Another Great Depression?

[TahoeDirtGirl]

I will have to check out that book (I think it's a book Animal, Mineral, Vegetable?) about water. For a while there, people were paying more per gallon than they were for gas. I think we have probably passed that. I think of that too, that water is often wasted as much as anything. We have water restrictions here in Mass where I am and I think I'm the only one that follows it. I thought that the other people had wells but no, they just don't care.

A few years ago, we hit a housing kaboom in Tahoe. If you had dirt, they would try and build on it. I won't go into the whole TRPA thing, but basically, there weren't many buildable lots so they ...made everything buildable. Building building everywhere. I couldn't understand who was buying these HUGE houses...we finally cornered a real estate agent at the local watering hole and she explained the 'no interest second' that people were taking out on their primary residence and then, either they were just figuring they would sell it in a few years because of the market (people were bidding over the asking price!) or they would just refi it or something before it came 'due' (ie they had to pay more on it or the interest went up). We didn't really get it. You would never really 'own' your house? on just paying interest only? What was going on...and like I said "this can't keep going".

And I guess that's what happened there. My house doubled in value of course, but no one is up for buying anything. There are people just loading up their furniture and shutting the lights out. It's crazy. My friend is telling me her neighbor is raffling off his house that he just HAD TO BUILD and ruin the lot with no intention of living in it. He just wanted to make $$$. So now there is a big ugly house with no one that wants it.

I remember back in the 90s when I bought my first house, they dug up everything on you, wanted all kinds of info, and it was much tougher. When I bought my current house in 2000, I think I just produced a w2 and tax statements for two years. It was over before I knew it.

To me, just that overconsumption was what made me realize this couldn't keep going on. It was like ....debt obesity? Or just waste?? And the more we build and build these huge malls on farmland, makes it less and less likely we will be farming anything on it? Has anyone else noticed that? Someone was reading me a list of stores that will be closing 'underperforming' stores. All I know is that there is a couple of stores that are under construction near me in Mass that aren't even going to open. What a waste...

[GLC1968]

I remember back in the 90s when I bought my first house, they dug up everything on you, wanted all kinds of info, and it was much tougher. When I bought my current house in 2000, I think I just produced a w2 and tax statements for two years. It was over before I knew it.

We experienced the same thing. I remember my friends moaning about having bounced a check in college and how it was coming back to haunt her when she bought her house in 92!

We bought our first home in 2003 and we basically just signed a piece of paper...it was SO easy even though the price was kind of a stretch for us. Same thing in 2004 when we bought in NC.

We just closed on a house here in OR last month. VERY different experience. We are actually now buying a house that is very much well, well below our means and yet we had to dot every single 'i' and cross every single 't' on the paperwork. They even questioned the dates on a transfer of our downpayment. It left one bank on the 22nd and got credited at the second bank on the 21st (due to a midnight transfer and a difference of time zones) and THIS held up our approval! They wanted a 'reason' for it and proof!! All in all, in some ways the extra scrutiny felt totally unnecessary and yet it made us feel like the industry was finally getting back to the way it SHOULD have been all along.

[Pax]

We just closed on a house here in OR last month. VERY different experience...

Same here, we transferred $900 from a tiny credit union account to our checking account to help with our closing costs and they wanted print outs and a letter from the credit union saying this happened. They said "we need to know that it wasn't a gift". I'm glad we didn't just bring some money from home and deposit it.

[TahoeDirtGirl]

I had that same issue when I was buying a house in the 90s. They were trying to figure out if I borrowed money from someone to cover the closing costs. I remember asking when we were purchasing our house in 2000 if they needed a statement of my accounts and they just took the first one and never bothered looking at it again.

There was a very very interesting program on, either MSNBC or PBS (I only get 5 channels, it had to be one of those!) about what happened with the mortgage industry. They showed a speech by Bush where he wanted to see more low income people own their own homes, and so, the mortgage industry began doing 'reverse redlining' where 30 years earlier they had drawn these red lines around undesirable neighborhoods where they didn't want to fund. Now they were going in those lines and funding housing within those lines, but with not the best ideas, such as interest only loans. I wasn't aware of that, my anecdotal experience was with the upper middle class that were just spending out of control and just way over extended on loans and mortgages. I have yet to see any type of information where they compare the salaries of those going up for foreclosures. Is it what they were talking about on this program or is it the upper middle class and their McMansions? I would like to see some kind of demographic on it, I guess I haven't looked hard enough.

It was sad to see people that were really stuck, they had already put money into their houses and soon realized that their payments were going through the roof. I know that everyone should be paying attention and understand the terms and conditions of their loans, but on the other hand, what were these banks thinking? Couldn't they figure out that people weren't going to pay double their payment? That's the part I don't get. Or was it just the fact that the people that were doing left the mortgage business as soon as they made a scad of cash?

[firenze11]

I keep reading this thread with a certain amount of horror. As a grad student with essentially nothing, the recession is scary enough. Seeing the word depression kinda blows my mind. As a history student, I've always hoped knowledge of the past actually does keep the same mistakes from being repeated (at the very least, the huge, devastating ones). I've done a little reading for the past couple of days (thanks for that article today Salsabike!) and I don't think we're headed for a depression. We do have a lot of work to do and I think many many people just got comfortable with all the things they could get over the past years.

When I graduate next year I'm terrified I won't be able to find a job, or I'll be laid off once I get one like one of my friends just experienced. I've already started looking. I'm reading more and more about how to keep my personal finances in check and stay out of debt. I watch some of my friends use their credit cards like there is free money on them. I know they don't make enough money to support the lifestyles they lead and wonder how much debt they have already gotten into. I'm trying to learn from others' examples, but it's hard when so many people still seem crazy irresponsible.

I think weathering a recession, even if it is a long and difficult recession, is part of the economic cycle. I'm ok with that. It's happened before and it will happen again. Hopefully, the issues this one is dredging up will actually lead to some change.

Besides, I don't really want to have to sleep in a tent on a commune and learn how to skin squirrels. . .but if I have to I better go find a copy of the Joy of Cooking from the 70s.

There was a very very interesting program on, either MSNBC or PBS (I only get 5 channels, it had to be one of those!) about what happened with the mortgage industry. They showed a speech by Bush where he wanted to see more low income people own their own homes, and so, the mortgage industry began doing 'reverse redlining' where 30 years earlier they had drawn these red lines around undesirable neighborhoods where they didn't want to fund. Now they were going in those lines and funding housing within those lines, but with not the best ideas, such as interest only loans.

I saw a clip about something similar on The Daily Show. Jon had Richard Bitner on the show. He wrote a book called Confessions of a Subprime Lender and was talking about how the whole situation might have worked out if the government had regulated the subprime mortgages/lenders. And that when you let businesses regulate situations like that it just becomes one big casino.

[maillotpois]

Wow. My in laws gave us a pretty big amount of money for a deposit on our house when we bought in 2004. First it wasn't in our account, then it was. No questions were ever asked. I never really thought much of it, but it sounds like that would raise some eyebrows now.

[tulip]

Wow. My in laws gave us a pretty big amount of money for a deposit on our house when we bought in 2005. First it wasn't in our account, then it was. No questions were ever asked. I never really thought much of it, but it sounds like that would raise some eyebrows now.

Usually you have to show bank account info for three months prior to your purchase. That's how it's always been for me in my three house purchases. Otherwise it's considered a gift and is treated differently.

[GLC1968]

Usually you have to show bank account info for three months prior to your purchase. That's how it's always been for me in my three house purchases. Otherwise it's considered a gift and is treated differently.

Unless you could show where it came from (in our case, the sale of our previous home).

When we purchased our first home, we used money received as wedding gifts towards the downpayment. We had to sign paperwork stating that it was from gifts and the largest of the givers had to write a letter as well. This was in 2003 - but we also had no home purchase history and I had very little career related job work (I was just out of my masters program and only employed for a few weeks). Plus, that home was a stretch for us, financially. In retrospect, I still can't believe how easy it was...even with all the things that now would be considered marks against us. And that was only 5 years ago!

[NbyNW]

As a grad student with essentially nothing, the recession is scary enough. Seeing the word depression kinda blows my mind. As a history student, I've always hoped knowledge of the past actually does keep the same mistakes from being repeated (at the very least, the huge, devastating ones).

As a student of history, I've become resigned to the fact that many people don't pay attention to history and make short-sighted decisions. Mistakes get repeated and we wonder why no one saw it coming; when things go well, we take more credit than we deserve.

I've also had the experience of coming out of school during a downcycle. If you're resourceful and flexible, you'll find a way to pay the bills and pay down any school debt. The first job (first few jobs?) might not be the ideal fit for what you went to school for, but even in the best of times it can take a while to find a long-term professional "home."

I think the current situation is really painful for people who are finding they are not able to meet their expenses as planned . . . I work with a woman who has been watching her investments lose value just as she's getting ready to send her daughter to college, and it's going to take a lot more of her savings than she would have expected a year or two ago.

If you have very little, then you have very little to lose. This could be a good time to start doing some long-term planning.

DH and I have talked a lot about how comfortable our life is right now -- we don't live extravagantly but we can definitely find ways to economize -- and on top of that we can make do with a lot less. There's a lot of comfort in knowing that we've done it before as starving 20-somethings with liberal arts degrees, and we could do it again if push comes to shove.

[sundial]

Our region is known for rice production and an Anheuser-Busch uses rice in the production of their goods.

In our local news last week, Anheuser-Busch was purchased by a Belgium company. What was disconcerting about this was the US dollar was too weak to defend the company against the Belgium buyout. This is what causes me to really think about our state of affairs. What if China steps up to the plate next? Saudi Arabia? What if Muslims get a foot hold on our soil and gains economic control while eroding our democracy?

[tulip]

What if Muslims get a foot hold on our soil and gains economic control while eroding our democracy?

WHOA THERE, NELLY! You are treading on dangerous ground with that one. I suggest that the moderators nip this in the bud.

Or at least Zen should bring out her most heat-resistant mitts.