I was talking to Nathan last night about the economy. Especially about banks and their "losses" from foreclosures. I thought I would post my thoughts and see what everyone else thought. Plus I really like knowing what other people think about the economy. First let me say, that I am NO expert and I haven't studied the economy at all.
So, first of all, is the economy really as bad as the media and others are making it out to be? We aren't even in a recession yet. Every quarter this year has seen some growth, no much that I am aware of. But in order to have a recession you have to have negative growth. I can't help but feel as I have since the beginning that the only reason the economy is as bad as it looks now is because people are freaking out about it which makes the people on Wall Street freak, and on and on. I'm sure you catch my drift.
And with that, I just wanted to give my thoughts about the "housing crisis" and banks. All of us who own a house know how a mortgage works. You borrow money from the bank and then in return the bank charges you an interest rate for that loan. But the part that kind of bugs me about everything is how the banks are claiming their "losses" from home foreclosures. If you buy a house for say, $150,000. (I know that's low, but it's around what I got my house for and so it's easier for me to work the numbers.) with a 30 year loan and a fixed interest rate of aroun 6% you will end up paying the mortgage company/bank around $200,000. in interest over the life of that loan (or there abouts). So, if you can't afford your payments and the bank takes your home from you, they will post a lost. Especially if they can't sell your home for what it's worth. And at least from what I have read they would claim a loss with the value of the house plus the interest. But is it really honest to say that they lost $350,000. on a house that they only gave you $150,000. for? That's my deal. It doesn't seem right. They really didn't lose all that money, just the $150,000 they gave you at the beginning. Nathan explained this all to me and told me that it really has more to do with their forecasted revenues, dividends and stocks. But I still don't think that it's honest to say you lost more money than you really gave out. That is my little soap box for the day. Do with it what you will. I would even love to hear what you have to say.
Family
Daniel
Daniel 7 years old
Tyler
Tyler 5 years
Jonathan
Jonathan 2 years
Olivia
6 months
3 comments:
I will also start by saying that I am by no means an expert. I don't really care if you want to call what's happening a "recession" or not, but I do think our economy is suffering. There are people who are having to make the decision of whether to pay their mortgages or go to the grocery store. On one hand, I know there are consumers out there who spend irresponsibly. But, I also know there are companies that are determined to take advantage of those who may not understand or who may be too desperate to avoid problems. My biggest worry is how the economy relates to our national debt. We are running the largest national debt ever - and haven't even begun to pay for the war. One day, this is going to catch up with us - to me, that will be the time when we will really see our economy tank. My two cents!
How much money is owed to the United States by other countires? I could not find these amounts but I would bet that if the United States called all debt owed to us by other countires we would in one feld swoop pay off all of our national debt and destroy the global economy at the same time. Also, can't we look to our government to solve problems like the silly housing crisis. Cause they do such a dern good job of it:) Just this past week new legislation was signed into law titled “The Housing and Economic Recovery Act of 2008.” This means that our government (i.e. those who actually pay into the system) will cut a check in the form of a tax credit for first time home buyers in the amount of $7500. Won't it be great! When government steps in, it really gets the job done. Look at France!
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