Jul 08, 2008 12:44AM GMT
Question
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Money - Economy
Indymac Bank Layoffs & Loans- Is This A Sign Of Economic Recession?
IndyMac Bancorp Inc., a Southern California bank, announced on Monday that it would close its forward mortgage business and cut more than half of its 7,200-person work force.The problem arose because Idymac was a huge lender at the time of the housing market boom, where they were offering low rates on mortgages (just below the prime rate but not as low as the sub-prime rate which is the lowest rate for the private sector). Now with the housing crisis, which entails an excess of new houses and people defaulting on the mortgages below the prime rate, Idymac has lost over 98% of their stock value and has to raise money to meet Federal regulations.
Is this a sign of economic recession?
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raves +1 posted Jul 08, 2008 07:24PM GMT
Answered There are other factors driving the economic recession, like...
gas, job cuts, people not spending, people not saving, the dollar not being backed and printed out of thin air, credit cards and buying things we cant afford. The banks, Insurance companies, drug companies, the vatican and credit card companies win! -
raves +1 posted Jul 08, 2008 05:38PM GMT (edited)
Answered There are other factors driving the economic recession, like...
I've never even heard of this bank. I have no idea why they are closing their fronts and laying people off.
What I do know is, credit is negative income. Spending on credit puts you in debt and causes prices to rise more than they would otherwise. The more people use credit, the more prices rise; and the more prices rise, the more people have to use credit to pay for things- especially expensive things like cars and homes. Then we hit our credit limits and sales stagnate while we try to pay off our debts. That's where the business cycle comes from. That's where recessions come from.
If you want to have lower prices and no business cycles or recessions, stop using credit. Save up and buy things when you have the money. -
raves +2 posted Jul 08, 2008 11:59AM GMT
Answered No, it was Idymac's own fault for giving out low-rate mortgages!
No its a sign of an economy going through a correction. I am so sick of people talking up recession. It may very well become a self-fulfilling prophecy if people keep jabbering on about recession. A recession is two consecutive quarters of shrinkage that's what it is. The last quarter was still a net gain, slowed yes, but still a gain. This is one thing that drives me nuts about this country everybody is a lemming (not you - just the mindless chatter). People honestly need to take some courses in economics to see how things work. Even in a gangbusters run, companies will go bankrupt, there will be layoffs, etc. Yes with oil where it is that is a bad sign which will bring inflation across the board. The media only cares about ratings and will drum anything up this being an election year makes things worse. Sadly, we are slitting our own throats with all this negativity. If we do slink into a recession we only have ourselves to blame. -
raves posted Jul 08, 2008 03:19AM GMT
Answered There are other factors driving the economic recession, like...
the feds monetary policy... the markets are down, the dollar is down, and gold and oil is up... energy expenses are a BIG drain, whether or not the average taxpayer made stupid home loan decisions, or the greedy banks that offered poor loans.. That said.. a few words of hope.. Lutts, and another leading market anaylst have recently revised thier recession predictions, and are now saying that this is still a bull market, with a price recalc.. like in 2000-2002.. we shall see.. Watch the next quarter.. and then we have the general election... sure to skew the markets again.. -
raves +2 posted Jul 08, 2008 02:00AM GMT
Answered There are other factors driving the economic recession, like...
...the devaluation of the dollar, the loss of American jobs going overseas, the greed of the big oil companies, and much more. But yes, mortgage companies have a huge responsibility towards the recession. -
raves +1 posted Jul 08, 2008 01:13AM GMT
Answered Yes! The Housing Crisis is driving our enconmy into recession; Idymac's loss is just a result of this.
They should have based loans off of what property people actually owned and not people's debt (credit score). This was bound to happen when people become unable to save up for basic needs off of one income. -
raves +1 Jul 08, 2008 01:23AM GMTAs far as I know, the USA is the only country that does this. Totally stupid, doesn't make sense. People have tried to argue that it proves you can pay your debt off, retarded arguement obviously. Why would anyone opt to have debt when it would be in their best interest to not owe anyone anything?
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raves +3 posted Jul 08, 2008 01:05AM GMT
Answered There are other factors driving the economic recession, like...
The price of oil is the main factor of this depression. The banks had no right giving out loans to people who could not afford them, they knew the income of the family they gave the loan to, they took a risk and lost.
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Answered There are other factors driving the economic recession, like...
The price of oil is the main factor of this depression. The banks had no right giving out loans to people who could not afford them, they knew the income of the family they gave the loan to, they took a risk and lost.