Hatrack River Forum: Government takes over Fannie Mae and Freddie Mac

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Posted by Derrell (Member # 6062) on :

link If they had failed,, what would've happened to their customers?

Posted by TomDavidson (Member # 124) on :

They did fail.

Posted by Lisa (Member # 8384) on :

Why would it have been bad for these two to collapse? If these mortgages can't be financed without government support, it means that the economy can't bear them. All they're doing is adding these risky loans to the national debt.

Clearly, the goal is to get everyone neck deep in debt. "Why?" isn't even the question. It should be, but it's not.

This is just disgusting.

Posted by TomDavidson (Member # 124) on :

quote:
Clearly, the goal is to get everyone neck deep in debt.

Well, no. It's to keep the rich people who've worked their way up the pyramid scheme by buying risky debt from plummeting downward.

Posted by Mucus (Member # 9735) on :

Theoretically, AFAIK, the bailout helps owners and shareholders with assets in the US (possibly, world) banking system. On the other hand, it penalizes (or rather, shares the risk/penalty) spread out across the US taxpayer population.

These two are overlapping sets, the first is not wholly contained within the second.

In other words, those people in (first set - second set) may benefit without getting "neck deep in debt."

In other words, thank you [Wink]

Posted by Jhai (Member # 5633) on :

quote:
But let's say that the Treasury did not support the debt of the mortgage agencies. The Chinese bought over $300 billion of that stuff and they were told that it is essentially riskless. The flow of capital from them and from other central banks, sovereign wealth funds, and plain old ordinary investors would shut down very quickly. The dollar would fall say 30-40 percent in a week, there would be payments system gridlock, margin calls at the clearinghouses would go unmet, and only a trading shutdown would stop the Dow from shedding half its value. Most of the U.S. banking system would be insolvent. Emergency Fed/Treasury action would recapitalize the FDIC but we would lose an independent central bank and setting the money supply would be a crapshoot. The rate of unemployment would climb into double digits and stay there. Many Americans would not have access to their savings. The future supply of foreign investment would be noticeably lower. The Federal government would lose its AAA rating and we would pay much more in borrowing costs. The deficit would skyrocket.

And I haven't even mentioned the credit default swaps market. Well, I have now.

That's from Marginal Revolution, and the author falls onto the libertarian/free market side of the debate among economists. There's tons of more good links here.

Edit: and, obviously, that's a worst case scenario. But it's plausible, and something along similar lines could easily happen to a lesser extent. I'm certainly not happy about this bailout, but arguing about it now is sort of like fighting over who left the gate to the pool open while the toddler drowns in the pool. Get the kid out of harm's way, and then take steps to make sure the fracking gate is never left open again.

Posted by TomDavidson (Member # 124) on :

So we're all agreed: deregulation of the derivatives market was a dumb idea?

(As a side note: I find myself agreeing much more strongly with the comments to that article, Jhai.)

Posted by The Rabbit (Member # 671) on :

The problem is that our economy is so interlinked that these things affect or are likely to affect most everyone.

Most of the people who own Fanny Mae and Freddy Mac aren't wealthy, they are middle class members of large pension funds. Most of them had little if any choice about joining the pension fund and little or no control over how their money was invested.

Then there is the other side to this, all the home loans. If Freddie and Fanny were simply allowed to go into bankruptcy, it would become even more difficult to get a new mortgage. That would result in an even sharper drop in housing prices, which would lead to even more foreclosures when people who had to move found they could no longer sell their house for what they owe, which would mean to even more lenders going bankrupt.

It would also have a severe impact on the building sector. That means a big increase in unemployment among carpenters, electricians, plumbers and contractors plus a big drop in demand for building materials so more unemployment in all those industries as well. Then there are ripple effects through the economy because the recently laid off contract won't be buying a new TV or car or iPod anytime soon.

All things considered, it will probably cost you, the American tax payer, less in the long run to bail our Freddie and Fanny than just to let them go under.

And what all this should be saying to you is that the republican/libertarian blind devotion to allowing the markets to regulate themselves simply can not work in a highly integrated economy. This is a repeat of what happened in the with Savings and Loan bail out under Reagan. And if the government chose to do nothing, it would be a repeat of the great depression. Under the guise of "liberty", Fanny and Freddy have been allowed to swing their fist in a way that was destined to hit the rest of us in the nose soon or later.

The thing that really pisses me off is that their are undoubtable a few very wealthy people who were culpable in the decisions that lead to this crisis and they have almost certainly gotten a lot richer out our expense. These people should be investigated and prosecuted to the fullest extent of the law. If it turns out that due to republican policies, everything they did was legal. They should be sued in the civil courts for every last penny they own. They should be left living on the streets and begging. If they by some chance ever again make more than a few dollars a day begging, that should go toward paying off their debt as well. These people deserve no mercy. But I don't have the slightest hope that will happen.

Posted by TomDavidson (Member # 124) on :

quote:
Most of the people who own Fanny Mae and Freddy Mac aren't wealthy, they are middle class members of large pension funds.

The immediate shareholders of Fanny and Freddy aren't the problem. It's the people (and banks) who have used Mac paper to back other debts that are the problem. "We" don't want them to go under.

Posted by fugu13 (Member # 2859) on :

Tom: that depends on what we mean by deregulation.

In fact, this problem is almost entirely due to the gov't intervention in the charters of the FMs.

Rabbit: free market principles generally work better in a highly integrated economy. The issues mostly arise when the gov't creates perverse incentives to do stupid stuff, such as by giving the FMs the charters to purchase all mortgages above a certain quality, creating an incentive to never bundle them with lower-quality mortgages, which bundling would have led to much less vulnerability (as security cash flows would not have been predicated on such bad paper).

Posted by Sterling (Member # 8096) on :

quote:
Originally posted by Jhai:
I'm certainly not happy about this bailout, but arguing about it now is sort of like fighting over who left the gate to the pool open while the toddler drowns in the pool. Get the kid out of harm's way, and then take steps to make sure the fracking gate is never left open again.

Or "In hindsight, scuba diving was not a good idea. That said, surfacing instantly from a depth of five hundred feet is also not a good idea."

Posted by Darth_Mauve (Member # 4709) on :

The closer one gets to a singularity, the more the rules fall apart. This works for the rules of nature and the rules of economics.

The problem with Libertarian ideas as we've seen practiced is that they believe that Government's role in keeping property rights sacred means a hand's off approach. But part of the rights of property means making sure the scales are balanced in the shop. In other words, that oversight and regulation are required to make sure that company A is not violating my property rights by cheating.

Posted by The Rabbit (Member # 671) on :

quote:
Originally posted by TomDavidson:

quote:
Most of the people who own Fanny Mae and Freddy Mac aren't wealthy, they are middle class members of large pension funds.
The immediate shareholders of Fanny and Freddy aren't the problem. It's the people (and banks) who have used Mac paper to back other debts that are the problem. "We" don't want them to go under.

The people and banks aren't the problem either. The problem is that Freddie and Fanny are large enough that their collapse affects sectors of the economy and millions of people that have little to do with the bad decision made by these lenders.

Posted by TomDavidson (Member # 124) on :

quote:
The problem is that Freddie and Fanny are large enough that their collapse affects sectors of the economy and millions of people that have little to do with the bad decision made by these lenders.

In all honesty, I don't think the decision was as motivated by a desire to keep the economy afloat in the short term as it was to keep a handful of individuals solvent.

Posted by Christine (Member # 8594) on :

Here's my question: Is this bail out a long-term solution or are we trying to put a band aid on a serious wound? In all honest, I don't see how housing prices can stay as high as they are now. They've been soaring up higher than inflation for years now and I've never been convinced that the economy could sustain that, bad loans or no.

Posted by TomDavidson (Member # 124) on :

It's a band-aid. I think everyone is in universal agreement on this point.

Posted by kmbboots (Member # 8576) on :

This is probably a very stupid question. I will say that upfront. Here goes anyway.

When a lending institution fails, it is because more people than anticipated default on their loans, right? So the holders of that debt get into trouble. It seems like in government bailouts, the government puts lots on money into the top of the pyramid. Wouldn't it keep the lending institutions from collapsing if the government addressed the bottom of the pyramid? Instead of a big influx of money at the top of the pyramid, a big influx in smaller bites to help keep people from defaulting - pay off bits of loans.

Posted by TomDavidson (Member # 124) on :

Three problems with that, Kate: 1) You're directly paying the loans of people who've chosen not to pay their loans. How do you rationalize not paying the loans of people who have responsibly paid their loans? 2) There's a time lag between the payment and the "trickle-up" that may wind up being too much for any given institution to float. 3) And finally, the cost of identifying and then making hundreds of thousands of small payments is potentially much higher than the cost of making a couple huge ones.

(IMO, the "stimulus check" we received earlier in the year was in part a "too little, too late" attempt to do exactly what you suggest.)

Posted by fugu13 (Member # 2859) on :

If you put money into the bottom of the pyramid, there's an even larger moral hazard problem. Also, a lot more money would be required. This is because the problem is not the value of the assets so much as it is the cash stock and flow. More people being able to make mortgage payments on time only somewhat alleviates the cash flow problem, and does almost nothing for the cash stock problem.

Also, honestly a lot of people in houses beyond their means shouldn't be making payments; that's just dropping money off a cliff, what with how house prices are going and are going to be going for a while. Helping them make payments is an actively counterproductive move.

Posted by kmbboots (Member # 8576) on :

Tom,

1) I suppose they could rationalize it the same way that the rationalize bailing out people who got very rich speculating.

2 & 3) I suppose what I had in mind was something along the lines of the stimulus package except more direct. Give the lenders some billions of dollars which is some percentage of the money that people owe then. So the people who owe then get some percentage knocked off what they owe.

Fugu, better they should lose their homes and be on the street?

Posted by katharina (Member # 827) on :

Staying in a house they could never afford in the first place and living in a cardboard box under the freeway are not the only two options.

They could always rent a less expensive home. Or, if they act quickly, sell, even at a loss, and buy a less expensive home.

Posted by TomDavidson (Member # 124) on :

quote:
1) I suppose they could rationalize it the same way that the rationalize bailing out people who got very rich speculating.

No, it's too hard. You don't know any of the rich speculators they're bailing out. You might know a couple people down the street who're now getting a handful of free mortgage payments that you aren't.

quote:
Fugu, better they should lose their homes and be on the street?

I don't imagine most of these foreclosures are producing homeless; these people can still afford rent.

Posted by Epictetus (Member # 6235) on :

quote:
don't imagine most of these foreclosures are producing homeless; these people can still afford rent.

But with a major blow to their credit score. Making renting more difficult.

Posted by Epictetus (Member # 6235) on :

Also it's worth adding, that the high demand for rent from all of these foreclosures is driving rent prices up. This makes things even more difficult.

I don't think there's any quick fix to this issue. Bailing out Fannie Mae and Freddie Mac may relieve the issues for a while, but unless the two companies follow through on their promises to change the way things are done, we're just going to keep having the same problems.

Posted by katharina (Member # 827) on :

Then rent some place that is smaller. No one has a right to a lifestyle they never could afford in the first place.

Posted by scholarette (Member # 11540) on :

quote:
Originally posted by katharina:
Then rent some place that is smaller. No one has a right to a lifestyle they never could afford in the first place.

I could not rent cheaper then the mortgage for my house. If I for some reason stopped being able to afford my mortgage, I would be on the street. Well, actually, if that ever happened, my brother (who might own more houses then McCain) would just buy the house off me and let me live there until I was doing better, so I don't actually have to worry. But I imagine most people in my financial situation don't have well off family who will take care of them.

ETA- my area has maximum occupancy laws so I would have to rent a 2 bedroom. My friend in a different state has to have a 3 bedroom because she has a boy and a girl and the rules in her city (possibly state) require separate rooms for each gender of child. So, going smaller is not always an option.

[ September 08, 2008, 03:54 PM: Message edited by: scholarette ]

Posted by fugu13 (Member # 2859) on :

Yes, I'm talking about people who took out mortgages for far more than they could afford, not just anyone with a house. And I think it is perfectly reasonable for someone to take a credit hit after taking out an unaffordable mortgage.

Posted by kmbboots (Member # 8576) on :

But not to take a hit if you were at the top of the pyramid?

Posted by Epictetus (Member # 6235) on :

quote:
Then rent some place that is smaller. No one has a right to a lifestyle they never could afford in the first place.

Oh I'm sitting comfortably in a one bedroom that's broadly feasible, thank you. It was the cheapest one I could afford that wasn't a slum (and mine barely squeaks past the definition IMO.) So I would counter that no one should have to live in a slum so that Property Management Companies and Mortgage Speculators can line their pockets.

Posted by fugu13 (Member # 2859) on :

It makes sense for such people to take a hit, too. However, not providing a cash infusion to the FMs doesn't make them (whoever they are) take any more of a hit. Not to mention that you haven't proposed not giving a cash infusion, just shifting the rules of it.

Of course, many companies and the people at them involved in the current situation have taken huge hits over the past year or so. Heck, just recently a number of companies took multi-billion dollar baths when over-speculating on oil, with good numbers of corporate execs losing jobs and significant reputation, at a time when people aren't doing much hiring of financial executives.

Posted by fugu13 (Member # 2859) on :

quote:
So I would counter that no one should have to live in a slum so that Property Management Companies and Mortgage Speculators can line their pockets.

A counter implies that someone held such a position prior to you saying it.

Posted by Irami Osei-Frimpong (Member # 2229) on :

quote:
But with a major blow to their credit score. Making renting more difficult.

Or they could move to a different neighborhood. It seems to me to be the case that there are some extraordinary cheap rents available, on good-sized property, if you don't mind living around black people.
_______

On a different note, I haven't heard about any criminal investigations for the Fannie Mae or Freddie Mac executives. It seems to me that too many people made too much money over inflated speculations for this to fall without accounting or reporting fraud. What's going on there?

Posted by King of Men (Member # 6684) on :

quote:
Originally posted by kmbboots:
But not to take a hit if you were at the top of the pyramid?

My understanding is that the shareholders of the FMs are going to take a hit, and a major one. I could be wrong. Who else should be punished?

Posted by The Rabbit (Member # 671) on :

quote:
Originally posted by fugu13:
Yes, I'm talking about people who took out mortgages for far more than they could afford, not just anyone with a house. And I think it is perfectly reasonable for someone to take a credit hit after taking out an unaffordable mortgage.

It's not quite that simple. One factor people are over looking is that these lending policies were a major contributor to high inflation in the housing market. At least in some parts of the country, low interest rates on loans were nearly perfectly counter balanced by the rising prices. So without these policies, some people at least could have bought the same exact house for a lower price but a higher fixed interest rate which resulted in nearly the same monthy mortgage payment they had initially with their artificially low variable rate mortgage.

I know this doesn't apply to everyone out there, but there are at least some people defaulting on their mortgages who would have been able to afford their house if sub-prime lending hadn't driven housing prices so high. How do you separate these people from those who were buying McMansions that would never have been within their means?

Consider my personal situation. My husband and I sold our place in Utah this spring. If we had sold 9 months earlier at the peak, would could reasonably have expected 16% so you could conclude that I've already lost a bundle through no fault of my own. But on the other hand, if we had sold 4 years earlier, we could only reasonably have expected to get about 65% of our sales price. So did I make money or loose money because of sub-prime lending? I don't really know.

I guess the only way to really answer that question is to find a parallel universe where the only difference is that this sub-prime lending debacle never happened and see how much the parallel me was able to get selling the house.

Posted by kmbboots (Member # 8576) on :

quote:
Originally posted by King of Men:

quote:
Originally posted by kmbboots:
But not to take a hit if you were at the top of the pyramid?
My understanding is that the shareholders of the FMs are going to take a hit, and a major one. I could be wrong. Who else should be punished?

What do you mean by major? Are they losing as much as the government is putting in?

Posted by TomDavidson (Member # 124) on :

quote:
Who else should be punished?

Well, honestly, I think the people who used Mac paper to prop up their own derivatives trading -- who are the people really being propped up, keep in mind -- could stand to suffer a bit.

Posted by King of Men (Member # 6684) on :

Well, I'm not an expert on this sort of thing. But as I understand it, the Treasury is putting in money that will dilute the current stock, and will also make it less senior. So it depends on the degree of dilution and the value of the seniority, which I don't know and am unqualified to calculate, respectively. Also note that current stockholders are apparently losing their dividends; again, I don't know what this was worth, but it seems it ought to be a nice chunk of change.

Reading a bit more, it seems that the Treasury is going to put in enough money to maintain a positive net worth of FM. So, suppose the total share price needs to be 100 for that to happen, it starts at 100 today, and it drops to 80. Then the government puts in 20 to gain, presumably, one-fifth of the shares. The remaining four-fifth are now worth 64 dollars, for a loss of 16 on top of the 20 they dropped by in the first place, and then you have to account for the loss of dividends and seniority. So it's in the same ballpark as the government input, but then again I may have made completely wrong assumptions on how much the government will own after its cash infusion, and who knows what the value of that seniority and whatnot is? Not me. So, intuitively I would say that yes, stockholder losses are roughly equal to government infusions, but I could be wrong. Fugu might know a better way to analyse it.

Posted by King of Men (Member # 6684) on :

quote:
Originally posted by TomDavidson:

quote:
Who else should be punished?
Well, honestly, I think the people who used Mac paper to prop up their own derivatives trading -- who are the people really being propped up, keep in mind -- could stand to suffer a bit.

Isn't this basically a subset of the stockholders?

Posted by Jhai (Member # 5633) on :

quote:
Originally posted by The Rabbit:

quote:
Originally posted by fugu13:
Yes, I'm talking about people who took out mortgages for far more than they could afford, not just anyone with a house. And I think it is perfectly reasonable for someone to take a credit hit after taking out an unaffordable mortgage.
It's not quite that simple. One factor people are over looking is that these lending policies were a major contributor to high inflation in the housing market. At least in some parts of the country, low interest rates on loans were nearly perfectly counter balanced by the rising prices. So without these policies, some people at least could have bought the same exact house for a lower price but a higher fixed interest rate which resulted in nearly the same monthy mortgage payment they had initially with their artificially low variable rate mortgage.

I know this doesn't apply to everyone out there, but there are at least some people defaulting on their mortgages who would have been able to afford their house if sub-prime lending hadn't driven housing prices so high. How do you separate these people from those who were buying McMansions that would never have been within their means?

Consider my personal situation. My husband and I sold our place in Utah this spring. If we had sold 9 months earlier at the peak, would could reasonably have expected 16% so you could conclude that I've already lost a bundle through no fault of my own. But on the other hand, if we had sold 4 years earlier, we could only reasonably have expected to get about 65% of our sales price. So did I make money or loose money because of sub-prime lending? I don't really know.

I guess the only way to really answer that question is to find a parallel universe where the only difference is that this sub-prime lending debacle never happened and see how much the parallel me was able to get selling the house.

Rabbit, the problem with your reasoning here is that, whether or not poor lending practices were the cause of the recent rise in housing prices, these people still chose to take out loans on houses they couldn't afford. Yeah, it sucks if this was the reason they couldn't afford the houses, but that doesn't mean they should or will get a free pass for their mistakes in buying those houses. You need to make the right decision for the situation you find yourself in, not the decision for the situation you think you ought to be in, if other people hadn't screwed up. That's not the way the world works. (Or, if it is and I haven't heard, someone should tell my boss, since I should be on vacation rather than cleaning up the fires from other team members' mistakes.)

Posted by fugu13 (Member # 2859) on :

kmbboots: yeah, pretty much exactly as much as the gov't is putting in is being wiped out in the value of other shareholders, almost by definition.

Rabbit: that's the point, I don't intend to separate. The FMs get propped up, people who can afford to keep making the payments they agreed to make are fine, and people who can't afford to keep making payments find a way to make them or don't make them. Giving this latter group of people more money is subsidizing bad decision making, even if some of them are people who made reasonable decisions and had bad luck. They are why we have safety nets, such as bankruptcy and social programs (safety nets I would love to see considerably expanded).

edit: note that it is subsidizing bad decision making that doesn't need to be subsidized, of both the people who took out the loans and the people who issued them. This action probably subsidizes the bad behavior of some of the people involved in issuing them, but minimally (it has to do with the dilution of other debts), but I don't see a way around at least a bit of intervention. Of course, this intervention may end up going too far and result in a bigger problem than if we had just let them fail and be carved up at pennies on the dollar, but that's a future issue.

Posted by fugu13 (Member # 2859) on :

KoM: no, most of the people the FMs buy paper from are not particularly big (if at all) stockholders in the FMs.

There are definitely criminal investigations warranted into the practice of a number of mortgage lenders, including the FMs. The leaked memos alone that show numerous people were aware of the worthlessness of a lot of the paper they were issuing is evidence enough.

Posted by The Rabbit (Member # 671) on :

quote:
Originally posted by kmbboots:

quote:
Originally posted by King of Men:

quote:
Originally posted by kmbboots:
But not to take a hit if you were at the top of the pyramid?
My understanding is that the shareholders of the FMs are going to take a hit, and a major one. I could be wrong. Who else should be punished?
What do you mean by major? Are they losing as much as the government is putting in?

As I mentioned before, the shareholders are for the most part middle class people who just happen to have a pension fund that invested in these companies (or for that matter the companies who are propped up by Mac paper). They aren't the ones who are responsible for this mess. I just don't see why 65 years olds who just happen to have worked for a company whose pension fund bought Fanny and Freddie necessarily deserves to loose 25% of their pension because of this. I guess if you can show me that their pension fund has actually made that much on their Fanny and Freddie stocks, it would be fair but I sincerely doubt that's the case.

The people who really deserve to take a hit are the executives and board members who've been making multimillion dollar salaries. They are the ones who have been making these decisions and get rewarded for it.

Posted by Irami Osei-Frimpong (Member # 2229) on :

quote:
They are why we have safety nets, such as bankruptcy and social programs (safety nets I would love to see considerably expanded).

In the name of blunting the negative aspects of risky behavior, while reaping the benefits of entreprenuerism. Aren't you worried that you are going to cause more bubbles? Or do you just figure that's it's worth it in the name of innovation.

Posted by fugu13 (Member # 2859) on :

I don't intend bankruptcy to be pleasant, just a feasible alternative that allows someone a substantial reset.

And there's a decent bit of evidence that minimally guaranteed supports introduces more structural inefficiencies and causes fewer bubbles. Europe has a number of cases of this. I think the moral arguments for such social programs outweigh the costs. And that isn't to say that I favor social programs that would make life comfortable for those who choose not to work.

Out of all the ways we've managed to cause bubbles, social programs are the least of my worries. Bubbles tend to be caused by perverse incentives that make it make sense for people to choose badly (in the sense of leading to an eventual bubble that collapses) based on artificial cost differentials (which might not be monetary; for instance, information).

Posted by kmbboots (Member # 8576) on :

quote:
Originally posted by The Rabbit:
The people who really deserve to take a hit are the executives and board members who've been making multimillion dollar salaries. They are the ones who have been making these decisions and get rewarded for it.

I would agree with that. I guess I assumed that the executives and board members would be the major stock holders. These are the people who I think should be relying on "safety nets" before the rest of us bail them out.

Posted by Dagonee (Member # 5818) on :

Here's an interesting article and chat by Steven Pearlstein.

quote:
But not to take a hit if you were at the top of the pyramid?

The top of the "pyramid" has taken numerous hits. For example, Bear Sterns investors lost most of their value. The shareholders in the FMs have taken a serious hit, that might or might not be temporary. If it's not temporary, then the taxpayers will make money on the "bailout."

quote:
I would agree with that. I guess I assumed that the executives and board members would be the major stock holders.

To the extent they are stock holders, they are losing money.

Posted by The Rabbit (Member # 671) on :

quote:
Originally posted by Jhai:
Rabbit, the problem with your reasoning here is that, whether or not poor lending practices were the cause of the recent rise in housing prices, these people still chose to take out loans on houses they couldn't afford. Yeah, it sucks if this was the reason they couldn't afford the houses, but that doesn't mean they should or will get a free pass for their mistakes in buying those houses. You need to make the right decision for the situation you find yourself in, not the decision for the situation you think you ought to be in, if other people hadn't screwed up. That's not the way the world works. (Or, if it is and I haven't heard, someone should tell my boss, since I should be on vacation rather than cleaning up the fires from other team members' mistakes.)

What you are missing Jhai is that when all the sudden a million people make the same bad decision its evidence that something more is going on than just bad judgement. And as you so aptly noted in your own situation, there are always people who pay for the mistakes they had no part in.

20/20 hindsight is deceptive. Go back five years to a time when prices were skyrocketing and imagine you are a young person watching as prices increase 15% or more per year and realizing that if you wait 5 years to buy a house, the price will have doubled. You are offered a loan to buy a modest house with little or no down payment and an initially low interest rate. Do you choose to buy the house now, knowing that your interest rates and payments are likely to double in 5 years or do you wait knowing that the price of houses is likely to double in 5 years? The decision isn't nearly as clear as people are pretending. 5 years ago, I'd be willing to bet that even conservative financial councillors were telling people to buy the house, that this was a relatively safe bet, that even if they couldn't afford the higher payments in 5 years they could sell the house at a profit and be better off than if they just kept renting. Five years ago, people would have been telling you that a home was the safest investment on the market, that averaged over 5 years home prices never dropped. The decision isn't as clear cut as people are pretending. In fact, over the last 20 years I've watched many of my friends and acquaintances overextend themselves to buy their first home and nearly all of them have come out way ahead in the long run. While some people have always lost that kind of gamble, the numbers were always small enough to go largely unnoticed.

The big problem with your reasoning is first that it ignores the fact that this crisis is big enough to impact all home owners (and renters) not just those who made bad decisions. As I mentioned before, the market price of my home in Utah dropped 16% in 9 months despite the fact that I didn't have a sub-prime loan. And second most of the people who are loosing their homes in this crisis didn't make fundamentally worse decisions than 90% of the other Americans who bought houses in major urban areas in the past twenty years. We should bail them (or at least some of them) out because 1st it would hurt most homeowners to let so many houses be repossessed and 2nd most of these people weren't fools.

Posted by The Rabbit (Member # 671) on :

quote:
Originally posted by kmbboots:

quote:
Originally posted by The Rabbit:
The people who really deserve to take a hit are the executives and board members who've been making multimillion dollar salaries. They are the ones who have been making these decisions and get rewarded for it.
I would agree with that. I guess I assumed that the executives and board members would be the major stock holders. These are the people who I think should be relying on "safety nets" before the rest of us bail them out.

Executives and board members almost always receive part of their compensation in stock but only part. If this is like any of the other big corporate scandals, the executives and board are walking away filthy rich even though their stock is dropping.

Posted by Dagonee (Member # 5818) on :

quote:
And second most of the people who are loosing their homes in this crisis didn't make fundamentally worse decisions than 90% of the other Americans who bought houses in major urban areas in the past twenty years.

I'm not sure that's true. Before say, 1995, it was much harder (that is, it almost would have required fraud) to make decisions as bad as many of the ones leading up to this crisis.

Still, I am in favor of some form of assistance for some homeowners in trouble.

Posted by Irami Osei-Frimpong (Member # 2229) on :

quote:
As I mentioned before, the market price of my home in Utah dropped 16% in 9 months despite the fact that I didn't have a sub-prime loan.

But Rabbit, doesn't that mean that your house value was artificially inflated?

Posted by scholarette (Member # 11540) on :

quote:
Originally posted by Irami Osei-Frimpong:

quote:
But with a major blow to their credit score. Making renting more difficult.
Or they could move to a different neighborhood. It seems to me to be the case that there are some extraordinary cheap rents available, on good-sized property, if you don't mind living around black people.

My comparison of renting versus mortgage is a black neighborhood, an apartment that was barely above slum, possibly slum. I was the only white person who lived there. Now I live in a fairly diverse safe, clean neighborhood (going through my nearest neighbors, we have a black family, a young white couple, two old retired couples, a Hispanic family and a Chinese family)- and for the same cost.

Posted by Jhai (Member # 5633) on :

quote:
Originally posted by The Rabbit:

quote:
Originally posted by Jhai:
Rabbit, the problem with your reasoning here is that, whether or not poor lending practices were the cause of the recent rise in housing prices, these people still chose to take out loans on houses they couldn't afford. Yeah, it sucks if this was the reason they couldn't afford the houses, but that doesn't mean they should or will get a free pass for their mistakes in buying those houses. You need to make the right decision for the situation you find yourself in, not the decision for the situation you think you ought to be in, if other people hadn't screwed up. That's not the way the world works. (Or, if it is and I haven't heard, someone should tell my boss, since I should be on vacation rather than cleaning up the fires from other team members' mistakes.)
What you are missing Jhai is that when all the sudden a million people make the same bad decision its evidence that something more is going on than just bad judgement. And as you so aptly noted in your own situation, there are always people who pay for the mistakes they had no part in.

Rabbit, I'm not "paying" for the mistakes of others. I'm doing the job I agreed to do, as a senior member of my team. I get the benefits of increased pay and responsibilities, but at the cost of cleaning up messes. I'm sure you can see the analogy without me spelling it out.

And no, I don't take the fact that millions of people made the same mistake as evidence of anything more than bad judgment - well, that, and the fact that the system just now allowed more of them to make a bad judgment. But I'm not going to blame "the system" for that - the people still made the wrong decision. Just like I don't blame credit card companies for the massive amounts of credit card debt that millions of Americans have wracked up.

quote:
20/20 hindsight is deceptive. Go back five years to a time when prices were skyrocketing and imagine you are a young person watching as prices increase 15% or more per year and realizing that if you wait 5 years to buy a house, the price will have doubled. You are offered a loan to buy a modest house with little or no down payment and an initially low interest rate. Do you choose to buy the house now, knowing that your interest rates and payments are likely to double in 5 years or do you wait knowing that the price of houses is likely to double in 5 years? The decision isn't nearly as clear as people are pretending. 5 years ago, I'd be willing to bet that even conservative financial councillors were telling people to buy the house, that this was a relatively safe bet, that even if they couldn't afford the higher payments in 5 years they could sell the house at a profit and be better off than if they just kept renting. Five years ago, people would have been telling you that a home was the safest investment on the market, that averaged over 5 years home prices never dropped. The decision isn't as clear cut as people are pretending. In fact, over the last 20 years I've watched many of my friends and acquaintances overextend themselves to buy their first home and nearly all of them have come out way ahead in the long run. While some people have always lost that kind of gamble, the numbers were always small enough to go largely unnoticed.

Five years ago I was a young person, and, as an economics college student I loved to watch Bloomberg and laugh at the people who thought housing prices would continuously rise, especially with the dotcom boom only a few years behind us. Today I'm still a young person, and a homeowner as well - with a house well within my & my husband's means.

quote:

The big problem with your reasoning is first that it ignores the fact that this crisis is big enough to impact all home owners (and renters) not just those who made bad decisions. As I mentioned before, the market price of my home in Utah dropped 16% in 9 months despite the fact that I didn't have a sub-prime loan. And second most of the people who are loosing their homes in this crisis didn't make fundamentally worse decisions than 90% of the other Americans who bought houses in major urban areas in the past twenty years. We should bail them (or at least some of them) out because 1st it would hurt most homeowners to let so many houses be repossessed and 2nd most of these people weren't fools.

The housing market drop meant that my husband and I could buy our home without stretching our income. Other home owners' losses are current home buyers' gains. And its always a fundamentally bad decision to buy a house you can't afford. Just because some other people have won the gamble doesn't mean that its not your fault that you choose to make the same gamble, and happened to lose.

I really don't have any sympathy for people who make bad financial decisions, and then want a hand out for it. Being a homeowner is not a right, just like having a big screen tv, stainless steel appliances, two newish cars, etc is not a right - despite what many people around me (geographically/socially) seem to believe. Having your home increase in value is not a right either - I'm sorry that your house lost value right before you needed to sell, but that's part of being a homeowner.

Posted by fugu13 (Member # 2859) on :

Yes, something else is going on than bad judgment. There were incentives created to encourage people to make those bad judgments. I'm pretty certain Jhai (like myself) is strongly opposed to the existence of those incentives.

However, that doesn't mean it makes sense to reward people for following those incentives.

And of course your home price went down, it was far higher than it should have been. It was probably still far higher than it should have been when you sold.

And no, most of those involuntarily (I distinguish them from those walking away on houses that aren't going to recover equity for a long time despite ability to make payments) losing homes at this time are not like those who were able to make housing payments before. The vast majority of those losing houses had subprime mortgages, and subprime mortgages effectively didn't exist until a little over 20 years ago, didn't start being somewhat popular until a little under 15 years ago, and weren't a really huge part of the mortgage market until 2003.

This isn't to say someone with subprime qualifications shouldn't be able to purchase a house, but many of those taking out subprime loans towards the end were the ones taking out loans that were absurd, frequently when barely able to make the payments before the rate ballooned. Many of them were being assured that they could just refinance, and those assuring them that was possible should be pursued, but that doesn't make their choices any less blatantly stupid.

Posted by lem (Member # 6914) on :

I would have supported the Free Housing Market Enhancement Act introduced five years ago by my favorite congressman.

quote:
Today, I will introduce the Free Housing Market Enhancement Act, which removes government subsidies from the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the National Home Loan Bank Board.

quote:
This explicit promise by the Treasury to bail out GSEs in times of economic difficulty helps the GSEs attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital.

quote:
Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

quote:
These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.

quote:
In fact, postponing the necessary, but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.

Posted by MrSquicky (Member # 1802) on :

Info on the severance packages of the heads of the FMs

Posted by BannaOj (Member # 3206) on :

quote:
Originally posted by scholarette:

quote:
Originally posted by Irami Osei-Frimpong:

quote:
But with a major blow to their credit score. Making renting more difficult.
Or they could move to a different neighborhood. It seems to me to be the case that there are some extraordinary cheap rents available, on good-sized property, if you don't mind living around black people.
My comparison of renting versus mortgage is a black neighborhood, an apartment that was barely above slum, possibly slum. I was the only white person who lived there. Now I live in a fairly diverse safe, clean neighborhood (going through my nearest neighbors, we have a black family, a young white couple, two old retired couples, a Hispanic family and a Chinese family)- and for the same cost.

While there are some risks to being a visible minority (I would love to know what city you live in) I have found that if you cultivate a good relationship with your neighbors, particularly ones who have children and use some common sense, you will generally be safe, apart from violence like random drive-by shootings.

Posted by TomDavidson (Member # 124) on :

To be fair, I have lived places where cultivating a good relationship with my neighbors would have required illegal activities.

Posted by katharina (Member # 827) on :

I tried to cultivate a good relationship with my minority neighbors by saying hello on the stairs and such. For my efforts, I was rewarded with the neighbor attempting to assault me in my apaprtment, apparently assuming that a lack of repulsion = "Come up and see me sometime."

I don't have a problem living in neighborhoods where I'm a minority, but I no longer talk to the neighbors.

Posted by BannaOj (Member # 3206) on :

I stand corrected, my statement above was too general.

Tom, I know where you lived, it does depend on the level of slum [Smile]

or maybe the definition of "slum" vs "ghetto" (I think there should be a level worse than ghetto for some specific areas too, and I suspect that where Tom lived was in the Beyond Ghetto classification.) I guess the key question is what scholarettes determination of "slum" is, which is why I'm extremely curious to know her general geographic vicinity.

Katie, I didn't realize your assaulter was a minority. I'm just curious, did he have children? Despite the assault, I suspect that I wouldn't define where you lived as inherently the "slums" but I don't know for sure.

Except at the "ghetto" extremes (which may contain large populations, but are generally confined to a limited number of large cities across the country) there are a lot of so-called slums that contain mostly "working poor" and/or illegal immigrants with a lot fewer criminals than one might think. Those sorts of areas are the ones where getting to know one's neighbors may come in handy.

Posted by Irami Osei-Frimpong (Member # 2229) on :

quote:

Except at the "ghetto" extremes (which may contain large populations, but are generally confined to a limited number of large cities across the country) there are a lot of so-called slums that contain mostly "working poor" and/or illegal immigrants with a lot fewer criminals than one might think. Those sorts of areas are the ones where getting to know one's neighbors may come in handy.

And where the property values are lower.

Posted by katharina (Member # 827) on :

He had a wife or a live in girlfriend and there were at least four children in the house.

I didn't live in quite the ghetto, mostly because I've lived in Detroit and I define ghetto as bullet holes in the front door and pizza places refusing to deliver. But I definitely lived in a poorer neighborhood filled with minorities where the police were regularly called and my apartment complex averaged about 6 arrests per month.

*shrug* I had a wonderful, rosy picture of the working poor as well until I found out first hand the reason for the "snotty princess" stereotype. It isn't safe, because you can't assume that everyone is operating under the same expectations of reasonable behavior.

Posted by scholarette (Member # 11540) on :

The not feeling safe was from a male neighbor. Whenever he talked to me, he kinda leered. Him and his friends would stop talking the moment I got out of the car and stare at me. And he was overly interested in when my "man" was going to be home. The leering was uncomfortable, but the attempts to figure out my husband's schedule freaked me out. (And the phrasing was much more how long will you be home alone then any other interpretation- also, he never, ever spoke to my husband).

Posted by katharina (Member # 827) on :

Yep - there's a standard of behavior where a woman's privacy is nonexistent and strange men feel perfectly free to invade her private life and space at will.

It is not an expectation of behavior that I share, and I am not comfortable living in a neighborhood where that is a popular expectation of behavior.

Posted by King of Men (Member # 6684) on :

Nonetheless, it is clear that many women do, in fact, live in such circumstances. Or are you asserting that these enclaves are 100% populated by men? This being so, why should you have an expectation that you, particularly, are entitled to follow your preferences in this matter? If middle-class living is expensive, then poor people cannot afford it. If you are poor, then you cannot afford it. Is there any particular reason why the taxpayers (me, among others) ought to be helping you move away from this?

It seems to me that several people here are saying "I could not rent any cheaper than X" with an unspoken rider "except under circumstances too unpleasant to contemplate".

Posted by katharina (Member # 827) on :

There are so many wrong assumptions in that post that it is completely worthless as a fact. Just take it that you're wrong at everything.

Posted by King of Men (Member # 6684) on :

Yes, dear. Do run along now, there's a good lass.

Posted by BannaOj (Member # 3206) on :

quote:
Originally posted by katharina:
Yep - there's a standard of behavior where a woman's privacy is nonexistent and strange men feel perfectly free to invade her private life and space at will.

It is not an expectation of behavior that I share, and I am not comfortable living in a neighborhood where that is a popular expectation of behavior.

In all seriousness, I suspect my general level of obliviousness probably helps me in this regard. I probably have been leered at in some neighborhoods where I have lived and just never noticed. Where I grew up, I knew who my friendly neighborhood drug dealers were, and would talk to one in particular about motorcycles.

We knew to go through the alley and look over the wall into a particular yard if bicycles or surfboards went missing, and how to negotiate behind the scenes to get them back. One of the ex-convicts (well he's back in jail again so he's not really an ex-convict anymore) on our street taught me how to lay brick when his mother had nagged him into finally fixing a brick planter. His legit brother that didn't live there was into masonry, and this guy could do the job of a craftsman had he wanted to but he scammed off of his mother mostly instead. His younger cousins and my brothers and I played bicycle tag together.

While being the only white folks, we were integrated enough into the community (and my parents and brothers still are) that we were never bothered in significant ways. There were certain areas of gang activity, that we knew not to linger long in, but we'd never be bothered if we were just passing through. I'd ride my bicycle alone through some even worse areas as a teenager when I was going to work during the summer, or visiting friends and was never ever bothered.

The only thing that I can figure, is that I'm truly oblivious, or that because of my early upbringing I just manage to carry myself so that nobody ever bothers to try messing with me to begin with. Now that I'm thinking about it, it is probably some combination of the two.

I actually found the reported crime stats for my city, which I know have vastly improved from when I lived there. The most interesting crime within a quarter mile of my folks house last week, along with the run of the mill assuaults and burglaries was an attempted kidnapping. They do manage to keep the murder rate pretty low although you'll see quite a few "shooting at an inhabited dwelling" reports.

Posted by scifibum (Member # 7625) on :

quote:
It seems to me that several people here are saying "I could not rent any cheaper than X" with an unspoken rider "except under circumstances too unpleasant to contemplate".

Yeah, this is true. I think "and maintain a similar standard of living" is the unspoken rider and it's understood by most everyone even though it's unspoken. Also assumed:

"in roughly the same area"
"without adding labor to the monetary cost of rent"
"with all the same people that live in the house currently"
..etc.

So, what's your point?

Posted by Irami Osei-Frimpong (Member # 2229) on :

BannaOj, I imagine that you and your family are salutary influences on the community; in addition, you learned how to lay bricks and who knows what other worthwhile sensibilities. Everyone wins.

scifibum, the point is that it's not just their housing that's artificially inflated, but also their standard of living and sense of social class.

[ September 09, 2008, 07:25 PM: Message edited by: Irami Osei-Frimpong ]

Posted by King of Men (Member # 6684) on :

Basically this, I guess: If you are living in a house you can't afford, then you are living beyond your means. And so, when stating "Renting would not be cheaper", you should be certain in your own mind that you really have looked for an apartment that actually does match your means, rather than your expectations.

Posted by Jhai (Member # 5633) on :

It's been said many times (at least at the magazines & blogs I frequent), but too many young people think that they should have the same standard of living their parents currently enjoy, while ignoring the fact that they haven't worked for twenty-plus years like their parents. They complain about money being tight, ignoring the fact that they have tons more things than people did a generation ago: cable television, cellphones, decent/nice cars, expensive organic Whole Foods-type food, and so forth. My husband, despite - or perhaps because of - his childhood of semi-poverty in India, is nearly as bad when it comes to electronic goodies.

Posted by BannaOj (Member # 3206) on :

Just did some research as far as relative crime rates go because I was curious. Oxnard is the city where I grew up in California.

http://www.bestplaces.net/city/default.aspx?cat=PEOPLE&city=Oxnard_CA&ccity=Chicago_IL&p=0654652&op=1714000

There is some sort of amalgamated crime database that gives cities rankings. 1-10 with 10 being the worst. The US average is also given. I've abbreviated Los Angeles and New York City as LA and NYC

code:

 
              Chicago  Oxnard  LA   NYC  U.S.
Violent Crime   7        6      7    6    3 
Property Crime  7        5      6    5    3

I don't know how much population density is taken into account in these numbers, but I do know that the population of Oxnard is around 185,000. Of course every city has its good and bad areas too, while we didn't live in the absolute worst area of town, we were on the wrong side of the roads that define the "good" areas too.

For addtional comparisons in the Chicago area, Harvey, IL is at 8 in both categories and Gary, IN is ranked 9 in violent crime and 7 in property crime. Compton, CA is 8 and 6. Washington D.C. is 8 and 7.

Ironically, the town I now live has crime stats of 4 and 4, and I feel perfectly safe walking down most of the streets at midnight. However I have been informed by people who live in the surrounding subburbs (crime rates 2 and 2) that my town actually is "the ghetto" a statement I find completely ludicrous even though I now understand why.

Posted by ketchupqueen (Member # 6877) on :

Okay, I find it very very funny that I was told by my in-laws not to walk around at night alone when we moved to their city, but my parents let me do it all the time; the city where I grew up (a "very good part of town" is a 7 and 7 according to those stats, whereas the city I moved to is a 4 and 3. You want to know the difference? Income level is higher where I grew up, education is higher where I grew up, there are more whites and asians where I grew up, more blacks and hispanics where I moved, most other stats are within 2 percentage points of each other. Our rent was about 1/6 what it would have been where I grew up... I'd compare to my current city but it isn't listed.

Posted by ketchupqueen (Member # 6877) on :

(FTR, I have always felt perfectly safe walking around at night almost anywhere, including most parts of downtown L.A. and Dallas. Yes, even the parts with homeless people.)

Posted by BlackBlade (Member # 8376) on :

quote:
Originally posted by ketchupqueen:
(FTR, I have always felt perfectly safe walking around at night almost anywhere, including most parts of downtown L.A. and Dallas. Yes, even the parts with homeless people.)

Not all of us can kill an assailant in under 2 seconds with an innocent looking ketchup dispenser. How many poor fools tried before word spread around KQ? [Wink]

Posted by katharina (Member # 827) on :

Ketchup Queen, I imagine that will change when you're assaulted.

KoM, you are better off sticking to what you know and are good at. Which isn't this. Or anything else you talk about. I'm sure there's something though. Keep looking. You'll find it.

Posted by TomDavidson (Member # 124) on :

C'mon, people. Play nice.

Posted by rivka (Member # 4859) on :

BB, I thought it was agreed to never discuss that incident!

Doesn't a pact mean anything to you?

Posted by King of Men (Member # 6684) on :

If you were just discussing how a low standard of living manifests, why not simply say so? While I'm certainly capable of reading your mind to determine the intent of your posts, I prefer not to do so; passive aggression is unpleasant enough in forum posts, without bathing in the brain that produces it.

Posted by ketchupqueen (Member # 6877) on :

quote:
Ketchup Queen, I imagine that will change when you're assaulted.

I've been the victim of an attempted rape, is that assaulted enough for you?

Posted by katharina (Member # 827) on :

By a stranger when you were walking alone at night which you continue to do? Did you learn nothing from it?

Posted by BlackBlade (Member # 8376) on :

quote:
Originally posted by katharina:
By a stranger when you were walking alone at night which you continue to do? Did you learn nothing from it?

Katharina I really don't think this is a subject that requires specific details, do you?

KQ clearly is quite aware that there are people willing to physically harm a person who has done them no harm. Weighing all the other things, she has decided to continue walking down the street alone at night. You claimed that if a worst case scenario occurred she'd reevaluate her standard operating procedure, but obviously now that is not the case. Trying to make the point that KQ's experience is not a complete mirror of your own does not invalidate what she is saying.

Nor does stating that because she has not reached the same conclusion as you, she is therefore less intelligent.

I've walked down the street at night alone numerous times, but there are occasions where the scene around me suggests I need to be alert. I've cautioned my wife about walking around at night alone, and she doesn't do it. There isn't a universal code of conduct for walking down an urban street alone at night.

Posted by katharina (Member # 827) on :

I didn't appreciate the challenging tone.

If you don't want it discussed, don't bring it up. If you bring it up, then it isn't off limits.

And no, it isn't obvious that that is what happened. The vast, vast majority of assaults do not come from strangers.

Posted by The Rabbit (Member # 671) on :

quote:
I didn't appreciate the challenging tone.

Then you should avoid using it.

Posted by katharina (Member # 827) on :

I am not as adept at it as you, I admit, but I haven't had as much practice.

Posted by dabbler (Member # 6443) on :

Did you ever hear that thing about assuming things?

Posted by foundling (Member # 6348) on :

quote:
Ketchup Queen, I imagine that will change when you're assaulted.

Right. Because this isn't at all challenging.
And of course, anybody who holds a different opinion on something you've obviously put so much thought into must be either inexperienced or an idiot.

Posted by BlackBlade (Member # 8376) on :

quote:
Originally posted by katharina:
I didn't appreciate the challenging tone.

Maybe it was the use of the word "when" rather than "if" in your statement, "I imagine that will change..." that struck me as a tad confrontational. That and you basically told KOM to take a hike in the same post.

quote:

If you don't want it discussed, don't bring it up. If you bring it up, then it isn't off limits.

If I mention that say my father molested me as a child,(he didn't thank God) how does requesting the lurid details advance the conversation?

quote:

And no, it isn't obvious that that is what happened. The vast, vast majority of assaults do not come from strangers.

Fine, so KQ statistically is safer walking down the street alone when she passes homeless strangers than in other circumstances where she is around acquaintances.

Or else she is safe until she reaches her neighborhood and it is then she should be brandishing some sort of weapon?

Posted by The Rabbit (Member # 671) on :

quote:
Originally posted by katharina:
By a stranger when you were walking alone at night which you continue to do? Did you learn nothing from it?

I'm trying to figure out how this sentence could be said with anything but a challenging tone and I'm failing. I can hear it in a mocking voice, or an exasperated voice, even a condescending voice -- but not any voice that doesn't imply a direct insult to the listener.

Posted by ketchupqueen (Member # 6877) on :

Nice to see the discussion continued while I took a nap... [Blushing]

Okay, so, first things first. Katie, sorry if I was rude. I guess I was a bit irritated by the tone of your post. I'm sorry I responded in kind (or what I percieved to be in kind.)

It was an acquaintance assault, indeed. I don't think that makes the experience less valid as grounds for deciding whether to walk around at night. I have felt threatened by certain areas at night; I don't go to the areas where I feel threatened. There are even a very small number of areas where I won't go walking during daylight because so much random violence happens (I gotta tell you, if I ever go to South Africa I am NEVER walking alone. The country has an astonishingly awful rate of rapes and it's just not safe for a woman to be out alone, ever.) I was simply saying that the areas I feel unsafe in do not always correspond to the ones other people feel unsafe in (I had an Armenian co-worker who wouldn't walk certain parts of L.A. with me when we went downtown because she felt unsafe, and that was in a group; I did not feel the same way about those areas.) I think a large part of it has to do with listening to your intuition about a place; if I feel threatened somewhere, I leave, even if there is no reason to feel threatened. I learned that one the hard way, from that attempted rape; I didn't listen to the nagging thought that this really wasn't a good idea, went out anyway, and got in trouble.

Posted by Dagonee (Member # 5818) on :

The government is going to try to stop golden parachute payments to outgoing FM execs. Details remain fuzzy.

Posted by scottneb (Member # 676) on :

I feel I need to say that this whole conversation is very intriguing. I haven't felt intimidated walking through an area since I was a kid. Mostly because I'm a big, white, male with broad shoulders and a buzzed head. Plus I can handle myself in a scuffle even if it involves a pistol (at very close range).

So even with people getting emotionally charged in this debate, I'm learning a tremendous amount about mindsets.

Please, without burning bridges, keep the emotion in this. I think it helps expose the guts of the debate.

Posted by BlackBlade (Member # 8376) on :

quote:
Originally posted by Dagonee:
The government is going to try to stop golden parachute payments to outgoing FM execs. Details remain fuzzy.

I'm not sure how I feel about this. On the one hand, I think the CEOs of both companies failed completely and shouldn't be given compensation for failing their shareholders. But how much total control does a CEO have? Is there a marked degree of difference from company to company? If CEOs do not have much control, should they be punished for a problem that expands across the entire economic sector?