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I had a dream last night where a couple big burly guys pushed themselves into our house and started demanding millions of dollars on the spot.
After I woke up, it occurred to me that this will be the reality for a lot of Canadian homeowners who see their mortgages renewing at rates they can no longer afford to pay on amounts no individual human being should ever consider borrowing.
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It gets worse before it gets better, but in the end their collapse is a forgone conclusion. Stay strong.
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What's happening in Canada is the US is exporting inflation. Canada is one of the biggest exporters of oil to the US so turning Canada into an economic colony is an effective way for the US to suppress oil.
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Maybe that's it then. @cjd made a god tier post thread a couple days ago about banking that I need to get back to that talks a lot about the damaging effects of having all this debt available, but the availability of 30 year fixed terms at anything other than the historical average mortgage rate is sort of absurd.
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@sj_zero
For most mortgages, Feddie Mac and Fannie Mae can buy the loans as needed. Then there’s other programs like FHA and VA (for military).
The government basically backs most mortgages here so the banks aren’t fully dependent exposed to the risks.
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I dunno. I can't find it, but I was sure there were specific things in US law that made a 30 year mortgage economical whereas in reality it's an absurdity where the bank is taking huge amounts of risk assuming that the interest rates won't go up for 30 whole years.
In Canada, once you get much past 10 years the interest rates are so high nobody would possibly accept such a term. I looked around in England, and it appeared that 10 years was about the maximum there too. The fact that mortgage term and rate term are so close linguistically makes it hard to find information about it...
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Right, Freddie and Fannie. Ugly solution, to be honest. 2008 showed that.
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You can amortize for up to 35 years if you come up with a 20% down payment, but the 30 and 40 year interest rate terms are something subsidized by the US government to help get people into houses. You can get a 25 year interest rate term in Canada, but the premium is so high it's unreasonable to go with it. To give you an example, you can get a mortgage for 4-5% right now if you're 0-5 years, but a 25 year mortgage is 9.75%.
This actually makes sense since prior to the gfc the average mortgage rate was about 9%, but it's awfully expensive insurance!
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Right, in the US 30 and even 40 years is common.
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I locked in my mortgage for 10 years, and in my age group only something like 3% of people opted for a mortgage like that. It was an extra percent or two, but much beyond that you're paying like 8%. Which at the rate we're going might be a bargain...
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I sometimes forget that the really long fixed rate mortgages is a US thing. I got mine in 2012 while the market here was still recovering from 2008 and locked in very low…a simple savings account has a higher rate now. It’s surreal.
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> People who package up financial instruments may make a lot of money
The western economy is no longer allocates resources to those who make the most value for others, it now allocates resources to those who are the most useful to the political machine which controls the printing press. We are in an era of decay.
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Although I don't follow Confucianism, one important detail of their ideology puts farmers at the top of the civilian hierarchy.
We don't live in an agrarian society like ancient China, but I think the idea of putting the people who actually do things on a pedestal is smart. People who package up financial instruments may make a lot of money, but to consider people who play magic tricks with dollars more important than people who make the things we use every day is a decadent and broken society imo...
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Sure, not everyone can own a rocket ship. But we're talking about an apartment and a pension for grandpa here. Not being able to provide that in 2023 is a huge red flag that we're in the midst of a societal collapse.
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@cjd @sj_zero
Post scarcity is a fable because human desires are the infinite and people will just increase what they demand to meet the supply.
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We've had the technological capability to provide effective post-scarcity to everyone for the past 50 years. The fact that retirement is even a question is proof that the political/financial system is broken beyond any hope of repair.
We're approaching the point of not even being able to generate power to keep the lights on anymore, this is Ancient Rome stuff.
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Retirement has much to do with what one does now. People are living longer and chose to not have kids. That killed the traditional pension and made them unviable. So now it is more up to the individual to properly save. For many that will require financial services whether that be advisors or the folks who create vehicles for long term savings and payments. That requires people to move money around. An annuity, for example, is a pure financial instrument. And that needs someone to create it and manage it.
I think the biggest difference today is that more responsibility is on the individual to make good decisions, at least enough good decisions. That wasn’t always the case. But even on the days of pensions you still needed people to manage them. It’s just that people are more exposed to it.
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Are you sure they benefit, or do we just think they do because that's how it's been done in our lifetime?
Especially considering that it's really questionable as to whether the next few generations will be able to retire...
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Values are, ultimately, subjective I suppose. But I also think that the perceived societal value of professions follows cycles like fads.
To me, it doesn’t really matter because it takes all types to make a system. In order for the farmer to keep the farm running he needs someone to perform magic with financial instruments. The cop, fireman, teacher, nurse, etc all benefit from mortgages, car loans, and financial instruments that allow them to retire. So I tend to avoid assigning values as long as they are serving someone else.