And you’re not speculating? About us being racist? About mental illness not existing in certain fields? Please. This is absurd especially since I never called him bipolar. Read this thread from the beginning.
You are correct in the short-run, but I think you exaggerate the deflationary effect. Besides, it all depends on the precise numbers, which can be fine-tuned as needed.
I definitely disagree about the long-run. Credit-fueled consumption binges always end badly. The sooner they are stopped the better it will be for everyone. It’s better to take a small amount of pain now than a larger amount of pain later.
People always come up with good reasons why it’s a bad idea to pop a bubble now. The problem is that the bubble always pops at some point. The economy isn’t exactly roaring now but we’re at 5.0% unemployment. We’re more or less in “normal” times.
Maybe I misunderstand you, but I think there is a big difference between credit extension policies that are too pro-cyclical and down-payment requirements. To me, it seems like your proposal is like doing a knee replacement to treat appendicitis. But I agree that pro-cyclical policies often lead to wild asset price swings.
It’s crazy. I agree with you. I’ve never in favor of 3% downpayment requirements. If you can’t save 3% of a home’s price for a downpayment then you have no business buying that house.
My biggest takeaway on Gabler’s situation is that if I had been in a profession with unsteady income, from the get-go, I would have been banking money for those lean times, not just flying along on a wing and a prayer like it seems he did. Heck, even with a steady paycheck, I saved and saved, it’s just my nature. Honestly, there are a lot of folks who just don’t get it and never will. I worked with a tech like that. She would leave us with our jaws on the floor at her money ineptitude. Just crazy.
Then you misunderstood me. I wasn’t saying he couldn’t be mentally ill because he was an accomplished writer.
I was saying that - given that he’s a great writer - it’s far more likely (to me) that he deliberately used his writing skills to craft a narrative designed to push people’s emotional buttons. That’s all.
However, I do think there is a societal bias in which it’s easier for many people to excuse affluent white people for behavior that we wouldn’t excuse others for. As some social scientists would say, the process of “otherization” makes us less empathetic but also perhaps less willing to swallow shallow excuses.
When I used the word “we” in reference to our differing perceptions of hip-hop stars and middle-aged writers, I wasn’t referring to you specifically, but I understand how you might have read it that way. Apologies - I didn’t mean to imply that. If it’s any consolation, I think that I’m personally no less biased than anyone else in thread.
I’m wondering why he decided to send his kids to private grade schools and high schools. That’s the kind of detail I’d need to better understand his financial decision-making history based on his life circumstances (location, public education system, etc.).
I am not exaggerating the deflationary effect because I didn’t say how big it would be. 
There definitely would be a deflationary effect.
Housing would slow under your proposal. If the economy was stronger, this wouldn’t be as much of a problem.
I don’t like the booms and busts. I am against the bubbles. I agree. I traded through the 1987 crash, the 1989 mini crash… Etc…
We should look at situations as they are instead of making blanket policies that cover all situations. We are in a different economy than the economy of 2006, so what we should do now is different than what we should have done in 2006.
We do the opposite of what we should do… We expand credit and loosen standards the bigger the boom gets. Oil prices go through the roof, this will never change. Now we have a bunch of debt in the oil sector.
We go from one boom and bust to another.
The 3 percent down payment only takes effect if it is cheaper to own than it is to rent.
I watched people paying $2,000 a month in rent, when if they were able to buy, it would have cost $1,500 a month. Maybe less. That is the time for 3 percent down. Even if the buyer got in trouble, the downside risk to the economy is low. Some person or institution would buy the place. People and institutions did buy these places instead of the middle class.
Now if the rent is $2,000 and the cost of ownership is $3,000 a month, that is a different situation and calls for a different down payment requirement.
I am not saying we should have 3 percent downpayments now. We should have had them in 2009-2012. Somewhere in those years.
I was under the impression he sent them to private school when they lived in Brooklyn and then once in East Hampton sent them to public. Didn’t he say one of the reason for moving there were the schools?
We weren’t willing to do without a child.>>>>>>>>>>
That is so sweet and I’m so happy you got your child! He is a lucky young man.
Oh, that’s right. Public school in EH would have been a huge draw, I would assume. Chasing education is a big motivator for economic choices. It has been for my family, at least.
I thought moving to East Hampton year round was a money saving decision, because people I know saved money when they decided to move out of the city: less expensive housing and no private school costs. If they sold their NYC real estate at a huge profit, they had some money left over to save for college or whatever.
That doesn’t mean lots of people don’t raise their kids in NYC and send them to public schools and they do very well in life. He’s telling his story. He’s telling how someone as privileged as he is got in financial trouble. I think we are supposed to extrapolate that if he got in trouble, anyone could, especially those in much less privileged circumstances. However, on this thread are a whole lot of people who were in worse circumstances and dug themselves out, so not much sympathy for him.
A potential problem for this in a hot market is that they may not be able to find a house (or condo, etc.) to buy. When we purchased our house last time, we were out-bid several times before we finally scored one (I think it was in 2000-2001. Was the real estate market hot at that time?)
I think this is what the family of DS’s GF has been trying to do (or more correctly, making her to do this when she really does not have much time and experience for this.) Her parents (not here) seem to be very knowledgeable and experienced (have always been landlords or in the construction related business for decades, as I heard) but their experience is in a real estate market far from here and they will never be here except for a couple of days of visit when they missed their D. DS said she might keep renting just because she could not successfully buy one – failed in every bid so far, most likely was out-bid by cash buyers with $10K to $20K over the asking price.
Yea, opportunities Gabler had and choices he made don’t generate much sympathy, especially as many here know folks who have had fewer opportunities, worse troubles thru no fault of their own, but still managed to improve their lot without whining.
Would everyone feel better about him if he had conquered his financial problems?
Maybe one point is that for a lot of people these problems become insurmountable. There is no way to dig themselves out. Sometimes people aren’t a success and it may not be their fault. It may truly be the fault of the present economy. Or at least, that’s what I think.
I am about ready for the next issue of the Atlantic. I already need something new to read.
Where could you not buy a place that rents for $2,000 and the home ownership costs were $1,500 a month? How much were you going to put down?
A mortgage may be less than rent if they can (a) qualify to buy, (b) come up with a hefty down payment and © be able to afford the taxes and maintenance.
Yes, I think you have that right.
Perhaps one of the reasons I am not very sympathetic to Gabler is because of some similarities between his situation and mine (however, I’m not claiming to be struggling financially).
We lived in the city when our kids were young. If you’re the “right” sort, you simply “have” to send your kids to private schools. Our local public school absolutely stunk. My wife and I would no sooner have sent our kids to the local public school then we’d hire a child molester as a babysitter. It was either private K-12 in the city or public schools in a good suburb, and we chose to move to the suburbs as soon as our kids got old enough to go to school. Had to tighten our belts quite a bit in order to do it, but investing for a better future for your kids is a parent’s job.
I also am self-employed, so I get my income in lumps without taxes being withheld. I didn’t draw a paycheck (we paid our employees, not ourselves) for 3 straight years, so had to live off of our savings. I was paying private college tuition for two kids as well. Never occurred to me not to pay our estimated taxes on the lump sums I’d previously received as income. Did I like paying taxes knowing that I would have no income for the foreseeable future? Of course not. But I’m not crazy, and I can’t imagine making the decision to not pay my taxes like Gabler did … especially since he had the money to pay the IRS sitting in his bank account.
His situation in terms of getting lump sum advances is really not very different from that of millions of business owners. Maybe people who only been employees don’t understand this since they haven’t lived it. You pay your damn taxes and you adjust your spending to fit your budget. You plan for a rainy day. You don’t sacrifice the long-term for the short-term. If you don’t make payroll then you lose your company. Sometimes it’s really hard. Oh well.
I do not know the situation exactly and do not know how much DS knows. Note that it is about the family of DS’s GF, not our family.
The only tidbits we happen to hear about are: Her rent is likely about $2000 to $2300 (about that range, do not know the exact figure.) If their family buys a condo, it could be cheaper (as I heard.) The real estate market is on the other coast, Boston in particular (probably not in a very suburban area), which may not be as hot as the market in the Silicon Valley here but still a quite hot market. Not sure here.)
Another twist here is that her income is not high (not even high enough to rent, say, $1600 studio based on her income alone.)
Not sure how much down payment they will put down. Not even sure whether they will even get the financing here in the US. (Likely it is more convenient for her not to obtain the financing here – she does not have the time but her parents are “experienced professional” (i.e., do this for a living) in the non-US market and they lack the language skill that is needed here. They seem to be familiar quite with the real estate market in some major cities, Canada also, I think.)
Re: “(a) qualify to buy, (b) come up with a hefty down payment.”
They likely are capable of doing this without any financing from the loan companies in the US, considering the fact that almost all of their family members in two or even three generations were sent to private schools all the way – and the financial aid is an non-existent phenomenon in a non-progressive country (as far as education is concerned) there. Oh…I learned that just to rent, the tenant needs to come up with a hefty downpayment (like 75-80% of the apartment’s value) if the property is in a desirable location. It is a totally a “different world” there – just the opposite of being progressive.
Don’t be judgmental here – it is how much her family wants her to spend on her housing cost here. Heck, 5 years ago, a close classmate of DS lives in an $3000+ apartment. It is their money so they can spend theirs as they wish.
I appreciate your sharing your story.
Why didn’t you draw a paycheck for 3 years? You lost clients? They paid less? This is because of the financial crisis?
Just saying… For the sake of brevity, he probably meant negotiating an installment plan with the IRS instead of not paying the taxes due. It is perfectly fine and legal - and he pays a hefty interest on top of the penalty, too. I do not think he would be free to tell his story if he had not paid the taxes like his sentence implies.
@mcat2, I am not being judgmental about the GF. I like to know other people’s experiences.
@BunsenBurner, yes!