Debunked Economists Face Even More Embarassment

Most mortgage companies will base your eligibility for a mortgage on what you can comfortably pay monthly, and that will vary depending on your circumstances, your income, you savings, you estimated future earnings, your credit rating, and anything else they seem to think is a good factor to evaluate. Same with the nations debt.....the amount isnt the criteria as much as our ability to pay the interest......as long as the US continues to pay the interest on the money it owes the debt is like a never ending mortgage...... the absolute dollar value is not as relevant as the ability to pay the interest......LJ is right in that government putting money into the economy keeps the economy growing, keeps companies making profits and hiring new workers, and those workers and the companies they work for pay the taxes that pay the interest on the debt. When you tamper with that formula, for example by cutting government spending abruptly, as the sequester did and as the GOP has proposed more of, the wheels of our economy slow down and the tax revenue declines from both individuals and corporations....and costs go up.....unemployment, food stamps, medicaid etc, which can negate any advantage the rapid spending cuts might have created.

A better approach is a long term solution.....first by revamping and simplifying the tax code, then by very judiciously going through all government programs and looking for areas that costs can be cut, spending can be cut, waste can be diminished, and productivity increased. A surgical approach if you will.....not a slash and burn attack on the economy as a whole. It took us decades to get into this situation, and it will take decades to get it under control.....if we are smart about it. There are no quick fixes.....only quick roads to disaster....and we are one of those roads now.

LadyJazzer wrote:

FredHayek wrote: Finance professionals say you should only buy a house that would take you about three years with combined income to pay off.

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Really?... And your source for that would be ______________?

I guess that's why virtually every mortgage since at least 1934 is a 30-year mortgage?

AHEM, Fred...reference that quote because it's just a tad bit wrong (I think)....

I may have not phrased that the best way. If your combined income is 100k you should be looking for 300 to 400k houses not million dollar homes.

THAT is a more valid point....it's called living WITHIN your means....ideally living BELOW your means is more preferable....JMO

archer wrote: No... To increase your household income you buy your house with a mortgage.... An effective use of debt. How many of you republicans who are homeowners didnt buy your homes using a mortgage? What would it do to your lifestyle if you had to pay off your mortgage in a few years. And why would you do that anyway? Most people never pay off a mortgage... Until perhaps they retire and downsize.... Debt is not always a bad thing.

You're correct, and it's a valid analogy. Have you ever heard the term "house poor"? The US is currently 'house poor' and needs to reduce the size of the mortgage to make the payments more reasonable.

I don't think home owership needs to be encouraged in America. In Germany, most rent, and their economy thrives. When you rent, you can move with the jobs.

FredHayek wrote: I don't think home owership needs to be encouraged in America.

I think it does...

But I think it should be homes that are within people's means; and I think that mortgage company vultures that use deceptive tactics to try to sucker people into mortgages they can't afford should go to jail.