Living Car Free - Downside to living within your means.

There's only one downside in living within your means,you can can't have it NOW,you have to EARN it.

I don't look at that as a "downside". Earning stuff makes a person appreciate it more.

No it isn't. My problems end with me and my family.

I think you fail to see the big picture, or rather, refuse to acknowledge its existence. If the credit market collapses, as it will without government intervention of some sort, the banks that are left with money will not let go of it. Without the free flow of money, many businesses that depend on easy access to capital will grind to a halt, and they'll stop buying from other businesses. Workers won't have anything to do, so they'll get fired. Since they're fired, they'll have no money, and will themselves stop buying stuff, which will eventually get other workers fired. And so on. Unless you're a subsistence farmer or the recipient of a bomb-proof trust fund, this is, in fact, your problem, too. In 1929, the government decided to let market forces take care of the situation, and look what happened.

That said, I think the people who let this happen -the amoral greedheads on Wall Street, the sleeping govt. regulators who didn't do their jobs, and the countless morons who thought they could just buy a few dozen condos and get filthy rich without effort- should all be expected to pay heartily, first with their assets, then with jail time if it's appropriate.

It's been the same strategy for the last thirty years: scare poor white people into believing gay people, black people, brown people, and yellow people will come take their jobs, women, and livelihoods away unless they vote Republican one more time. Throw in some feel-good nonsense about self-reliance (which is code for selfishness the way patriotism really means nationalism), and you've got yet another administration with long-running ties to the transportation, energy, health, and war industries. In the meantime, other countries develop their public transportation infrastructure, their universal healthcare and free educations, and provide all sorts of good things for their populations. But we're continually reminded that America is just better than everywhere and everything else, so we get to keep sticking our heads in the sand.

+100000000000000 you said it brother.

I think you fail to see the big picture, or rather, refuse to acknowledge its existence. If the credit market collapses, as it will without government intervention of some sort, the banks that are left with money will not let go of it. Without the free flow of money, many businesses that depend on easy access to capital will grind to a halt, and they'll stop buying from other businesses. Workers won't have anything to do, so they'll get fired. Since they're fired, they'll have no money, and will themselves stop buying stuff, which will eventually get other workers fired. And so on. Unless you're a subsistence farmer or the recipient of a bomb-proof trust fund, this is, in fact, your problem, too. In 1929, the government decided to let market forces take care of the situation, and look what happened.

That said, I think the people who let this happen -the amoral greedheads on Wall Street, the sleeping govt. regulators who didn't do their jobs, and the countless morons who thought they could just buy a few dozen condos and get filthy rich without effort- should all be expected to pay heartily, first with their assets, then with jail time if it's appropriate.


I acknowledge the big picture. I still say that if you remove consequences for stupid behavior, you have to expect the same stupid behavior in the future.

We need a truly radical change in the economy--a fundamental change in the way we think about it. The current model is based on maximizing GDP through rapid and unsustainable development. A new and improved model would be based on sustainable living that emphasizes quality of life rather than quantity of material possessions. People need to learn that real happiness is not attainable through acquiring material goods. (Provided that basic needs like food, shelter and health care are available.)

We need a truly radical change in the economy--a fundamental change in the way we think about it. The current model is based on maximizing GDP through rapid and unsustainable development. A new and improved model would be based on sustainable living that emphasizes quality of life rather than quantity of material possessions. People need to learn that real happiness is not attainable through acquiring material goods. (Provided that basic needs like food, shelter and health care are available.)

By definition, unsustainable development will end. Do we have a current example of an improved model? One with mod-cons like bikes would be nice. I worry that the peak oilers are right and the survivors will devolve back to some kind of stone age living.

By definition, unsustainable development will end. Do we have a current example of an improved model?

Ecological economics (http://en.wikipedia.org/wiki/Ecological_economics)

Deep Economy (http://www.billmckibben.com/)

Ecological economics (http://en.wikipedia.org/wiki/Ecological_economics)

Deep Economy (http://www.billmckibben.com/)

Jared Diamond's Collapse (http://en.wikipedia.org/wiki/Collapse:_How_Societies_Choose_to_Fail_or_Succeed) is full of examples of failures and quite a few models that worked. One good example was a small Pacific Island nation that had survived some 1,000 years on a diet of roots and pigs. When the population grew to a density that is something worse than Manhattan, the elders of the society decreed that a change was necessary: they could no longer survive if they continued to eat pork, so they switched to a more vegetarian diet with some fish.

Even models that eventually failed also offer interim successes. Like the Norse in Greenland who were able to survive in a stark landscape for more than 400 years before succumbing. They survived by adapting of course, but also by coming to a common consensus on what was best for their well-being. When they did fail, it was their rigid customs that prevented them from the change that would have kept them healthy.

The current situation was caused, to a large extent, by government intervention into the marketplace. The combination of two government actions palyed a large part in the credit meltdown. The Community Reinvestment Act required lenders to make loans to low income borrowers who clearly could not afford to pay back the loans. Then, artificially low interest rates propagated by the Federal Reserve set the price of borrowing money very low. These two actions distorted the market and set off a frenzy of borrowing, cheap consumer credit and real estate "investing". To lower risk, smart (but greedy) lenders sold these risky loans to investors as packages. This is probably where you think there should be more regulation by the government. But if the original distortions were not there (cheap money and government requirements) and the lenders were able to refuse the risky loans up-front, then more regulation and government intrusion would not be needed because the risky loans (at least not to the extent we have today) would not have been made. For the few who do get cheated in a free market, there are the courts of law.


From what I understand, the repayment rate of CRA loans has been above average. I was under the impression that the bulk of the defaults resulted from bubble markets and oddball loans (like hybrids).

I admittedly haven't been following this extremely closely, but blaming government intervention seems to be a weak excuse. Ok, so I take that back partially... I do have a problem with the government pushing so many people into homes in the first place. I think the vast majority of people would be better off without a mortgage.

I acknowledge the big picture. I still say that if you remove consequences for stupid behavior, you have to expect the same stupid behavior in the future.

That's just it: the people who created this mess won't pay the consequences no matter what happens. They're going to be okay even if the economy tanks completely. The ones who'll suffer are hard-working middle class people who had nothing to do with this mess. I don't see the point of making regular, mostly blameless people go homeless and wait in line at food banks on a matter of principle.

What's wrong with "Ca$h and Carry?"
If you can't afford it, then don't buy it.
And: 'Quak, quack, quack' from a lame-duck prez!

What's wrong with "Ca$h and Carry?"
If you can't afford it, then don't buy it.
And: 'Quak, quack, quack' from a lame-duck prez!

But THAT is not the AMERICAN WAY!!!:innocent: Though quite a few of us live that way...

Aaron:)

The more immediate emergency involves the US Federal Reserve; which handed out $370 billion over the last two weeks.

...which of course included $25billion for the US automotive industry.

<snip>
The ones who'll suffer are hard-working middle class people who had nothing to do with this mess.
</snip>

If they put money away in 401k retirement investments, or even kept money in the bank (which gets loaned out perhaps as subprime loans, or certainly gets invested elsewhere), they too have blood on their hands. Ignorance is no excuse and anyone with a 401 sees small print in every statement outlining that this is not savings, it is investment with attendent risk. Middle class believed what they were being sold and bought into the privately funded retirement trap set for them by those who needed their money added to the financial system. Imagine if Social Security had gone that way...

Part of an economic depression is also an inevitable run on the banks. They don't have cash to pay out all deposits, and if everyone loses faith in the system, they will inevitably try to withdraw their funds. We've seen it recently with the few banks which have been allowed to fail--armed police guarding the doors. Sure, FDIC covers savings, but what happens when the Feds run out of money to cover that, too?

While this goes on, the Feds are just gambling--hoping and praying--that people don't get too crazy and start a run on the banks...

<snip>
The ones who'll suffer are hard-working middle class people who had nothing to do with this mess.
</snip>

The ones who suffer are the ones that need to borrow money. All too often, they are small businesses and startups. Small businesses + startups = jobs.



If they put money away in 401k retirement investments, or even kept money in the bank (which gets loaned out perhaps as subprime loans, or certainly gets invested elsewhere), they too have blood on their hands. Ignorance is no excuse and anyone with a 401 sees small print in every statement outlining that this is not savings, it is investment with attendent risk. Middle class believed what they were being sold and bought into the privately funded retirement trap set for them by those who needed their money added to the financial system. Imagine if Social Security had gone that way...

Speak for yourself. 1. I doubt if any middle class folks had their 401(k)'s investing in hedge funds that were buying up loans. They were popular for pension funds to buy. 2. As stated above, I welcome the opportunity to lower my average basis.

Speak for yourself. 1. I doubt if any middle class folks had their 401(k)'s investing in hedge funds that were buying up loans. They were popular for pension funds to buy. 2. As stated above, I welcome the opportunity to lower my average basis.

I actually don't know what the stock market is doing today, but I know my wife's 401k has taken a hit over the past year. The scare tactic being used to sell the bailout is that the whole financial system, not just banks and those who bought into hedge funds, is going south, and will take all investments with it because all finance is so intertwined at this point. Can you say for sure that none of the funds you invested in with your 401k are absolutely not involved with any morgage backed securities anywhere along the way? Do you think that the deposits you have at the bank are all invested in safe, secure things that will remain unaffected by a general severe economic downturn?

I can't fathom all the twists and turns this will take, but those in the know sure are saying that everyone will suffer if the bailout does not happen...

I admittedly haven't been following this extremely closely, but blaming government intervention seems to be a weak excuse. Ok, so I take that back partially... I do have a problem with the government pushing so many people into homes in the first place. I think the vast majority of people would be better off without a mortgage.

Best example of this is the tax code which allows you to write off mortgage interest. It really eggs you into a)buying a house when you can barely afford it and b)buying more house than you need... all just to make sure you are getting your piece of the tax break. Then there's the actual refund itself which is often invested right back into the real estate in the form of jacuzzis and sun porches and other essentials.

I actually don't know what the stock market is doing today, but I know my wife's 401k has taken a hit over the past year. The scare tactic being used to sell the bailout is that the whole financial system, not just banks and those who bought into hedge funds, is going south, and will take all investments with it because all finance is so intertwined at this point. Can you say for sure that none of the funds you invested in with your 401k are absolutely not involved with any morgage backed securities anywhere along the way? Do you think that the deposits you have at the bank are all invested in safe, secure things that will remain unaffected by a general severe economic downturn?

I can't fathom all the twists and turns this will take, but those in the know sure are saying that everyone will suffer if the bailout does not happen...

That is my general take on it. FWIW my wife's 401K took a helluva hit when the airlines tanked after 9/11. Her 401k (poor choice on her part) was heavily weighted by her company's stock. Bankrupt companies are worthless. She basically lost what most of what she had put into that account. Currently the collapse of the financial system would lead to total mayhem. Take a look at what has happened in places like Venzula and other countries where the financial system is in chaos and inflation runs wild. The government keeps printing worthless money. I think we will see a surge in black market and barter very shortly.;) Quite a few people are moving their money to things like gold and oil in an attempt to stave of the total loss of assets. But I can assure you that a pound of gold at any dollar value is worthless to someone if they can't eat it. We have hedged our bets by beefing up our veggie gardens and chicken flocks, hope to have some milk goats by the end of the year.:innocent: couple of sheep wouldn't hurt my feelings too bad either.

Aaron:)

T
Speak for yourself. 1. I doubt if any middle class folks had their 401(k)'s investing in hedge funds that were buying up loans. They were popular for pension funds to buy. 2. As stated above, I welcome the opportunity to lower my average basis.

Check usibx on google finance. See the fnma, wachovia and ge bonds? It is/was a conservative fund that was supposed to buy corporate bonds but switched to mortgage backed bonds. At first just commercial real estate pools then.... see the graph? It wasn't just hedge funds, everyone was trying to get into the act because the safe us federal funds rate was so low thanks to Greenspan and Bernanke trying to shore up the Bush admin right? People trying to avoid risky gambling with the money they save from being car-free got burned too not just hedge fund gamblers. I can't wait for President Palin to come in and set things right, right?

Can you say for sure that none of the funds you invested in with your 401k are absolutely not involved with any morgage backed securities anywhere along the way? Do you think that the deposits you have at the bank are all invested in safe, secure things that will remain unaffected by a general severe economic downturn?

Well, probably a little bit. My 401(k) is invested in:


An index fund that tracks the Wilshire 4500 Index.
An index fund that tracks the S&P 500 Index.
An index fund that tracks the MSCI EAFE ( Morgan Stanley Capital International Europe, Australasia, Far East) Index


As you can see, I like a broadly diversified portfolio. I also am of the school of thought that over time index funds will outperform managed funds (like the ones mentioned below by gwd).


I can't fathom all the twists and turns this will take, but those in the know sure are saying that everyone will suffer if the bailout does not happen...

If you read what I have written in this thread you will see that I agree. I am just not worried about my 401(k). I AM worried about having a job.


Check usibx on google finance. See the fnma, wachovia and ge bonds? It is/was a conservative fund that was supposed to buy corporate bonds but switched to mortgage backed bonds. At first just commercial real estate pools then.... see the graph? It wasn't just hedge funds, everyone was trying to get into the act because the safe us federal funds rate was so low thanks to Greenspan and Bernanke trying to shore up the Bush admin right?

Hmmm... very interesting. I have never met anybody in person that has their 401(k) in mortgage back securities, but I guess someone probably did.

Can someone please explain how this Wall Street bail-out situation SUDDENLY became a crisis?

Why is it that only months before the Bush administration has to hand over the keys to the White House, that this is a dire problem that requires an immediate passage of $700 billion dollars to bail out financial institutions run by millionaires and billionaires?

Why was this not even on the radar screne 2 months ago and all of a sudden within a couple of weeks it is a crisis?

Whenever Bush screams wolf, shouldn't we start looking behind the sheet?

Can someone please explain how this Wall Street bail-out situation SUDDENLY became a crisis?

Why is it that only months before the Bush administration has to hand over the keys to the White House, that this is a dire problem that requires an immediate passage of $700 billion dollars to bail out financial institutions run by millionaires and billionaires?

Why was this not even on the radar screne 2 months ago and all of a sudden within a couple of weeks it is a crisis?

Whenever Bush screams wolf, shouldn't we start looking behind the sheet?

I saw it coming 4 years ago. The US financial system has been nothing but a shell game for many years. When they allowed the leverage to increase is when things started to unravel...fast. Our economy has been shaky for many years even with the housing boom, we also had "information technology" and "service industry" though on that one I think they were talking through their hats. I believe that ALL of the elected regardless of party know damn well what is going on but don't want to frighten anybody and mess up their chances for re-election. It is kind of like checking the brakes on your vehicle AFTER you start down the 8% 5 mile grade...a bit late.

What I find interesting is the collolary between Clinton and WM...both are from Arkansas and WM is doing basically the same thing that A&P did back in the early 1900's and had their hands slapped by congress and the DOJ. It has been going on for a long, long time. It is kind of like one of your kids lying to you, they might get away with it for a while but eventually it will come to light and chances are it will be a lot worse for them than if they had told the truth at the beginning of the mess.

Aaron:)

Why was this not even on the radar screne 2 months ago and all of a sudden within a couple of weeks it is a crisis?
The U.S. government is in an absolute panic. It's not because Joe Citizen can't get a car loan. I suspect it's much worse -- something like the foreign central and money center banks world wide are insolvent due to mortgage based derivative holdings and are now threatening to cut up the U.S. government's credit cards if they aren't bailed out.

Yes, the bailout is primarily for foreign banks. If they aren't bailed out, they can't buy any more Treasury bonds and the U.S. government goes down.

Everyone's known for long time that the U.S. government is now absolutely dependent on a steady stream of foreign loans. That's the critical credit availability issue. We knew the day of reckoning would come some day. Looks to me like this could be the day.

Bailout or no, I think within a year a lot more people in the U.S. will be living simply and car free. They won't be happy about it, though.

I saw it coming 4 years ago.

Aaron:)

Ralph Nader saw it coming 8 years ago when he ran for President....

http://www.thenation.com/blogs/jstreet/361063

I find the news reports incomplete but can't quite say what is missing. Its a feeling that many of the players are disguising personal plans to save their own butts at everyone else expense. The bailout talk would be more palatable if it included sending Bush, Paulson and their buddies to jail and make 'em pay restitution. It reminds me of talk during the '60s when our government said we had to go kill Vietnamese because of China. General LeMay was one of the few people to ask "If China is the problem why aren't we attacking China?" Similarly, if Paulson when he was at Golman Sachs with his buddies and Bush's lax regulation caused the problem why aren't we going after them instead of going after the taxpayers? It doesn't add up.

I suspect it's much worse -- something like the foreign central and money center banks world wide are insolvent due to mortgage based derivative holdings and are now threatening to cut up the U.S. government's credit cards if they aren't bailed out.


I think some of these "mortgage-based derivative holdings" are so esoteric and poorly understood -- by even the financial gurus -- that no one really understands what they represent. This makes it easy to claim the sky is falling... since no one can dispute this fact. The only side effect we now hear is "banks aren't lending to each other".

My question is: why?

I'm no economics major but don't they just steal money from Social Security outright?

It's strange how congress thinks that the solution to a credit crises is to spend 700+ billion dollars and cut taxes at the same time.
So they print up a lot of monopoly money, the value of the dollar goes down the toilet, more banks go under, the FDIC goes bankrupt,
so they print up a lot more monopoly money, the value of the dollar goes down even more, more banks go under...
Yeah I know, it could never happen in America.

The things that everyone has taken for granted like the FDIC, pensions, and Social Security are all in jeopardy and nobody in politics dare tell the american people the truth about how bad the economy really is, at least not in an election year.

Let's see... 700 billion dollars to bail out 50 to 60 trillion dollars in repackaged bad loans. That will work.

It's strange how congress thinks that the solution to a credit crises is to spend 700+ billion dollars and cut taxes at the same time.
So they print up a lot of monopoly money, the value of the dollar goes down the toilet, more banks go under, the FDIC goes bankrupt,
so they print up a lot more monopoly money, the value of the dollar goes down even more, more banks go under...
Yeah I know, it could never happen in America.

The things that everyone has taken for granted like the FDIC, pensions, and Social Security are all in jeopardy and nobody in politics dare tell the american people the truth about how bad the economy really is, at least not in an election year.

Let's see... 700 billion dollars to bail out 50 to 60 trillion dollars in repackaged bad loans. That will work.
Yes, inflation is a great way for a government to get out from under its debt. Its just another financial planning tool for them like bankruptcy is for overpaid executives of Lehman Brothers (isn't George H. Walker the president's cousin?). See, if the money is worth half as much then it is twice as easy to pay back that debt incurred when it was worth twice as much. 10 trillion in debt today doesn't seem as bad as it would to a voter in the 1980's. It won't seem so bad in a decade when a cup of coffee costs $10.00 or $100.00. Why spend your retirement hanging out when you can have fun working as a Wal-Mart greeter? They might have bike racks there so you can pedal your trike to work.