Economucs Questions

[GAC]

Economucs?

I think you must have been sitting beside me in Spelling class!

[durl]

Regarding the mortgage problems going on today, it's quite possible that Congress paved the way. Laws passed 20 years ago changed the way lendors operate. From Fortune Magazine:

Says Patricia McCoy, a law professor at the University of Connecticut: "Congress never likes to blame themselves, but in this case there's no question they bear some of the responsibility." Indeed, only now is Congress talking about enacting some tougher regulations that they could and should have pushed through 10 or 20 years ago.

McCoy points to two key pieces of legislation that are at the root of the current mortgage crisis: the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) and the Alternative Mortgage Transactions Parity Act of 1982 (AMTPA).

The former abolished state usury caps that had limited the interest rates banks could charge on primary mortgages - and, in the process, gave banks more incentive to make home loans to folks with less-than-perfect credit. - http://money.cnn.com/2008/01/30/real...tune/index.htm

The full article goes into more detail. This could very well be another case of politicians passing laws that seem good up front (especially to voters) but they don't consider what their actions will have in real life and real markets.

[dman]

Originally Posted by GAC

Economucs?

I think you must have been sitting beside me in Spelling class!

It was early when I posted this and the "i" is right next to the "u" on the keyboard.

It might also be the hillbilly coming out in me.

[Ltlabner]

Simple economics: During boom times sock away as much money as you can. Durring down times lean on credit if you must.

Unfortunatley far too many people have done the exact oppisate thing. Spent like mad and used up all the credit they could get during the boom years of the 90's and post 2001 (without saving a dime). Now times are getting a little worse and they have nothing to fall back on and credit is getting harder to come by (especially if you abused it when times were good).

I know it's boring and goes against the grain of "get it now" but you simply must save what you can during the good times and only access credit when neccessary or financially wise to do so. I can hear my grandfather and father giving me that speach as I type this, but good advice is good advice.

[oneupper]

A tip for the college kids out there: take a Macroeconomics 101 course if you can.

You won't learn how the economy "works" (not even economist know that), but it will give you the jargon to BS with the best about economic affairs at parties and family gatherings.

[M2]

We should remember the dollar was awfully strong 10 years ago when interest rates were extremely low. Not building up any more federal debt and then paying it down would probably be a net positive - stability begets confidence, begets long-term investment, spurs business activity, increases the GDP and strengthens the job market.