^I don't see what democracy has to do with anything. People who don't buy enough insurance have only themselves to blame. You can't blame the freedom.

my point is: making lawsuits for any kind of "damages" ( like falling to the floor, putting cat in microwave and sue the manufacturer for not telling you not to do it, ... ) and asking a ridiculous amount of money, as in this case qudrillions, that's quite a US phenomenon. Don't know another country where I could do that.

In case you had an insurance for hurricanes, hail, fire, ... they have to pay for the house, etc fully agree. but as said above by RC, they should cover the actual loss and not give you an extra million for the next supercar :mrgreen:

And IMO people can? enjoy life and in case of a damage, they ask the government to help solve it - it sounds maybe a little tough, but you can't always sue somebody else to "fix it"

I see your point that poor people take the risk, because they need the money for food instead of insurances and I can follow this approach ... often they rather buy a new car than having an insurance .... at the end, the system is not able to solve that, it collapses
-> similar on what we see in the SubPrime crisis

[quote]^I don't see what democracy has to do with anything. People who don't buy enough insurance have only themselves to blame. You can't blame the freedom.[/qupte]
Democracy means government laws follow the will of the people.. If the will of the people is to spend rather then insure, as is human nature, then you see the above situation. Not freedoms fault.

In the US, despite what you hear on tv, most people in true financial trouble are not there because they are destitute, its because they made poor decisions like lack of insurance. Id love to take many of you down to south atlanta near where I went to college. The sheer number of welfare receipients living in boarded up houses and driving 40000 dollar escallades will definitly give you an intersting perspective.

The sub-prime crisis only exists because people borrowed more money than they could afford.

Trust me, I tried that, but I made too much money to qualify for one of those "you can afford it now by only payin interest" loans... so "they" (banks and money lenders) would not let me borrow more money than I could afford... so I am now "stuck" with a low interest mortgage I can afford to pay on the reasonably comfortable house that I could get a loan for.. ;)

Unlike some other people, who were somehow qualified for 4 times as much mortgage so they could buy an awesomly amazing $900,000 house up the road.... and now the interest only variable rat eloan has natured to a higher interest rate and their house note is now $7500 a month, instead of the $1500 per month it was for the first 3 years...

Hmmm... this "crisis" is not a "crisis" at all... it is a reality check.

Those that should not have been loaned money are the ones in the crapper right now.. and those people who wanted to borrow more than they could afford and were approved, can't sell the $700,000 house they couldnt afford anyway, even at $400,000.

Read the woe as me mortgage crisis items on CNN and you'll see what Paul is discribing. They are talking about people with 2500 dollar a month mortgages going bust. Some of them were making 70k a year. That means their interest only loan constituted a pay out of 30000 dollars a year out of their pretax 70 k a year salary. And they werent paying off the balance.
Thats insane.

Irresponsible democracy perhaps. One would hope for a prudent govt seeing past sheer populism.

One thing that is pretty much unique to the US legal system is the concept of high punitive damages. In most other common law jurisdictions, this sum is a pretty insignificant proportion of actual damages. In the US, it is often higher than actual damages, which is just weird.

The penchent for govt handout systems world wide seems to indicate some idealism in that statement.

The credit crisis is essentially the mass erosion of artificial, implied wealth.

An artificial economy has been created over the last 16 years, and the market is waking up. The notion for the last 16 years has been "buy a house, it gpes up in value, you make money (implied wealth - equity), and pay off the debt".
This dream-scenario started to turn into a nightmare, when properties started to foreclose and market face an oversupply.
RC45 makes a good point here, where the ARM's and irresponsible sub-prime lending can be described as the catalyst, but not the entire root cause. ARM's work whereby there is a honeymoon interest period, (3-4%) for the first 2 odd years, then reverts to high, high interest - 13% and above. The common strategy was to refinance with a different lender before the honeymoon period was over, and all is well. A substantial portion of these loans were cast in 2005-2006, and you are now seeing them become due and entering the high interest period. This has been, and will continue to unfold to be the breaking of the camels hump for those who have kept head above water on repayments during the 2-3% glory days.

Foreclosures, and subsequent over-supply, ensue. This creates the downward pressure on housing prices and the erosion of implied wealth. The implied wealth - of $1 trillion+ of US citizens savings being eroded over such a short period of time creates means less spending and investing, resulting in pressure on banks, a reluctance to lend, non-availability of college loans, car loans, business loans, etc, and subsequently grinds the economy to a halt.

I can't believe how misleading the positive meida spin-doctors are. The US might go into a recession? Rubbish, it's already in one. How does a depression sound?

The financial party's over. Anyone still sporting a lampshade on their head, kindly remove it. ;-)

Seems like they already have gotten alot from the federal government to date and still coming. Anybody seen the Louisiana state governement recently helping out. (it is there biggest city afterall)

Actually alot of New Orleans is back. Waiters are nice, restaurants arnt super crowded, hotel prices in the quarter are reasonable. Had a real good time last time I went about a year ago. Lots of people are still being killed on the streets late at night, just like before.

However the parts that are below sea level are still gone and probably shouldnt be built back. Sorry Brad, but maybe nature is telling you its a bad idea.

And heres where we part ways. Do we have some financial issues? Yes... Is it a US implosion? Hell no. Credit is tighter yes, but its a correction to norm not the end of the world.. At least if the fed and the govt quits trying to fix the correction... Govt bailouts of the mortgage companies and the fed constantly pumping money into the economy may chage my mind shortly.

Unemployement- still near all time low
gdp per capita- still near all time high
Stock market and stocks- still making hella profit.

It aint the end of the world.. yet.

If anything, I'd think that the US economy would be stronger after sorting out this sub-prime mess. Economies are cyclical, in any case.

I agree with the points you make about the circumstances ('cause they're correct) so don't get me wrong there.. but with each new day here in Las Vegas it's starting to seem more and more like a crisis. The effects of the foreclosure rates here are starting to have a negative effect our crime rate (which was already too high during the good times) and things of that nature. It's starting to drive business out of town. It's all a big circle jerk, as you know.

Which BTW, Texas is also a state that's being heavily affected by this credit crunch, correct?

I suppose the only good thing that will come out of this for a young guy like me is I may be able to get a loan (the right way, of course) on a home as the prices have gone down drastically. I've even seen incentives like full kitchen appliances & upgraded counter-tops, things of that nature, for free just to try and get people to buy homes again. And I mean on top of the lowered prices.

My grandpa reported to me that in his neighborhood about half of 60 some homes have signs on the lawn. And that's just one sub-division :-(

While no one will argue these facts exist the point we are trying to make is that home ownership was artifically high. If 70 percent of adults owned homes prior to the bust, 50 percent is probably more the norm. To get to the norm you have to see forclosures everywhere...
The people in the forclosure situations are none to bright, and education has an indirect tie to liklihood of violent crime (not a 1-1 mind you as smart people do commit violent crimes, but your more likely to see an intelligent person in an enron type crime).

*note to not make me sound like im putting down a education class of people: Violent crimes are easier to catch, someone with inteligence is probably more likely to think things through and go after harder to catch crimes like money laundering.

In other words.. "the bubble has burst".

In Texas we never had a "bubble" - no-one was buying $200,000 houses for $600,000 with loans they could not afford.

If house prices n Vegas never jumped to artificial highs, people would not be stuck with houses that are now worth less than the balance they still owe on the mortgage.

This is the ugly spiral... house prices dropping so you cant sell the house you cant afford, because no-one wants to buy.

Southern Cali, Vegas and South Central Florida I believe had the most insane property price rises over the last 5 years.. and these "false" values are now correcting - and the people who "own" these houses are screwed.

I would rather say "home ownership of really expensive homes, was artificially high.

What I witnessed was people moving up to really expensive houses, that they could only afford because of "creative financing".

You had a case where people did not want to settle for an older $150,000 house they could afford.. when "the builder and bank could get youinto a $350,000 home - You deserve it :P"

I would rather see 95% home ownership - as property ownership (that you can afford) does something for the population, makes them "better" - but sadly human nature cant settle for "what you can afford" ;) hehe