A decade after the financial crisis, many Americans are still struggling to recover

[Demovictory9]

http://www.latimes.com/business/la-fi-financial-crisis-middle-class-20180909-htmlstory.html

Edmund F. Biro still remembers how good his life was before the financial crisis that nearly destroyed the economy 10 years ago.

The software engineer was earning about $85,000 a year doing consulting work. He, his fiancee and her teenage son lived in a three-bedroom Chatsworth condo that had jumped to about $500,000 in value. And, just in case of emergencies, his bank had set him up with a home equity line of credit.

“As far as I was concerned, things were going really well,” he said, “except I wasn’t aware of all the things that could go wrong.”


There were a lot of them.

The housing market crashed. The economy fell into recession. Then the collapse of Wall Street investment bank Lehman Bros. on Sept. 15, 2008 — 10 years ago this week — plunged the nation into the worst financial crisis since the Great Depression.

Like many average Americans, Biro, now 61, is still struggling to get his life back in order.

He earns less than half what he did in 2007 after much of his work dried up. His fiancee and her son left, he said, when he could no longer afford to pay her college tuition and car expenses. And although he still has his condo, its value has dropped and he owes about $100,000 on the credit line.

“I’m very aware that I’m that close to being out on the street like those other poor unfortunates, and they’re everywhere,” he said.

[ck4829]

1. But the Dow is at a new high, so who cares about them?

[Drahthaardogs]

2. Do you see what happened here?

Even back then, no on was acquiring wealth. People just used their house as a credit card.

DON'T cash out the equity on your house!
$100,000 in credit?

The rich do thus shit to keep us complacent. Borrow against your house, then watch the bank take it in the end.

[FBaggins]

5. Much of that borrowing is unlikely now

It wasn’t just that people had equity that they could tap... it was that they had equity and that rates were falling. You could pull tens of thousands of dollars out of your home and still save money every month because the new (larger) mortgage actually had a lower monthly payment.

That’s as close to “free money” as most are likely to see. Of course, we’ve seen the consequences when the market turns around.

This time around, equity is growing for much of the country, but there’s little appeal to refinance and take out cash, because rates are rising.

[Drahthaardogs]

7. You are right to a degree

But I know plenty of people who are cashing equity. In fact, with vehicle prices increasing, I know a guy cashing equity out of his truck.

If you are 70 and no heirs or don't wish to leave anything behind, this is a good strategy. If you are 45, it's stupid. One of the guys I know doing this is a financial advisor.

I was talking to him the other day noting that I had the oldest cars and cheapest mower in the neighborhood, while all the young couples had EVERYTHING. I noted my job is high paying and I have a pension, but that I save %15 in my 401K.

This financial advisor said, a better strategy is to just spend it while you are young and then save everything bthe last five years before you retire.

I kid you not..

[FBaggins]

8. No response to that last paragraph... jaw still hanging

But I’ll clarify the earlier comments.

That’s all normal borrowing. Use home equity as collateral instead of the car you’re buying... or to pay for college at a better rate... whatever. And certainly I agree that this generation lacks delayed-gratification maturity... but The problem 15 years ago was that people were borrowing money they wouldn’t otherwise borrow. They would even show up to refinance (without planning to take cash out) and walk away with 40k and plans to spend their new windfall. That is unlikely these days.

[democratisphere]

3. The wealthiest are a disgusting scourge on America.

[Vinca]

4. I always wondered why the bailout of the banks didn't include a little bailout of the people

who owe them money. They could have reduced consumer debt by applying a chunk of the bailout to a portion of individual debt. The banks would still have gotten taxpayer dollars, but taxpayers would have seen a few come back to them. The rich get richer.

[FBaggins]

6. Because that couldn't work the same way

The bailouts weren’t just handouts of cash to needy corporations. They injected capital in exchange for ownership in the company they were bailing out... then later they took the capital back with a profit. Since the bailout ensured a return to profitability for most of them, the government had the power (that other investors lack) to know that their “investment” would be repaid.

The same couldn’t work for individuals. Or rather, just getting rid of some of the debt wouldn’t have the same effect.

[Blue_true]

13. That is an excellent idea.

The next bailout should be for honeowners that have only one home and make less than $75,000 per year. Pay off the underwater amount for them, then apply a lower rate. The banks get nothing but a fraction of the write down, the homeowners keep the house at a lower Mortage rate and payment.

[MichMan]

17. The banks repaid all the money back to the government

According to President Obama, the banks have paid back all the money given to them as loans

https://www.politifact.com/new-hampshire/statements/2012/oct/25/barack-obama/barack-obama-says-banks-paid-back-all-federal-bail/

[beachbum bob]

9. throw in the loss of real estate value that has not rebounded in many areas of the US

and middle and lower class americans are royally screwed

[honest.abe]

10. In some parts of the country $200,000 hh income is not wealthy.

In Wash DC area for example rent or mortgage would take a big chunk of that plus daycare, car payments, utilities, etc and there not much left each month.

[MichMan]

11. Wow, I think his fiance did him a favor

Left him because he could no longer pay for her college tuition & car payments. If you believe it, tells you a lot about what she was really attracted to

[Blue_true]

14. I noticed that too.

One truism that I live by is that if you want to know a person's true character, get money involved. Anything else that they show you is window dressing and bullshit.

[ZeroSomeBrains]

12. Absolutely true.

I have saved a lot since I've started working a few years ago but thankfully I don't have student loan debt and have just a small auto loan. We really need a debt jubilee for medical and student loan debt and work to have a more equitable economy. However, republicans would rather tell all the little people to pull themselves up by their bootstraps when these people have so little.

I would recommend people consider electric cars before gas prices go through the roof again. I have a chevy volt and only pay for gas once every 3 or 4 months or so and use my battery exclusively over 95% of the time. Plus you don't help out the oil barrons when you use electric.

[Blue_true]

15. Another good idea.

Banks can get bailout money, but they need to write down dollar for dollar student loan debt. Or student loans are paid off, with the banks getting the money.

[ZeroSomeBrains]

16. Both student loan and medical debt

Are wrong on a moral level to me. Why do we need to put someone in enormous debt right when they get out of college? You're hampering their long-term future and that of their children. And if you get sick with cancer or other catastrophic illnesses there is no reason to ruin their lives when they're already down. Get the damn facsist republicans out of office and get people with souls in office to end this human misery.