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  #31  
Old 03-16-2017, 07:08 PM
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Originally Posted by PickleBottom View Post
As opposed to the bank making a profit of ~$500,000 (in interest) for only typing some details into a database? Why can't I make a fictional unreasonable post on an Internet forum in response to a bank being unreasonable (in the real world, legally, in plain sight).

Secondary to this, with a $50.00 service fee, houses would not be worth $500,000 but more a truer value relative to median income.
You really know nothing about economics it seems. If a house costs $500,000 and the bank charges interest that let's say for simplicity comes to $50,000, then the bank would clear a $50,000 profit, not $550,000.

And the bank isn't just "typing some details into a database." They're lending you money that people have deposited into the bank. There's a part in the beginning of It's a Wonderful Life where at the start of the Great Depression people storm the bank to get their money out and Jimmy Stewart tells them, "I don't have your money. It's in Fred's house and Bob's house..." Meaning that much of a bank's money (its capital) that it loans out comes from the money that people deposit into their accounts, especially small banks like credit unions that don't have publicly-traded stocks and so forth.

In a perfect world where people aren't greedy, banks would make only reasonable, low-interest loans and reinvest most of that money into offering more loans. But since this is the real world there are some institutions that see poor people as easy prey because poor people have few options. Last year on Last Week Tonight With John Oliver there was a story about predatory car dealers; one 2003 Kia Optima had been sold, repossessed, and sold again something like eight times in the last 13 years. That's the real world.

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  #32  
Old 03-16-2017, 08:34 PM
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Originally Posted by moonpunter View Post
You really know nothing about economics it seems. If a house costs $500,000 and the bank charges interest that let's say for simplicity comes to $50,000, then the bank would clear a $50,000 profit, not $550,000.

And the bank isn't just "typing some details into a database." They're lending you money that people have deposited into the bank. There's a part in the beginning of It's a Wonderful Life where at the start of the Great Depression people storm the bank to get their money out and Jimmy Stewart tells them, "I don't have your money. It's in Fred's house and Bob's house..." Meaning that much of a bank's money (its capital) that it loans out comes from the money that people deposit into their accounts, especially small banks like credit unions that don't have publicly-traded stocks and so forth.

In a perfect world where people aren't greedy, banks would make only reasonable, low-interest loans and reinvest most of that money into offering more loans. But since this is the real world there are some institutions that see poor people as easy prey because poor people have few options. Last year on Last Week Tonight With John Oliver there was a story about predatory car dealers; one 2003 Kia Optima had been sold, repossessed, and sold again something like eight times in the last 13 years. That's the real world.
The way I understand it is if a person takes out a loan for a house of $500,000, and they have an interest rate of 4%, that is ~ $20,000 per year for the duration of the loan. Let's say the person has an annual income (median) of $50,000 per year, 40% of their salary is the interest to their loan. Whatever else they cobble together to pay for the principal after that leads them to taking a very long time, I'm not sure how you only get $50,000 as the bank profit?

Does it take more energy for an admin assistant to type in $10.00 vs $1,000,000? Why should banks ultimately decide who buys a house?

Finally, no need to convince me of your final paragraph, I'm on the level.
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  #33  
Old 03-16-2017, 08:48 PM
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Originally Posted by PickleBottom View Post
The way I understand it is if a person takes out a loan for a house of $500,000, and they have an interest rate of 4%, that is ~ $20,000 per year for the duration of the loan. Let's say the person has an annual income (median) of $50,000 per year, 40% of their salary is the interest to their loan. Whatever else they cobble together to pay for the principal after that leads them to taking a very long time, I'm not sure how you only get $50,000 as the bank profit?

Does it take more energy for an admin assistant to type in $10.00 vs $1,000,000? Why should banks ultimately decide who buys a house?

Finally, no need to convince me of your final paragraph, I'm on the level.


Well, in most places, a guy who makes $50,000 a year can't get a loan for $500,000. Maybe $200,000.

I still see the point, and so far agree with you. I hate to see a point ruined by details😀
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  #34  
Old 03-16-2017, 09:50 PM
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Originally Posted by brianpatrick View Post
Well, in most places, a guy who makes $50,000 a year can't get a loan for $500,000. Maybe $200,000.

I still see the point, and so far agree with you. I hate to see a point ruined by details😀
My good friend moonpunter came up with the figure, but it still shows the absurdity that there are houses priced at and above $500K (not just one or two) that most Americans cannot afford.
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  #35  
Old 03-17-2017, 04:00 AM
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Originally Posted by PickleBottom View Post
My good friend moonpunter came up with the figure, but it still shows the absurdity that there are houses priced at and above $500K (not just one or two) that most Americans cannot afford.
500K buys you a shoebox in New York City. Lol
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  #36  
Old 03-17-2017, 07:49 AM
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We bought a house in a marginal neighborhood -- knowing it would become "gentrified" -- now the values are creeping up to $500,000. We couldn't afford to buy here now. What I don't understand are these younger couples who are moving in -- how do they afford it? Not only that, some of them think these houses are "starter homes" and that they'll have to move once they start having kids or when the children get older. These are mid-century ranch houses -- no walk-in closets or giant bathrooms, but plenty of room to raise a family. And what really sucks is some people are buying these classic American homes and plowing them down to build shitty McMansions. How much space do you need? It's like the people who have a baby or two and then go out and buy a Suburban...
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  #37  
Old 03-17-2017, 08:58 PM
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Originally Posted by moonpunter View Post
500K buys you a shoebox in New York City. Lol


$500,000 gets you a really nice house where I live.
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  #38  
Old 03-17-2017, 09:12 PM
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Originally Posted by Myers View Post
We bought a house in a marginal neighborhood -- knowing it would become "gentrified" -- now the values are creeping up to $500,000. We couldn't afford to buy here now. What I don't understand are these younger couples who are moving in -- how do they afford it? Not only that, some of them think these houses are "starter homes" and that they'll have to move once they start having kids or when the children get older. These are mid-century ranch houses -- no walk-in closets or giant bathrooms, but plenty of room to raise a family. And what really sucks is some people are buying these classic American homes and plowing them down to build shitty McMansions. How much space do you need? It's like the people who have a baby or two and then go out and buy a Suburban...


In 2012 my family paid $204,000 for a four bedroom den with three full baths. 2300sqft, in a nice neighborhood about 25 miles from downtown Phoenix. Last week the house behind ours(pretty much the same house) sold for $366,000.

How does that happen?

Yeah, yeah, we bought at the bottom of the market by accident. After the recession in 2007-2008, housing hit bottom here and then started coming back up in late 2012.

Still, it seems weird.

I've also noticed a huge jump in investors buying up houses everywhere. I guess all the people who were caught with their pants down during the recession need a place to rent. Oh yeah, rents have almost doubled since 2004.

I think anybody who thinks this is just economics at work is probably stupid. I'm glad to be on the good side of the game, but I'm not sure where it can go from here.
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  #39  
Old 03-18-2017, 07:58 PM
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Originally Posted by brianpatrick View Post
$500,000 gets you a really nice house where I live.
One of my Facebook friends is trying to sell her house in the Phoenix area. I think is much less than $500,000
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  #40  
Old 03-18-2017, 09:55 PM
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Originally Posted by moonpunter View Post
One of my Facebook friends is trying to sell her house in the Phoenix area. I think is much less than $500,000


$500,000 in the suburbs gets you a McMansion with a pool and built in movie theater.
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  #41  
Old 03-19-2017, 09:29 AM
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Originally Posted by brianpatrick View Post
$500,000 in the suburbs gets you a McMansion with a pool and built in movie theater.

They can build a movie theater in a pool?

Now that is some tech.
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  #42  
Old 03-19-2017, 02:03 PM
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Originally Posted by Nick Pierce View Post
They can build a movie theater in a pool?



Now that is some tech.


Yes they can. I've worked in two houses with outdoor movie theaters where a body can lounge in the Pool and watch his favorite movies in HD and surround sound. $500k can get you that kind of goose here.
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  #43  
Old 03-19-2017, 05:11 PM
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If a bank rises interest rates until they reach a "pain point" have they not increased the chance a person will default?

Will re-sharpening the guillotines lead to a better dialogue?
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  #44  
Old 03-19-2017, 05:23 PM
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Originally Posted by PickleBottom View Post
If a bank rises interest rates until they reach a "pain point" have they not increased the chance a person will default?

Will re-sharpening the guillotines lead to a better dialogue?


The capitalist system demands growth. Yes, I see it is an unsustainable system without occasional historical corrections. The proponents also see the need for market corrections. So: squeeze those lemons until there ain't no more, crash the system, and then rebuild. Simple. Inhumane? Yes. But what has been humane except for theoretical concepts of how things could be? I mean ever?

Can we find a new way? Yes. If one can imagine it, it can be done.

But for now we wait and watch.
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  #45  
Old 03-19-2017, 05:30 PM
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The new way is easy, capitalism is a good system, but just like every system put into the hands of a hierarchically controlled society, "greedy cunts" (the professional wording to describe them), warp the system to work in their advantage.
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  #46  
Old 03-19-2017, 05:31 PM
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Furthermore, a child after watching four hours of Elmo on Sesame Street has all the capabilities...
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Old 03-19-2017, 07:47 PM
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You've really learned nothing, have you? I think I could say everything I did to my 4-year-old niece and she'd have a firmer grasp of interest and banking than you do.
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  #48  
Old 03-19-2017, 08:07 PM
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Originally Posted by moonpunter View Post
You've really learned nothing, have you? I think I could say everything I did to my 4-year-old niece and she'd have a firmer grasp of interest and banking than you do.
But this is what I understand from you;
1) Interest is related to risk
2) Interest is not related to risk
3) Banks, on average(?), only get $50K from a $500K loan
4) Banks are providing a greater service rather than just lending people money, when they are just lending people money
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  #49  
Old 03-19-2017, 08:15 PM
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Originally Posted by PickleBottom View Post
But this is what I understand from you;
1) Interest is related to risk
2) Interest is not related to risk
3) Banks, on average(?), only get $50K from a $500K loan
4) Banks are providing a greater service rather than just lending people money, when they are just lending people money
I only used the $50K, $500K loan as an illustration. If you want real numbers, apply for a loan at your local bank.

Which, have you even been to a bank? It's more than just loans. There are checking accounts, savings accounts, and all sorts of investments. It's really not as difficult as you try to make it seem.
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  #50  
Old 03-19-2017, 08:35 PM
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Originally Posted by moonpunter View Post
I only used the $50K, $500K loan as an illustration. If you want real numbers, apply for a loan at your local bank.

Which, have you even been to a bank? It's more than just loans. There are checking accounts, savings accounts, and all sorts of investments. It's really not as difficult as you try to make it seem.
Yes but the illustration, ironically, has no basis in reality, which is the argument you are making towards my understanding. Don't take my word for it though, check this out, http://www.bankrate.com/calculators/...alculator.aspx put in $500,000 for 30 years, then multiply the answser by 12 and then multiply that answer by 30. The person has to pay $411,880 to the bank (for their "service") + $500,000 for their house.
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  #51  
Old 03-20-2017, 04:40 AM
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Originally Posted by PickleBottom View Post
Yes but the illustration, ironically, has no basis in reality, which is the argument you are making towards my understanding. Don't take my word for it though, check this out, http://www.bankrate.com/calculators/...alculator.aspx put in $500,000 for 30 years, then multiply the answser by 12 and then multiply that answer by 30. The person has to pay $411,880 to the bank (for their "service") + $500,000 for their house.
Yes over the course of 30 years. The "service " is you're using their money to buy the house. Again, it's not just typing something into a database. And 4.25% interest is really low. Credit cards charge up to 35% interest and pay day loan avances even more. If you want less interest you could get a shorter loan period but then your monthly payment will be more.
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  #52  
Old 03-20-2017, 01:16 PM
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Originally Posted by moonpunter View Post
Yes over the course of 30 years. The "service " is you're using their money to buy the house. Again, it's not just typing something into a database. And 4.25% interest is really low. Credit cards charge up to 35% interest and pay day loan avances even more. If you want less interest you could get a shorter loan period but then your monthly payment will be more.
Why is it not something someone types into a database? What else do they do when they loan money to another person? Do they build anything? Create anything? Invent anything?

Why don't you put 35% interest rate into the same calculator, check out what happens to the monthly repayment and interest amount paid over 30 years. Why is the interest rate at 4.25%?
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Old 03-20-2017, 02:04 PM
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Originally Posted by PickleBottom View Post
Why is it not something someone types into a database? What else do they do when they loan money to another person? Do they build anything? Create anything? Invent anything?

Why don't you put 35% interest rate into the same calculator, check out what happens to the monthly repayment and interest amount paid over 30 years. Why is the interest rate at 4.25%?
Criminy, you really must be a toddler.

Where do you think the money for a loan comes from?

Interest rates are largely influenced by the Federal Reserve Bank. They just raised rates last week. It was on all the news outlets.
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  #54  
Old 03-20-2017, 02:34 PM
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Originally Posted by moonpunter View Post
Criminy, you really must be a toddler.

Where do you think the money for a loan comes from?

Interest rates are largely influenced by the Federal Reserve Bank. They just raised rates last week. It was on all the news outlets.
Ah yes, then why are interest rates (we are discussing interest rates independent of risk and relative to population spending) not exactly the same as those of the Federal Reserve? In fact, in Japan interest rates went negative, so why, therefore, aren't Japanese banks paying off people's mortgages? If interest is only related to spending (supply and demand of money in banks)?
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Old 03-20-2017, 03:27 PM
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Why don't you ask Siri or Cortana or Ok Google to explain Japanese interest to you? I don't live in Japan.
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  #56  
Old 03-20-2017, 03:42 PM
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Originally Posted by moonpunter View Post
Why don't you ask Siri or Cortana or Ok Google to explain Japanese interest to you? I don't live in Japan.
But you're the expert though aren't you? What would happen if the US Interest Rate went negative? Does it differ to what would happen in Japan?
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Old 03-20-2017, 04:21 PM
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I don't think banks would be making many loans if interest were negative. It wouldn't make sense (or cents) for them to do so. ����������������
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  #58  
Old 03-20-2017, 05:03 PM
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Originally Posted by moonpunter View Post
I don't think banks would be making many loans if interest were negative. It wouldn't make sense (or cents) for them to do so. ����������������
Which then brings us back to the question, hopefully we can now both agree that the interest charged by banks is;
1) independent of risk
2) not wholly dependent on interest rates (but a relationship exists, especially when the Reserve Bank increases interest rates, but not so much when the Reserve Bank makes interest rates negative), and in some cases completely independent, for example, when people have to pay back loans at 35% interest rates

Therefore*, what is interest rate related to? One factor which is a major contributor to the actual interest rate is the amount people can afford to pay off an essential product (like housing) - a population's pain point. Therefore, charging interest is the reason people default on their loan.

*if you do some more reading, or already have the understanding, you will also get to reasons (x, y, z etc), but I already have my responses, which in my understanding also demonstrate the relative independence of the interest rate to these "factors"
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Old 03-20-2017, 05:36 PM
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Setting the Rate

Lenders use three primary pieces of criteria when setting a mortgage rate. The federal funds rate is set by the Federal Reserve, and it is usually the basis for the prime rate used by most financial institutions to set their general interest rate on mortgages and other types of loans and revolving credit. Your predicted ability to repay the loan based on past credit history also plays a part. If you have dings on your credit report for missed or late payments on past loans, expect to pay a higher interest rate on your mortgage than someone with a clean report and proven credit history. Lenders also take the type of mortgage into consideration when setting your loan rate. Mortgages that put the bank at higher risk, like a fixed-rate mortgage instead of an adjustable-rate mortgage, normally come with slightly higher interest rates.
http://budgeting.thenest.com/banks-c...rest-3760.html
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  #60  
Old 03-20-2017, 06:26 PM
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Yep, but we've explored all three...

If interest is related to risk (risk the person defaults on their loan), then the risk is exacerbated by charging the interest (or, in my understanding, the interest will cause the person to default).

Let me interpret what that paragraph is actually stating;

Guy who makes $50,000 in one year goes to the bank and states he would like to take out a loan for $200,000. The guy can afford, with no interest, fees etc afford to comfortably pay this loan back within a working lifetime.

The bank reviews his application and notes that the Federal Reserve Interest Rate is down which means that people are not spending money, most likely because they do not have any money to spend (any interest over this rate is already stressing the guy). Then they note that the guy has had some issues in the past paying back loans (if the amount of money the guy pays back is in excess of how much he is able to comfortably pay back he will most likely default). They also do not want to go with a fixed interest rate because if people start spending money the bank wants to be in on this action (the bank can change the conditions of the loan to ensure they do not inherit this risk).

The evil cunt bankers (whoops, that just slipped right out) calculate that this guy will be struggling, and only eating tins of catfood, but can afford $X per month. So the bank then magically produces a figure X% that "coincidentally" makes the payment rate of $X per month.

The bank claims, "Oh this number is based on the federal reserve rate, multiplied the risk we take in giving you this loan multiplied by how much of a dumbass we think you are". As a result the guy is stressed, not by the $200,000 loan amount, but by the X% which leads him to eating catfood each week, and this is the reason the guy will default on the loan.

Ergo, the bank has created the figure that makes the risk that, they claim, allows them to charge interest.

If the bank didn't include X% the person will have the budget available to pay off the house and also have quality of life (which will (relative to the above) increase the guy's happiness but will definitely decrease the average bank CEO's happiness, as these cunts derive pleasure in seeing people suffer).
__________________
If you have an apple and I have an apple and we exchange these apples then you and I will still each have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas
-George Bernard Shaw

Last edited by PickleBottom; 03-20-2017 at 06:37 PM..
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