This iReport is part of an assignment:
Bailout outrage
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Posted October 6, 2008
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Princeton, New Jersey
Princeton, New Jersey
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The Economy and New Jersey
NJ and The US Economy Watching the markets on CNBC during the day is the equivalent of watching financial pornography. It's like taping the weather channel and then watching it a year later. A different cast of characters is interviewed every day (most of them are white males - I cannot recall the last time an African American was interviewed) spouting when the X is going to rise or fall. Insert housing market, stock market, inflation, rates, bonds, etc. for X. And they are never on the mark. It's like the weatherperson - right or wrong they are brought back to ‘update' predictions as they inevitably fail the first time. (By the way, the housing market is now going to rebound in April). The trend over the past few months by many of these so called pundits has been to blame Chairman of the Federal Reserve Ben S. Bernanke for not acting quickly enough to lower rates or to blame Washington's fiscal policy (including the War) on the state of the economy. No one stands up and says what really has caused us to fall into or at least near an economic recession. Stupidity and greed. Private sector job growth in the region and in the US has rebounded nicely since 9-11. We're not where we were in 2000 but we are not seeing negative growth like we did in the years between 2002 and 2004. This is a recession on an individual basis that is both self-inflicted and government assisted. But the assistance is not coming from where some claim that it is. A primary albatross in our current economy is the housing market. Here we have both greed and stupidity at play. Folks got into bidding wars over homes just a few short years ago - greedily lusting over owning something, anything, because prices were simply going to keep going up. Banks put blinders on and thought the same exact thing - house values would never stop going up. So they loaned money to people with atrocious credit in the form of sub-prime mortgages. Well guess why most people with bad credit have bad credit ratings? Yes, there are a few who have health related issues that devastate their financial lives but, for the most part, these individuals have bad credit because they don't know how to manage their money and they are delinquent paying their bills. Any pact between those with bad credit and the folks stupid enough to take them on should stay between them. The mean outstanding loan balance on a fixed rate mortgage in NJ is $207,000 while it's $264,000 on an adjustable rate mortgage (ARM). The percentage of people in foreclosure in NJ who had a fixed rate mortgage is 4%.....it's 14% for the ARM group. So, banks and poor credit risk individuals got together, took out a lot of money at adjustable rates, and then couldn't afford it as home values declined. Stupidity and greed. The government needs to stay out of the agreements and let the chips fall where they may. Any intervention by the government is unfair to those hard working people who pay their bills. Who bought homes within reason. Who sacrificed other items in order to afford a house. Because you know if you or I have some misfortune 2-3 years from now - the government is not going to step in and help you out then. A 2nd obvious problem in the housing sector is the many owners trying to sell their homes today. A careful eye on the newspaper's housing advertisements show many are still living in 2005 mentally. They overprice their homes, don't negotiate logically, and do not lower their asking prices. A lot has changed in the past 3 years and some are stuck with houses worth less than they paid and possibly even worth less than their remaining mortgage payments. If that is the case - tough! Don't sell then. Settle in and enjoy the fact that you own a house when home ownership is at its lowest levels in years. One does not need to make a profit every time they sell a home and this is one of those times. Why is there no competition at gas stations? Greed. How is it that Exxon Mobil is able to make 40 billion dollars in profits last year despite high crude oil prices and declining demand? They set the record for a US company's profit total last year and are on pace to break it again this year. If the cost of a good that is to be sold (oil) is at all time highs - the only way a company can make a profit is to charge historically high prices. The only way for Exxon to get away with that is, obviously, price fixing. There are all kinds of regulations placed on gas stations regarding prices and price changes. These all work to keep the prices up, not down, like congress and the president would have you believe. High gas prices (and they're comparatively low in NJ due to our lower than average gas taxing) are killing our wallets. Besides the obvious - it costs you more to drive to work, to the store, to visit family, etc. - high gas prices add to the cost of food, clothes, basically everything. Why? Because every product has to be shipped and the shipping companies need to charge more in order to pay for their gas. My wife actually has an ‘oil surcharge' appear on her office water cooler's water delivery invoice. The trickle-down effect is in full force here - just in reverse fashion. Exxon Mobil is at the heart of all that is evil in this country's economy. They are driving the dagger through the hearts of every single man woman and child in the USA. Years ago we were stuck with one cable company and one telephone company in any given city. It was take it or leave it. Today? I have so many choices for digital television and telephone service that companies actually listen when I call and get this - they lower rates in order to compete. How is it that there are, seemingly, several gas stations in every town and yet they all charge the same price? I don't expect Congress to fix all our problems with all kinds of regulations. Actually they mingle too much in our everyday lives both at the national and local level already. (Heck, NJ is trying to ban flavored cigarettes - don't they have more important things to worry about - say property taxes?) Why is it that the only place where the government seems to take a laissez faire approach is with the oil companies? So, my fellow citizens, get your homes in order. Don't use credit cards to buy what you do not need. Drive less, clip coupons, don't list your home at 2004 prices, and, importantly, write your representatives and tell them to put Exxon Mobil in a straightjacket. That is how to right this so called recession. www.BobsBlitz.com This was written on 02/22/08
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