First house for a young man

[rstofer]

I'm wondering what exactly you mean with ARM loans? Are those so they change the interest rate every year? If yes they may not be so bad. Over here you can get mortgages where the rate changes every year. Sure there will be good years and bad years but overall the interest rate is lower than longer term fixed rates. What I did in the past few years is wait for the interest rates to drop before committing to a longer term interest rate (which is pretty sweet if I may say so). I expect the interest rates won't stay as low as they currently are for very long; I expect to see a rise somewhere in 2017/2018.

Right, Adjustable Rate Mortgages.  It all depends on how it is structured.  We just got a flyer for an ARM that started at 2.5% and, over time could get to 8% while a 30 year fixed might be 3%.  The rate is intended to rise, it is not simply a matter related to the Prime rate.  Bsically, the bank is lending money quite cheap in the first couple of years and making up their profit in later years.

ARMs are a little more reasonable (they used to top out at 15% or more, much more than a 30 year fixed loan of, say 3%,

The idea is to allow people to buy more house than they can initially afford with the hope that there income rises as fast as the rate.

When money is cheap, house prices rise.

[IanB]

Right, Adjustable Rate Mortgages.  It all depends on how it is structured.  We just got a flyer for an ARM that started at 2.5% and, over time could get to 8% while a 30 year fixed might be 3%.

Adjustable rate (or variable rate) mortgage loans were for a long time the standard repayment mortgage in the UK, and fixed rates were almost unheard of (and maybe still the case, I haven't look at the UK market in 20 years). There were some mortgages where the rate was fixed for, say, the first ten years, and after that it varied.

So coming to the USA from the UK and seeing interest rates fixed for the life of the loan was something of a surprise.

That said, I have an ARM, I chose it deliberately. The rate is tied to a standard bank rate, so the interest rate is not going to go up arbitrarily. After I got the loan I watched people refinancing each year to get lower rates, while for me the rate just went down automatically. Maybe in the future the rate will go up again, but I won't be too concerned. I knew exactly what product I was buying and am completely happy with it. Another benefit is that I have tremendous payment flexibility. I can pay as much or as little as I like each month as long as it is more than the minimum amount (effectively interest only). If I want to, I can pay the loan off early without penalty.

So, I really don't agree that ARMs are bad. They are different, is all. There are pros and cons and you need to know what you are getting into.

[cdev]

There are crooks who are pushing to pull something similar to 2008 again, but this time the people will be hit much harder.

The world will want to punish everyday Americans for electing such irresponsible people. But, they didn't know. People here have been really badly deceived by both parties, who must be laughing together behind our backs.

Both parties here now are rich crooks who couldn't care less about the country or its people.. They just want to milk their positions of power for as much money as they can, and stash it away in some numbered swiss bank account.

[rstofer]

So, I really don't agree that ARMs are bad. They are different, is all. There are pros and cons and you need to know what you are getting into.

What the banks did around here is have the beginning interest rate less than the Prime Rate.  They were loaning money for less than it cost them to borrow.  To recover this, the rate of increase and the maximum amount for the interest were set fairly high - much higher than a fixed rate mortgage.  As the payments ratcheted up, people could no longer afford the payments.  Throw in some asset depreciation, wage stagnation or job loss...

The idea behind the ARM is twofold:  Allow people to buy houses they can't afford in order to keep prices up and, second, hope that the asset value increases such that the buyers can sell out with a profit to use as a down payment for a different house.

As the prices fell, a LOT of people realized they were under water and just walked away from their obligations.  The .gov helped with this by cancelling the capital gains tax they should have had to pay.  This tax alone would have bankrupted most people.  Imagine suddenly owing tax on $100k (or more) worth of capital gains!  All of a sudden there was a flood of houses on the market, prices collapsed and the banks and bond holders were in trouble.

Had the buyers been able to hold on, they would have recovered and then some.  Not every area has recovered equally but I suspect that everybody would have been fine.  But they couldn't hold on because the interest rate was increasing and, really, who wants to make payments on a house that is wildly underwater?

I don't object to ARMs if they are sensible but, basically, they are allowing folks to buy stuff they can't pay for.

The banks knew these "liar" loans were questionable so they came up with a way to securitize the mortgages and sell the debt off as Mortgage Backed Securities.  What could be safer than a MBS?  In a normal market, these bonds would have been a good investment.  In a crash, they were worthless.

At the time I remember reading about a town in Finland that was especially hard hit because they had invested in these bonds.  I was staggered that a housing problem in the US could devastate a town in Finland!

Here is a discussion about Finland's national problem during the meltdown but I didn't find the article about one specific town:

http://njb.fi.s189994.gridserver.com/wp-content/uploads/2015/04/2013_1_Paper_Laitamaki_Jarvinen.pdf

Around here, ARMs are really bad news but the fixed rates are fairly low at around 3%.

I would like to see the US go back to the arrangement we had in the '50s and '60s.  Banks didn't write mortgages. Savings and Loans took all of the mortgage business (and risk) leaving the banks doing 'banking'.  Interest rates were fixed for 15 or 30 years and some kind of down payment was required (usually 20%).  GI Loans didn't require a down payment but, naturally, the payments were higher.

Instead, I get several offers to refinance my house each week.  They all have attractive 'teaser' rates but, in the end, they're all ARMs.  It seems everybody wants to write GI Loans because so much of the loan amount is guaranteed by the .gov.

[LaserSteve]

A couple of comments from a University Staffer who takes care of a big house on 7/10s of an Acre in Ohio.

One as I read this, I see the tone of a single, male, engineer, so a few things you need to think about:

HOAs and Electrical Engineers don't mix.  You'll need antennas for satellite internet if there is no FIOS or a 2.4 Ghz directional panel for WISP,
No Engineer I know is happy with the internet speeds at his house these days, and many of them have two internet
feeds.   If you have the renters, they will need high speed feeds of their own, a place to park their cars, and their own bathrooms.

 You will eventually probably want to try ham radio or having a trebuchet or boat in the back yard.  Every engineer I know that has a HOA has ran into them headlong one time or another. Often over the color of paint, or tree choices, or even  the desire to keep a trailerable airplane in the driveway.


The HOA may have something nasty to say about your planned  subleasing or choice of sub-lease candidates or even your tools.. I have a neighbor who is moved from a HOA covered house to our neighborhood. Her nosey attitude has caused problems for me, including with a pre-employment background investigation.  She even nagged local cops about the extensive electronics gear and tool kit in the back of my then SUV.   Pick a place where you, will be, quietly left alone.  Never discount the problem of neighbors who seemingly have nothing better to do then to study you and complain. If you can, meet the neighbors before you buy!

State funding and in some cases Federal funding for universities is rapidly decreasing. I know you are a "Rising Star" from the quality of your posts, but even with a EB1, I would not assume they will make you a Post-Doc or offer you a associate faculty  slot, even if you have big time IP with them.  I'm seeing the direct results of this more and more here in the Midwest, with large staff cuts.  By all means please stay in the US, but get the Green Card ASAP.


Along the way, as you work at the "happy hunting ground" of a University, where there are far more potential quality  mates per square meter then anywhere else for the rest of your life, hopefully  you will find a potential  Mrs. Blueskull.  From minute one SWMBO (She who must be Obeyed) will start making choices about your home, and the first thing to go will be your renters. Her income will be spent on shoes, and not the mortgage payments, for the immediate time being. In other words, do you really want to buy something you'll need to "Flip" when you get the good job?
She certainly will not want to share a bathroom...

  If your going to stay in academia, SWMBO is not really a option you can ignore, as one of the silent, un-expressed,  criteria for joining a faculty (in many cases) is a stable home life. Why? A single PROF can outperform married with children co-workers 20 to 1, not having all the responsibilities of a married staff member with hatchlings.  That can anger your colleagues, as they can see it as a unfair advantage. Your colleagues will want to see stability, and a major indication of that is a communicative, educated, spouse.  Married staff members value married colleagues.   Look at the house you buy in a woman's eyes or potential mate's eyes. 

    Girlfriend 1.0  is always seeking an upgrade to wife 2.0, and will spawn daughter processes*. (Part of old joke) Educated women choose where to raise their offspring carefully in terms of local schools.  So look carefully at the school district where you buy the home, as in talk to local parents and look at the funding, demographics, and teacher student ratio..

Your predicted/planned   utility, upkeep,  and emergency upkeep costs are too low. No where did I read about the costs of a lawn-mower and consumables.

If you rent/sublease, make sure you can dismiss/remove the renter on a short, reasonable notice. In some locales, getting rid of a persistent renter can require the reformation of the universe as we know it. Check with local landlords about jurisdiction  related issues, and  have a lawyer review the rental agreement.

Also check into the local, state, and federal taxes... Paying 4,000 to 6,000$ a year in taxes might be typical.

Just an FYI..

*, Link to old programmer's joke:

http://www.indranet.com/potpourri/humor/girlfriend_upgrade.html

Steve

[nctnico]

I'm wondering what exactly you mean with ARM loans? Are those so they change the interest rate every year? If yes they may not be so bad. Over here you can get mortgages where the rate changes every year. Sure there will be good years and bad years but overall the interest rate is lower than longer term fixed rates. What I did in the past few years is wait for the interest rates to drop before committing to a longer term interest rate (which is pretty sweet if I may say so). I expect the interest rates won't stay as low as they currently are for very long; I expect to see a rise somewhere in 2017/2018.

Right, Adjustable Rate Mortgages.  It all depends on how it is structured.  We just got a flyer for an ARM that started at 2.5% and, over time could get to 8% while a 30 year fixed might be 3%.  The rate is intended to rise, it is not simply a matter related to the Prime rate.  Bsically, the bank is lending money quite cheap in the first couple of years and making up their profit in later years.

Aha. That is completely different than a mortgage with a rate which follows the actual interest rates (like Euribor, Libor) + margin.

[rstofer]

I'm wondering what exactly you mean with ARM loans? Are those so they change the interest rate every year? If yes they may not be so bad. Over here you can get mortgages where the rate changes every year. Sure there will be good years and bad years but overall the interest rate is lower than longer term fixed rates. What I did in the past few years is wait for the interest rates to drop before committing to a longer term interest rate (which is pretty sweet if I may say so). I expect the interest rates won't stay as low as they currently are for very long; I expect to see a rise somewhere in 2017/2018.

Right, Adjustable Rate Mortgages.  It all depends on how it is structured.  We just got a flyer for an ARM that started at 2.5% and, over time could get to 8% while a 30 year fixed might be 3%.  The rate is intended to rise, it is not simply a matter related to the Prime rate.  Bsically, the bank is lending money quite cheap in the first couple of years and making up their profit in later years.

Aha. That is completely different than a mortgage with a rate which follows the actual interest rates (like Euribor, Libor) + margin.

When you think of the US, you need to think in terms of unregulated greed!  Now, greed is good, that's true, but you need to read the fine print.  If you think you are getting a deal (low initial interest rate), read the fine print.  You're getting hosed a little farther down the line.  There are no deals!  The consumer always loses and they lose more if they're stupid.  Think of it as a tax on stupidity.

[rstofer]

Aha. That is completely different than a mortgage with a rate which follows the actual interest rates (like Euribor, Libor) + margin.

But there was some kind of jiggering the Libor rate:

https://en.wikipedia.org/wiki/Libor_scandal

What I didn't realize is that the Libor Rate was used in the US.

[cdev]

They have figured out a new way to steal huge amounts of money from taxpayers, called a control fraud. The key to these huge bailouts and giveaways are a new scheme to do an end run around democracy..
(trade and investment) "agreements" where governments agree to insulate corporations from risks they always figured into their costs before. 

By doing this they can make mistakes of all kinds, irreversible.

We're seeing our governments become thinly veiled schemes to channel more and more of all money to the insiders, looting the "peasants" everywhere of all we own in the process.


See if you see a pattern here.

https://www.researchgate.net/publication/237428807_THE_BCCI_COVER-UP

https://www.democracynow.org/2014/6/20/a_plan_only_banksters_will_love

https://www.citizen.org/documents/Memo%20-%20Unanswered%20questions%20memo%20for%20Geneva.pdf

Prudential_Measures_Report FINAL

Memo on Feb 2010 WTO Secretariat Paper on FS5 "That'sAllTheyGot.pdf"

MEMO Gats conflict with bank size limits may-10-2011

Financial crisis Policy Primer Nov 2009 FINAL

WTO-GATS-Medicare and Social Security

Patricia Arnold - GATS and financial dereg

Financial crisis Policy Primer 121508

public-citizen-comments-on-international-services-agreement.pdf


Quote from: rstofer on Today at 07:57:11

What the banks did around here is have the beginning interest rate less than the Prime Rate.  They were loaning money for less than it cost them to borrow.  To recover this, the rate of increase and the maximum amount for the interest were set fairly high - much higher than a fixed rate mortgage.  As the payments ratcheted up, people could no longer afford the payments.  Throw in some asset depreciation, wage stagnation or job loss...

The idea behind the ARM is twofold:  Allow people to buy houses they can't afford in order to keep prices up and, second, hope that the asset value increases such that the buyers can sell out with a profit to use as a down payment for a different house.

As the prices fell, a LOT of people realized they were under water and just walked away from their obligations.  The .gov helped with this by cancelling the capital gains tax they should have had to pay.  This tax alone would have bankrupted most people.  Imagine suddenly owing tax on $100k (or more) worth of capital gains!  All of a sudden there was a flood of houses on the market, prices collapsed and the banks and bond holders were in trouble.

Had the buyers been able to hold on, they would have recovered and then some.  Not every area has recovered equally but I suspect that everybody would have been fine.  But they couldn't hold on because the interest rate was increasing and, really, who wants to make payments on a house that is wildly underwater?

I don't object to ARMs if they are sensible but, basically, they are allowing folks to buy stuff they can't pay for.

The banks knew these "liar" loans were questionable so they came up with a way to securitize the mortgages and sell the debt off as Mortgage Backed Securities.  What could be safer than a MBS?  In a normal market, these bonds would have been a good investment.  In a crash, they were worthless.

At the time I remember reading about a town in Finland that was especially hard hit because they had invested in these bonds.  I was staggered that a housing problem in the US could devastate a town in Finland!

Here is a discussion about Finland's national problem during the meltdown but I didn't find the article about one specific town

:

[rstofer]

ARMs were, and still are, about greed!  The lender wants a high rate of return later on and the buyer wants to buy more house than they can afford so they can sell it and reap a windfall.  The bond holders (buyers of Mortgage Backed Securities) wanted a safe investment that paid a lot of interest/dividends.

I don't have any sympathy for any of them.  Particularly the buyers!  They should have understood what they were signing and not base their hopes on an ever increasing asset price.

Some people might not understand how the capital gains tax comes about as a result of foreclosure.  The bank held a note on your asset for, say, $300k.  You defaulted and they only recovered, say, $100k on their $300k investment.  That's a $200k loss to the bank.  Well, their loss is your gain (it has to balance!) so, since $200k is going to push the buyer into a pretty high tax bracket, they might owe the Feds about $70k and the State about $20k.  So, not only would they not have a house, their credit rating would be destroyed by the foreclosure and they owe about $90k in taxes.  If they couldn't afford the house payments, the really can't afford the tax hit!  The .gov felt sorry for them and let them off the hook for the capital gains taxes.  They shouldn't have done that!

Borrowers simply have to read the fine print!

[cdev]

All the complaints about banking regulation always frame it as if the money being borrowed is primarily for investment here in the US, but right now its not, and it seems to me if given the opportunity to borrow more and insanely inflexble investment protection rules which bite both ways (ISDS) its likely business will shed jobs here and invest in new construction and new factories, etc, overseas, which they frame it as "where the growth is" but just as much or more, its really "where the cheapest labor is".  The "global value chains" system we're pushing frames all tasks as best done where they can be done the best for the cheapest, but often the emphasis is far more on cheapest than best.

So easy credit won't enable business to create jobs here any more than it will enable businesses to move more jobs overseas, or automate them. Also of course, jobs are going away in large numbers just because we are figuring out better ways to do them without people. That's pretty much unavoidable and it will mean massive job losses over the next decade, in all kinds of jobs.

Also, administrative jobs are being shifted overseas in large numbers.

This means to me that we may see another crash in home values soon due to large numbers of people losing jobs- which are going away for good, and not being able to find others, and losing their homes, depressing the market.

Banks like bubbles when the government bails them out of the consequences of them. Last I looked, we pay interest for loans to cover lenders for potential loses, not just as profits. Part of that profit should be spent on re-insurance and explicitly understood as meaning the lender did NOT get their risk covered by the government.

[GreyWoolfe]

I'm wondering what exactly you mean with ARM loans? Are those so they change the interest rate every year? If yes they may not be so bad. Over here you can get mortgages where the rate changes every year. Sure there will be good years and bad years but overall the interest rate is lower than longer term fixed rates. What I did in the past few years is wait for the interest rates to drop before committing to a longer term interest rate (which is pretty sweet if I may say so). I expect the interest rates won't stay as low as they currently are for very long; I expect to see a rise somewhere in 2017/2018.

Right, Adjustable Rate Mortgages.  It all depends on how it is structured.  We just got a flyer for an ARM that started at 2.5% and, over time could get to 8% while a 30 year fixed might be 3%.  The rate is intended to rise, it is not simply a matter related to the Prime rate.  Bsically, the bank is lending money quite cheap in the first couple of years and making up their profit in later years.

In a rather perverted way, ARMs make sense if you only plan to stay in the house for a couple of years, such as changing military deployment.  It keeps the initial monthly payment lower and by the time the interest rate starts to rise, you are deployed elsewhere and selling.
Aha. That is completely different than a mortgage with a rate which follows the actual interest rates (like Euribor, Libor) + margin.

When you think of the US, you need to think in terms of unregulated greed!  Now, greed is good, that's true, but you need to read the fine print.  If you think you are getting a deal (low initial interest rate), read the fine print.  You're getting hosed a little farther down the line.  There are no deals!  The consumer always loses and they lose more if they're stupid.  Think of it as a tax on stupidity.

[VK3DRB]

If you are ever considering buying in Australia and not living here (ie: hiding your cash or investing in our housing stock) you are not wanted. Go buy a place in your own country of residence.

[rstofer]

I might be a stockholder in every one of the companies expanding overseas.  I didn't buy their stock just because I'm a nice guy, I want an increasing stock price.  Otherwise, I'm going to take my money and go elsewhere.  Do whatever it takes to make my stock value increase!  I'm not in the charity business.

Greed is good!

As to the bank bail-outs, let's not forget that the .gov TOLD Fanny Mae and Freddie Mac to write non-conforming loans and managed to change the banking regulations such that banks could make similar loans with lots of encouragement.  This whole thing was a .gov experiment that backfired.  Of course the .gov has some responsibility.

Nobody complained when home construction was at an all time high.  Everybody was making money!  The stock market was at record highs, home sales were at record highs as were prices.  Money way easy to get thanks to .gov and non-conforming loans.  What could possibly go wrong?

It's like musical chairs:  When the music stops, somebody won't have a place to sit.

Had their not been bailouts, the banking failure would make 1929 look like a family picnic.  Everything would have crashed, including my retirement.  As it is, I had a few lean years in the stock market.  These things are worrisome when you're retired because you simply don't have much time to recover.  Allowing the banks to fail was simply not an option.  We would have taken the rest of the world with us.  As it is, many countries haven't fully recovered yet.

When you lose 20% on an investment, you need to make 25% to recover.  If you lose 50%, you need 100% to recover.  Just something to keep in mind.

[NiHaoMike]

HOAs and Electrical Engineers don't mix.  You'll need antennas for satellite internet if there is no FIOS or a 2.4 Ghz directional panel for WISP,
No Engineer I know is happy with the internet speeds at his house these days, and many of them have two internet
feeds.   If you have the renters, they will need high speed feeds of their own, a place to park their cars, and their own bathrooms.

The FCC law also covers antennas used for satellite or fixed wireless internet service.
https://www.fcc.gov/media/over-air-reception-devices-rule
What is not explicitly covered are antennas for amateur radio, but for VHF/UHF, the antenna can double as a TV antenna and be covered. What is problematic is HF.

Satellite internet service is expensive and high latency, making it mostly for those who have no other option or want a backup that is resilient to disaster.

[cdev]

Quote from: rstofer on Today at 09:01:47>I might be a stockholder in every one of the companies expanding overseas.  I didn't buy their stock just because I'm a nice guy, I want an increasing stock price. 


There is much more to this than that, what's happening is a system has been created that lets rich people rip off the rest of the planet Especially in the US.

>Otherwise, I'm going to take my money and go elsewhere.  Do whatever it takes to make my stock value increase!  I'm not in the charity business. Greed is good!


Neither are the people of this country, why should we subsidize wealthy speculators?

As to the bank bail-outs, let's not forget that the .gov TOLD Fanny Mae and Freddie Mac to write non-conforming loans and managed to change the banking regulations such that banks could make similar loans with lots of encouragement.  This whole thing was a .gov experiment that backfired.  Of course the .gov has some responsibility.


The people who made a killing should be made to repay the country from their own swiss bank accounts.

Nobody wanted what they did and they did it to line their own pockets. that means they are the ones who should pay, not us.

Thats why the people of Greece and Iceland were literally up in arms, because a few people wanted to steal their retirement to cover the asses of big banks and big bankers.
 
The Clinton Administration (which was notoriously corrupt) created a global trade agreement on services which basically gave the big banks carte blanche to steal in unauditable ways by limiting any checks on them. In a single line on the last page of a appendix to a long and boring document filed in Geneva, not in the US , they claimed that this GATS agreement required that the Glass-Steagall Act be eliminated. So in 1999 they did. Now the GOP want to do essentially the same thing to Dodd Frank, for the same reason.

Partners in dishonesty.

Nobody complained when home construction was at an all time high.  Everybody was making money!

Thats not true. Millions lost their entire life savings. The shaft stripped entire communities of their homes.
Globally, billions of people ended up paying for this tiny group of people to make a killing and walk away scot-free.


The stock market was at record highs, home sales were at record highs as were prices.  Money way easy to get thanks to .gov and non-conforming loans.  What could possibly go wrong?

Famous last words.

It's like musical chairs:  When the music stops, somebody won't have a place to sit.

It wont always be the other guy who pays the price. Statistics show that.

Had their not been bailouts, the banking failure would make 1929 look like a family picnic.  Everything would have crashed, including my retirement. 

Learn about austerity. THAT will eat up your retirement savings. It will strip everybody of everything thats not nailed down, EXCEPT for those responsible. thats how it works. And then you wont be happy. When the veil falls away and you see them for what they are. But by then it will be too late.


The way things look now, the same people will be sitting on a beach somewhere and laughing at all of us then.

As it is, I had a few lean years in the stock market.  These things are worrisome when you're retired because you simply don't have much time to recover.  Allowing the banks to fail was simply not an option.  We would have taken the rest of the world with us.  As it is, many countries haven't fully recovered yet.

In the neighborhood I used to live in on my way to work or going out for walks early in the morning I would see, often impeccably dressed senior citizens, fishing food out of restaurant garbage cans.

When you lose 20% on an investment, you need to make 25% to recover.  If you lose 50%, you need 100% to recover.  Just something to keep in mind.

While we discuss this, jobs are vanishing at an exponentially increasing rate, so the ability more and more people have to work to recover (the only way most people earn money) is becoming more and more elusive for many. Without investing in more education for our country, we're going to run into a real impasse. 

At that point, most investments will crash, home values will crash. You cant have a whole country of people hoping to sell at the same time without values crashing. Pretty much everybody here can see that we're all headed towards a single global society because we're living it and we can see thats just the way it is. But that also means wages will become more similar everywhere which means wages here will fall, a lot. Equal pay for equal work. That could work out if its gradual only if corporations and those who enable them stop what theyre doing to the rest of the planet. And trade deals that are forcing countries to crapify their healthcare and education and water systems so that corporations can milk them will have to end.

The problem is NOT the poor or anybody else, its THE CORPORATE PILLAGERS. And they are not people, they deserve no personhood, their money is not free speech. Its poison for democracy.

Corporations are an artificial construct, a legal fiction and a world ruled by them will be horrible for everybody, especially those who run them, especially for even those doing well within it because of the brutal competition. Their numbers will constantly be shrinking as more and more of them as well as things that matter, are sacrificed to keep them unaccountable and their Ponzi scheme growing for those on top.

That will be a very very unhealthy and stressful world for all of us.To give one example, their "harmonisation" of regulations, downward. Safety regulations should improve or all society pays a very high, increasingly costly price when people are poisoned by bio- persistant endocrine disrupters..

Thats not a business opportunity- its a crime and its avoidable, you should know, however, that they who conrtol governments have decided they want a decline, instead of rising standards of living not only do they expect a race to the bottom on wages and working conditions and extreme poverty and shorter lifespans for most people, they are getting it set up so they make a killing on that too, by privatizing everything, including clean water and likely soon, air.

Thats what they want, even though logic dictates that technology's gifts should be shared, resulting in improved standards of living and growing lifespans and people having more and more time.

They don't want that because they claim it cheats them of the insanely high profits they feel entitled to, as wages drop towards zero and poor people of the countries of the world fight one another for the vanishing jobs - while they cash in.  And their bretheren in the developing countries, already fat from having impoverished their own people, want in on the action, so they plan to give them, our jobs, perhaps even Blueskull's future hypothetical postdoc - to temp out.

Every good deal is under attack by Wall Street. "Too generous".

The people of the world are too generous, but dont know it. Because we don't know we're being stolen from.

[rstofer]

While we discuss this, jobs are vanishing at an exponentially increasing rate, so the ability more and more people have to work to recover (the only way most people earn money) is becoming more and more elusive for many. Without investing in more education for our country, we're going to run into a real impasse. 

Absolutely there is a skills gap!  We have a large segment of the population that doesn't have an education, nobody in their family has ever had an education and they aren't going to change course.  They are no longer employable.

But then you have GM CEO complaining that they can't hire enough coders.  Why aren't there enough coders?  Well, it's a lot of work to learn the trade!  Welfare is easier.

We spend about $620 Billion per year on primary and secondary education without tangible results (2012-2013).  How much more should we spend?  Do we double the spending?  Triple it?  We're talking about $12k per student per year.  The public education system is a failure and it always will be.  Schools are plugged up with students who don't want to learn and teachers who don't teach but are well protected by their unions.  The unions, in turn, have massive influence on their state and local elected officials.

I must say, public education rose to the challenge when Russia launched Sputnik.  The next day, math became the most important topic in 6th grade!  We are still the only country to land on the moon and return.  Six flights with 12 astronauts having walked the surface.

Maybe Sputnik is the reason the boomers are the best educated and most productive generation the world has ever seen.

The present generation of middle age, the offspring of the “Greatest Generation” of the depression and World War II years, will be the healthiest, best educated, wealthiest, and most productive older generation America has ever had. This is very good news. The news is all the better in that this coming older generation will exert a powerful influence on the policies, priorities, and values of the United States.

George McGovern

http://www.huffingtonpost.com/george-mcgovern/hey-baby-boomers-welcome-_1_b_16947.html

We may be old but we vote!  Every election for the last 50 years!

[cdev]

A lot of young people here would jump at the chance of being able to learn computer science or engineering.

They would jump at the remedial math they would need.  they would do it. But, the powers that be dont want it. They want everybody except them to be at a disadvantage of some kind. That means they want foreign workforces whose presence depends on a job thats lacking the normal level of freedom to change jobs. In the normal world, when people learn all sorts of new skills, they get paid more. Not with l-1 visa temp jobs. They are six year contracts and the wage is negotiated at the start and doesnt go up.

Its not based on prevailing wages like H1B jobs are. In other words, H1B jobs are seen in some circles as too good a deal, not as too bad a deal. The lure of abnormally cheap labor is a lot like slavery, its a corrupting influence.


The people who tell us that there are no Americans (or smart young Chinese not laboring under an artificial handicap) who want those jobs have already traded those jobs away in all but deed - they used them as virtual IOUs to get what they wanted from other countries for two decades, making themselves rich, (the people who cashed in did it personally, not nationally) and the cover story now is the afterthought, simply the last lie in a long long chain of lies, and of course, confident that nobody will call them oyt on anything, they are trying to craft a story to fit what they have already done behind the scenes.

Mode Four is a means of having a workforce that cant bargain for better wages or conditions. Pushing down wages in a race to the bottom.
In education, they want a shift to corporate ownership. Think "ITT Technical institute" on a massive scale, and more expensive, but with a foreign workforce here being paid wages that are somewhere between wages here (possibly even below US minimum wage) and wages in the corporations home country, the foreign corporation with workers here temporarily becomes a means of bypassing all sorts of laws by the expediency of trade rules..

Mode Four is based on the Middle Eastern kafala system..

 "modern day slavery" is what those jobs have been called, with justification.

   You have to have some personal experience with pathological liars before you realize how dishonest they are. Their entire business model depends on milking information gradients in the worst possible ways, the entire planet being successfully shafted by them, so, think, what things have to happen for that to work.  #1 thing, their target audience, which is essentially the 90% of all of us who dont have broken consciences, well the subset of that group who are well to do and influential, rich people with consciences all around the world, they are trying to justify their scheme to them, not us as a whole.

And they do that by hiding all of it and only revealing little things at a time, and spinning them dishonestly in a false narrative worthy of North Korea. Its that complicated and that wrong. (not just evil, factually wrong)

Those people are being trained to see the victims, (us, the middele class and upwardly mobile poor of the world, who otherwise would have risen higher) as deserving of every misfortune we got. 

So, a relentless spin machine has likely been churning on this for decades. Its trying to spin the changes they want as benefiting the poor of the developing world (the trunk of the elephant) while ignoring the fact that the tip of the elephants trunk is rising ever higher at an dizzying rate, we're supposed to think that the loss of those in the trunk area the top qunitile minus its richest 1%, will go to those in the bottom 4/5 when it will actually go to the top 1%.

Look at what they've done with health care. Whats their real plan? Its already there in the GATS and in the WTO Government Procurement Agreement- they want people who get subsidies to get their care, at least any hospitalization, overseas. they want to resell those services. Then they can use those patients as bargaining chips.

According to R. (a WTO official) countries that have committed health insurance in their existing commitments implicitly agree that their health insurance must become portable. That means us.

These deals trade various concessions, just like a poker game.

here are the four modes of supply which are traded.
http://www.slideshare.net/GitanjaliMaria/four-modes-of-wto

our drug companies might gain a right to buy up shares in ownership of firms that make generic drugs overseas, lowering the prices of drugs generally. US firms would essentially get a right to eliminate their compatition, under the guise of increasing competition. Thats how these things work.

Countries that become dependent on us for jobs are less likely to develop their own businesses at home that compete with us.

here is India's argument for more Mode Four to the WTO. (several years ago because thats when this debate was happening)

http://web.archive.org/web/20090410103914/http://commerce.nic.in/wto_sub/Invest/sub_invest-W39.htm

My main objection to all this is that it cheats a great many groups of people of their futures, keeping a few already insanely wealthy groups of people's children on top, while jobs are going away. Lying to the planet about how its being done, and stealing democracy.

A good example here in the US is health care. The real reason our healthcare situation has nothing to do with the things they say. instead, a deal was made in the WTO. And US patients are now essentially pawns in this global game. Bargaining chips.

So, both parties are shamelessly lying.

[nctnico]

ARMs were, and still are, about greed!  The lender wants a high rate of return later on and the buyer wants to buy more house than they can afford so they can sell it and reap a windfall.  The bond holders (buyers of Mortgage Backed Securities) wanted a safe investment that paid a lot of interest/dividends.

Borrowers simply have to read the fine print!

I strongly disagree. If you buy a product it should not be designed to bite you in the ass (like a gun which fires backward). You shouldn't need a PhD in economics to borrow money for a house. Unfortunately in the 1990's and early 2000's a lot of financial products have been designed in a way they where only proffitable to the banks/insurance companies and over here banks and insurance companies are paying deerly for that because the terms where not clear enough. All in all it is very important to strongly regulate the financial sector so they only offer products which benefit both the bank/insurance company and the customer. Only then you will have a financial system which functions properly and isn't prone to collapsing.

[Nusa]

A bit too much TLDR here. If you could make your points with fewer words, I might read them.

[cdev]

Rstofer,

At the very cutting edge, sometimes a condition exists where no schools teach "it" (whatever it is)  because no teachers know it well enough to teach it.

if they know it they are doing it, because its that new.

not teaching.

A good argument can ahnd should be made that the way we teach a great deal of knowledge could and should change to adapt to the exponentially rising curve.

Your Trumpeting this alleged "skills gap" - is parroting the phony PR campaign for the offshorers and outsourcers.  Who are primarily driven by money, not anything else. As they put it, its the people of the United States, damn us, who often are self taught, lacking formal credentials, but sometimes also brilliant, who stand in the way of US corporations grandiose expansion schemes. (because we see the value of knowledge and want to share in the wealth it brings) We're not wowed by the mere fact of employment, we want to be challenged, we want to solve problems, but we also want to be treated well. We don't buy into the bean counters and economists race to the bottom windfall bullshit.

Well, those of us who are a bit older have seen it all before, during the 90s and it was 99% BS. Its a cargo cult mentality that ignores the facts of productivity and real wealth generation, which happens when it happens and more often than not despite government policy (except for education and things that have nothing to do with deregulation or banking, or cheap labor schemes.. those things are energy drainers and soul suckers that will kill creativity, which frankly is what they want. )

They dont want creativity, if they did they would behave differently in every possible way. They wouldn't know creativity if it bit them in the ass, seriously. They dont want the win win positive vibe of a creative community. They hate that when they see it and try to kill it. They are trying to kill public universities. They are trying to drain American families of their every penny. They are trying to set up a future which only they control, and it will backfire on them.


In their world, we're both in a declining job market (ie. race to the bottom) when it suits them and in a boom which demands endless new flesh when it suits them.

It doesnt add up.

What it really ius is a sort of familial abuse scenario where the people of this great land are being taken advantage of by the false promise of jobs.. Jobs are vanishing for the many but5 for a subset of people the future is bright, but they need to be paid a living wage, not eight dollars an hour.

Those are the businesses that moved to the South to shave a few bucks off their wages and now are moving jobs offshore or automating, giving them what they want wont fix the systemic problems, it will only cheat workers of their due and stimulate bad conditions in workplaces which should be improving and becoming more professional, not less.

No growth continues forever, and we should throw out the crooks whose overenthusiasm needs to be tempered by the reality that economic predictions made for trade deals have turned out to almost always have been wrong. So its a huge mistake to give them what they want, they are like addicts who will never be satisfied.

Like the banks, they are crooks, who are trying to lock in their ill gotten gains.

[cdev]

Rstofer, its the US's strong position that any "innovative financial products" of any kinds whatsoever, no matter how predatory, should be allowed. At several points you've described regulations we used to have in the past (funny how many Americans dont realize that the laws have been changed and especially, WHY) that violate the US's core trade goal, in financial services, DEREGULATION = "progressive liberalisation" which means ever less regulation, irreversibly, for corporations. SO for you to say that some financial products should not be allowed because people wont know they are falling into a trap. why you're sounding too much like me!

What we have now is a lot like feudalism, with serfs being bound to the land.

Look at it this way, an 'opening' is a concession, suddenly everything gets locked down by the trick of "having been paid for".

"Other countries' (corporations) traded concessions to get their rights to exploit "serve" us, they paid for us fair and square. Thats what trade deals do.

If you then regulate - (you cant, its forbidden by an international agreement, thats why DoddFrank and the ACA are being eliminated, its really being rolled back (!)..)


Because, since we committed to open health insurance in 1998, that also meant we could not fix it after that date, because doing so would spoil its profitability for this hypotetical foreign investor, so a million Americans have had to die (really!) to avoid doing anything that deprives banks (insurance companies, etc.)  from all around the world of their legitimate expectations of profits.


(Now thats likely a crime against humanity because we had the money all along to fix it- but didnt,  in fact as insurance companies are experts at collecting money for decades and then dumping people when they get sick and then the government ends up paying, it actually would have been cheaper and still would be - if we didnt count the compensation which soon we will in theory SOON have to pay, under the GATS article XXI procedure, to simply give everybody involved healthcare for free!) And as we committed to this path back in the 90s, they will claim to deserve and will likely ask the WTO to force us to pay them, compensation. And they will likely win because it will be undebatable that indeed, we did add new regulations after February 26, 1998. Thats what will be at issue. Not whether any of our objections to the deal (postulating some future uncorrupt Administration, Congress, Senate, etc) make sense. Or not. Thats irrelevant.  This is the system we have today, one which is totally rigged, so rigged they refuse to tell us about it knowing that they all would be laughed out of existence and office, and their deals would all be torn up.

Why do overseas banks want US customers? Lack of financial sophistication. Also, probably the least regulated market on Earth in a developed country.

Shouldnt we be happy that India wants our poor patients? Do insurance companies want the patients?

Not necessarily, their proposal is just for the WTO to force us to make health insurance portable, along with a bunch of other things, (one of them is making it easier to outsource engineers) The rich countries are dragging their feet on the promises they made back in the 1990s, and India wants the WTO to force us to open up our services to  former WTO DG (and ex NZ PM) Michael Moore called the "cleansing disinfectant of competition".  Neoliberalism is a sort of cult, that sees corporations as the future. They want a "world without walls" for corporations.

Nobody is asking anybody to lose any money. They couldn't, anyway, insurance is a business whose intent is making money. and the hope is to make the rest of the world less generaous and more business friendly, for example, they would like governments to stop helping the poor. Instead, they want a partnership among thieves, where governments eliminate the risk for them in exchange for the FS firms  taking away their responsibilities to their people. irreversibly.

Conditions in the US in 1998 (the year signatories to the agreement linked below froze regulation, newer regulations were frozen) were a nightmare for people with any kind of chronic condition, but very nice for insurers.

Whether its housing, banking or health insurance, don't make any mistake that anybody is doing anything out of the goodness of their hearts, no its all about maximizing profit and eliminating moral hazard.

Using this system they will create a new normal which is the lowest common denominator of regulation. Just in time for millions to lose their jobs. Imagine that.

If foreign financial services firms have been hyped up to see our market as more valuable than it turns out to be, just like happens with housing, it might turn out to be mutual, because their markets may turn out to not be generating the growth that we expect because we underestimate their level of exploitation and the lack of upward mobility there, too! 

After all, there is a reason countries like India have so many poor people, and it has nothing to do with America.. (despite how they would like to blame it on us) Its a problem thats been thousands of years in the making.  Both India and China had very bad inequality, (even under Communism which starved maybe as many as 30 million people in rural areas to death in the early 60s in a completely avoidable, ideologically driven "famine" without the rest of the world even realizing it had happened.)
I think our corporations are overestimating their profit potential in developing markets, because they are underestimating the willingness of their rich to exploit their poor. So, using an allaged need to mistreat our poor more giving up the bird in the hand, giving up good jobs here, or sending our poor patients there, in order to get more business there, is nuts.

Nomatter what we do there likely are only a few decades at most, before almost everything that can be automated will be, even in poor countries, will be. That will mean poverty for billions of their unemployed and ours as well, and many now employed wont be - So they wont buy our products in large numbers, no matter what we do.. in other words they wont be "growth" or any kind of replacement for the middle class we're so eager to lose, in fact have already written off as gone, instead it will be a total disaster.


Instead both will stagnate but both sets of crooks will have extracted all sorts of promises and changes they NEVER could have gotten at the ballot box based on this back room con . But the system will then crash and god knows what will come put of it.

Quite possibly then we all lose.

For health insurers (think India and Brazil, in particular) and bankers and other financial service offerers, they've been trained to look at the US as a gold mine of financially unsophisticated people whose savings are higher than they would be elsewhere. Ripe for the takings.

In exchange they are expected to let US banks do the same for to their people.

Don't foreign banks and health insurance firms deserve a little bit of that captive action?

After all, its practically free money, waiting to be stolen earned?

No, its a symptom of a total decline which will lead the world into a pit of destruction. Give them an inch they will take a mile. Of course, thats why they are using trade deals to wipe out every hint of compassion, like the compassion you describe, rstofer - telling gullible people what kinds of cons they should avoid. Once you start doing that, it will never stop. before you know it, the whole scheme goes down in flames and nobody gets filthy rich, except the poor who work hard for it. Nobody (important) should ever have to do that. Damn you!


/sarcasm.

[tronde]

A bit too much TLDR here. If you could make your points with fewer words, I might read them.

The essence of all the words is that those who don't want to waste time on educating themselves will be badly bitten.

[tronde]

Question to bluescull:

I can see why you and your family fear for financial trouble in China. My understanding of the Chinese economy is that it does not follow the "western rules of economy" if you look at the government level because the government as an entity does not see money as a goal in itself. I know that one of the most important goals for the government is to remain in office, and money can be a tool to achieve just that so it is importat that way. But just to save up a huge pile of money is not importat in the same way as it is in the West.

So - how big losses for a Chinese citizen or family will they allow? I guess a large group of pepole can be rather difficult to handle if they loose a lot of money because of something as abstract as large scale economy?

Will your money actually be more safe in the american housing market than within China? If the Chinese economy really goes bust it will for sure affect most western countries too.

[tronde]

If they've been hyped up to see our market as more valuable than it turns out to be, just like happens with housing, it might turn out to be mutual, because their markets may turn out to not be generating the growth that we expect because we underestimate their level of exploitation and the lack of upward mobility there, too!  Their rich will stay rich but they already own all the useless junk they need. And their poor, even the smart ones, will stay poor. All around the world.

So they wont buy our products in large numbers, in other words they wont be "growth" or any kind of replacement for the middle class we're so eager to lose, in fact have already written off as gone, instead it will be a total disaster.

Some reading from Nick Hanauer, one of the "super rich":

http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014