CHESSNOID

Lately, I have noticed my blog posts are getting more hits than usual.  I attribute that from more people wanting to read about business and politics from just a regular middle class American like me.  I try to put down what I think at the moment.  Obviously, I like to talk a lot about the economy, recession, the stock market and credit related stuff.  If you look at my blog, most of my posts are about that.

I still talk about boxing and mma, but I think as my priorities change because of my surroundings.  The focus is definitely more on the recessionary state of our economy and its effects on me and the  people around me.  Again, I live in California where not only do we seem to have fires in October and crazy earthquakes or aftershocks every month, but we also have one of the highest amounts of foreclosures.  This definitely emphasizes how bad this recession really is locally.

I am actually very conservative when it comes to spending. Even though I live in Orange County, I drive a small economy car (over 40 mpg :smile:) and rent an apartment.  I have actually been doing that a long time, way before it became fashionable.  I really do try to live within my means.  I use to work with people in a medium size company 2 years ago where we all made about the same amount of money, but I always wondered why they could afford a 1/2 million dollar house and drive big SUVs and/or foreign luxury cars.  This current economy we are in is squeezing all that excess out and forcing people to go back to the old days of paying cash.

I actually would like to buy something now even if prices are still falling because I could get a payment on a 30 year fixed rate loan that would be lower than my rent payment.  The problem is even with a 20% down payment and perfect credit and documented income, lenders just don’t want to loan money on depreciating assets.  I know I look good on paper, but lenders and their investors want more than the typical stuff and definitely don’t want to be burned again.  People are walking away from their houses because they are now upside down in them. Strictly looking at it as a business decision, they are doing the right thing.  With the recent bailout, it is even easier to justify.  They made the wrong decision timing wise and no one is bailing them out for the bad decision.  Why sink in more money on an investment losing money?

I remember helping my mother get financing for her house a while back, and a broker was upfront with me and said that California is a state that many lenders just don’t want to lend because of the dramatic falling prices.  He told me just to apply at a local bank that still does loans in the area because no one else would do it.  I appreciated his candidness, but didn’t believe him until I tried a few other lenders.  He was speaking the truth.

There were signs the economy was slowing down and going into a mild recession last year.  That is when I sold all my stocks.  I have been extremely fortunate to miss the 40% decline and will be OK in this downturn.  I don’t think this recession had to be this bad, but unfortunately we had the 3 stooges Bush, Bernanke and Paulson in charge with our economy.  Luckily for all of us, they won’t be for long.