Comments on: A Realistic View of the Economy

By: John Goerzen

John Goerzen — Wed, 02 Apr 2008 14:12:58 +0000

What can I say. Occasionally I slip up, I guess… :-)

By: cliff

cliff — Wed, 02 Apr 2008 05:55:38 +0000

You worried me for a while John. You started to sound like one of those stinking Republicans.

By: Russ

Russ — Sun, 30 Mar 2008 00:30:09 +0000

RE: germany unemployment

Gah, I’d really rather not pay for the percentage of society that does not want to pay for the risks they take. I could have purchased a house double the size I have now, with a high risk loan, but then I wouldn’t be able to pay if I got laid off or if the rates changed.

Meanwhile, we are talking about bailout for people who did exactly that?

Same with unemployment insurance, and heck, for that matter, social security. I invest around 10% of my earnings, and I see another 10% go to social security. The 10% I invest will give me plenty to retire on 40 years down the road. The 10% or so that goes to social security will be chump change.

By: John Goerzen

John Goerzen — Sat, 29 Mar 2008 14:19:06 +0000

That is a good point. In the US, we have some of that (unemployment insurance, for instance, but it tends to last not nearly as long as you mention). But things like health insurance generally don’t go along.

By: John Goerzen

John Goerzen — Sat, 29 Mar 2008 14:08:58 +0000

You’re quite right; I blame the bank, too. As I pointed out, this type of loan isn’t really in the best interest of either the borrower or the bank. I quite agree that the bank shouldn’t have even offered this type of loan.

By: Bill Steele

Bill Steele — Sat, 29 Mar 2008 11:01:54 +0000

This is not good on the part of the woman and also the bank. The bank should help the needy, but also should take care that the person is able to repay. The woman in the article had taken a bad decision, and will end up in paying.

By: jldugger

jldugger — Sat, 29 Mar 2008 10:05:19 +0000

Obviously the numbers sound strange to Kansan ears. A woman making 70 thousand unable out of cash and options after a month is bizarre to me. But whatever. Interest only mortgages are strange, and it was clear a year ago they were contributing to a bubble, when I heard that 40 percent of all new homes bought in Vegas were bought on interest only terms.

Let me offer a different tack: What if she bought a home in order to give her children an education in a good public school? I don’t know the full dynamics of Californian schools, but I know what happens here: rich suburban neighborhoods raise funds for public schools, while rural and urban schools are rife with neglect. I’m not convinced that vouchers or other free market solutions will solve anything, but it might relieve some of the pressure for parents to live in the right neighborhood for their children’s future’s sake in homes they can’t afford.

By: Mike

Mike — Sat, 29 Mar 2008 05:00:07 +0000

No doubt this woman made bad decisions, and it sounds like she’ll end up paying for them.

One thing about blaming borrowers vs banks: Most of the former have little experience whereas the latter have a lot of experience and should really know better or are simply being greedy. The most effective solution here will be to make it in their interest to act responsibly.

By: Adrian

Adrian — Sat, 29 Mar 2008 01:32:01 +0000

You say “suggest that everyone ought to have 6 months of income in liquid non-retirement assets in case something like a layoff happens”.

That might be true in the USA where much seems to depend on people preparing themselves for such situations (and in reality people don’t save money but spend more money than they have). Other countries are aware that people don’t care enough for themselves and therefore force everyone to have e.g. an unemployment insurance, pension savings and a healthcare insurance.

As an example, Germany handles unemployment benefits as follows: There’s a state insurance where each employer and employee has to pay some percentage of the wages, and if an employee gets unemployed he gets 60% or 67% of his last wages for some time (e.g. after being employed for two years he gets the money for one year) while searching for a new job.

And that’s not good-will social security, everyone who gets money has paid for it.