Friday, February 06, 2009

Into the Depths of That Which I Don't Understand

Ok, I'm gonna voice some opinions here -probably way, way off base with them too since it's a topic I just can not seem to wrap my mind around -at all!

A fair warning in advance too is that those of you who read this drivel regularly are accustomed by now to the fact I do ramble -a lot. I'm sure you've figured too that I rarely "plan" my attack when I start writing -just fly by the seat of my pants, which probably is the main reason I ramble so much.

But, here's the thing - it's this economy, this "bailout" and why do we really have to have it?

This is so looming or reeling about in my mind and there are so many questions I have -because so damned much of this crap going on just does not compute in my pea brain, I guess -but somehow, I think the ones whose logic has long gone, up and left home for good, are the honchos on Wall Street as well as the powers that be in Washington.

I mean -really now -how many of you reading this now have ever been fired? Be honest now, tell the truth -not laid off, but fired? I've been there. To quote a famous lady of the recent political past, "You betcha!"

And if you have been fired, canned, tossed out on your rear, did you get a massive bonus check up in even the hundreds of bucks much less in the millions?

Somehow, I doubt very seriously anyone reading that has ever had that happen.

But, apparently we are all in the wrong line of work because if you read the papers, watch the news on tv, you've no doubt seen a goodly number of folks given their walking papers with a bonus that they could probably use to buy an airplane with and fly out of town then! Ok, how many of us were the CEOs of some major corporation or finance/insurance firm too.

Whatever! Where I come from, back in these old country coal mining hills, fired meant you didn't do a very good job or totally pissed someon in the chain of command off and out you went! If you were lucky, you found some loophole so you could at least sign up for unemployment. Right?

How many of you have ever lost your home -foreclosure, ya know? Would the banks even talk to you about the possibility of refinancing? Would the government come to your rescue to make sure you had that all-important roof over your head for yourself and your family? Didn't think so.

And, if you were in the above situation, I'm betting what you owed was a far cry from the money the government and Wall Street are now clamoring about, wasn't it?

I'm not talking about people who managed to wrangle a mortgage on a house four times larger than they probably really needed and most likely five to ten times higher than what they probably should have been looking at in terms of a mortgage in the first place. I'm talking about people who scraped together to buy a home and found themselves in a bind due to oh, a layoff maybe, illness, not enough insurance perhaps or heck, maybe even no insurance too. Things like that that come along and smack people upside the back of their head and knock them silly, for a big loop and before you know it, you are in deep financial doo-doo.

Back in the day, when I was in high school, our home economics teacher then told us the rule of thumb at that time was that if you were buying a home, your mortgage should not be more than three times your annual salary. I've heard somewhere along the way a variation of that "rule" but this one said you shouldn't mortgage more than four times your annual salary.

Now tell me, with houses now often starting on the really "cheap" side at oh, say $100,000 then, supposedly by the latter set of rules, you could purchase this place if you were earning $25,000 a year, right? And to that I say "BULLS**T" because a mortgage on a house selling for $100 grand is definitely NOT going to be affordable to someone earning a measly $25,000 a year! And I don't care what kind of fantastic interest rate you finagle to get such a mortgage approved, it just ain't doable.

Well, maybe if you don't have to pay for minor trivialities like utilities -heat, electric, phone, a car, insurance, and if you forget to eat every day too.

Tonight, Mandy was watching one of those "Let's Buy a House" shows. I don't know why but maybe it was just something to make herself sick viewing it or some such. But they were showing houses that were selling in the $400,000 to $900,000 range with square footage on some of these places that was less than 900 square foot! In my opinion, anyone buying a house that small for that price apparently has more fricking money than brains!

Now, I realize what I'm gonna tell you here happened back in the early 70s but at that time, around here -and I suppose in lots of places -if you had a lot or a little piece of land in your name, you could purchase a new house for around $19,000. I know because that is what my ex-husband and I did. Of course, the house was delivered to your lot/land in pieces and you put it together yourself or with the help of every friend and relative you could wheedle into believing how much fun it was to play carpenter/plumber/electrician/mason, but back in 1973, we bought a small "ranch" -three bedrooms, one bath, full basement, etc., for the grand old price of $19,900! The company who sold this package deal to us also financed it -a 16 year mortgage for $216 a month back then.
And it sported a whopping 960 square feet of living space.

When we divorced 7 years later and tried to sell the property, for exactly what we had paid for it, unconstructed -see, you were supposed to accrue value via your sweat equity but since we just needed out from under the mortgage so my ex could move on, set up a new life with his then girlfriend, ya know, and the economy in this area was then, just as it is now -always has been too for that matter -tight, tough, rough -choose your own descriptive word there -well, no buyers were forthcoming.

We had one couple who was very interested in buying the place but they had no money to put down on a purchase so since I knew about the Farm Home Agency and their program for first-time buyers in a rural setting, I told them to apply there for the money. You could finance a home through them with no money down and at really, really low interest rates too -we're talking here a beautiful 3% I think at that time.

Well, they applied and their first application was turned down because the agency was out of funds at that time. Yeah -a government agency and their fiscal years ya know. They were told to come back in a couple months once their new fiscal year started and apply again. THey did that and were turned down again. This time because the guy handling their paperwork said they had earned too much money the previous year. Well, the wife told me that the maximum one could earn to purchase through this program at that time was around $16,000 a year and near as she could determine, using their income tax statements that they had only grossed a mere $15,000 so how come they got turned down. Back they went and the rep said oh, there was a mistake. Apply again. They did and got turned down a third time. The reason they were told for the 3rd turndown -you'll love this one -was that we -my ex and I -were not asking ENOUGH money for the house. Had we been asking $26,500 or even $28,000 -at least in that range, they could have had the loan approved.

Now how insane is that? And yes, this is all true. As sure as I am sitting here typing this, I know it happened that way because I didn't believe the wife when she told me that and I CALLED the rep myself to verify this and he said yes, it was true. I offered to up the price but he said, no, that couldn't be done!

Now when government agencies are -or were (probably still are though) operating like that, is it any wonder our economy is in such crappy shape today?

Having had an opportunity a few years after that debacle to deal with this same agency to get a mortgage on this house which I already owned -but this was for home repairs and upgrading (commonly called "remodeling") and some of the absurdities in the governmental regulations for the loan I requested, one would think the government was really taking a hard line on this stuff. They even dictated what things I could have done in my home remodeling. Why I could get new kitchen cupboards -upper ones and new counter top but I couldn't get new base cabinets that would match the wall cabinets because that wouldn't have been "Safety oriented." In order to get my kitchen cabinets so they would match, I had to get a second loan from the bank -a personal loan/line of credit to cover those little amenities. And keep in mind now this was a loan I was applying for that would be repaid, with interest, every penny of it -not some grant program whereby I got repairs and only repaid a smidgen of the cost. But had I been able to go through a program like that -and yes, there was one that did that -I could have had whatever I wanted included in the amount of money I was borrowing then.

Ah yes, this all makes so much sense, doesn't it? NOT!

Now if the government in its excellent logic, wonderful wisdom, were to offer loans to these major corporations with conditions akin to those they put out for me -in which they would tell the corporations EXACTLY what they could or could not do with the money being loaned out, well maybe I could be a little more agreeable to this bailout thing. But when these corporations take the first batch of funds "loaned" out and spend it on raises for the executives, snazzy-dazzy remodeling of board rooms and big, luxurious retreats -all things that are definitely geared to stimulating the economy, then me thinks someone's logic is pretty damned skewed here and ya know, I don't really think it is mine either.

I may not be the sharpest tool in the shed. Math was far from my best subject and I got a D in the freaking MicroEconomics course I HAD to take in college (and which I hated because I could n't understand diddly squat of what was being said, but gee, am I really the dumbass here?

Ok -that's all I'm gonna dissect tonight about my thoughts on the economy and the bailout and politics and all that good stuff.

But can someone here explain any of this to me or is this kind of like the issues I've been having with blogger, my reader, feedburner, etc., -which works, then it doesn't for some people, some of the time and which problem I have decided is my own personal "Go Figure?"

Jump in and explain any portion or all of this to me, would ya please?

1 comment:

Raven said...

It all makes no sense. Some of the government regulations for even things like food stamps and HEAP are just insane and keep people struggling to eat and survive. For the most part (with exceptions), I've encountered pretty decent people at Social Services, but I know others who have been treated with obscene cruelty and disrespect and I've had one or two encounters that were less than acceptable.

Regarding housing prices on those shows - I think a lot of them are filmed in California where shacks seem to sell for hundreds of thousands. I was SO lucky that I got my house through the HOYO/SONYMA program here in NY State. They pushed me to the brink of madness and if I'd been young enough would have demanded my first and second born children, but in the end they helped me get my house at 4% interest. I'm very grateful.

With or without the financial crisis, I don't get the whole golden parchute game in the "business" world. Seems like graft and bad policy to me. If I were a share holder (and I guess all of us ARE shareholders now), I'd be pissed.