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View Full Version : Either Candidate Have Idea's to fix the Real Estate Market?



Cracka2HI!
09-16-2008, 03:58 AM
For some reason this seems like a non issue. Am I wrong? I have always admitted to not paying much attention, however I do watch Stewart and Colbert almost every night and while those are comedy shows they do speak on the real issues. Are both candidates ignoring this?

All I hear around here is that people don't want the gov to bail out anymore lenders...which really means you don't want the gov to bail out homeowners. Why Not? Is either candidate making this an issue? I can't tell if they are. I would love to hear any idea's(especially from Obama) on the topic.

I know most around here want to focus on other issues but do people realize that the real estate market that is killing our economy right now? Also does anyone realize no one is predicting an end anytime soon...actually ever, there are still no plans to fix it that I have heard and I think its pretty absurd that both candidates seem to be pushing this under the rug.

I hope you all know it can get MUCH worse even though the media seemingly has stopped covering it. This is similar to the Leman brothers thread if someone wants to merge it, but I don't pay enough attention and I am curious to know if either candidate is willing to attempt to tackle this issue. Hate to say it but the real estate crunch might be too big for a president to fix. They might both be saying F it.

ari1013
09-16-2008, 07:19 AM
Here's the thing. In order for the government to bail out the banks they're going to have to ante up several hundred billion dollars. That's going to HAVE to come from tax hikes. No way around it.

Let's put the number at $500 billion in taxes that need to be raised. That's roughly $2,400 per household. Now think about your situation and how you would be living with $200 less per month.

But that's not even the biggest problem. Nobody cares if Joe Schmo can't afford to pay his cable bill any longer. But what does matter is that the $500 billion is coming directly out of consumption via a reduction in disposable income. Sure a lot of that money is going to come from the rich and not as much from the poor. But when you aggregate the numbers, for every tax dollar pulled out of the economy, you're still going to lower GDP by slightly less than a dollar (let's approximate it at $0.75).

Generally that's not so much of a problem because the government can turn around and spend those dollars which should neutralize (and sometimes improve upon) the tax-based GDP effect. But now since all that money is just going to pay off corporate debt, it's not adding much to GDP. It's mostly going to places like banks in Japan and China instead.

So what happens is you wind up with a big negative hitting the economy. If the economy really is strong, that's ok because we never want it to grow too fast. But if the economy is weak, we also don't want it to shrink too fast either.

So if we take that $500 billion and assume that $100 billion stays domestic, we're at $400 billion. Multiply it by $0.75 and you're at a $300 billion decrease in GDP.

Our real GDP is something like $13,130 billion. Working out the math, you'll find that GDP would fall about 2.3%, or roughly twice as much as a typical recessionary downturn would bring.

Of course that assumes all else is equal, which it wouldn't be. But you should get the point. It might not seem all that fair, but bailing out a few to keep confidence from crashing is much better than bailing out the entire industry.

hoosiercubsfan
09-16-2008, 08:24 AM
Ari
That was a pretty good explanation of why all sectors/companies aren't going to be bailed out. But you may want to break it down in English next time. :p

ari1013
09-16-2008, 08:32 AM
lol sorry

hoosiercubsfan
09-16-2008, 08:45 AM
I hope you all know it can get MUCH worse even though the media seemingly has stopped covering it. This is similar to the Leman brothers thread if someone wants to merge it, but I don't pay enough attention and I am curious to know if either candidate is willing to attempt to tackle this issue. Hate to say it but the real estate crunch might be too big for a president to fix. They might both be saying F it.

Now I may be completely over simplifying this but here is my take on the housing crunch. First I do not believe it is as bad as it is portrayed on TV. You had builders building houses as fast as they could put them up even if they where just spec homes that did not have a buyer attached to them. The amount of growth in home ownership was running at such a rampant rate that the builders just got greedy that it would just keep going. Problem with that train of thought is there is not an infinite amount of people that are looking to buy a home. So when you have 10 builders building house after house after house for a finite amount of people eventually problems of over supply are going to happen eventually.

Then you factor in the type of mortgages that where being peddled to get people into houses that they could not afford. If you where able to realistically pay $1000 but wanted the house that was $1500 a month some mortgage lenders/homebuilders where able to get "creative" with their loan programs with the adjustable rate mortgages and not the traditional fixed rate mortgages. Problem with that is eventually the higher prices where going to have to be paid sooner or later and when those bill came due people where/are not able to pay the higher prices. For the people that got conned into these types of loans I truly feel for them but the ones that knew what they where doing well quite frankly I don't one bit.

Then you take into account that these loans got so popular with some of the financial sector because so much money could be made from them. So now that the bottoms of these types of loans have fallen out the people that are in such trouble are left holding the proverbial bag. As I said in another thread is this was a long time coming and should not come as any surprise. So after the people who are left with this bad debt are able to weather the storm things should come out of the other side just fine. And maybe a little more responsible on the types of loans they are willing to accept. I am sure for a while it will make it harder to get loans since there will be an over correction but it will all settle back out in the end.

Cracka2HI!
09-16-2008, 01:24 PM
Good posts by Ari and hoosier! I am in real estate and was one of the 1st people to see this coming. hoosier couldn't have broken down what happened any better. Banks were lending on fake values is how you can break it down in one sentence. I just wanted to know if I have my facts clear as far as the election goes. So let me just ask this and I think ari can probably answer it best.

Is McCain's stance to bail out the instustions?

Is Obama's to tax the hell out of the Super Rich?

After reading ari's description of what would happen if we continue to bail them out I would prefer Obama's plan. I could probably live off $200 less a month for a while but I would prefer not to.

ari1013
09-16-2008, 01:42 PM
Good posts by Ari and hoosier! I am in real estate and was one of the 1st people to see this coming. hoosier couldn't have broken down what happened any better. Banks were lending on fake values is how you can break it down in one sentence. I just wanted to know if I have my facts clear as far as the election goes. So let me just ask this and I think ari can probably answer it best.

Is McCain's stance to bail out the instustions?

Is Obama's to tax the hell out of the Super Rich?

After reading ari's description of what would happen if we continue to bail them out I would prefer Obama's plan. I could probably live off $200 less a month for a while but I would prefer not to.
No not any more. McCain just said that he stood by the government's decision to not bail out Lehman. So that puts him in Obama's camp.

And Obama said that if the economy doesn't start picking up, he will not roll back the Bush tax cuts for the upper class. He'll still go through with his middle class cut, but he'll have to give up on some spending initiatives to "pay" for it (of course that still leaves us with a deficit...). So that moves him a little closer to McCain. Now neither candidate is talking about raising taxes, just lowering them. Obama wants them lowered for the bottom 80% of earners, McCain for the top 20% of earners.

Cracka2HI!
09-16-2008, 02:05 PM
Got it! Sounds like by election they both might realize there is no prefect way to fix it and probably only 1 smart way to move forward.

ari1013
09-16-2008, 02:15 PM
Got it! Sounds like by election they both might realize there is no prefect way to fix it and probably only 1 smart way to move forward.
Yeah exactly -- which is why issues like this really aren't political. There are certain places where regulation of the economy is a good thing, but for the most part you can leave the economy to itself (and the Fed) and things generally work out for the best.

So despite all the rhetoric that comes out of Washington during campaign seasons, we always wind up with the same general economic policy year after year. Even Bush's tax cuts which were by far the largest fiscal manuever in history still only really account for about 7% of the federal budget.

hoosiercubsfan
09-16-2008, 03:46 PM
Yeah exactly -- which is why issues like this really aren't political. There are certain places where regulation of the economy is a good thing, but for the most part you can leave the economy to itself (and the Fed) and things generally work out for the best.

So despite all the rhetoric that comes out of Washington during campaign seasons, we always wind up with the same general economic policy year after year. Even Bush's tax cuts which were by far the largest fiscal maneuver in history still only really account for about 7% of the federal budget.

Totally agreed here. So far Obama has blamed Washington for the problems the financial sector is facing. Which I think is kind of unfair since it was the higher ups in the companies that chose the paths they took. Heard that JP Morgan Chase CEO had advisor's that warned him to get out of these type investments that there was trouble on the horizon. If more of these people would have had equally as shrewd advisor's they wouldn't be in the situation they are in now. I am of the opinion let em burn that way next time something like this comes along maybe there will be a second thought about getting involved with something like this.

Doc Fluty
09-16-2008, 04:50 PM
cracka just because you can live off $200 less a month doesn't mean:

A: You should have too
B: Not everyone can
C: That's the best option

My mother can literally barely get enough money to fill up her gas tank... she eats nothing special, only going for things like hamburger helper and never eating out.

She can not afford to buy a house so she doesn't try... why should she pay even $50 more a month for people who took out loans that they couldn't afford or that they didn't understand the 30 year contract they signed willingly.

That extra money could get her new shoes, my younger sisters clothes, happy meal or even an ice cream.

An extra $200 a month is a new car lease for average people on a day to day basis.

The point is.. we should leave other peoples money alone.

its unfortunate right now.. but in 2-3 years this will all be an afterthought and some lessons will be learned.. corporations wont be acting so recklessly if they know that if they mess up.. their done.

Cracka2HI!
09-16-2008, 05:17 PM
Totally agreed here. So far Obama has blamed Washington for the problems the financial sector is facing. Which I think is kind of unfair since it was the higher ups in the companies that chose the paths they took. Heard that JP Morgan Chase CEO had advisor's that warned him to get out of these type investments that there was trouble on the horizon. If more of these people would have had equally as shrewd advisor's they wouldn't be in the situation they are in now. I am of the opinion let em burn that way next time something like this comes along maybe there will be a second thought about getting involved with something like this.Good point. There is no doubt the real people to blame are the President's and CEO's of these companies. The company I worked for had all 1,500 of their employees work and entire pay period(2 weeks) knowing they had no intention of paying us for it. Of course they were assuring the whole time not only was the company not going out of business but we were doing very well. They are still assuring us to this day that we will someday get paid. So far they have sent me like $70 of the $1,700 they owe me.

Worst part is they are completely protected by BK laws and have already started another company under a new name. I don't think those a-holes should be able to start making money again until they pay us.


cracka just because you can live off $200 less a month doesn't mean:

A: You should have too
B: Not everyone can
C: That's the best option

My mother can literally barely get enough money to fill up her gas tank... she eats nothing special, only going for things like hamburger helper and never eating out.

She can not afford to buy a house so she doesn't try... why should she pay even $50 more a month for people who took out loans that they couldn't afford or that they didn't understand the 30 year contract they signed willingly.

That extra money could get her new shoes, my younger sisters clothes, happy meal or even an ice cream.

An extra $200 a month is a new car lease for average people on a day to day basis.

The point is.. we should leave other peoples money alone.

its unfortunate right now.. but in 2-3 years this will all be an afterthought and some lessons will be learned.. corporations wont be acting so recklessly if they know that if they mess up.. their done.

No I hear you. My question was more about what kind of impact bailing these companies would have. I really didn't know. If there was no burden to the tax payers and our Gov could help thousands avoide losing their homes I would think they should even if the big companies wouldn't learn a lesson.

I really don't know much about politics or the economy and I usually regret when I post anything let alone start a thread. However I'm glad I posted this one because I have a much better idea of whats really happening then I did.

I was more asking for myself because since I'm in Real Estate it would be very benefical for me if one candidate had an idea to drastically fix the market. If either did and I liked their idea that candidate would have my vote. I understand now that this isn't even a political issue and both will handle it the same way. I would never want to see every tax payer be burdened with an extra $200 a month even if I was going to benefit greatly. I understand how wrong that is.

JHG722
09-16-2008, 05:39 PM
You can't fix real estate markets. They fix themselves.

hoosiercubsfan
09-16-2008, 05:54 PM
Good point. There is no doubt the real people to blame are the President's and CEO's of these companies. The company I worked for had all 1,500 of their employees work and entire pay period(2 weeks) knowing they had no intention of paying us for it. Of course they were assuring the whole time not only was the company not going out of business but we were doing very well. They are still assuring us to this day that we will someday get paid. So far they have sent me like $70 of the $1,700 they owe me.

Worst part is they are completely protected by BK laws and have already started another company under a new name. I don't think those a-holes should be able to start making money again until they pay us.

Once all assets are sold off of the old company you may very well see a bit more of the money you are owed. Payroll is usually paid pretty close to the top if I remember right. And there is nothing that can be done with them opening the business as long as the money they opened it with was borrowed/obtained after the date they filed the BK then it is all on the up and up for them. But if it wasn't the BK trustee will figure that out and nail them to the wall with it.



No I hear you. My question was more about what kind of impact bailing these companies would have. I really didn't know. If there was no burden to the tax payers and our Gov could help thousands avoid losing their homes I would think they should even if the big companies wouldn't learn a lesson.
I really don't know much about politics or the economy and I usually regret when I post anything let alone start a thread. However I'm glad I posted this one because I have a much better idea of whats really happening then I did.

I was more asking for myself because since I'm in Real Estate it would be very beneficial for me if one candidate had an idea to drastically fix the market. If either did and I liked their idea that candidate would have my vote. I understand now that this isn't even a political issue and both will handle it the same way. I would never want to see every tax payer be burdened with an extra $200 a month even if I was going to benefit greatly. I understand how wrong that is.

Problem here is the government is playing with our money at all times. They are financed through the tax payers and anything they don't get from us is borrowed from people like China. So any bailout that is going to be done is going to be done by the tax payers. That is my biggest problem with Obama and his policies there is going to be massive cost and a meager tax return when he taxes the upper 5%. Either he is going to have to push our deficit even farther or start stripping a lot of what he is pledging. They both seem to be saying the same thing about more oversight and greater transparency over the problems we are facing now in the financial sector. Though I again don't think the economy is as bad as it is being portrayed in the media. If it was truly that bad you would not see near the amount of people on the roads as you do now. With gas at 4.15 here the roads are still packed at all times of the day which means that money to fill the gas tanks is coming from somewhere.

Cracka2HI!
09-16-2008, 06:25 PM
Once all assets are sold off of the old company you may very well see a bit more of the money you are owed. Payroll is usually paid pretty close to the top if I remember right. And there is nothing that can be done with them opening the business as long as the money they opened it with was borrowed/obtained after the date they filed the BK then it is all on the up and up for them. But if it wasn't the BK trustee will figure that out and nail them to the wall with it.




Problem here is the government is playing with our money at all times. They are financed through the tax payers and anything they don't get from us is borrowed from people like China. So any bailout that is going to be done is going to be done by the tax payers. That is my biggest problem with Obama and his policies there is going to be massive cost and a meager tax return when he taxes the upper 5%. Either he is going to have to push our deficit even farther or start stripping a lot of what he is pledging. They both seem to be saying the same thing about more oversight and greater transparency over the problems we are facing now in the financial sector. Though I again don't think the economy is as bad as it is being portrayed in the media. If it was truly that bad you would not see near the amount of people on the roads as you do now. With gas at 4.15 here the roads are still packed at all times of the day which means that money to fill the gas tanks is coming from somewhere.

Does McCain have a different or better policy? Or is he planning on not spending as much as Obama


As for the first part...It's not their money. They found an investor who is funding them. None of the licensing or red tape is the same as the old company. They are savvy guys, they knew what they were doing. Yes I do expect to get a little more money some day. It didn't suck that bad for me, I did very well with that company, however it killed the people living paycheck to paycheck.

ari1013
09-16-2008, 07:29 PM
Does McCain have a different or better policy? Or is he planning on not spending as much as Obama


As for the first part...It's not their money. They found an investor who is funding them. None of the licensing or red tape is the same as the old company. They are savvy guys, they knew what they were doing. Yes I do expect to get a little more money some day. It didn't suck that bad for me, I did very well with that company, however it killed the people living paycheck to paycheck.
Well first off, Obama's not taxing the top 5% any more than Bush has. He declared that last week.

Secondly, neither candidate is really going to be able to cut spending much lower than $2.6 trillion -- which still leaves us with a good sized deficit.

ari1013
09-16-2008, 10:48 PM
Here's some light reading (for an economist anyway). If you can't follow it that well, there are some summary tables in the back.
http://www.taxpolicycenter.org/UploadedPDF/411741_updated_candidates.pdf

Basically, McCain's economic plan will leave us with $140 billion in additional deficits over Obama's economic plan each year for the next ten years.