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[qrypt]

Trying to follow the logic: if someone doesn't have all that much income, then they shouldn't engage in all that much spending.  And since Keynesianism is bad, if someone doesn't have all that much income then we shouldn't do anything to get them more income. 

Therefore if someone is unemployed and doesn't have much income, the only possible answer is: for god's sake, stop spending. 

Have I got it so far?

[mad_doctor]

I think I already told you that maybe I'm one of those people like you that can't sell a second home. aandsdean.  I got kneecapped at my last job shortly after moving my family and buying a home.  I wouldn't be able to get my money back on a home deal in a good economy if I had to sell after only 6 months buying it, so I know we're going to take a hit.  That said, I'm still practicing what I'm preaching here - live simply, save money, be disciplined in your finances, and be productive.

BTW, is there anyone who believes we need a $12 trillion debt?  It will be $14 trillion next year, and more the year after that, and more the next year, and so on.  I was pretty deep in the hole once, but I can guarantee you I didn't think it was a bright idea that spending even more would make matters better.  I doubt Keynes himself would think this much spending is a good idea.  What we need is a smaller government, and there's the rub.  I think we may be past the tipping point where a majority of people know they can keep voting themselves goodies, and the politicians know this.

[mad_doctor]

Trying to follow the logic: if someone doesn't have all that much income, then they shouldn't engage in all that much spending.  And since Keynesianism is bad, if someone doesn't have all that much income then we shouldn't do anything to get them more income. 

Therefore if someone is unemployed and doesn't have much income, the only possible answer is: for god's sake, stop spending. 

Have I got it so far?

Now, imagine a nation that's unemployed but keeps spending and you're getting warmer.

[aandsdean]

Aandsdean, can you not sell your house because absolutely no one is buying? Or can you not sell your house at the price you want? Of course, now the term *priced to sell* takes on a whole new meaning.

This is a good question, and one I've puzzled over for almost a year and a half now, since we first listed the house in May of 08.  It's in a city that ostensibly has been very little affected by the downturn in the housing market because it never really inflated in the first place.  The house was on the market from May 08-Jan. 09, and we reduced the asking price over $20,000 during that time (I know, peanuts relative to people in, say, the NoVa suburbs or Las Vegas), to several thousand below what we paid for it in June 2005.  At that point, it was solidly in lower tier of the price/sq ft range of houses in the neighborhood that would occasionally (that's the rub) sell.

So here we are.  We'll relist it in January for another couple grand less than we asked a year ago.  We'll have around $8,000 in room to drop and still be able to pay off the mortgage.  We're not in a good position to pony up additional cash at closing, but on the other hand, when you're flushing $2,000/mo. down the toilet, writing a check for $5,000 more doesn't look so bad.

Mad_doctor, sorry about your house.  I feel your pain, I really do.

And finally, I've seen no evidence whatever that the electorate isn't going to continue to ask the government for "free" goodies and refuse to pay for them through increased taxes or cuts in spending in other areas.  Perhaps you live in a more rational area than I do.

[mad_doctor]

And finally, I've seen no evidence whatever that the electorate isn't going to continue to ask the government for "free" goodies and refuse to pay for them through increased taxes or cuts in spending in other areas.  Perhaps you live in a more rational area than I do.

I haven't made up my mind about this, aandsdean.  I said we may have passed a tipping point as a nation.  I'll let you know when I think it's happened.  When and if that happens, the people voting for the free goodies won't be the ones paying the taxes.  I recall that something like 2/3 (67%) of the [lowest-earning] taxpayers pay only about 8% or 9% of the tax revenues.  The other 92% is paid by only the top third of all taxpayers.

[madhatter]

Aandsdean, can you not sell your house because absolutely no one is buying? Or can you not sell your house at the price you want? Of course, now the term *priced to sell* takes on a whole new meaning.

This is a good question, and one I've puzzled over for almost a year and a half now, since we first listed the house in May of 08.  It's in a city that ostensibly has been very little affected by the downturn in the housing market because it never really inflated in the first place.  The house was on the market from May 08-Jan. 09, and we reduced the asking price over $20,000 during that time (I know, peanuts relative to people in, say, the NoVa suburbs or Las Vegas), to several thousand below what we paid for it in June 2005.  At that point, it was solidly in lower tier of the price/sq ft range of houses in the neighborhood that would occasionally (that's the rub) sell.

So here we are.  We'll relist it in January for another couple grand less than we asked a year ago.  We'll have around $8,000 in room to drop and still be able to pay off the mortgage.  We're not in a good position to pony up additional cash at closing, but on the other hand, when you're flushing $2,000/mo. down the toilet, writing a check for $5,000 more doesn't look so bad.

Mad_doctor, sorry about your house.  I feel your pain, I really do.

And finally, I've seen no evidence whatever that the electorate isn't going to continue to ask the government for "free" goodies and refuse to pay for them through increased taxes or cuts in spending in other areas.  Perhaps you live in a more rational area than I do.

Good luck with the house. As I've posted, our situation is similar. We bought our house in 2004, making what we thought at the time was a rather conservative purchase -- 30 year fixed rate mortgage, the highest down payment we could swing (13%), for a home that cost considerably less than "three time our income" and a hell of a lot less than the ridiculous sum the banks were eager to loan us. Five years later, the Great Recession led to a layoff which forced a job search which forced an out-of-state move.

We put the house up for sale, not expecting to make any money but hoping (naively, as it turned out) to at least be able to withdraw our down payment and equity from the house. That was eight months and four price cuts ago. We're now at our rock-bottom price. If we sold at this price, we would walk away from the sale with nothing at all. If we tried to sell at lower than this price, we would have to come up with money to pay for the privilege of selling the house. Unfortunately, a year of unemployment followed by a cross-country move and several months of paying both rent and a mortgage have depleted our savings. We're at the point of planning alternative exit strategies -- foreclosure, deed in lieu, whatever is possible. I would love to not have a massive hit on my credit score and be hounded by creditors, but if that is inevitable, then it makes sense to get the pain over with sooner rather than later, so we can begin saving and repairing our credit.

As for your final point, living in California is providing a front-row seat to electorate irrationality. When presented with a range of options to try to salvage the nation's most screwed-up state economy, Californians resoundingly voted to a) maintain or increase all services, and b) reject any tax increases, and c) reject any changes in the current laws that prevent legislators from having any flexibility in the budgeting process. This state is beyond bankrupt, the electorate is pissed about it, but they absolutely refuse to accept any changes to the status quo.

I don't know that there is a solution to salvage this mess that we are collectively in. This looks like the beginning of a structural collapse to me.

[qrypt]

Trying to follow the logic: if someone doesn't have all that much income, then they shouldn't engage in all that much spending.  And since Keynesianism is bad, if someone doesn't have all that much income then we shouldn't do anything to get them more income. 

Therefore if someone is unemployed and doesn't have much income, the only possible answer is: for god's sake, stop spending. 

Have I got it so far?

Now, imagine a nation that's unemployed but keeps spending and you're getting warmer.

Well, I'm glad you think I'm following you so far.  But I'm not sure about this "nation that's unemployed" bit.  I have the notion -- perhaps silly of me -- that unemployment is usually a "some do, some don't" kind of thing.  I'm not aware of any nations that are unemployed. 

So if it's individuals (not nations) who are unemployed, and if I'm right in seeing that "stop spending" is your medicine, then I'm stymied at trying to figure out what "stop spending" actually means. 

[mad_doctor]

So if it's individuals (not nations) who are unemployed, and if I'm right in seeing that "stop spending" is your medicine, then I'm stymied at trying to figure out what "stop spending" actually means. 

Let's clarify a few things before I answer your questions, qrypt.  First of all, you're the only one talking about stopping spending here.  So, what do you mean by that?  Re-read what I said if you want to know my prescription, and I'll be happy to answer any questions you may have after that.

Well, I'm glad you think I'm following you so far.  But I'm not sure about this "nation that's unemployed" bit.  I have the notion -- perhaps silly of me -- that unemployment is usually a "some do, some don't" kind of thing.  I'm not aware of any nations that are unemployed.

When we talk about unemployment at the national level, we usually refer to "unemployment" statistics that are based on the number of unemployment claims being filed.  However, the official statistics don't include some very important information about a nation's "unemployment" status that have a significant impact on the economy: underemployed people, people no longer looking, people who once filed but are no longer eligible, and perhaps another category or two I'm missing at the moment.  "Underemployed" refers not only to part-time jobs, but also to people who are not employed at their fullest level of productivity -say, a Ph.D. in engineering teaching at the local high school or a talented manager working on a loading dock, or the all the "Wallys" in the workforce that the system allows to just glide by without ever really being that productive.  Although I see a lot of estimates that put our nation's true unemployment rate somewhere between 18% and 20%, I think it may be as high as 25%, and even more than that if you include all the Wallys.  Does that help?

[prytania3]

Qrypt is just mincing words because he's an extreme liberal who refuses to see anything other than extreme liberal views. Sorry Qrypt, but it's the truth.

I, on the other hand, am an extreme moderate.