Impacts from Recession - Part 2

[ISUAlum2002]

Originally Posted by Phaedrus

People are not living "paycheck to paycheck" because the economy is bad, people are living paycheck to paycheck because they are idiots, who are borrowing money to buy a big-screen TVs, Monster trucks, and houses 3-4 times what they can really afford.

I agree with this, but the economy is going downhill, and there is no denying that.

My home equity line limit just got cut in half because my home's value supposedly dropped dramatically.....even though houses like mine are still selling for tens of thousands more than the bank thinks my property is worth. Banks are panicking and think that home values are decreasing at a uniform rate across the country, when in reality the bad housing markets are in fairly isolated areas like Los Angeles County, San Bernardino County, DC and a few areas of Florida and Texas. They're cutting into the available spending money for homeowners with HELOC's and it makes those homeowners apprehensive about spending money on home repairs and upgrades.

I work in mortgage servicing, and there are more people living paycheck to paycheck than everyone here might think. A lot of people with interest only loans, not necessarily by choice but by necessity. The houses they needed (size wise for families) had inflated values and the only way they could afford them is with interest only loans. I agree that they could rent instead, but when you're in southern California, its just about a wash anyway.

Throw in never-ending gas price increases and grocery increases.....people are holding money to pay for those necessities and are not going out to eat or spending the $10/ticket for movies anymore. I said it years ago, gas prices are going to have a HUGE trickle-down effect on the entire economy. All areas of retail and entertainment are going to struggle.

[rahtotheames]

Our country has always gone through periods of market growth or downturn, bear or bull if you will. Why does it amaze people that even the great United States in 2008 is an exception to the rule. I am traditionally conservative but I think that the deficit spending needs to stop or else this will turn from a downward trend to a recession. And as much as it pains me to say, Republican presidents of the last 3,4 decades are notorious for such. We also need to get a handle on the oil situation which means one or two things.
A. Pull off a miracle and somehow gain control of OPEC
B. Alt. fuel source

[Phaedrus]

Originally Posted by ISUAlum2002

I agree with this, but the economy is going downhill, and there is no denying that.

I don't think so. I think it's going back up, as of about 30 days ago, actually.

My home equity line limit just got cut in half because my home's value supposedly dropped dramatically.....even though houses like mine are still selling for tens of thousands more than the bank thinks my property is worth. Banks are panicking and think that home values are decreasing at a uniform rate across the country, when in reality the bad housing markets are in fairly isolated areas like Los Angeles County, San Bernardino County, DC and a few areas of Florida and Texas.

Agreed, 100%

They're cutting into the available spending money for homeowners with HELOC's and it makes those homeowners apprehensive about spending money on home repairs and upgrades.

That would be because home-owners with HELOCs are much more likely to lose everything. HELOCs = dumb, imo.

I work in mortgage servicing, and there are more people living paycheck to paycheck than everyone here might think. A lot of people with interest only loans, not necessarily by choice but by necessity. The houses they needed (size wise for families) had inflated values and the only way they could afford them is with interest only loans. I agree that they could rent instead, but when you're in southern California, its just about a wash anyway.

Now, this, I disagree with, entirely. First, the size of house someone "needs" is often a very, very subjective thing. And the fact that these folks CHOOSE to live in S. California does not make me cry them a river. There are lots of places in this country they could CHOOSE to live in that are affordable, and the living arrangements in high-cost areas need to be non-conventional if they CHOOSE to work at subsistence jobs in high cost areas.

Throw in never-ending gas price increases and grocery increases.....people are holding money to pay for those necessities and are not going out to eat or spending the $10/ticket for movies anymore. I said it years ago, gas prices are going to have a HUGE trickle-down effect on the entire economy. All areas of retail and entertainment are going to struggle.

The amount of people who struggle to pay for necessities in the US is miniscule. The great majority of people in the US who struggle to make ends meet do so for LUXURIES, compared to the rest of the world. 4000 sq. ft. houses and $20,000+ cars are not "necessities". And the price of gas in the US is still ridiculously low.

[sunset]

Originally Posted by keepngoal

there ISN'T a recession........... ARGGGGGGGGGGGGGGGggggggggggggggggggggggggggggggggggghhh..

-keep

Thank you. I'm so sick of hearing that we are in a recession. A recession has a defintion. That definition has not been met. It's really pretty simple.

If you would like to discuss if we are headed towards a recession (I do not believe that to be the case) please feel free.