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You need a mortgage because you don't have $400,000 in cash sitting around. You need insurance because you don't have the personal finances to adequately cover

You need a mortgage because you don't have $400,000 in cash sitting around. You need insurance because you don't have the personal finances to adequately cover the risk of "life"

alextgordon 11y ago
If we live in a democracy, and money is backed by the state, why do we have to pay interest to profit-making banks and insurance companies? Giving out mortgages is not difficult. You just have to be a bank. Not only that but 2007 showed that profit-making banks are even worse than a reasonable person, or precocious five year old, would be at deciding who should be given a mortgage. Mortgages are a necessary part of society. Profit-making banks are not. The only reason you spend your life slaving away paying extra interest to the shareholders of banks, is because banks have manoeuvred themselves into a privileged position. Inequality is not an accident of the system, it is the point of the system.
- coderzach 11y ago
  So you want to collect enough taxes to have the government provide zero interest mortgages. Does that mean everyone gets a mortgage, regardless of creditworthiness? You want me to pay for other people's mortgages, when they won't even give me one?
  - BBlarat 11y ago
    The parent never mentioned zero interest, why not have a interest just because the loan is granted by the government? Just call it a tax instead of interest.
  - rorykoehler 11y ago
    That's essentially how buy to let works. As a renter I am paying for someone else's mortgage. If I could get a zero interest (or even normal interest) mortgage guaranteed by the government I wouldn't have to rent and I could retain that value that I have generated for myself. As it stands I work my ass off and make someone else rich in exchange for keeping my chin just above the water line. Housing is a necessity and its profitization is unethical. It amplifies wealth disparities and destroys value in society.
    - jsprogrammer 11y ago
      How would banks collect profit then?
      - rorykoehler 11y ago
        I didn't rule out being charged a nominal fee for the service. They could also focus on non-essentials? Banks have many products other than mortgages.
- bmelton 11y ago
  Even if the banks weren't trying to make a profit, you'd still have to pay interest as loan-making is inherently risky enough that at some point, somebody has to cover the costs of those who default.
  - jsprogrammer 11y ago
    Defaults exist because it is a loan-backed currency.
    - zo1 11y ago
      Defaults have nothing to do with "loan-backed currency", as if that statement means anything. You could have a default on a loan if you were paying for your house with NukaCola bottle-caps, or engraved-crab-shells.
      - jsprogrammer 11y ago
        If your legal tender currency is created primarily through loans, then it is loan-backed. As you noted, the concept of a "loan" entails the possibility of default. If most currency is created through loans and loans must be repaid in that currency, the system-wide probability of defaults is significant. The likelihood of defaults increases as loans require payors to also include tribute payments (interest), for which no currency was ever created (necessitating that the payor obtain the requisite currency from someone else before the default day occurs).
  - ZenoArrow 11y ago
    I prefer the suggestion of Positive Money ( http://positivemoney.org http://positivemoney.org ), which is that bank accounts are split by savings and investments. Savings would just keep your money safe (no interest), investments would have a potential return but also carry the risk of a loss. It'd be up to you how you wanted to split your money between savings and investments. The bank that is the closest to this model (that I know of) is Mondo (due to be launching soon). Along with it's other innovations, it plans to allow you to invest money via Funding Circle for a potential return: http://www.thememo.com/2015/06/25/meet-mondo-the-app-thats-got-the-banks-worried/ http://www.thememo.com/2015/06/25/meet-mondo-the-app-thats-g... This is a smart idea on a couple of levels, it mitigates against the risk of bank runs and it provides a better return than many high street banks offer (the current average return rate from Funding Circle is 6.6%): https://www.fundingcircle.com/statistics https://www.fundingcircle.com/statistics
- cmdkeen 11y ago
  Except Fannie May and Freddie Mac were a significant part of the reason that bad mortgage lending was made - because politicians wanted more people to be home owners. Profit making banks should be the reason that lending decisions are strict. It wasn't just banks making poor decisions in 2007 about who should have a mortgage.
- ZenoArrow 11y ago
  Bingo. Cut out the middle man, or at least make the middle man not-for-profit. Prices would drop and nothing of value would be lost.
- Bostonian 11y ago
  "Giving out mortgages is not difficult." That is true only if you are not concerned about being repaid at a reasonable rate of interest. Lenders need to assess credit and interest rate risk.
denim_chicken 11y ago
> You need a mortgage because you don't have $400,000 in cash sitting around. And a large part of why housing costs $400,000 in the first place is due to the availability of mortgages. Mortgages gave themselves a reason to exist.
- ghiculescu 11y ago
  No, it's because a house is 400,000 times more valuable than a can of coke.
  - innguest 11y ago
    The banks really succeeded in convincing you that that's the price of a house, but that only says something about you, not about the real price of a house. A 500 sq ft monolithic dome house costs around $30k. It fulfills all the roles of a normal house, but better, safer, and cheaper. Now tell me how I'm wrong because "furniture doesn't fit in curved walls" and how that justifies the $370k discretionary increase in how much you want to help banks prey on homeowners and earn more interest.
    - dragonwriter 11y ago
      > Now tell me how I'm wrong because "furniture doesn't fit in curved walls" Well, yeah, if you are going to have a house that small -- 500 sq. ft. -- optimal shape is a pretty big concern. > and how that justifies the $370k discretionary increase Well, much of the increase is going to be land price. Even a 500 sq. ft. dome home anywhere more typical home prices for reasonably moderately sized homes are around $400,000 is going to be a lot more than $30k just of the land it sits on.
      - sdenton4 11y ago
        Eh, I lived in a 400sq foot dome for four years. Always with a room-mate, sometimes with two. It was great. The bit of space between the couch and the wall just becomes some oddly-shaped storage space. Sometimes people would carve their own dome-fitting bookshelves in the wood shop. There were fourteen of these domes, run as a cooperative, on three acres of land. The loans on building them were paid off in full by the early eighties, and I believe there was about a decade where no one paid rent. But eventually it was decided that a nest egg should be built up for upkeep and so on; by the time I was there, it was running about a third of market rent, and these days (due to some additional pressure to modernize) the rents are up to about 2/3 market. Cooperative ownership is fantastic, and a great cure for the ails of capitalism. But they tend to not get a lot of investment for exactly the same reason: capital isn't interested in investing in non-capitalist spaces. But it's certainly possible to band together with some friends to get an initial down-payment+loan. Then you incorporate the cooperative, and essentially 'sell' the house to the new cooperative, so that the 'rent' you pay to your new co-op pays off the bank loans. Once the loans are paid off, the cooperative becomes an autonomous creature, self-sustaining as long as there are people happy to live with other people and decide how the place will be run, rather than dealing with a landlord...

You need a mortgage because you don't have $400,000 in cash sitting around. You need insurance because you don't have the personal finances to adequately cover the risk of "life"

alextgordon 11y ago

If we live in a democracy, and money is backed by the state, why do we have to pay interest to profit-making banks and insurance companies? Giving out mortgages is not difficult. You just have to be a bank. Not only that but 2007 showed that profit-making banks are even worse than a reasonable person, or precocious five year old, would be at deciding who should be given a mortgage. Mortgages are a necessary part of society. Profit-making banks are not. The only reason you spend your life slaving away paying extra interest to the shareholders of banks, is because banks have manoeuvred themselves into a privileged position. Inequality is not an accident of the system, it is the point of the system.

coderzach 11y ago
So you want to collect enough taxes to have the government provide zero interest mortgages. Does that mean everyone gets a mortgage, regardless of creditworthiness? You want me to pay for other people's mortgages, when they won't even give me one?
- BBlarat 11y ago
  The parent never mentioned zero interest, why not have a interest just because the loan is granted by the government? Just call it a tax instead of interest.
- rorykoehler 11y ago
  That's essentially how buy to let works. As a renter I am paying for someone else's mortgage. If I could get a zero interest (or even normal interest) mortgage guaranteed by the government I wouldn't have to rent and I could retain that value that I have generated for myself. As it stands I work my ass off and make someone else rich in exchange for keeping my chin just above the water line. Housing is a necessity and its profitization is unethical. It amplifies wealth disparities and destroys value in society.
  - jsprogrammer 11y ago
    How would banks collect profit then?
    - rorykoehler 11y ago
      I didn't rule out being charged a nominal fee for the service. They could also focus on non-essentials? Banks have many products other than mortgages.
bmelton 11y ago
Even if the banks weren't trying to make a profit, you'd still have to pay interest as loan-making is inherently risky enough that at some point, somebody has to cover the costs of those who default.
- jsprogrammer 11y ago
  Defaults exist because it is a loan-backed currency.
  - zo1 11y ago
    Defaults have nothing to do with "loan-backed currency", as if that statement means anything. You could have a default on a loan if you were paying for your house with NukaCola bottle-caps, or engraved-crab-shells.
    - jsprogrammer 11y ago
      If your legal tender currency is created primarily through loans, then it is loan-backed. As you noted, the concept of a "loan" entails the possibility of default. If most currency is created through loans and loans must be repaid in that currency, the system-wide probability of defaults is significant. The likelihood of defaults increases as loans require payors to also include tribute payments (interest), for which no currency was ever created (necessitating that the payor obtain the requisite currency from someone else before the default day occurs).
- ZenoArrow 11y ago
  I prefer the suggestion of Positive Money ( http://positivemoney.org http://positivemoney.org ), which is that bank accounts are split by savings and investments. Savings would just keep your money safe (no interest), investments would have a potential return but also carry the risk of a loss. It'd be up to you how you wanted to split your money between savings and investments. The bank that is the closest to this model (that I know of) is Mondo (due to be launching soon). Along with it's other innovations, it plans to allow you to invest money via Funding Circle for a potential return: http://www.thememo.com/2015/06/25/meet-mondo-the-app-thats-got-the-banks-worried/ http://www.thememo.com/2015/06/25/meet-mondo-the-app-thats-g... This is a smart idea on a couple of levels, it mitigates against the risk of bank runs and it provides a better return than many high street banks offer (the current average return rate from Funding Circle is 6.6%): https://www.fundingcircle.com/statistics https://www.fundingcircle.com/statistics
cmdkeen 11y ago
Except Fannie May and Freddie Mac were a significant part of the reason that bad mortgage lending was made - because politicians wanted more people to be home owners. Profit making banks should be the reason that lending decisions are strict. It wasn't just banks making poor decisions in 2007 about who should have a mortgage.
ZenoArrow 11y ago
Bingo. Cut out the middle man, or at least make the middle man not-for-profit. Prices would drop and nothing of value would be lost.
Bostonian 11y ago
"Giving out mortgages is not difficult." That is true only if you are not concerned about being repaid at a reasonable rate of interest. Lenders need to assess credit and interest rate risk.

denim_chicken 11y ago

> You need a mortgage because you don't have $400,000 in cash sitting around. And a large part of why housing costs $400,000 in the first place is due to the availability of mortgages. Mortgages gave themselves a reason to exist.

ghiculescu 11y ago
No, it's because a house is 400,000 times more valuable than a can of coke.
- innguest 11y ago
  The banks really succeeded in convincing you that that's the price of a house, but that only says something about you, not about the real price of a house. A 500 sq ft monolithic dome house costs around $30k. It fulfills all the roles of a normal house, but better, safer, and cheaper. Now tell me how I'm wrong because "furniture doesn't fit in curved walls" and how that justifies the $370k discretionary increase in how much you want to help banks prey on homeowners and earn more interest.
  - dragonwriter 11y ago
    > Now tell me how I'm wrong because "furniture doesn't fit in curved walls" Well, yeah, if you are going to have a house that small -- 500 sq. ft. -- optimal shape is a pretty big concern. > and how that justifies the $370k discretionary increase Well, much of the increase is going to be land price. Even a 500 sq. ft. dome home anywhere more typical home prices for reasonably moderately sized homes are around $400,000 is going to be a lot more than $30k just of the land it sits on.
    - sdenton4 11y ago
      Eh, I lived in a 400sq foot dome for four years. Always with a room-mate, sometimes with two. It was great. The bit of space between the couch and the wall just becomes some oddly-shaped storage space. Sometimes people would carve their own dome-fitting bookshelves in the wood shop. There were fourteen of these domes, run as a cooperative, on three acres of land. The loans on building them were paid off in full by the early eighties, and I believe there was about a decade where no one paid rent. But eventually it was decided that a nest egg should be built up for upkeep and so on; by the time I was there, it was running about a third of market rent, and these days (due to some additional pressure to modernize) the rents are up to about 2/3 market. Cooperative ownership is fantastic, and a great cure for the ails of capitalism. But they tend to not get a lot of investment for exactly the same reason: capital isn't interested in investing in non-capitalist spaces. But it's certainly possible to band together with some friends to get an initial down-payment+loan. Then you incorporate the cooperative, and essentially 'sell' the house to the new cooperative, so that the 'rent' you pay to your new co-op pays off the bank loans. Once the loans are paid off, the cooperative becomes an autonomous creature, self-sustaining as long as there are people happy to live with other people and decide how the place will be run, rather than dealing with a landlord...