The Great Contradiction.

[The Hedgehog]

Does anyone else pick up on how many Congressmen and the President keep contradicting themselves.

They keep beating on the banks for lending money to folks that can not pay it back and at the same time keep telling them to get out there and do it again. And no, the teaser rate arguement does not work. 41% of those with loan problems can not pay it back if you dropped the interest rate to zero.

I am ok with the fact that we will need more regulation but that is not exactually stimulative either.

[zelatore]

While I basically tend to agree with the old saw about 'how do you tell if a politician is lying.....his lips are moving' I think in this case they do need to loosen the purse strings a little. No, not back to the levels they were at, but looser than currently.

Here's an example from my business: last weekend we did a small local boat show. Several lenders had booths on site. They were actually willing to lend money (for a while there NOTHING was happening) but aside from stiffer credit requirements, they also wanted 35% down.

35%? That's a tough pill to swallow! I'm sure the argument is that it's a luxury item; and a quickly depreciating asset to boot. But even though I'm not exactly selling to minimum wage workers, even people with the financial strength to buy a $300K-$3M boat have a hard time coming up with $100K-$1M cash!

For example, I could be in the market for a $300K boat in a few years. But there's no way I can swing $100K cash down.

[The Hedgehog]

While I basically tend to agree with the old saw about 'how do you tell if a politician is lying.....his lips are moving' I think in this case they do need to loosen the purse strings a little. No, not back to the levels they were at, but looser than currently.
Here's an example from my business: last weekend we did a small local boat show. Several lenders had booths on site. They were actually willing to lend money (for a while there NOTHING was happening) but aside from stiffer credit requirements, they also wanted 35% down.
35%? That's a tough pill to swallow! I'm sure the argument is that it's a luxury item; and a quickly depreciating asset to boot. But even though I'm not exactly selling to minimum wage workers, even people with the financial strength to buy a $300K-$3M boat have a hard time coming up with $100K-$1M cash!
For example, I could be in the market for a $300K boat in a few years. But there's no way I can swing $100K cash down.

Unfortunately that is the way it is going to be on luxury and rapidly depreciating items for a while. You can probably do better than that on smaller ticket luxury items though like boats up to $150k. You will have to go to banks that don't market as aggressively.

[MOP]

I still say give it to American citizens on a pro rated basis with the following caveats, have paid taex for atleast five years, all money must go toward bills, if anything is left over they can spend it how they like but must spend it all. Poof the banks would be Ok and many would buy cars and other big ticket items the economy would get better in a hurry. The way it is setup now big business, good old boys and pay backs will eat it all and very little if anything will get better.

[handfulz28]

41% of those with loan problems can not pay it back if you dropped the interest rate to zero.

That's what I've been trying to point out: if you don't have a job, it doesn't matter what kind of deals you get on your debt. Everybody wants to blame "the housing crisis" for "the credit crisis"....when it's really been "the job crisis".


For example, I could be in the market for a $300K boat in a few years. But there's no way I can swing $100K cash down.

Lenders have gotten creamed in this market. Why is it so outrageous that a lender protect their investment by requiring lower LTVs? The historical standard for houses USED to be 20% down...that's for an APPRECIATING asset. Hasn't all the criticism about our economy centered on people living beyond their means? Yeah, it will put a dent in the sales to those who were borderline. But maybe it will bring prices down too.

[The Hedgehog]

That's what I've been trying to point out: if you don't have a job, it doesn't matter what kind of deals you get on your debt. Everybody wants to blame "the housing crisis" for "the credit crisis"....when it's really been "the job crisis".



Lenders have gotten creamed in this market. Why is it so outrageous that a lender protect their investment by requiring lower LTVs? The historical standard for houses USED to be 20% down...that's for an APPRECIATING asset. Hasn't all the criticism about our economy centered on people living beyond their means? Yeah, it will put a dent in the sales to those who were borderline. But maybe it will bring prices down too.

You are dang right

[roadtrip se]

I can't remember the exact number, but I heard last week that the actual number of mortgages that are in danger of not being paid was less than five percent, so 95% are paying on time. Again, I could be off so correct me, but it struck me as being a very small number for the publicity it gets as part of the reason for putting our economy into the crapper.

My opinion, no amount of "stimulus" or what I like to call payola is going to pull us up out of the dive. Solution? Shut up media (you got him elected okay, so time to relax), let the little guy get focused on going back to work and making a living/saving/buying wisely, and SMALL businesses will see the trend and begin to hire and invest. Until this starts, nothing is gonna happen positive, even with all of the manipulation.

Another one I like, as passed on from one of Danny's carpet dealers: "Even with 10% unemployment, 90% of people are working, so I am going to focus on selling carpet and flooring to those folks"!

You can call it dilusional, but until people start thinking this way, we are stuck.

Comments, Hedge?

[The Hedgehog]

I can't remember the exact number, but I heard last week that the actual number of mortgages that are in danger of not being paid was less than five percent, so 95% are paying on time. Again, I could be off so correct me, but it struck me as being a very small number for the publicity it gets as part of the reason for putting our economy into the crapper.
My opinion, no amount of "stimulus" or what I like to call payola is going to pull us up out of the dive. Solution? Shut up media (you got him elected okay, so time to relax), let the little guy get focused on going back to work and making a living/saving/buying wisely, and SMALL businesses will see the trend and begin to hire and invest. Until this starts, nothing is gonna happen positive, even with all of the manipulation.
Another one I like, as passed on from one of Danny's carpet dealers: "Even with 10% unemployment, 90% of people are working, so I am going to focus on selling carpet and flooring to those folks"!
You can call it dilusional, but until people start thinking this way, we are stuck.
Comments, Hedge?

SE,

You are right on all fronts. By 41%, I meant 41% of the 5%. I think that the stat is on the +90 day delinquencies but will confirm it.

You are so right on the media. In my line of work I see mostly the bad stuff these days. It makes me look through jaded eyes at times. I sometimes come home from a nasty week of this stuff and just won't turn on the TV (at least not the the news). I love to argue a good point and pick apart credit but don't like weeks where I walk out and the senior credit guys just look like I have beaten them down. Most of them are good guys that are experiencing the fallout of a tough market.

Hell, I am a Republican and wish they would shut up sometimes even though I think that about 75% of what they say is valid. It's almost like things would be better if they would take a portion of the stimulas money and pay the media to focus on positive stuff. Most of the stuff I look at is commercial. If I stepped back and looked at the whole portfolio I would say that 90% is ok in most shops. By ok I mean not past due (Thats' usually less than 2%)but pretty solid. I see plenty of folks with the means to buy stuff but are sitting on the sidelines because the media has them scared #$less.

As for me, like you I try to spread the positive word as much as I can. I say if you have the money go out and buy a car, some new toys and enjoy yourself. I don't even need a new car but find myself wanting to buy one just to make a point. There are many that can contribute something to the economy by buying. Like I said, most of what I look at is fine but until those start spending again...well things will stay in the crapper.

Dilusional? Its not.