Our President has said repeatedly, Americans must live within their means.  Think, within their means, don't sign on the dotted line before YOU do the research.  He has asked Americans to be accountable and except personal responsibility for taking out loans they couldn't afford.  No more keeping up with the Jones's.  The Jones's are homeless too. 

Keep up the good work!

Thank you.

Wall Street doesn't like it because it's going to make THEM be responsible TOO if it gets implemented in any way that's going to work.  Many of the problem loans are problems (or were problems) because of problems in how the loans were issued.  Like inflation of prices by the supposedly independent appraisers or issuing credit where credit (or that much credit) never should have been issued.

Ultimately though, Leatrice is also right.  American consumers, generally speaking, have NO idea how to use credit responsibly.  As long as checks aren't bouncing and collectors aren't calling, too many thing everything is fine - which isn't necessarily true.  Ask people like my sister and her husband who just managed to have a house of (credit) cards fold that lost THEIR house AND our MOTHER's (they'd arranged to "refinance her home in their name for better terms").  All it took was one briefly lost job because they'd stretched everything so thin.

There's a major factor in the current raping of the poor I hear nothing about:  bank fees, penalties, and interest rates on credit cards.  The giant banks we have been shovelling money to make most of their profits from fees and penalties.  Bank of America and CitiBank are now instantly increasing credit card interest to a whopping $29.99% if you miss one payment.  The only people affected by this are the poor who are living on the edge.

Let me give you two personal examples of how this works and how incredibly unfair the system has become: 

1.  This summer on two different occasions my bank, after holding a local check for four days (I could have walked one block and gotten cash for the checks) credited the check to my account at 5:01pm.  At 5:00pm they charged me multiple NSF fees for items purchased with my debit card, mostly purchases less than $10.  The NSF's were $36 EACH.  Basically they were charging an APR of over a billion percent to loan me money for a fraction of a second while their computer balanced the account.  This can only happen to people who are poor and have no cushion to fall back on.  It's worse than mob lending.

2.  Around Christmas time a check written to me bounced, sending my checking account deeply into the negative.  The bank, despite having my e-mail address and telephone number, informed me with a letter, sent two days after the check had bounced, arriving a week later (it was Christmas time, after all).  During that time the account accumulated over $300 in NSF fees.  But it gets better.  I noticed the bounced check quickly, got cash from the person whose check bounced, and deposited it in an ATM (I'm charged a fee to use the main counter).  I then deposited several more checks in the next few days equalling over $4000.  Well, my bank had blocked my account, without informing me, and by the time I finally realized this they had declined two credit card payments.  The credit card companies both charged me almost $100 each for returned payment and late payments and then bounced my interest rate to 29.99%.  There is no recourse whatsoever.  My only fault in this is being poor but these two credit cards, which I was managing to pay down, now have monthly payments almost double what they were.

Oh, but it's my fault for accumulating the debt in the first place, right?  Sure, you can say that.  For years these cards had monthly payments that I could easily make and pay down.  The cards got me through some rough periods, for instance a client stiffed me for three months' of work and in my scramble to pay for materials and labor as well as my mortgage and utilities I was forced to use those checks they send every month.  Even with those huge expenses sitting on the card I was able to double the monthly payments and slowly decrease the amount owed.  In what is a common practice, Band of America then failed to send a bill one month and my $60/mo payment increased to over $200 and the interest went up to 19%.  Oddly enough, two other cards that I had not missed payments on also increased because I missed on the other card. 

The mega-banks' entire profit model is based on stealing from poor people and now that the poor have run out of money they are attempting to squeeze the last drops of blood out of them to continue this profit model.  To what end?  Apparently they will not be punished for this criminal profit model.  I hear not a peep about capping credit card interest rates or regulating penalty fees, ATM fees, and other bank charges that disproportionally effect the poor.  Even our state and local governments are using the fee model to fund programs, again placing the burden on the poor.  The cascade of failing mortgages is a direct result of the this increasing drain on the resources of those of us at the bottom of the economic scale.  We have no money left so the banks take our houses and at the end of our lives when we become sick they take everything so there is nothing left for us to give the next generation.


We have allowed the banking industry to tear down all the protections we put in place during the Great Deppression and we need to put them back.  Break up these mega banks, rebuild the wall between banks and speculation, and force them to make money the way they're supposed to:  by charging reasonable interest rates on loans.  Period.

There's a word for what they're doing:  usury.  We must stop them.

Alan even left one thing off his very good list, a growing number of banks are charging per day NSF fees on top of the item fees.  That means if you don't catch it WHEN it happens - and as he pointed out, it often happens not because of what YOU do but because of how THEY process transactions or because of things YOU don't know, so you easily might not know - you can be so far behind you'll never catch up by the time you find out. 

The way credit has gotten to work is absurd.  If I pay Bank A's credit card on time, but pay my electric bill late why should my credit card interest go up?  One late electric payment couldn't hurt anyone's credit score THAT much.  Even two couldn't, unless maybe they're in a row.  Still, if all my credit card payments are on time, why does Bank A care?

Then just to add insult to injury, after suffering all of this, credit reports are an impediment to employment on top of being an obstacle to housing.  Which leads to a catch-22.  Blech.

I don't get how many Americans CAN live "within their means" or take "personal responsibility".

If there isn't enough affordable housing, where do our minimum wage workers live? Not just "them", but also "young families" that have to juggle day care expenses. Or "older individuals" with high medical costs.

Societies are ultimately judged by how they treat those at the "bottom". History will not be kind to us...unless, we begin to talk about "social responsibility" too.

On June 4, 1963, President Kennedy signed Executive Order 11110 (see right). The order could have—and should have—begun the process of ending the Federal Reserve money monopoly in America. Instead, President Kennedy was assassinated and a few months later the silver certificates he ordered into circulation were removed.

One thing is for certain: Fiat money cannot compete with real money. Had President Kennedy and the silver certificates survived, the Federal Reserve would have been out of business, the perpetual wars on everything could not be financed, our people would not be drowning in consumer credit debt, our economy would be anchored to value and New Year’s, 2009 would not be the eve of our destruction. Our choice is clear: End the Fed Nov. 22, 2008, or do nothing and let the bastards do to our entire nation what they did to JFK that fateful day in Dallas 45 years ago.

Executive Order 11110

AMENDMENT OF EXECUTIVE ORDER NO. 10289 AS AMENDED, RELATING TO THE PERFORMANCE OF CERTAIN FUNCTIONS AFFECTING THE DEPARTMENT OF THE TREASURY. By virtue of the authority vested in me by section 301 of title 3 of the United States Code, it is ordered as follows:

On June 4, 1963, President John F. Kennedy signed Executive Order (EO) 11110 to compel the U.S. Treasury to issue paper certificates backed by silver held by the Treasury. The certificates directly challenged the authority of the Federal Reserve Bank to "loan" fiat (unbacked) money to the United States government at interest.

"The Christian Law Fellowship has exhaustively researched this matter through the Federal Register and Library of Congress. We can now safely conclude that this Executive Order has never been repealed, amended, or superseded by any subsequent Executive Order. In simple terms, it is still valid," wrote John Curran.

With EO 11110 (see above), President Kennedy returned to the federal government its constitutional responsibility "to coin money and regulate the Value thereof." Per EO 11110, the Treasury was ordered "[t]o issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury..."

For every ounce of silver held by the U.S. Treasury, the government could introduce new money into circulation.

According to Curran, "As a result, more than $4 billion in United States Notes [USNs] were brought into circulation in $2 and $5 denominations. The $10 and $20 United States Notes were never circulated but were being printed by the Treasury Department when Kennedy was assassinated."

"United States Notes," Curran explained, "were issued as an interest-free and debt-free currency backed by silver reserves in the U.S. Treasury. We compared a ‘Federal Reserve Note [FRN]’ issued from the private central bank of the United States (the Federal Reserve Bank a/k/a Federal Reserve System), with a ‘United States Note’ from the U.S. Treasury issued by President Kennedy’s Executive Order. They almost look alike, except one says "Federal Reserve Note" on the top while the other says "United States Note". Also, the Federal Reserve Note has a green seal and serial number while the United States Note has a red seal and serial number."

Shortly after President Kennedy was assassinated on November 22, 1963, the USNs he had issued were immediately taken out of circulation (series 1958 silver certificates were also removed from circulation).

Most Americans had no idea at the time that President Kennedy’s death was tied to the issuance of silver certificates, nor did they realize that they were stolen back out of circulation soon after LBJ replaced JFK as president. People just continued using fiat FRNs as "legal tender" and are still mindlessly using them as if they were "money" today.

Had the American people understood that President Kennedy’s silver-backed USNs were real money and used them as such, demand for FRNs would have evaporated as a simple matter of economics: Trading goods and services with silver-backed USNs is an exchange of value while trading goods and services for FRNs is trading value for pieces of paper.

Think about the billions of commercial transactions that have taken place since Nov. 22, 1963. Since that time, billions of transactions have taken place with FRNs changing hands. With every exchange of goods and services for FRNs, one party holds real value and the other holds no real value. Every exchange, then, records a loss in parity. Perhaps the bill for exclusive use of FRNs (and their even more chimerical paper extensions) in immediate obligations is about $10 trillion?

Now think about how different the world would be had President Kennedy and USNs survived and America’s children grew up believing that lawful money is the only acceptable medium of commercial exchange?

President Kennedy was preceded by President Eisenhower who, in his farewell address, warned the nation of the threats posed by the emerging (congressional)/military/industrial complex. President Kennedy responded to the outgoing president’s fair warning by moving to remove the war machine’s source of funding: Federal Reserve fiat.

Because Kennedy was assassinated, because we did not understand why he was assassinated, because we hardly noticed as USNs were removed from circulation, we now live in a preplanned era of perpetual war and exist on the verge of economic collapse.

It is time to end the Fed—before it ends us.

Affordable housing is definitely a problem - and it's a problem in many ways.  Even if an individual or family somehow finds and keeps a home, it tends to be well above the recommended (and allowed by assistance programs) 1/3 of their income.  The national averages for housing cost are more like 50% of income or so, though I'll admit this figure is probably off and if anything it's low because I'm doing it from memory from workingfamilies.org.  Now if an individual is having to put 50% of their income - and in many areas it's easy to HAVE to do that just to rent an apartment akin to a roach motel - they have no chance to get ahead and they're spending a LOT of money on housing that they HAVE to spend on housng that because of how the Federal Poverty Line is figured (and thus the related expense allowances are figured) they're considered to be "wasting" a lot of money on unallowed expenses. 

Clearly this nation HAS to do SOMETHING about housing for those who NEED what can truly and reasonably be called affordable housing.  Affordable in the sense of entry level, as in housing that can be rented by those making minimum wage or housing that's operated by assistance programs so that people like the disabled and seniors who live on various Social Security programs can rent.  Not stuff like Seattle's recent "affordable housing" that provided subsidies to builders willing to build units that would rent at the median income - around $1150/mo - and would be rented to families making the region's median income (over $50K/year)...all while Seattle has a drastic shortage of true affordable housing that would house people like, oh, the POOR...  I guess we who are poor aren't supposed to live in Seattle, like we're some sort of undesirable.

This nation seems to forget (speaking in generalizations, not to anyone here) that the poor can't "better themselves" or "better their situations" if every bit of their energy and money has to go into survival.  If 50% or so of income goes to housing, if housing assistance to escape that problem is non-existant, if medical assistance is impossible to get without becoming even more impoverished, if food assistance doesn't begin to honestly help - what little income we who are poor have goes to patching the holes in our budgets, pinching pennies till they scream, and simply hoping we continue to survive.  All too many of us eventually give up on escaping poverty, with odds like this, the chances are too slim - and most hope has long since been stolen from us since so many are all too ready to blame us for our circumstances rather than help or even argue for proper reforms.

Me?  At this point, I'd be ecstatic just to have some decent housing assistance and some real medical assistance - preferably some medical assistance that didn't involve delusions like declaring my husband and I to be "two families of one".  I live below the FPL and the State of WA DSHS based on their declaration we're "two families of one" figures we can pay what's currently several THOUSAND in Medicare coinsurance payments.  Do they expect me to print the money or just pull it out of thin air? Or did I miss a message to die more quickly to solve their budget problems?

Prices have come back to normal or bottomed out in all areas except NY and DC.   

There are two general very good statistics to use regarding this, price/rent ratios and also the case shiller 20 city index.   If you look at the case shiller 20 city index for the last 20 years you'll see that typically real estate increases in value by around 25%-50% every 10 years.   Trending the index from the November 2008 numbers to February you'll see that we are very close to 125 to 150 for this index or will be reaching it by May.  

Looking at the price/rent ratios is another independent means of seeing this value, and again, trended out you'll see that within the next two or three months we'll be back to normal price/rent ratios we've seen in the last 30 years.   DC and NY seem to be experiencing the same fall, but lagging the rest of the index by a year or so.  

Even looking at your first link http://www.ritholtz.com/blog/2009/02/homes-still-too-pricey-to-stabilize/ you'll see that the most meaningful statistic is the ratio of median home price to median income has since 1980 been around 3.5, and trending that graph out to the present, we are back at that 3.5 level.  

I saw that we were in a real estate bubble from these same statistics I've given here back in 2003, so I've been tracking this for a while.   What we need to worry about now is shooting ourselves in the head for fear of what is yet to come when literally the worst is over.

Peace

This is a fascinating discussion. I'll have to admit, I don't really have much expertise in the area of finances. I'm paying attention to the news and reading articles and blogs such as this to educate myself. 
But i agree that the poor are demonized. "hard work pays off". In the bible it says the same thing, pretty much- but its talking about a fair system of justice based on God. What i've realized in this crisis is that our society or our government are playing god in a way because they are seeking to push responsaiblity where they think it falls, when in reality those getting hurt may not have been the ones stealing all the money or goods. 
I've been thinking that the fault may go all the way around. Maybe we all had faulty ideals about money and prosperity. After all we are a CAPITALIST society to the max, right. We believe in the power of our mighty dollar and the power of our government to solve world problems. Look at the war in Iraq and how much we are spending there- doesn't it seem ironic that we pour money into another country, through war, and then our country is weakened as a result. I think it all goes back to a general mentality.
I'm glad to see that mentality being challenged and i'm glad to see CEOs being investigated by the FBI for fraud. I think there is some good in seeking retribution.
But the poor in this country or the lower middle or even middle class who buys food at walmart should not be punished.
I think there may be alot to say for forgiveness or grace in all of this. But that isn't "profitable" to the banks or to the owners of the houses or to those in financial power.
And, at the very least, I'd like to see people stay in their houses even if they cannot afford them, because having a bunch of jobless, homeless adults and children is a very destructive way to build our future country.

HOUSING PRICES WERE ARTIFICiALLY INFLATED. THEY ARE BACK DOwN around normal now.  WE CANT ALLOW  A BASIC SURVIvAL NEED TO BE used for boom and bust type profiteering by big developers.
We need to figure out how to stop the bleeding but we WE CANT ALLOW PRICES TO RE-INFLATE.
 WE THE demand needs to ask for 100k houses not 500k houses AS STARTER HOMES  and be able to get them.
How do we MAKE PERMANENT REPAIR  TO ALL ? This is the question of the day.