my thoughts on the subject. Another way of putting it is that I don't particularly care about the people who foolishly get caught up in meth, but if my tax dollars paying for them to get treatment keeps them off the streets and reduces crime I can live with that. It is enlightened self interest.

 

[Dawg52]

I think this loss of empire is already a wrap. The Bush wars have likely advanced the timeline 10 or 20 years.

Ha

I hope I'm long gone before Russian or Chinese tanks come rolling down the street.

 

[DblDoc]

I am trying to figure out what 'back to work' program Obama's folks will come up with that both targets the skills of the unemployed and invests in infrastructure.

While repair of roads and bridges is badly needed I don't see that addressing un or under employment because a lot of the unemployed are white collar or hammer & nail gun construction workers. However, odds are asphalt is cheaper right now than it has been for a couple years.

Manufacturing solar and windmill electrical generation would create/maintain manufacturing jobs... something like the BPA or TVA for green energy would be a model.

Some white collar workers could be useful to help in schools, our children are our human infastructure.

Now, what to do with all those unemployed Wall Street financiers...

Thoughts folks

Many of those financial bankers are graduates of places like MIT with engineering and math degrees. Hopefully they will now do something more usefull with their lives then creating innovative ways to create risky financial products. I read an interesting article the other night about who is hiring grads from business schools. Currently it is companies that actually do or make things and they can now pick from the cream of the crop rather then the dregs as in years past as the high $ jobs in banking and finance are no longer there. There just may be a silver lining in all this.

DD

 

[haha]

I hope I'm long gone before Russian or Chinese tanks come rolling down the street.

Dawg, if you don't quit banging your head you will be gone before you planned.

Now stoppit, ya hear?

ha

 

[Brat]

To tell you the truth I haven't priced asphalt, at a gut level I assumed that it would track the price of oil.

I have noticed that the removed surface material is being reclaimed in our area.. we use asphalt almost exclusively (those studded tires chew up concrete). Other than concrete what other road surfacing options are there?

I agree with you on drug treatment.. unfortunately few of the unemployed have the skills to deliver those services. If meth use was tackled with the same effort as that given tobacco we would be a healthier and safer nation. Putting users and small dealers in prison is expensive. Decreasing demand is one sure way to reduce drug wars in Mexico.

 

[Dawg52]

Dawg, if you don't quit banging your head you will be gone before you planned.

Now stoppit, ya hear?

ha

Yeah but I always chase it with one of my meds.

 

[hankster]

To tell you the truth I haven't priced asphalt, at a gut level I assumed that it would track the price of oil.

I have noticed that the removed surface material is being reclaimed in our area.. we use asphalt almost exclusively (those studded tires chew up concrete). Other than concrete what other road surfacing options are there?

I agree with you on drug treatment.. unfortunately few of the unemployed have the skills to deliver those services. If meth use was tackled with the same effort as that given tobacco we would be a healthier and safer nation. Putting users and small dealers in prison is expensive. Decreasing demand is one sure way to reduce drug wars in Mexico.

I recently read a news story about asphalt. Pretty much what Brewer said. The refineries have shifted production toward gas and diesel and as a result, asphalt is predicted to be in short supply for awhile.

 

[dinodino]

U.S. moves to thaw credit for consumers - Economy in Turmoil- msnbc.com

So after all the hemming and hawing about $700 billion, I wake up to find another $600 billion in the mix like it's no big deal? I'm very confused.

Basically, our elected officials are scum and have no regard for the Constitution or the taxpayers. That's it in a nutshell.

 

[laurence]

Mortgage rates fell through the floor today!

Mortgage security rates fall after Fed action - washingtonpost.com

I guess this might be what it takes to free up the credit markets, let's see if it holds.

 

[Nords]

Interesting you should mention asphalt. I actually have bought a piece of a company that produces asphalt because the supply picture has been tightening for the past several years as refiners install equipment that allows them to squeeze every last drop of the "good stuff" from crude, leaving less behind to make asphalt with. It looks to me like the supply side is in no way prepared to cheaply supply a lot more asphalt if we embark on a big program of road building.

To tell you the truth I haven't priced asphalt, at a gut level I assumed that it would track the price of oil.
I have noticed that the removed surface material is being reclaimed in our area.. we use asphalt almost exclusively (those studded tires chew up concrete). Other than concrete what other road surfacing options are there?

I recently read a news story about asphalt. Pretty much what Brewer said. The refineries have shifted production toward gas and diesel and as a result, asphalt is predicted to be in short supply for awhile.

Asphalt is in painfully short supply around here. Only one plant produces it and it doesn't get anywhere near the feedstock that it could use. Road projects are strung out for months depending on its availability, and chewed-up road surface is shipped back to the plant for reprocessing and return later that week.

At some point it's going to be cost-effective for idle tankers or bulkers to bring asphalt over here. We're not far away on price.

 

[ERD50]

The private sector (which includes the consumer) is de-leveraging, which is a very painful process. To ease this pain, the Fed and Treasury are leveraging up big time. It's sort of like a "Conservation of Leverage" principle, where the total leverage of the economy is held "constant" to ease the overall pain, while transferring it from the private to the public sector, not unlike the conservation of energy or momentum in a closed system. What possibly awaits us at the other end of this process a few years down the road is frightening to me.

I'm not saying it shouldn't be done. I'm just afraid we may be building a ticking time bomb which could result in serious inflation a few years out. At some point we will have to face the music and de-lever the entire economy. I guess the government believes it can do this slowly over a period of many years, and this will be preferable to having the private sector do it over a shorter time period. Time will tell.

I just have not been able to absorb all the posts and info out there on this topic, but on general principles, this post seems to summarize what I see as the basic issue.

So, what concerns me about much of what I'm hearing, is that we just need to get the credit markets going again. But that was partly the problem. I guess I'd feel OK if that was viewed as the "band-aid", and there was some serious talk about how we (citizens, businesses and govts) de-leverage going forward. Even if it is baby steps, it seems like we (well, anyone who is over-leveraged) need to start doing this.

In many ways, it seems like it is this leverage that turns a bad situation from "sorry, I'm going out of business", to " hey, I'm going out of business and I'm dragging a bunch of other people with me".

And when it affects those who were not over-leveraged, well.... arghhhh.

-ERD50