Socialist States of America still not learning the lessons

[eddie]

Looks like the elitists in Germany are denying the German people a right to have an airport that works! Leave it to the socialists to screw that up too!

http://news.msn.com/world/delays-gro...-shame-germans

[Skybird]

The Berlin airport is the biggest and most expensive jokes of all major construction projects currently being... being... tried in Germany, yes. The new central station Stuttgart 21 or the so-called Elb-Philharmonie or the new blue-water harbour at Bremerhafen are just three other prominent examples where leaders' personal megalomania led them to not do the table homework and calculations properly. There are more examples.

But we got a new air port in Kassel-Calden. 270 million. With four regional airports and Frankfurt Main Hub nearby. The construction went smooth and within time table, almost. The reward : they have one plane per day. The thing was wanted but irresponsible politicians who are not even in politics any longer. The losses this thing creates every day, must be payed by the tax payer.

Hoppenian explanation in action!

[Skybird]

On the US housing issue, cheap credits given to crowds of people who could not afford it was one of the key reasons that triggered the crisis 2007/2008. It was not the factor leading and creating the crisis in the decades before, but it was one of the triggers that finally blew it up.

And now they do the same insane suicidal trick again, while already having flooded the market with devalued money. First you place the explosives. Then you arm the igniters.

People do not learn, they just do not learn. Instead the try to solve every issue with the same old hammer that they happen to have learned as their only tool available.

And those politicians proposing this "solution"? Will never be held accountable. Just not voting for somebody is not holding that someone responsible for what he did - in fact what it is is letting him get away with it.

And who said that people will not vote for the sweet-talkers next time? They promise what people want: private property that people originally cannot afford, and cheap credit. Let the party go on. A material gain falling from heaven without having been worked for. Manna for the people!

Bills? What do you mean by "bills"...?

Stimulus packages, and all that. I laugh about this nonsense. That is no reasonable economic concept. That is economic superstition.

[Wolferz]

Doing the same thing over and over and over again expecting a different result each time.

[Bilge_Rat]

Originally Posted by Skybird

On the US housing issue, cheap credits given to crowds of people who could not afford it was one of the key reasons that triggered the crisis 2007/2008. It was not the factor leading and creating the crisis in the decades before, but it was one of the triggers that finally blew it up.

true, but that is not what we are talking about here, which you would evident IF you had quoted the ENTIRE article you linked to.

Before the crisis, about 40 percent of home buyers were first-time purchasers. That’s down to 30 percent, according to the National Association of Realtors.

From 2007 through 2012, new-home purchases fell 30 percent for people with credit scores above 780 (out of 800), according to Federal Reserve Governor Elizabeth Duke. But they declined 90 percent for people with scores between 680 and 620 — historically a respectable range for a credit score.

“If the only people who can get a loan have near-perfect credit and are putting down 25 percent, you’re leaving out of the market an entire population of creditworthy folks, which constrains demand and slows the recovery,” said Jim Parrott, who until January was the senior adviser on housing for the White House’s National Economic Council.

(...)

Deciding which borrowers get loans might seem like something that should be left up to the private market. But since the financial crisis in 2008, the government has shaped most of the housing market, insuring between 80 percent and 90 percent of all new loans, according to the industry publication Inside Mortgage Finance. It has done so primarily through the Federal Housing Administration, which is part of the executive branch, and taxpayer-backed mortgage giants Fannie Mae and Freddie Mac, run by an independent regulator.

The FHA historically has been dedicated to making homeownership affordable for people of moderate means. Under FHA terms, a borrower can get a home loan with a credit score as low as 500 or a down payment as small as 3.5 percent. If borrowers with FHA loans default on their payments, taxpayers are on the line — a guarantee that should provide confidence to banks to lend.

But banks are largely rejecting the lower end of the scale, and the average credit score on FHA loans has stood at about 700. After years of intensifying investigations into wrongdoing in mortgage lending, banks are concerned that they will be held responsible if borrowers cannot pay. Under some circumstances, the FHA can retract its insurance or take other legal action to penalize banks when loans default.

Since 2008, Banks have been exceedingly cautious, refusing to lend to borrowers which are very acceptable credit risks, which slows down the recovery. That is all we are talking about, not a return to the pre-2008 "wild west" days.

[Skybird]

We are talking about politicians telling banks not to be so cautious anymore in giving credits to untrustworthy people, but encouraging banks to take higher risks again so that people who cannot afford their own home nevertheless buy one - on tick. The reference to the past trustworthy creditscore from before the crisis - obviously was not good enough to not trigger the crisis. How one can conclude from that that it was a trustworthy standard for credit decisions then, escapes me. The outcome showed that it was not.

Same kind of credit bubble generating. Same procedure as before - just with even more devalued paper-money flying around, and an even bigger state debt.

It will blow up into people's faces once again in some years.

[Bilge_Rat]

well again, it is a question of whether you do not like government intervention per se or you are just worried that they will go too far.

A first time homeowner with a credit rating of 620-650 or more out of 800 is very credit-worthy.

Problem is Banks only want to lend to rich people. The US government pumped $800 billion into Banks not only to keep them solvent, but also so they would lend out funds and get the economy moving. They conveniently forget the second part.

There is nothing wrong per se with government backed loans to first time homeowners. Canada will garantee home loans which meet certain financial criterias as long as the buyer can come up with a 5% down payment. Most first time buyers use such loans. Yet Canada avoided the worst effects of the 2008 recession, the Canadian government did not pump one single cent into Canadian banks and the Canadian Housing market is doing pretty good.

Like everything else, the devil is in the details.

[AVGWarhawk]

As a person who has just closed on a new home, the banks are quite aggressive at investigating every aspect of ones financial standings. Good credit must come along with a good source of income. I had to explain every deposit into my checking and savings accounts. Not just once, but over three month period, once each month.

I can say, they are in fact practicing the same old stunts that produced the bubble burst. The banks still advise what one can afford month to month as far as a mortgage. I had found that what was suggest is not remotely close to the reality of my financial situation. Unless one does not pay insurances, water, electric, TV/cable or buy grocery then what is suggested is affordable is correct. If anyone does buy the services I stated, plus eat, then what the banks suggest is off the mark. The banks also base an affordable mortgage payment on gross income and not actual(net). This my friends is totally deceptive. A practice that needs to stop. They attempted to pull this on me. I was livid. The banks knowingly promote the gross income as the figure to work with than using net which is the correct way. I was told this is standard practice and set up by the Feds as the way to determine what one can afford.

[Skybird]

I am against credit-run consummation in principle. Keynesian economics to me makes no sense, and are dangerous, because they encourage the corruption of fiscal discipline, they also distort what as an ideal is described as the so-called "free market".

Government should not intervene in private trades between private people.

For German readers, I recommend this book on the desaster of the past 5 years unfolding, revisited in super slow-motion.

The best book I ever have read on what money is and what it really means, probably is this (English version). It is also available in German.

[mookiemookie]

but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.

Except that's not what caused it. Rampant deregulation, irresponsible securitization and poor decision making by the Fed is what caused it.

[frau kaleun]

Originally Posted by AVGWarhawk

The banks still advise what one can afford month to month as far as a mortgage. I had found that what was suggest is not remotely close to the reality of my financial situation. Unless one does not pay insurances, water, electric, TV/cable or buy grocery then what is suggested is affordable is correct. If anyone does buy the services I stated, plus eat, then what the banks suggest is off the mark. The banks also base an affordable mortgage payment on gross income and not actual(net).

Yup. When I used one of their little "calculators" to show me what I could "afford" in a house payment, the number was quite astonishing. Especially since I could easily do the math and deduct it from what I actually bring home every month, then deduct all my other bills and typical living expenses, and see what was left over.

I guess if you never wanted to put any money in savings, take a vacation, or repair or replace anything you own that breaks, or actually furnish that nice big expensive home you just bought, it would be fine. But that doesn't sound like much fun over the long haul.

[AVGWarhawk]

Originally Posted by mookiemookie

Except that's not what caused it. Rampant deregulation, irresponsible securitization and poor decision making by the Fed is what caused it.

And offering up a loan to anyone with a pulse. To me, it was one big cash grab by realtors, banks and mortgage brokers. Why not? It is all backed by the government.

[Bilge_Rat]

Originally Posted by Skybird

I am against credit-run consummation in principle. Keynesian economics to me makes no sense, and are dangerous, because they encourage the corruption of fiscal discipline, they also distort what as an ideal is described as the so-called "free market".

Government should not intervene in private trades between private people.

Being a capitalist myself, I agree in principle. However, unregulated capitalism gave us the excesses of the 19th century leading up to the great depression of 1929. The Free Market has never really been Free or worked as well as it should in theory.

Governement regulation is necessary to temper the excesses of the "Free market". The trick is always how much regulation is not enough or too much.

If you look at the '29 depression, what really made it bad was when all the Banks started going bankrupt in the early 30s. What would the world economy look like now if the US had not put any money in its banks in 08 and let the "Free market" drag down a chunk of the banking sector? better? worse?

[Skybird]

Originally Posted by Bilge_Rat

Being a capitalist myself, I agree in principle. However, unregulated capitalism gave us the excesses of the 19th century leading up to the great depression of 1929. The Free Market has never really been Free or worked as well as it should in theory.

Government regulation is necessary to temper the excesses of the "Free market". The trick is always how much regulation is not enough or too much.

If you look at the '29 depression, what really made it bad was when all the Banks started going bankrupt in the early 30s. What would the world economy look like now if the US had not put any money in its banks in 08 and let the "Free market" drag down a chunk of the banking sector? better? worse?

The government is a territorial monopolist itself, having the power to steal from everybody and declaring that robbery legal: it not only steals private property, but also makes the laws and decides how much should be stolen (taxes). In a democratic system, only those leaders make it to the top that lure and deceive the ,masses more successfully: by making big promises and using the loot to bribe them. This is what makes this a socialist redistribution scheme from those owning to those owning not. And worse, the need for competing in elections is what makes sure that those being the most competent in showing these character traits of anti-social and amoral standard and unscrupulousness make it to the top, while those being more ethically and realistically and shy away from winning by telling lies, cannot succeed. The system guarantees that only the amoral scum becomes leaders, and that is what we see everywhere happening. The democratic competition is not about competence and morals and realism, it is about lying, deceiving, corrupting and luring. Since elected leaders do not own the communities' wealth like a king does, they only can make use of the right to use it, and producing a resulting income by that they can claim for their purposes. So their interest horizon is extremely short-sighted,m since they want to make as much profit from their position as long as they can stay in power - afterwards, the communal wealth is meaningless for them in good and in bad. Result: every politician winning elections and claiming governmental power and influential positions, abuses his power as best as he can in the time he is being given.

And that is why you should not trust in these political entities that they could cure an amok-running banking system by regulating it. They have no inrest to do so, since you cannot differ between private enterprise and its lobbies and politicians anymore. Worse is that, as somebody pout it, our states are no longer run by the law, but by lawyers, with some imagination and open mindedness one can easily imagine what is meant.

As is no secret anymore, I assume , this is why I conclude that the existence of governments and democratic states is the real problem. With democracy, thing shave become worse than they were in feudalism before, nevertheless, feudalism also means abuse of the power and forms a territorial monopolist with the power to make laws (to which the kings often were more bound than governments are today), its just that the dimension of the abuse was smaller than it became under democratic reign.

When such a monopole for power (to make laws and to tax) is allowed, it equals blackmailing of the people to pay protection money, else... Also, like with every monopole, the services the state of this kind gives in return will become more and more expensive, while their quality becomes lower and lower. More expensive it becomes because the socialist redistribution discourages initiative and work and sense for responsibility, because property more and more becomes non-personal, but public (tax money, laws limiting your right to use your privately owned wealth), and encourages to just raise demands to the state that more and more should become the nanny for everybody. Which means more taxes. More debts being risen. Take the social systems, no matter whether the US, or Europe. We are bancrupt over them. Their services become worse and worse, but their costs become higher and higher.

So, how could one think that the state should regulate the banks, and all will become good...? The banks can only be kept in check by making communities extremely small so that the small size allows transparency for everybody regarding what is going on inside the community, and enterprises and banks must be bound in their growth to the limits of these communities, ion other words: their growth and size must be limited to a level where they cannot become powerful enough to hijack and blackmail politics and the citizens, and where transparency in their ways of doing still can be guaranteed.

Not regulation by governments. Governments are the worst criminals and evil-doers of them all. Limiting community sizes and hard-linking business dimension to community dimensions - that is what it is about. Scrap that globalization madness, it is suicide by megalomania. Instead: regional, self-sustaining small economies. Interregional trade where it is needed to bridge shortcomings in items and resources only. As few traders in the middle as possible, best would be to trade directly from seller to buyer, without agents in between. That also would do wonders for the environment! Of course, this also says goodbye to the infinite-growth paradigm of so many politicians and economists. I never believed that you can have infinite growth in a physically limited environment.

Hard to achieve, I am realistic: I think it will not happen. Nevertheless, this is the way if one wants a real longtime solution that holds some reasonable hope for standing the test of longer times than just three decades or so. But it will not be done like this. And that si why I am convinced we are heading for disaster: total collapse.

[AVGWarhawk]

Skybird:

The government is a territorial monopolist itself, having the power to steal from everybody and declaring that robbery legal: it not only steals private property, but also makes the laws and decides how much should be stolen (taxes).

I think you have defined it quite well here.