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dithers

Posted: Tue Sep 30, 2008 6:32 pm

dugo wrote:

Don't want to rain on anyones party bashing parade, but this stuff is far wider than just fannie and freddie + democrats.

Yes, there is plenty of blame to go around. But the bottom line is that we don't need anymore govt. interference/intervention. That has been a big source of the problem. We just need to take the politics out of the regulating. The regulators should not be shackled by those who careers are beholden to politics. But that happening is as likely as me being the Virgin Mary.

Pretty in Blonde

Joined: 17 Apr 2006
Posts: 3468

yankee-in-france

Posted: Wed Oct 01, 2008 4:02 am

dithers wrote:

If you respect Lou Dobbs' opinion, and that too was an excellent interview, government interference/intervention is exactly what we do need in the form of agressive regulation. If I read it correctly, Dobbs is saying that the key is liquidity. If liquidity is maintained, foreclosures are minimized, and the financial institutions are made to get in step quickly, the crisis will ease. It makes more sense than throwing nearly a trillion dollars into the hands of Washington bureaucrats to dole out with little oversight.

YIF

Joined: 30 Mar 2006
Posts: 6562
Location: France

dugo

Posted: Wed Oct 01, 2008 4:31 am

dithers wrote:

Bottom line is lots of us citizens are in debt and they are not paying.

/rimmshot*

Dashing Dutch Dynamo Dude

Joined: 12 Apr 2006
Posts: 5949
Location: L4L

Need2Know

Posted: Thu Oct 02, 2008 9:35 am

Presidents are like captains of a large ship: They can map out a course and shout out orders, but without the trust and hard work of the people who actually move the rudders, their commands mean nothing.

In retrospect, the lack of trust and confidence we now have in our leaders was really the root cause of everything that's happened since. While our founding fathers designed a brilliant system of checks and balances, separation of powers and democratic elections, trust was the one thing they couldn't mandate in the Constitution.

Unfortunately, it's also the foundation upon which everything else is built and once it began to erode, our whole house inevitably began to crumble.

Looking back now, it's pretty obvious that our trust in government declined at about the same rate as our partisanship increased. People became so concerned about getting their party into power at any cost that the truth didn't even seem to matter anymore.

That's probably one of the reasons why George Washington hated the idea of political parties so much. Here's what he said about them in his 1796 farewell speech:

"The alternate domination of one faction over another, sharpened by the spirit of revenge, natural to party dissension, which in different ages and countries has perpetrated the most horrid enormities, is itself a frightful despotism. But this leads at length to a more formal and permanent despotism. The disorders and miseries which result gradually incline the minds of men to seek security and repose in the absolute power of an individual; and sooner or later the chief of some prevailing faction, more able or more fortunate than his competitors, turns this disposition to the purposes of his own elevation, on the ruins of public liberty."

N2K

Joined: 06 Jul 2006
Posts: 8839

Trixie

Posted: Sun Oct 05, 2008 12:28 pm

dugo wrote:

Bottom line is lots of us citizens are in debt and they are not paying.

/rimmshot*

I think it's bigger than just the US, no?
Looks like banks from all over were over-extended.

AP
Europeans scramble to save failing banks
Sunday October 5, 12:27 pm ET
By Matt Moore, AP Business Writer
Europeans scramble on their own to save banks, day after economic summit promises coordination

STOCKHOLM, Sweden (AP) -- Germany joined Ireland and Greece on Sunday in guaranteeing all private savings accounts, putting Europe's biggest economy at odds with calls for a unified European response to the global financial meltdown.
ADVERTISEMENT

The decision came as governments across Europe scrambled to save failing banks, working largely on their own a day after leaders of the continent's four biggest economies called for tighter regulation and a coordinated response.

Chancellor Angela Merkel said that no citizen should fear for the safety of their investments, speaking to reporters as her government held crisis talks on the collapse of a ballyhooed euro35 billion (US$48.4 billion) bailout of Hypo Real Estate AG, the country's second- biggest property lender.

In Iceland -- particularly hard-hit by the credit crunch -- government officials and banking chiefs were discussing a possible rescue plan for the country's overstretched commercial banks.

Belgian Prime Minister Yves Leterme said he aims to find a new owner for troubled bank Fortis NV to restore confidence in the company before the opening of markets on Monday.

Leterme told two media outlets that government officials were going over a takeover bid for Fortis' Belgian operations. The bank's Dutch operations were nationalized amid fears they could go insolvent.

British treasury chief Alistair Darling said that he was ready to take "pretty big steps that we wouldn't take in ordinary times" to help the country in weather the credit crunch.

In the past year the government has acted to nationalize struggling mortgage lenders Northern Rock and Bradford & Bingley.

"The European banking industry is feeling the wind of default blowing from the other side of the Atlantic," said Axel Pierron, senior vice president at Celent, a Boston, Massachusetts-based financial research and consulting firm.

The erosion has also been seen in overall confidence and concern among investors, politicians and the European public, too.

The leaders of Germany, France, Britain and Italy met Saturday to discuss the growing meltdown which has leapfrogged across the Atlantic from the U.S. to Europe, but shied away from the massive US$700 billion (euro506 billion) bailout passed by the U.S. Congress a day earlier that President Bush signed into law.

Their failure to agree an EU-wide plan showcased the divisions in Europe on how to deal with the crisis.

France had suggested a multibillion-euro (multibillion-dollar) EU-wide government bailout plan, but backed off after Germany said banks must find their own way out.

Hypo Real Estate said Saturday that the rescue plan had fallen apart after private lenders withdrew support, a key element to the proposal that had already been approved by the EU earlier this week.

Icelandic banks expanded rapidly after deregulation of the domestic financial market in the 1990s and now have combined foreign liabilities in excess of euro100 billion (US$138.34 billion) -- dwarfing the tiny country's gross domestic product of euro14 billion (US$19.37 billion.

The government last week took over Iceland's third-largest bank, Glitnir, a decision that prompted major credit ratings agencies to downgrade both Iceland's four major banks and its government credit rating.

Looming large was a growing sense that the Federal Reserve and Europe's major central banks -- which have been flooding euros and dollars to banks that have become increasingly stingy about lending money even to themselves -- were ready to institute emergency cuts to their benchmark interest rates this week.

None of the banks, including the European Central Bank and Bank of England, have commented on potential rate hikes or cuts. But analysts believe the Bank of England, which meets this Thursday, will likely lower its rate from 5 percent. The ECB left its rate unchanged at 4.25 percent on Thursday, but opened the door to a rate cut.

Robert Brusca, chief economist at the New York-based Fact and Opinion Economics, said that the ECB does issue such a cut it would a be a sign "that they're really, really scared."

http://biz.yahoo.com/ap/081005/eu_europe_meltdown.html

Joined: 23 Mar 2006
Posts: 6663

dugo

Posted: Sun Oct 05, 2008 1:22 pm

Trixie wrote:

dugo wrote:

Bottom line is lots of us citizens are in debt and they are not paying.

/rimmshot*

I think it's bigger than just the US, no?
Looks like banks from all over were over-extended.

US citizens are in debt and they are not paying, the value of their collateral dropped hard because they are foreclosing en masse.

These mortgages were packaged and shipped all over the world, that's why it is not a local problem.

Very smart move, stimulate economy by giving credit everywhere, let foreigners hold the bag when people can't pay their loans.

Dashing Dutch Dynamo Dude

Joined: 12 Apr 2006
Posts: 5949
Location: L4L

Trixie

Posted: Sun Oct 05, 2008 2:53 pm

dugo wrote:

But weren't the foreign banks investing in the sub-prime mortgages package deals because of the billions of dollars in return they could receive? The high rate of return on their investment is why they got in and all was excellent until the bubble burst from bottom to top.

Joined: 23 Mar 2006
Posts: 6663

dithers

Posted: Sun Oct 05, 2008 3:02 pm

Trixie wrote:

Right on. I don't think anyone was holding a gun to their heads.

Pretty in Blonde

Joined: 17 Apr 2006
Posts: 3468

dugo

Posted: Sun Oct 05, 2008 5:33 pm

Trixie wrote:

Sure, everyone fucked up. I Have a nice cartoon about it, will post tomorrow.

Dashing Dutch Dynamo Dude

Joined: 12 Apr 2006
Posts: 5949
Location: L4L

dugo

Posted: Sun Oct 05, 2008 5:33 pm

dithers wrote:

Right on. I don't think anyone was holding a gun to their heads.

No, but moody's et all were dangling a sausage in front of their noses though..

Dashing Dutch Dynamo Dude

Joined: 12 Apr 2006
Posts: 5949
Location: L4L

dithers

Posted: Sun Oct 05, 2008 6:00 pm

Here's an interesting article from the New York Times, September 30, 1999! Freaky - just about nine years to the very day.

September 30, 1999

Fannie Mae Eases Credit To Aid Mortgage Lending

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.

Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.

In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.

Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.

In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.

http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=print

Pretty in Blonde

Joined: 17 Apr 2006
Posts: 3468

dugo

Posted: Mon Oct 06, 2008 5:20 am

Yes dithers, this has been in the making for a loong time.

Dashing Dutch Dynamo Dude

Joined: 12 Apr 2006
Posts: 5949
Location: L4L

dugo

Posted: Mon Oct 06, 2008 5:20 am

Cartoon time!

http://www.xs4all.nl/~dugo/mc.html

Dashing Dutch Dynamo Dude

Joined: 12 Apr 2006
Posts: 5949
Location: L4L

dithers

Posted: Mon Oct 06, 2008 3:09 pm

dugo wrote:

Cartoon time!

http://www.xs4all.nl/~dugo/mc.html

Thanks for this, dugo.

It really put it into a very basic and easy - and humorous - form that one can understand.

Pretty in Blonde

Joined: 17 Apr 2006
Posts: 3468

Need2Know

Posted: Tue Oct 07, 2008 11:22 am

(CNN) -- The Emergency Economic Stabilization Act contains plenty to make lawmakers on the left and right shudder. On the right, it's the apparent abandonment of free-market principles. On the left, it's the absence of punishment for high-flying Wall Street CEO's.

Looking down the middle, what I found downright unnerving was how hard Washington struggled to pass a bill that, in reality, represents less than 1 percent of our current federal financial hole.

Don't get me wrong. Congress and the Bush Administration are to be commended for acting to relieve the credit crunch and trying to minimize any immediate, adverse effect on our economy and by consequence, on American jobs and access to credit.

The ultimate cost of the act should ring up at less than $500 billion, less than the advertised $700 billion because of anticipated proceeds from the government's sale of the assets it will acquire with the appropriated funds.

The nation's real tab, on the other hand, amounted to $53 trillion as of the end of the last fiscal year. That was the sum of our public debt; accrued civilian and military retirement benefits; unfunded, promised Social Security and Medicare benefits; and other financial obligations -- all according to the government's most recent financial statement of September 30, 2007.

The rescue package and other bailout efforts for Fannie Mae, Freddie Mac, AIG and the auto industry, escalating operating deficits, compounding interest and other factors are likely to boost the tab to $56 trillion or more by the end of this calendar year.

With numbers and trends like this, you might ask, "Who will bail out America?" The answer is, no one but us!

Since we're going to have to save ourselves, recent events could hardly be called encouraging. It took an additional $100 billion in incentives -- some would call them "sweeteners;" others might call them bribes -- to get lawmakers to pass the rescue package. Regardless of what you call these incentives, ultimately the taxpayers will have to pick up the tab, with interest.

The process that was employed to achieve enactment of this bill was hardly a model of efficiency or effectiveness. The original proposal represented an over-reach and under-communication by the administration.

Neither lawmakers nor ordinary citizens had enough information to properly assess the real risks, the need for action and what an appropriate course of action might be. Furthermore, the key players allowed the legislation to be characterized as a $700 billion bailout of Wall Street, which was neither an accurate nor a fair reflection of the legislation.

Passage of the credit-crunch relief provisions in the act was understandable, not just because of what risks and needed actions the Treasury and the Federal Reserve were aware of, but more importantly, because of what policymakers didn't know and eventually might have to address.

Let's face it -- the regular order in Washington is broken. We must move beyond crisis management approaches and start to address some of the key fiscal and other challenges facing this country if we want our future to be better than our past.

A good place to start would be for the presidential candidates to acknowledge our $53 trillion (and growing) federal financial hole and commit to begin to address it. Their endorsement of the need for a bipartisan fiscal future commission along the lines of the one sponsored by Rep. Jim Cooper, D-Tennessee, and Rep. Frank Wolf, R-Virginia, also would make sense.

Any such commission should, at a minimum, address the need for statutory budget controls, comprehensive Social Security reform, a first round of tax reform and a first round of comprehensive health care reform. It should hold hearings both inside and beyond the Beltway. And, its recommendations should be guaranteed to receive an up-or-down vote by Congress if a super-majority of the commission's members can agree on a comprehensive proposal.

Our fiscal time bomb is ticking, and the time for action is now!

Editor's Note: David M. Walker served as comptroller general of the United States and head of the Government Accountability Office (GAO) from 1998 to 2008. He is now president and CEO of the Peter G. Peterson Foundation.

N2K

Joined: 06 Jul 2006
Posts: 8839

dugo

Posted: Tue Oct 07, 2008 12:30 pm

53 trln .. lol .. in $100 bills that is a stack of 65720 km high

Dashing Dutch Dynamo Dude

Joined: 12 Apr 2006
Posts: 5949
Location: L4L

SavannahStar

Posted: Tue Oct 21, 2008 2:50 pm

The Economy

Wasn't sure where to post this.

Commentary: Is it 1929 all over again?

Story Highlights
Maury Klein: The 1929 market crash and the Depression were separate events

Many financial panics have not led to depressions, Klein says

Before 1933, the government wasn't active in trying to save banks, he says

After crisis, people demanded regulation, which eventually faded, Klein says

By Maury Klein
Special to CNN

Editor's note: Maury Klein is professor emeritus of history at the University of Rhode Island. He is the author of 15 books, including "Rainbow's End: The Crash of 1929" and most recently "The Power Makers: Steam, Electricity, and the Men Who Made Modern America."

Historian Maury Klein says it's important to remember that psychology plays a huge role in financial markets.

(CNN) -- Friday marks the 79th anniversary of the day that launched the stock market crash of 1929.

As an unprecedented wave of selling threw the floor of the New York Stock Exchange into pandemonium on a day that became known as Black Thursday, a show of organized support by a coterie of leading bankers halted the panic. But on the following Monday, the market collapsed in a tsunami of selling.

Every intense convulsion of the stock market raises primal fears spawned by the Great Crash of 1929 and the ensuing Great Depression, which dragged on for a full decade and has haunted Americans ever since.

The Panic of 2008 is no exception.

In the past year, the market's fall has at times rivaled that of 1929. Are there connections or similarities between those earlier national traumas and our current crisis?

First some facts about that earlier experience. The Great Crash and the Great Depression were two separate events. The Crash was a financial panic, the Depression an economic downturn. The one does not necessarily lead to the other; the market has collapsed several times in American history without bringing on a depression. Great Depression holds lessons for surviving a tough economy

Don't Miss
Commentary: Another Great Depression?
Commentary: Why there's a crisis
CNN/Money: Hard times in the heartland
In Depth: Commentaries
The Crash began in October 1929, and the worst of it was over in three weeks; the Depression did not fasten itself on the nation for another year. To this day, the connection between them remains unclear, which makes it difficult to draw lessons or analogies from them.

The Dow plunged 39 percent between October 23 and November 13, 1929, but it regained 74 percent of that loss by March 1930. Only when the economy failed to gain momentum in the spring did the market slip back.

By fall the country had slipped into a depression, and the market resumed a downward course that did not touch bottom until July 1932. It did not again return to the levels of 1929 until 1954.

The Depression did not end until increased military spending revived the economy in the spring of 1940.

The bull market of the 1920s was unique in that it marked the first time large numbers of ordinary people participated. The market moved from Wall Street to Main Street and aroused intense interest even among people who were not active in it. The new investors, or "fish" as the pros called them, were prone to panic when the market fell sharply.

Could it happen again? History never repeats itself, but historical patterns do -- though always in a new context. Here are just a few of the similarities and differences between the earlier crisis and its modern version.

During the 1920s, the financial industry underwent a great expansion, bringing into the business many inexperienced people and new investment vehicles -- most notably the investment trust, the forerunner of the modern mutual fund. Nobody knew what impact they would have on the market with their buying and selling on a large scale.

The business world hailed the 1920s as the "New Era," one with new rules in which the old pattern of cyclical depressions would no longer occur and prosperity would be continuous. Compare this delusion with the "New Economy" of the 1990s.

The 1920s marked the beginning of the consumer economy, and with it a broad expansion of credit. Installment buying made its debut on a large scale. Credit also was used to buy stocks on margin, greatly increasing the market's volume and volatility.

The banking system was shaky throughout the 1920s, and failures escalated steadily after 1929. The Crash exposed many cases of fraud that led to investigations and passage of the most significant banking reform in American history.

The Glass-Steagall Act of 1933 created the Federal Deposit Insurance Corp., or FDIC, gave rise to the Securities and Exchange Commission, or SEC, and separated investment banks from commercial banks. The latter reform was repealed in 1999, giving banks free rein to perform both activities once again.

Some differences between the eras are worth noting. Prior to 1933, the federal government played virtually no active role in relieving the banking crisis of the 1920s. The stock market did not have giant institutional buyers moving huge blocks of stock. Nor did it operate on a global scale, though it was deeply influenced by international events.

After the crash, the banks had plenty of money to lend but no takers, the opposite of today's situation. Deflation became the mortal enemy as people removed their cash from banks and hoarded it.

A familiar pattern emerged from these events. Business and the Republican Party in the 1920s demanded and got a "free" market unrestrained by government. Neither Wall Street nor the New York Stock Exchange was regulated by the government.

The resulting disaster prompted outraged demands that Washington "do something." Regulation was then forthcoming. Later, as prosperity returned and the market began soaring, the restraints were gradually removed and the pattern of excess began anew until it collapsed once again in our own time. With the fall comes renewed pleas for government to "do something."

Finally, it is important to remember that psychology plays a huge role in financial markets. Every panic has been at bottom a crisis of confidence. So too with the economy. As Frederick Lewis Allen observed, "Prosperity is more than an economic condition; it is a state of mind." The trick is always to find out what exactly is needed to restore it. We are still fishing for the answer to that riddle.

http://www.cnn.com/2008/US/10/21/klein.depression/index.html

**SuperStar**

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Need2Know

Posted: Wed Oct 22, 2008 11:46 am

We all may have to downsize Shocked

From Thelma Gutierrez and Traci Tamura
CNN American Morning

CALISTOGA, California (CNN) -- Bill and Sharon Kastrinos practice the ultimate in minimalism. They've squeezed into a 154-square-foot home that looks more like a kid's playhouse than their previous 1,800-square-foot home.

The Kastrinos moved into this tiny home from an 1,800-square-foot place.

With the economy crashing, the Kastrinos traded in their spacious kitchen for one that stretches barely an arm's length.

It hasn't been without its challenges, but Sharon Kastrinos says it's exhilarating to no longer feel compelled to keep up with the Joneses. "There's a tremendous burden that's off your shoulders," she says. "Small is OK, and it might even be better."

Her husband adds that most Americans "want to be seen in their big house with a big car." But not them, not anymore.

"I don't think bigger is better," he says.

Bill Kastrinos had been in the construction business in Southern California. But when the real estate market went bust, it forced the couple to reconsider their lifestyle. Watch what life is like in a home the size of a shed »

Now, they live in a place so small, he and his wife use a ladder to climb into their bed every night. The downstairs has a sitting area, tiny kitchen and bathroom in a space that's 98 square feet. The upstairs loft has a bed in 56 square feet of space. They keep extra clothes in their car.

"It's a very simple lifestyle," he says. "The downside of it is it takes a readjustment. You can't have 100 pairs of shoes in the closet or 50 outfits."

The house cost them $15,000, and the utilities are a mere $15 a month. The couple now live on property owned by their daughter in California wine country, where the average home in 2007 cost $725,000. If they want to leave, the home has wheels and can be pulled behind their vehicle and plugged into any RV park in the nation.

The family still has their 1,800-square-foot home, but they will probably sell it. The house is too expensive, they say, costing them about $1,500 a month in mortgage payments, plus another $160 in utilities.

The change to their shed-like home has been so dramatic that Bill Kastrinos is now building the tiny homes to sell. He's sold 11 in six months, most of them in the range of $15,000 to $20,000. Clients range from people on welfare to retirees on fixed income, he says. Inquiries about the homes are on the rise, he adds.

The Kastrinoses might be extreme in their shedding the traditional American dream, but others are trying it too. iReport: Do you live in a small space? Show us how you make it work

In nearby Sebastopol, California, Jay Shafer designs tiny homes and has even started a blog about living on less. His homes have a designer feel -- interior wood paneling, stainless steel kitchens, built-in bookcases -- packed into a space about the size of walk-in closets of upscale homes. His smallest home has 65 square feet; his biggest (a three-bedroom place) has 774 square feet.

"I look around and I do see a lot of people who seem they're slaves to their homes," he says. "I didn't want to pay rent or a mortgage forever. So my plan was to escape the rat race."

"It's both," he says, his head touching the vaulted ceiling from his bed. "It's a very practical thing for me. If I didn't have a 100-square-foot house, I probably wouldn't be able to afford to live in this county. Aside from that, politically speaking, I like the idea of showing people how little a person could need."

By sizing down, he says he's living on a total of $15,000 a year. He doesn't have to worry about not making a mortgage payment and gets to work a job that he enjoys.

"Living in a small house has allowed me to do what I love doing, which is designing more small houses," he says.

He, too, has purged junk and other items, donating most of it to the Salvation Army and to friends. "It does feel good," he says. "I don't miss the extra books, the extra clothes I never wore."

He's married, but there's not enough space for his spouse in his place. He's designing her a nearby place that's about triple the size of his: 280 square feet.

He admits a tiny house isn't for everybody. But with the economy in a tailspin, he says, he doesn't worry one bit about it, thanks to his newfound lifestyle. It's peace of mind you can't put a price on.

"I don't think I have anything to worry about," he says. "I've made more money, and I can save all of it and still go out to eat."

http://www.cnn.com/2008/LIVING/wayoflife/10/22/tiny.houses/index.html?iref=mpstoryview

N2K

Joined: 06 Jul 2006
Posts: 8839

SavannahStar

Posted: Wed Oct 22, 2008 11:59 am

N2N, I was just reading that article! I had seen those tiny homes before...wow, that is really something, huh? It's "the thing" now! LOLOL.

http://tortoiseshellhome.com/

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Katie

Posted: Wed Oct 22, 2008 12:08 pm

SavannahStar wrote:

N2N, I was just reading that article! I had seen those tiny homes before...wow, that is really something, huh? It's "the thing" now! LOLOL.

http://tortoiseshellhome.com/

Thats like camping full year round, wait my camper is bigger than that.
I guess if it was just me and my husband, heck no that is too close for comfort. Laughing

Joined: 25 Mar 2006
Posts: 4961

Need2Know

Posted: Wed Oct 22, 2008 12:59 pm

SavannahStar wrote:

N2N, I was just reading that article! I had seen those tiny homes before...wow, that is really something, huh? It's "the thing" now! LOLOL.

http://tortoiseshellhome.com/

Sounds practical to me! We sold our other house that was 3100 sq feet with only four of us after my dad passed away and my MIL moved back to her place when our little one started school. The one we just bought is 1530 sq feet and we LOVE IT!!! We also love the 40% less we will be paying in total monthly payments. Very Happy

N2K

Joined: 06 Jul 2006
Posts: 8839

Need2Know

Posted: Wed Oct 22, 2008 1:34 pm

Hello Mom - Goodbye Retirement

(AP) -- Sue Martin does her best to be a dutiful and loving daughter.

Sue Martin, left, has delayed retirement to care for her mother, Betty Gresick, right.

So when her 84-year-old mother finally retired from a family electronics business -- at age 82 -- Martin bought the small three-bedroom ranch house next door to her own home in Claymont, Delaware, and moved her mother in.

It hasn't been easy. Martin, who's divorced, had planned to retire next year from her job as a legal assistant at a pharmaceutical company. But while she has a retirement fund of her own, her mother does not.

So now, Martin plans to work, indefinitely, to help cover the portion of the mortgage and living expenses that her mother's Social Security and small allotment of food stamps don't.

"She's still very independent, just broke," says Martin, who's 59.

Indeed, Betty Gresick is spry and healthy. She's an avid piano and bridge player and is able to drive to visit friends in the Delaware town where she and her late husband ran the family business -- one that, unfortunately, had little net worth when she sold it.

Financing parents' retirement

Even into adulthood, there is this notion that parents will be there to take care of us, emotionally or financially, possibly with a nice inheritance. That's still the case for many families.

But increasingly, adult children like Martin are finding themselves cutting into their own savings and retirement funds or even going into debt to support their aging parents.

"The fact of the matter is there's only so many dollars to go around," says Dan White, a financial adviser with Daniel A. White & Associates in Glen Mills, Pennsylvania.

He and others see it all the time: Retirees are facing massive health care costs. They're living longer, so retirement funds are being depleted. And now rising prices, for everything from food to gas and heating oil, are only making matters worse.

Recent statistics from the U.S. Census Bureau found that the number of parents who've moved into their adult children's homes increased 67 percent, from about 2.1 million in 2000 to 3.6 million last year.

Other children are supporting parents who live in a separate home and who, in some cases, aren't even of retirement age.

"It's a lot more common than people realize," says Donna Wagner, director of gerontology at Towson University in Maryland. "One of the issues is that people don't talk about this, maybe only to their best friend."

Wagner, who oversaw a caregiver survey last year, found that respondents spent an average of 10 percent of their income to support parents.

She recalls one woman from the survey who was among a small group who kept a diary. She had four siblings, but was the only one willing to have her dad, who was 50, move in with her.

"He just couldn't keep a job. There's all that kind of messy stuff, too. It's not just sickness," Wagner says. "There are a lot of people operating on the margin."

She says she last she heard from the woman about a year ago, shortly before the woman's phone was disconnected.

Social Security cuts

A product of the Depression era, Gresick prides herself on her ability to do without and to help herself when she can.

So to cover her bills, she got a job playing piano during Sunday services at a nearby church. She and her daughter reported the income to the Social Security Administration -- and they, in turn, cut her benefits by the same amount she was making.

"Basically, it's a bummer," Gresick says.

They are appealing. But in the meantime, Martin has had to pick up more of her mother's growing expenses. Besides covering a good chunk of the mortgage, she pays for her mother's water and lawn care and tries to help with the monthly heating oil bill, which has doubled from $100 to $200 since last year. She also gives her cash whenever she runs out.

On weekends, they eat dinner together. And Martin cooks "lots of extras" so she can send them home with her mother for leftovers for the week.

"It's tough having an older family member, trying to give them the same quality of life as they always had," says Martin, the only member of her family who's in a position to help her mother right now.

Gresick, meanwhile, watches as her friends take shopping trips and travel, "hither and yon."

"Fortunately, they have not asked me to do anything I can't afford," she says.

She doesn't sound sorry for herself when she says this -- maybe just a little surprised that she's in this position. Her own mother, who lived to 100, didn't travel until she was 80, she says. "I'd love to do that, too," Gresick says. "But I can't."

Where to get help

Some investment firms and employers have begun offering services to address the stress and worry associated with aging, especially as the oldest baby boomers hit retirement age.

Harris Private Bank, for instance, offers a service that helps adult children coordinate their parents' bill paying, tax returns, investment management and even their health care services.

OppenheimerFunds Inc. is among those that educates financial advisers with a growing number of clients in the so-called "sandwich generation," those who are supporting both aging parents and their own children.

Meanwhile, AstraZeneca PLC, the pharmaceutical company where Martin has worked nearly 20 years, is among employers that offer eldercare benefits. They include assessments of an elderly relative's medical, social and functional needs, with recommendations for support and care. There's also an eldercare support group with about 400 employee members, as well as some reimbursement for last-minute in-home care for a parent or child.

If nothing else, Martin says it would be nice to have someone to talk to about her situation. "I do feel kind of alone," she says.

She mentions several times how much she loves having her mother next door.

But beyond delaying retirement, she's also had to cut back. "Oh, let me count the ways," she says, noting how she used to take regular vacations, private ballroom dance lessons and trips to the opera.

She also discovered that her mother canceled her life insurance to save some money, so she'll be responsible for her burial expenses. So when Gresick mentioned that she was going to cancel her insurance for in-home care, Martin quickly stepped in: "Oh no, you're going to keep that one," she said.

The 'upside'

Hugh Delehanty, editor-in-chief of AARP Publications, knows what it's like. He helped take care of his father and now helps support his mother-in-law.

"People sacrifice their own dreams sometimes," says Delehanty, co-author of the book "Caring for Your Parents."

He has little doubt that those sacrifices will only become greater in this economy. "But I think there will be an upside to all of this," he says. "It will bring people together and strengthen connections."

Besides the time she gets to spend with her mother, Martin says she has experienced that connection. She sings in the church choir now and goes to Bible study. She's also gotten to know her neighbors better.

Still, both daughter and mother are worried, wondering if the day will come when they'll have to move in together.

"We love each other. But you can't have two bosses in one house," Gresick says with a slight chuckle.

"I hope it doesn't come to that. But if it does, I would accept that gracefully."

http://www.cnn.com/2008/LIVING/wayoflife/10/22/parental.support.ap/index.html

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