Re: [RT] Re: sub-prime issue

["Ira" <mr.ira@xxxxxxxxxxxxx>]

Terry:

 

When you have a society and economy that is based upon credit you have created a   monster.   This monster feeds upon the unwary, the uneducated, and the me now generation.  My first home cost me $27,000 and I had a 30 year fixed rate mortgage at 7.25% and that was great for the early 60s.  Cars sold for $1000 to $3000 on average and there was 24 month credit.  Credit cards were just coming into their own.  Main credit cards at the time were gas cards and some stores. 

 

Now enters inflation and things start to happen with prices.  Cars are now worth $15,000 to $30,000 for the same car and car loans are now 5 years and 6 years.  That same house that I bought for $27,000 is now selling for $635,000.  The thing is that the length of the mortgage remains at 30 years.  The only way they could get people to qualify for the increased value of homes was creative financing.  Creative financing has never worked in the past and didn't work this time.  The only solution at this time is for the lending institutions to reconstruct the existing bad loans with fixed rates and an extended length of loan.  It won't hurt anyone that way.  There will be no more bad or sub-prime loans or at least they will be substantially reduced.  The banks and lending institutions won't be hurt because most of the loans will be paid off in 7 years.  That has been the average stay in a home before a move takes place to either a bigger home or to another location because of employment.  The homes also sell because of downsizing when the kids leave home and the dog dies.

 

As far as credit cards are concerned, I believe that the lending institutions should get a wake up call from congress and a limit on interest rates be re-established.  Usury laws be reinstated and the credit card companies brought under some kind of control.  I look at my credit card bills at the  end of the month and I am appalled at the interest rate someone would have to pay if they miss a payment.  Initially 25% and then it goes up from there and it isn't on what you owe, but it is on your average monthly balance.  You are paying interest on money you have already paid the company.  Here is another case  where teaser interest rates hurt a lot of people.  The credit card companies then got congress to change the law so that their bad practices couldn't be voided by bankruptcy.

 

I will get off of my soapbox now.  Sorry, this is just one man's opinion.

Ira www.delta100.com. 

 

 

----- Original Message -----

From: Terry B. Rhodes

To: realtraders@xxxxxxxxxxxxxxx

Sent: Friday, November 09, 2007 2:04 PM

Subject: [RT] Re: sub-prime issue

"he has noticably NOT allowed indiscriminate borrowing at the discount window"

Lengthening the borrowing period and expanding the assets that can be used as collateral sure sounds suspicious to me.

i have seen no action yet to even think of likening Bernanke toVolker. Please correct me if i'm missing something.

regards,

tbr

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