Study: Productivity up.. Workers pay, hirings down.

[Kanastrous]

My understanding is that quite a few people are doing just that: walking away from debts that they can no longer service, leaving the lender holding the keys. Well, if that's what they find they have to do, then that's what I guess they have to do. So some people *are* stiffing the banks, which from my perspective is simply part of the cost of doing business, if you happen to run a bank.

[Kanastrous]

Ah, gotcha. You made it out OK, so you're a good guy.

Whether or not I'm going to make out okay is still an open question. Frankly I think that my particular way of handling my finances contributes to the odds that I will, but I don't have any more certainty than the next guy. As for 'good guy' I don't really know what you mean. I haven't defrauded or robbed anyone, so I sure don't view myself as a 'bad guy.' But I'd need something more to wear the 'good guy' title than simply handling the basics like paying my bills. Is 'Neutral Guy' available?

Those that didn't make it out OK are the losers and lazy who want to be victims and that makes you mad.

No, because people who are not financially okay right now got into that position in a whole variety of different ways. Sometimes there's no 'fault' to identify; some people are in the shit through no action or lack of action on their own part. Some people are in total disaster, and they 100% did it to themselves. The people in that latter category don't make me mad, but a failure to acknowledge their responsibilities does.

Recession isn't over yet, but I made it OK,

Well, if the recession isn't over, how do we know who will or will not make it out okay? I guess multi-millionaires probably will, but alas I'm not a multi-millionaire. I'm not the non-multi kind, either.

I'm a bit stretched and all my personal safety nets are a bit hollow at the moment, but I'm OK with my assets and debt. Guess what? I still think the system is rigged and the companies are fucking responsible.

I don't see what the first part of the sentence has to do with the second. Why should your personal financial state affect your perception of the system? And, given an entire system rigged against you - all those thousands and thousands of highly-trained bankers, loan agents, economists, investors, whatever plus all those thousands if not millions of pages of regs designed expressly to screw you - how have you managed to pull off *not* falling victim, to it?

[J]

To me 'asset stripping' sounds pejorative - hey, I was just minding my own business, running everything perfectly, gettin' on great, being a responsible consumer - then those bastards just came outta nowhere and stripped me of my assets!

Ok then, shall we call it a "systemised asset transfer operation" then? In the end it's the same thing, the middle & lower class are separated from their assets one way or another and it all ends up in the hands of corporations and the rich.

[Alphawolf55]

I will say this, I personally think people are responsible for the loans they sign out, but I still think that the required legal and fiancial knowledge needed for these loans is ridiculous, it's one of the reasons why I think highschools need to start offering finance classes where they teach how to apply and read loans.

[Kanastrous]

This is something you can pretty easily learn yourself, and you probably ought to anyway, as part of the process. Aren't high schools burdened enough as it is?

[General Zod]

This is something you can pretty easily learn yourself, and you probably ought to anyway, as part of the process. Aren't high schools burdened enough as it is?

You're obviously unfamiliar with the concept of predatory lending. Just because someone might know better doesn't mean the sales people aren't going to be putting as much pressure on them as possible to take subprime loans even though they might qualify for prime loans. (Thanks to the lenders putting out big bonuses for closing a subprime loan.)

[Kanastrous]

This is something you can pretty easily learn yourself, and you probably ought to anyway, as part of the process. Aren't high schools burdened enough as it is?

You're obviously unfamiliar with the concept of predatory lending. Just because someone might know better doesn't mean the sales people aren't going to be putting as much pressure on them as possible to take subprime loans even though they might qualify for prime loans. (Thanks to the lenders putting out big bonuses for closing a subprime loan.)

I'm familiar with the concept. Here's another concept: you have to look out for your own interests when taking out a loan, same as any other venture. You know that the laws don't adequately constrain lenders from questionable practices, you know that lenders are in it to make as much money as possible, you know that it's up to you to ensure that the terms etc fit your needs and resources. So, knowing all these things, how is it not your responsibility to deal with it?

I can't speak for others but for my part if I find that I'm involved in a process that I don't understand, I don't proceed until I can gain some understanding of what I'm doing. Because I don't want to get slammed with unexpected consequences. Is there an argument in favor of getting into deals that one doesn't understand? Is there some reason we're so eager to shift responsibility for bad decisions, from the particular people who made those particular bad decisions?

[General Zod]

I'm familiar with the concept. Here's another concept: you have to look out for your own interests when taking out a loan, same as any other venture. You know that the laws don't adequately constrain lenders from questionable practices, you know that lenders are in it to make as much money as possible, you know that it's up to you to ensure that the terms etc fit your needs and resources. So, knowing all these things, how is it not your responsibility to deal with it?

I can't speak for others but for my part if I find that I'm involved in a process that I don't understand, I don't proceed until I can gain some understanding of what I'm doing. Because I don't want to get slammed with unexpected consequences. Is there an argument in favor of getting into deals that one doesn't understand? Is there some reason we're so eager to shift responsibility for bad decisions, from the particular people who made those particular bad decisions?

Is there some reason you're so eager to blame the victim? Just because someone made a bad decision doesn't magically white wash the lender's hands of any and all guilt.

[Knife]

Whether or not I'm going to make out okay is still an open question. Frankly I think that my particular way of handling my finances contributes to the odds that I will, but I don't have any more certainty than the next guy. As for 'good guy' I don't really know what you mean. I haven't defrauded or robbed anyone, so I sure don't view myself as a 'bad guy.' But I'd need something more to wear the 'good guy' title than simply handling the basics like paying my bills. Is 'Neutral Guy' available?

You seemed rather indignant that those who defaulted are 'bad' and should be made responsible. No, I don't think neutral guy should apply.

No, because people who are not financially okay right now got into that position in a whole variety of different ways. Sometimes there's no 'fault' to identify; some people are in the shit through no action or lack of action on their own part. Some people are in total disaster, and they 100% did it to themselves. The people in that latter category don't make me mad, but a failure to acknowledge their responsibilities does.

Actually, me and a couple others have spent the morning saying exactly this, so glad you came around. Some people who didn't do it to themselves represent a majority position, while a minority who did it to themselves on purpose or ignorance, don't make the system. If this portion is the only portion you want to turn your vitriol upon, fine; but at least write the qualifier of 'that portion of people who....' because when you make blanket statements of 'people did it to themselves' it makes it sound like you think all people are like that if they are in hard times.

Well, if the recession isn't over, how do we know who will or will not make it out okay? I guess multi-millionaires probably will, but alas I'm not a multi-millionaire. I'm not the non-multi kind, either.

We don't.

I don't see what the first part of the sentence has to do with the second.

I was actually playing 'my antedotal evidence against yours' game because you were talking about how responsible you've been with your loans.

Why should your personal financial state affect your perception of the system? And, given an entire system rigged against you - all those thousands and thousands of highly-trained bankers, loan agents, economists, investors, whatever plus all those thousands if not millions of pages of regs designed expressly to screw you - how have you managed to pull off *not* falling victim, to it?

I played the game as best as I could and got lucky and didn't get laid off or fired. A lot of the people who are unable to pay their loans just got unlucky, not made bad decisions, didn't do things they shouldn't have, they just got unlucky and worked for a company who RIFed them.

Which brings us all the way back to where I entered the conversation where you said:

I think some aspects are a lot closer to the Long Depression of 1873 and the depression of 1893, particularly the Ponzi finance, concentration of capital, asset stripping of the middle & lower classes, and failed government attempts to inflate our way out of a depression.

Isn't the 'asset stripping' of those classes to a great degree a direct result of their own credit and purchasing decisions over the last ten years or so? The term suggests that someone else is doing something to them, as distinct from their own voluntarily-assumed debts coming due.

The asset stripping of those classes isn't a direct result of their own credit and purchasing decisions, it was a direct result of the economy crashing and people who made loans who could pay for them, no longer being able to with no job. It is something someone else is doing to them, companies holding on to money, not hiring, not forgiving debt, and giving them a shitty loan in the first place.

Edit: Changed an 'it' to 'is' to make a sentence make sense.

[Kanastrous]

Whether or not I'm going to make out okay is still an open question. Frankly I think that my particular way of handling my finances contributes to the odds that I will, but I don't have any more certainty than the next guy. As for 'good guy' I don't really know what you mean. I haven't defrauded or robbed anyone, so I sure don't view myself as a 'bad guy.' But I'd need something more to wear the 'good guy' title than simply handling the basics like paying my bills. Is 'Neutral Guy' available?

You seemed rather indignant that those who defaulted are 'bad' and should be made responsible.

I'll just wait until you provide a quote wherein I wrote that. I don't recall writing that those who defaulted are 'bad' but I guess I must have. Because otherwise you'd be lying, and I'm sure you wouldn't lie...

Actually, me and a couple others have spent the morning saying exactly this, so glad you came around.

Don't flatter yourself with this 'came around' bullshit. I never said otherwise, you did not persuade me of anything there, so just save it, okay?

I would have thought that when I write about 'people who did it to themselves' it would be clearly understood that I mean...people who did it to themselves. I can't make it any fucking simpler, for you.

[Knife]

I'll just wait until you provide a quote wherein I wrote that. I don't recall writing that those who defaulted are 'bad' but I guess I must have. Because otherwise you'd be lying, and I'm sure you wouldn't lie...

Oh please, you kept harping about how people should be responsible for their loans even if they entered into it with ignorance. You don't have to physically push the 'b', 'a', and 'd' keys when you can just infer it. Don't be a douche.

Don't flatter yourself with this 'came around' bullshit. I never said otherwise, you did not persuade me of anything there, so just save it, okay?

I would have thought that when I write about 'people who did it to themselves' it would be clearly understood that I mean...people who did it to themselves. I can't make it any fucking simpler, for you.

Actually, no you didn't. You made a blanket statement about how all people should take responsibility for their loans and debt regardless of how or why they did it with no culpability for the lender; because you think the lendee holds all the responsibility. When called on it, you backpedaled and redefined your position. Good for you. You started with a blanket statement that obviously not everyone knew what you meant. Good to know you've boiled it down to the few people who should be blamed for bad loans you think should be responsible for their bad loans. Yay, we can agree.

[Kanastrous]

Is there some reason you're so eager to blame the victim? Just because someone made a bad decision doesn't magically white wash the lender's hands of any and all guilt.

In some cases where you see a 'victim' I see an irresponsible borrower. And I think that irresponsible acts are the responsibility of the person who perpetrated them.

That's not every bad loan, and it's not every defaulting lender. It's specifically the people who were irresponsible. Why are you so eager to exonerate them?

[Knife]

Is there some reason you're so eager to blame the victim? Just because someone made a bad decision doesn't magically white wash the lender's hands of any and all guilt.

In some cases where you see a 'victim' I see an irresponsible borrower. And I think that irresponsible acts are the responsibility of the person who perpetrated them.

That's not every bad loan, and it's not every defaulting lender. It's specifically the people who were irresponsible. Why are you so eager to exonerate them?

Probably because you've made no attempt to qualify what makes someone 'irresponsible', which leads people to think you infer that all people who can't make their loan payments are 'irresponsible'.

Edit: Gah, changed not to no. Should stop posting till my brain can type this morning.

[Kanastrous]

Look, fraud is one thing, and if someone is suffering because they were defrauded into a bad loan, or if anything unlawful was done by the lender or agent, that ought to be prosecuted and to some degree the borrower ought to be made whole. But we allow people full adult rights at 18, which mean full adult responsibilities. If someone voluntarily enters into a bad loan without fraud being involved, it's their responsibility. It's their total responsibility. Because they had total power to decline, to walk away, to learn what the fuck they were doing so as to properly handle the responsibilities they were voluntarily - as adults with rights - assuming.

^ that's really of zero help to you, in defining whom I mean when I say 'irresponsible?'

Really? No help, at all?

Knife, I don't object to your typing but I agree that you should wait until you actually register the words I am using and what they mean when you read them. It's like you skip every second or third post and then complain that what I clearly wrote in there, wasn't there.

[General Zod]

Look, fraud is one thing, and if someone is suffering because they were defrauded into a bad loan, or if anything unlawful was done by the lender or agent, that ought to be prosecuted and to some degree the borrower ought to be made whole. But we allow people full adult rights at 18, which mean full adult responsibilities. If someone voluntarily enters into a bad loan without fraud being involved, it's their responsibility. It's their total responsibility. Because they had total power to decline, to walk away, to learn what the fuck they were doing so as to properly handle the responsibilities they were voluntarily - as adults with rights - assuming.

^ that's really of zero help to you, in defining whom I mean when I say 'irresponsible?'

Really? No help, at all?

The problem is you seem to be arguing that the only person being irresponsible is the borrower, as if banks could never be irresponsible in their lending practices. Or that responsibility must be absolute and can't possibly be divided between the lender and borrower.

[J]

I think we're getting sidetracked here with the whole "responsible borrowing" issue. Yes, this is one part of the asset stripping and it's the first one that came to mind, there are of course better examples. Such as the various bailout bills and backdoor handouts to the financials, all of which were and are paid for with your taxpayer dollars. Those were all direct transfers from your income, which should be paying for your services such as healthcare, social security, and other government services but was instead funneled right into the pockets of the financials.

It gets better. The financials then take the money which was stolen from you via the government and lend it back to you in the form of mortgages and other loans, loans which they would not be able to make without stealing the money from you in the first place. The mortgage you just took out for your home was actually made possible by the bailouts your bank received from the government, which was paid for by your taxes. The bank uses your money to loan you more money, with interest.

Since it's impossible for anyone who isn't rich to buy a home in cash and there aren't 150 million rental properties in the US, mortgages are a fact of life for almost everyone. If you need a mortgage, and nearly everyone does, you are being asset stripped.

[Kanastrous]

Look, fraud is one thing, and if someone is suffering because they were defrauded into a bad loan, or if anything unlawful was done by the lender or agent, that ought to be prosecuted and to some degree the borrower ought to be made whole. But we allow people full adult rights at 18, which mean full adult responsibilities. If someone voluntarily enters into a bad loan without fraud being involved, it's their responsibility. It's their total responsibility. Because they had total power to decline, to walk away, to learn what the fuck they were doing so as to properly handle the responsibilities they were voluntarily - as adults with rights - assuming.

^ that's really of zero help to you, in defining whom I mean when I say 'irresponsible?'

Really? No help, at all?

The problem is you seem to be arguing that the only person being irresponsible is the borrower, as if banks could never be irresponsible in their lending practices. Or that responsibility must be absolute and can't possibly be divided between the lender and borrower.

I'll admit this may be a result of my exceedingly low opinion of banks, and bankers. I don't expect different or better from them, so indeed I have pretty much always perceived the borrower as being entirely responsible for protecting themselves save in cases of clear criminal behavior on the part of the bank. Because as always...the borrower always has full freedom to walk away from a loan that's not to their advantage...until they've foolishly gone and signed for it

Anyway, the snuggly swimmer babe is right; this is a prolonged side-track.

Can we agree that people who were in the specific class of irresponsible were, well, irresponsible, and therefore not proper candidates for excessive sympathy or special treatment, and leave it at that?

[Knife]

Can we agree that people who were in the specific class of irresponsible were, well, irresponsible, and therefore not proper candidates for excessive sympathy or special treatment, and leave it at that?

Sure, no need to continue with the sidetrack since I can agree with that.

[Alyrium Denryle]

This is still a set of circumstances that the borrowers entered into voluntarily and with access to all of the information they needed to make a good choice rather than a poor one. People have to bear responsibility for the consequences of their own free decisions. I don't care how enticing a lender made the loan out to be, the borrower still bears full responsibility for their decision to take that loan. Unless there was fraud, but I don't think that in the main we are talking about anything where fraud was involved.

I agree that a lot of people didn't do their homework before signing on the dotted line, and yes they do need to take some responsibility. But full responsibility? No. Because in many cases there was fraud in the system, there've been many, many cases of banks and mortgage brokers falsifying loan documents, such as this case in NY where the bank didn't even know how much the couple owed and pulled numbers out of thin air. The entire system is rotten, and as I've said many times before everyone is responsible to some degree, the people, the bankers, the government, everyone.

Am I wasting my time by repeatedly pointing out that I am not talking about people who were defrauded?

Yes, I am obviously wasting my time repeatedly pointing out that I am not talking about people who were defrauded.

The problem is that the banks knew the loans were bad. They would inform the individual "Oh yeah, based on your income and collateral we can qualify you for loan X" when the loan, say, an adjustable rate mortgage, was designed in such a way that the initial terms look good, but either the term of the loan or the interest rate will increase over time (potentially) making it more and more difficult to pay off.

The banks, because they are the ones holding all of the information have the responsibility to make sure that the person they are making a loan to really does have the means to pay it off. They should not have qualified a person for a loan in the first place, and the bank is in a better position to know that than the borrower.

[Simon_Jester]

I think we're getting sidetracked here with the whole "responsible borrowing" issue. Yes, this is one part of the asset stripping and it's the first one that came to mind, there are of course better examples.

Exactly. And this is part of why making a fetish out of "borrower responsibility" does not fix anything and distracts from things that could. Since the real issue seems to be "how to make sure we don't wind up with a country that's 5% millionaires and 95% debt slaves and beggars?"

[Kanastrous]

The problem is that the banks knew the loans were bad. They would inform the individual "Oh yeah, based on your income and collateral we can qualify you for loan X" when the loan, say, an adjustable rate mortgage, was designed in such a way that the initial terms look good, but either the term of the loan or the interest rate will increase over time (potentially) making it more and more difficult to pay off.

All of those terms - the good and the bad - are right there on paper for the borrower to read before signing. Meaning the borrower either (a) knowingly signs off on suicidal terms, which is their own choice and responsibility or (b) did not bother to read said agreement and is therefore responsible for having signed an agreement that they didn't bother to understand. And let's not even get into the borrowers who were themselves complicit in overstating their earnings and assets, in the first place.

The banks, because they are the ones holding all of the information

Except that they aren't the ones holding all the information. Have you taken out a bank loan? You are offered - and required to sign - the documents containing that information. The bank can only put it in front of you. They can't make you read or understand it; theoretically you are a responsible, competent adult who can be expected to pay some damned attention to your own business. But if you choose to sign without reading and understanding...well, who was twisting your arm?

They should not have qualified a person for a loan in the first place, and the bank is in a better position to know that than the borrower.

Having taken out and repaid a number of loans, I have found that I'm in a much better place to evaluate my own finances, than a bank. Especially when you consider that in the application process there are forms of income that you don't even have to divulge to the bank.

Anyway...sidetracked.

[Jalinth]

Except that they aren't the ones holding all the information. Have you taken out a bank loan? You are offered - and required to sign - the documents containing that information. The bank can only put it in front of you. They can't make you read or understand it; theoretically you are a responsible, competent adult who can be expected to pay some damned attention to your own business. But if you choose to sign without reading and understanding...well, who was twisting your arm?

For many of the banks during the crisis, the term willful blindness should apply. The banks loaned money not caring whether any of the loan documents were correct - not the income, not the debt/income ratios, not the appraisal, nada. So both parties have unclean hands and the banks should be much more competent than most individuals. So my sympathy level for a bank is pretty low especially given many were bailed out by taxpayers (TARP is the most direct but they've received a number of other subsidies) but not most individual home-owners. This is the reason why I do think that different ethics should apply when dealing with individuals than between businesses. But if businesses start treating individuals with pure "business like" mentality, they really don't have a case if individuals reciprocate.

What they term "ruthless default" for individuals (I honestly expect that this term is very overused as many of the anecdotes are situations where default is just a matter of time - this month, next month, 6 months from now. If your core expenses - mortgage, house overhead, food, cheap - exceed your income you will default) isn't uncommon for companies with non-recourse loans - and a number of states make many mortgages non-recourse. So why should individuals be expected not to take advantage of what is essentially a "put" option on their home (call it jingle mail). If I was in California with a $700K mortgage and a $400K FMV house (not unheard of in some areas), why shouldn't I just walk away whether or not I can pay? I'm making a business decision that the value of my asset is less than the non-recourse debt so the only logical option is to walk away and I'll be $300K better off. The banks should respect that since they make such decisions all of the time.

[MKSheppard]

Indeed, people need to take responsibility. People like the banks and credit card companies, I hear they are legally people now, who peddle this shit. So do the people who accept these loan, that is true, but just because Joe Schmo takes the loan doesn't mean he is the only person responsible. Schmo, Joe, & Doh Inc. also have responsibility, and IMO more responsibility.

So the solution's really simple.

EVERYONE takes a bath from:

1.) The fucking idiots who signed up for these loans without reading the fine print.
2.) The banks who gave out all these loans to people who simply could not fulfill them
3.) The dodgy financials who helped finance the whole mess and pushed off this reckoning until it was this bad.

That's the only way this entire schlerotic mess will be resolved. It definitely won't be solved by saying "oh, but let x, y or z off!"

[Simon_Jester]

Thing is, I'm not sure we can easily distinguish (1) from people who made prudent financial calls and got fucked over anyway. Can we make (1) take a bath without making the responsible people take a bath?

And for that matter, how does making the people in group (1) take a bath actually help? They're stupid, they're powerless, and they have no money. They're not the ones who are going to fix this, no matter how hard a squeeze we put on them.

[Kanastrous]

I think there's a sense that in the case of those specific borrowers it's throwing good public money after bad private money. Ideally tax money is not collected for the purpose of making whole careless people whose losses are their own fault. It's not about punishing anyone; it's about refusing to punish responsible taxpayers by using their taxes to compensate irresponsible people who should not be compensated with public funds.

Although if it turns out that it's actually in the national interest that they *do* get made whole with other taxpayers' $$$, then I guess the prudent thing would be to hold one's nose and do it anyway.