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> The Next Banking Crisis?, More trouble approaching fast.
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Patch 
Posted: 30-Oct-2008, 08:04 AM
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I have been hearing about an impending credit card crisis. This mornings CNN news just reported that lending institutions are now reducing credit limits and increasing interest rates. NOT just on marginal customers. The reduction in ones credit limit will adversely impact ones credit score and in many instances reduce your ability to obtain favorable interest on even an auto loan. Those who have been getting by using their cards for "short term borrowing" will no longer be able to do so. It will probably put more people into the foreclosure group. Higher interest will also have the same effect.

Their advice is pay off your CC balances. Good advice, but too late for many.

This is part of the mortgage crisis in that people were encourage to spend and use their ever increasing home equity to pay for it.

The next financial crisis is the auto loan business.

Slàinte,   

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flora 
Posted: 30-Oct-2008, 08:14 AM
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When the first bail out plan started I was talking to several young couples. They mentioned that the larger home improvement stores had sent letters saying that they were reducing the credit available.

My concern is if people tried to pay of their credit cards using equity from their home with a morgage that is controlled by the government, wouldn't the government own your home?

We had a financial plan to be completely dept free in a year and half. I don't think that is going to be possible now.

Flora


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Patch 
Posted: 30-Oct-2008, 08:59 AM
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QUOTE (flora @ 30-Oct-2008, 09:14 AM)
When the first bail out plan started I was talking to several young couples. They mentioned that the larger home improvement stores had sent letters saying that they were reducing the credit available.

My concern is if people tried to pay of their credit cards using equity from their home with a morgage that is controlled by the government, wouldn't the government own your home?

We had a financial plan to be completely dept free in a year and half. I don't think that is going to be possible now.

Flora

With the bail out, yes, the government could own your home. I have not read the 'bill" and to read the 400 pages would probably be depressing.

A large portion of the population used their equity to pay credit card balances (more than once as home values increased) and treated the equity like income.

The next crisis may be why the banks are not using the bail out to extend credit.

If you were within a year and a half, you will be better off than most.

Four years ago I saw a problem and began expressing my views. I positioned my self to be as crisis proof as possible. I use my credit cards once every two or three months to keep them active and use mostly a debit/check card. I have no mortgage and live in a small 1930's house.

In a financial melt down the system could not handle the volume of foreclosures and repossessions. How it would be handled would be anyone's guess. Those who could not pay might just get to keep the items involved. I wouldn't count on that though.

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flora 
Posted: 30-Oct-2008, 09:06 AM
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With so many not being able to pay their obligations and after the government owns you, I wonder if they will not "forgive" the bad credit rating.

Flora
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Patch 
Posted: 30-Oct-2008, 10:14 AM
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I doubt that "forgive" is the proper word. "Ignore" may be more appropriate. I have no idea where all the encumbered property would be stored should they take possession of it. Then who would buy it? Most would depreciate rapidly. I expect to see a lot of renegotiated loans as receiving a partial repayment is better than none. In the crash of "29" there were many less people. That is the biggest unknown today. People can not keep rabbits or chickens if they live in town and very few could plant a garden. My youngest daughter was never interested growing up but this summer asked if I would help and show her what to do. She would never (I think) butcher anything but could probably get away with it. I would buy goats. They taste like venison and produce milk (which, with the aid of rennet tablets, can be turned to cheese.) Only the Billy Goat is odiferous. Two or three Nannies and a Billy would keep a family of 4 in protein as they produce twins or triplets. I had one goat which had 4.

Survival skills may become more important than formal education.

I saw this AM they are investigating Countrywide's upper management, lending to "special" customers, two D legislators and cabinet members from both parties. That is ONLY in the investigative stage at this time. NO charges!

I wish I had not deleted the poem "Something wicked this way comes." I posted it here so I can probably locate it.

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Robert Phoenix 
  Posted: 30-Oct-2008, 08:25 PM
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If the goverment wants my house-I wish them luck cuz its a definite fixer upper. I manged to get rid of all my credit cards years ago. The only ting I have to worry about is my car. Its got way too many miles on it and I owe way to much onit yet because I had to throw the leftover amount from a previous vehicle on it. I'm almost ready to let them take that too. Two payments from this one would be a good down payment on a new one


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TheCarolinaScotsman 
Posted: 30-Oct-2008, 09:28 PM
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QUOTE (Robert Phoenix @ 30-Oct-2008, 09:25 PM)
The only ting I have to worry about is my car. Its got way too many miles on it and I owe way to much onit yet because I had to throw the leftover amount from a previous vehicle on it. I'm almost ready to let them take that too. Two payments from this one would be a good down payment on a new one

We've got two cars and don't owe on either. One is a 1997 with 150,000 and still going strong. The other is a 1976 with well over 300,000 and still perking along. We'll drive 'em till they fall apart and we can't put 'em back together.


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Jillian 
Posted: 31-Oct-2008, 06:23 AM
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QUOTE
We've got two cars and don't owe on either. One is a 1997 with 150,000 and still going strong. The other is a 1976 with well over 300,000 and still perking along. We'll drive 'em till they fall apart and we can't put 'em back together. -TheCarolinaScotsman-


i haven't bought a new vehicle since 1984! I buy used and run'em until they give out...save the money I'd normally be paying for car payment and use that to pay off the next used vehicle! I just can't see paying all that money for a vehicle. Ya ever notice that vehicles are one thing that is mass produced and sold but never come down in price? Are automobile companies preying upon our need for status or what?!

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Patch 
Posted: 31-Oct-2008, 07:00 AM
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My last new car was 1991 and until 1997, it was driven very few miles. I hit a deer with it in 2007 and it was not worth fixing though it was in good mechanical shape and still considered low milage.. The last auto was used with very low milage. Had there not been health issues, I might have bought a new or newer one.

Slàinte,    

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stoirmeil 
Posted: 31-Oct-2008, 07:04 AM
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QUOTE (Jillian @ 31-Oct-2008, 06:23 AM)
Are automobile companies preying upon our need for status or what?!


Wow! In these complicated times, a question with a simple, one-word answer again!! thumbs_up.gif
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Jillian 
Posted: 01-Nov-2008, 07:48 AM
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QUOTE
QUOTE
Are automobile companies preying upon our need for status or what?! - Jillian -

LOL!!

Jillian
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Jillian 
Posted: 01-Nov-2008, 07:51 AM
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I hit reply before I was done up above there!!

QUOTE
QUOTE (Jillian @ 31-Oct-2008, 06:23 AM) Are automobile companies preying upon our need for status or what?!


QUOTE
Wow! In these complicated times, a question with a simple, one-word answer again!! 


LOL!!

Jillian

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