Quote:
Originally Posted by cglenhar
One of the hidden factors in the rate of home foreclosures is the fact that incomes have not risen the way we have come to expect. In the past you stretched the budget for a while to make a home payment, knowing that your income would go up. This in no longer true for working people.
The gap IS widening at an unprecedented rate all over the world, but is especially painful to see it here in such a land of plenty.
You also could always count on a boom economy during war time. Since we shipped all of our manufacturing off shore, we don't make anything anymore. Of that doesn't scare you, nothing will.
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In my parents day and their parents day, and I guess in our day also, one needed 10%-20% down to buy a home and very few would dare sign for a mortgage payment greater than their current earnings. The idea was to show the bank that you had the discipline to manage your money and were therefore a good credit risk. Nobody back then would get a no down payment or interest only loan. Nobody in their right mind would sign for an ARM. Why would they want a mortgage that would increase in payments.
What went wrong was the Government trying to make the lending system "fair" to those people that didn't qualify for loans under the standard lending practices. People that should never have gotten mortgages now were able to get them. No money, low money, interest only and ARM s. Once the rules were changed they were also open to speculators, who used the relaxed lending rules to try to flip homes to make a profit on rising home values. The government allowed a base week stack of cards to be built and it collapsed. The housing collapse resulted in the economic collapse.
The income gap is widening, in my viewpoint, because of the ever increasing educational levels in countries like the former soviet union and china and the increased level of free market participation of countries like them. The more people are released from the old communist, socialist, caste systems the mare opportunities they have to archive a high income level.
I do agree that in order to maintain both a strong military and a strong economy the government should purchase American, as long as doesn't preclude us from technologies we don't produce here in the US.