Hillary/Bushcare for Housing: “Comprehensive work out plan;” Update: How about the Suck It Up plan?
Update 3:15pm Eastern. Here’s video of my appearance on Fox Business Network announcing my three-point “Suck It Up” plan.
Update 1:50pm Eastern. Treasury Secretary Paulson is making his bailout announcement. Wait! He has decided to change his mind, drop the federal intervention plan, and is offering my new three-point plan instead:
Suck. It. Up.
Nah. Not really.
Agh! Just as I predicted: Paulson has adopted Hillary’s euphemism for the bailout–the comprehensive “work out plan.”
HUD Secretary Alphonso Jackson is blubbering platitudes about home ownership and the American Dream. Tell that to all the responsible taxpayers who chose not to take on risky subprime mortgages and who chose not to overextend themselves and who aren’t getting any breaks or rewards.
***
Here’s video via WSJ of Hillary’s Wall Street finger-wagging speech that I wrote about yesterday:
Later today, the Bush administration jumps on the bandwagon with the formal announcement of the not-a-bailout-homeowners’ bailout at 1:40pm Eastern. Wonder if Bush will use Hillary’s new euphemism, “Comprehensive work out.” Blech.
I’ll be talking housing and politics on Fox Business Network at noon Eastern.
Meantime, I noticed an interesting comment from a self-identified “moderate to liberal Democrat” on the Hillary campaign blog that’s worth reprinting in full here:
by VaHomes
12/5/2007 7:14:09 PM
I wish Hillary would reconsider her suggestion to freeze mortgage loans – since it sounds like nationalizing industry to me. It’s definitely a mess but trying to examine it from different perspectives raises a lot of questions.Here in northern Va, homeowners are watching the wealth in their homes (that accumulated rapidly in the last 5 years) shrink. Some recent homeowners bought high, with loans they could barely afford, and are now ‘upside down’ on their mortgages. Some have suffered hardship with the weakening economy or health problems. If they plan on being long term homeowners and can make housing costs a priority, perhaps they can ride it out. If they were speculators or must move soon, probably they can’t.
Remember that many other prospective homebuyers stayed on the sidelines, saving up for a downpayment and not shoehorning themselves into loans they couldn’t afford beyond the intro period. They’re still waiting to participate in the American dream of homeownership. So they get punished for being responsible and the high risk-takers get bailed out?
Many of these first time prospective homebuyers are hoping that the high cost of housing relative to income will decline, interest rates will stay affordable, and that the tightening of financing guidelines won’t freeze them out of borrowing.
Investors who bought real-estate backed bond securities – including Moms and Pops on fixed incomes – are facing massive losses by accepting ’short sales’ or going to foreclosure, after bending over backwards to try to work things out with the borrowers. So now they also face the prospect of the federal government stepping in and rewriting the terms of contracts under which they loaned money.
So is it fair to future homebuyers to pay more for credit because rates rise from the uncertain possibility of contracted loan terms being “frozen” – for 5 years! Is it fair that they pay for the irresponsibility of some previous homebuyers and some bad mortgage brokers? Is it fair that the bond holders lose the benefit of their bargain? It’s not just foreign investors who will be stiffed. It’s easy to ‘blame the banks’ but they have shareholders, too. And they definitely would prefer to work things out with borrowers rather than acquire depreciating real estate.
I’m a moderate to liberal Democrat – and a real estate broker who represents homebuyers (including investors), homeowners, and home sellers – and counsels them responsibly. I get great deals for clients, some with 100% financing, but they are homes they can afford. So I watch and listen to all this talk with more than a passing interest. And I feel a certain chill with the prospect of government control in rewriting negotiated contracts between private parties.
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Again, where are the constitional lawyers? There is a contract between two parties, which the government thinks it has the Right to Rewrite. Where did that right come from?
Bush just keeps digging, doesn’t he? With Republicans like him, who needs to worry about the Dems?
The post by VaHomes repeats what many of us who are conservatives have expressed. It is good to see there are Democrats out there than are still moderate and have the ability to reason when presented with the facts.
My wife went ballistic last night when I told her about the proposed bailout. We worked most of our married life (25 years in February) to build our credit rating to the point we could afford the home we are blessed with now. This bailout of the greedy and unfortunate is bad policy that will rightfully inflame home owners on both sides of the political spectrum that have had the sense to live within their means.
it’s a dangerous thing when Government steps in to manipulate a market, we are a capitalist society and the market decides the price of a commodity, not the Government. I think a few people are worried that a recession could determine the outcome of the 2008 election, remember ‘it’s the economy, stupid’.
The messiah speaks. Man, I am going to vote for her. She has the correct answer to every problem in the universe.
Sheeeeesh
Whatever happened to the Constitution and the 10th amendment? It seems to be totally ignored, oh, unless it supports your own view. We’ve become an “Animal Farm” nation.
Trying to get cooperation from lenders to work with struggling homeowners is one thing. In this market it is actually in the best interest of both parties. But…the government has absolutely no authority to force lenders to “freeze” interest rates PERIOD! The underlying securities that these loans are tied to would become worthless.
Here is a huge question I haven’t heard answered. Does the freeze mean the REAL interest rate or the “payment” rate that is often well below the actual calculated rate. (Remember the 1% payment rates?) It’s called negative amortization because many borrowers aren’t even paying the actual interest on some of the true subprime loans let alone principal. That has added to the problem of people owing more than their home is worth in a declining real estate market.
I can see how Hitlary would love the idea because banks or bond holders would take it up the you know what under this idiotic plan. And worse, tax payers will eventually cover a lot of the cost.
I hope someone sues someone. This deal is utter B.S.
P.S.
I should have bought the bigger house that I could not afford.
Politicians have never learned that when you find yourself in a deep hole the first thing you should do is:
Stop digging stupid!
“punished for being responsible”
God Almighty….same as:
educated = un-cool
Time to take this country back.
Agnostics need not apply.
My husband and I are living in an apartment for an extra year beyond our original plans because we couldn’t really afford a decent house and we were trying to be responsible. Apparently we should have just jumped in with our eyes closed and waited for the govt. to bail us out.
This is so frustrating.
“Tax-exempt bonds to help homeowners?” In other words, Hillary’s favored people — the stupid, greedy and incautious — get government help as a reward for supporting her?
I’m not a homeowner. I’d love to be. Does this mean if I vote for her I can move into the 10,000 sq ft palace of my dreams?
What the heck, it’s only “the rich” who will suffer….
On our walk this morning, my daughter and I talked about this “bail out” plan, the negatives are awesome but her overall point of view is: “I have paid 2 years 0×30 and I get no help, again!” She was in the industry and she cannot understand the stupidity out there of Bush, Hillary and the rest. The interest not paid will be added to the end so here’s hoping appreciation is huge in the next 24-48 months. The market is bad now, but with this nonsense, just you wait to see what they have wrought.
The dumb leading the stupid! As usual.
Bipartisan
BailoutSellout.Another worthless argument from the “sub prime crisis” – Schools will be hurt by falling home values because that means less revenue from property taxes.
Well, good! My property taxes for the last few years have gone up 15-20% a year. My own personal income only increased 3-5% a year. Someone please tell me why the local government should get such a large windfall every year?
And of course instead of giving the money back to the taxpayer or even saving it, they increased their budgets to spend every excess tax dollar coming in. And now with property assessments dropping, the cash cow has dried up. They should cut their spending and not look to the taxpayer to pony up for their shortfall.
Another way these sub-prime morons, especially the ones with the interest only loans, is that they were able to deduct much larger amounts off their taxes than those of us who went a more conventional amount. So, they end up paying less taxes, With the bailout, they still keep their deductions. Do you think that they will take the tax savings and apply it to their mortgage payments – I doubt it.
I will not vote for any republican who supports this unconstitional invasion or private enterprise.
whoops, meant “of” private enterprise.
Well, if they are giving out money, they better give me some either in tax cuts or with subsidies. I have loans that I pay diligently. If they are going to give away my money anyway, they better give me some or I’m going to be angry.
Like amnesty, they just don’t care what is right for this country, they only care about what makes THEM ‘likable’.
This woman must not become President.
I am ashamed of our current President.
Where are all of the real conservatives???
This is me! And the prospect of a bailout is really making me p-o’ed! Who knew I should have taken on terms I didn’t feel comfortable with so the rest of you could pay for my risk?!?!
Great comments by “VaHomes”, and others on this thread. Market forces only — not gov’t intervention — should sort out the mess.
One other point needs to be clarified, and that’s with regard to the Moms & Pops investors. The re-packaged mortgage debt was structured into such complicated vehicles, that even the well-respected rating agencies couldn’t understand them. They (the mortgage-backed securities) were given a pass; and Mom & Pop never had a chance.
–Ken
…a very small number of blogs that I check regularly … MM is one, and this is another:
http://bigpicture.typepad.com/comments/2007/11/berating-the-ra.html
http://bigpicture.typepad.com/comments/2007/11/financials-wors.html
Ironic it’s a five-year plan. Didn’t the Soviets always have five-year plans for improving their economy? I’ve edited these remarks – took out some references to W and Hill and Stalin…
Here I are!
How much more arrogant and disrespectful can our political leaders get? Spending billions of our tax dollars on illegal aliens and now spitting on the hard-working, lawful, taxpayers of this country without any regard for the will of the people or for what is right. I say screw all the people involved in this mortgage scam. Almost all of them were greedy, unscrupulous, opportunists with full knowledge of their actions. Let them pay the price, not us. What’s next on the disappoint America agenda?
This is it! This is the tagline that should be associated with any mandatory freeze.
Soap, you are a riot.
When Hurricanes Katrina and Rita destroyed homes along the gulf coast, those affected weren’t bailed out of their mortgages. Lenders offered a short grace period, then expected mortgage payments to be resumed on uninhabitable houses. Homeowners borrowed from relatives and friends, closed out retirement plans, depleted savings, and did whatever they could to avoid loosing their homes. Those facing foreclosure now in the subprime market should be expected to do the same, or face the consequences.
Several points:
If this bailout program is well received, watch how quickly Hillay takes credit for it being her plan.
Has anyone in Congress presented a bill that would make “those” subprime mortgages illegal? How can you condemn a product, bail out the dummies who knew (before hand) that they couldn’t afford them, and then not take action to stop the marketing of said product?
Politics for domestic consumption…totally!
Get another job and pay your bills? Sell your home and refinance your loan to make the payments lower and then rent for awhile? Deal with your bad decisions and learn from them?
No, those solutions would be too responsible.
I’m just hoping Michelle doesn’t put the words Hillary and Bush so close together in future headlines. Ew.
….says the guy named ragman
Hopefully the real conservatives that this to court and make a constitutional example of it.
good comment from Mr. Mod-to-Lib
“When in trouble,
When in doubt,
Whirl around,
Scream and shout,
Jump up and down,
And BAIL US OUT!”
/sarc
I’m suffering from Hillary fatigue.
Can’t we just flush this plan like we did Shamnesty?
Let’s get it done.
Shove this into her freaking pie hole and deprive her of her “leadership” opportunity that will simply delay the inevitable banking collapse their own greed has brought on.
J S Ragman, as in J(oe) S(h*t the) Ragman. Just an ordinary guy trying to make my way in an extraordinary world.
It sounds to me like VaHomes will soon realize he is actually a “moderate to conservative” at heart. Once heretical thoughts like this get started they are hard to stop and reason takes over. With any luck he will soon start to notice the idiocy of her statments, see her for what she is and become rapidly disillusioned with Democrats.
The problem is that people don’t understand how different loans work. The responsibility is on the loan officer here. They must both be salesmen and protectors. Salesmen because they have an obvious incentive to maximize profit, but they must protect their customers since if everyone can’t afford their loans, they get nothing too.
So in other words, a market failure.
The federal government has had its hand fixing market failures since the Depression. I understand why “true conservatives” oppose this sort of thing, but it’s often necessary to prevent a total crisis.
But don’t just blame the homeowners for being greedy. The people making the loans have to take responsibility for their careless actions as much as the homeowners do. People always ask for money, it’s the lender’s responsibility to say “No.”
(Which is not to say that I endorse this proposal or not. I have to some more reading on it. I’m just uncomfortable with all the blame being thrown towards people trying to make a better life for themselves and their families through loans.)
That’s a little too funny
I’m still waiting to hear how they plan to justify this from a legal standpoint. I don’t see how they can do it without subsidizing the borrowers to achieve the same goal. Am I missing something here?
Even if they manage to get it by the courts, it’s going to set a horrendous precedent by allowing the government the authority to break or modify contracts.
Even more concerning is that it feels as though Secretary Paulson is more concerned about looking like a ‘nice guy’ rather than working towards long-term economic growth. If he were acting as a CFO, would he still believe this was the best course?
Newsflash for you buddy: it’s our country too.
I’m an athiest. I’m also in favor of limited government, low taxes, the Bill of Rights, national security (including pre-emption of obvious threats) and holding people responsible for their actions. I think the only thing wrong with Gitmo is it’s too lax on the terrorist scum that inhabit it.
In other words, I’m on your side of every major policy issue I can think of. My circle of friends is the same way, and I doubt we’re unique. Why so many of you are so intent on alienating your natural allies is completely beyond me.
Ie never thought they were greedy, just not very intelligent. And the lenders have NO responsibility to protect the borrowers! If they had, don’t you suppose the courts would be overloaded with consumer lawsuits by now?
The only responsibility the fed’s have is for allowing this type of product to be offered in the first place.
Does anyone remember the “dot-com implosion” on Wall Street, not quite ten years ago?
What happened is that some people, through foresight and prudent investing, made a boatload of money investing in technology stocks. Then other people, lacking in both foresight and prudence, attempted to replicate the achievement without having to do the underlying work. They tried to get something for nothing, and they lost their shirts.
Sounds pretty similar to this mortgage mess. People taking on too much debt in the foolish assumption that interest rates would be forever favorable then being shocked when it doesn’t work out.
Once more it looks like Nanny Sam is going to relieve them from the responsibilty for their foolishness, and so once again they will learn nothing. We’ll be going through this again in another ten years, I guarantee it. If it’s not stocks or mortgages it’ll be something else.
Rusty,
While it is a market failure in a sense a lot of people will lose money, there are plenty of safeguards built into the system. I recently bought a home and at every step in the process it was clearly explained what I was getting into. I thoroughly researched the market and different types of loans and felt very well prepared. Anybody that feels they got taken did not take advantage of readily available information or pay attention to what was explained to them. They will get no sympathy from me.
I do agree that there are some very aggressive lenders as well, as I saw this first hand and was encouraged to borrow more than I could afford. These people should also bear the cost of their mistakes/bad investments. I say no relief for the borrowers or lenders!
No, it isn’t. It’s the lender’s responsibility to make sure a loan makes sense for the lender, not the borrower. The lenders protect themselves by having a lien on the collateral, in this case the house.
And really, anyone who signs something as serious as a mortgage without making sure they understand it gets very little sympathy from me.
No they will go buy a new LCD HDTV while I sit here watching this 19″ piece o garbage, Does anybody really think this is going to change these people’s behavior, I don’t really know if my sister in law is included in this (I don’t even know what to call it anymore) but I have never seen anyone that is more irresponsible than her. She act’s as if she has all the money in the world running around spending it on swimming pools, TV’s, Cars and Eating out every night, then having the gaul to come to my wife at work and demanded money from her. I don’t owe her anything I’ve never barrowed a dime from this idiot yet somehow we owe her something because she can’t make her house payment’s. The Bank has been in forclosure on her several times and she keep’s getting people to bail her out. She refinanced her home 6 times and pulled 22 yrs. of equity out of her house. This may be an extreme case but this type of behavior is I believe more of the norm for a, I want it now society. What ever happened to delayed gratification?
I’d almost (not really, just musing) buy into a “bailout” if I got coresponding equity in the homes that I was saving. Did I miss something in this grand plan, or did Hil and Bush say that each taxpayer funding this plan would gain equity in their neighbors’ houses in return for the bailout? And a new first-in-line mortgage on the property?
I didn’t think so. Screwed again.
And the most pathetic example of the people that will be bailed out:
As an attorney with substantial experience in debtor/creditor, bankruptcy and commercial banking law I would say VAHomes hits the nail on the head. I really find it hard to imagine the potential for chaos that federal government intervention in private contracts would certainly provoke.
These problems, if indeed they deserve special action, should be addressed by special provisions in the bankruptcy laws providing relief tailored to the situation. That would also provide the oversight that only the scrutiny of a federal bankruptcy judge can provide, to assure that the exceptional provisions were not abused, and that any plan presented to the court was practical.
But federal government intervention across the board would absolutely undermine the confidence of parties to contracts that the terms thereof would be enforceable. The inevitable result would be to undermine confidence in the market as a whole, and the depth and breadth of the collapse that could result would dwarf the present issues in magnitude.
From 1950 to 2000, the national percentage of households owning their own home was about 64%. From 2000 to 2005, that percentage rose to 68%, mostly through the use of “creative” new financing products.
Some of those additional 4% worked hard to be able to afford a home, and some of them were merely speculating that interest rates would stay low, and home prices would continue to rise, so that they could flip the house in a few months and reap a big profit.
When interest rates rose, and house prices dropped, many of those speculators, who had put little or nothing down, simply threw the keys back on the desk and said “take it back.” They account for some of the increase in foreclosures.
I don’t think those are the people that the goverment needs to bail out. And the people that have worked hard to achieve the American dream will find a way to make their payments. Just my opinion.
This can all be traced to the failure of our K-12 grades to teach math, especially math applicable to real world situations.
Do you think anyone in their right mind would choose a mortgage with a balloon payment? Or an “interest only” mortgage? How about one where you pay PMI– more than 1% of the value of the house?
It’s all fuzzy math, and it leads to fuzzy business practices and fuzzy bankruptcy filings.
Drug smugglers, gang members, terrorists, and Mexicans by the millions are sneaking accross our border. The Alternative Minimum Tax will hit 20million of us next year and their attention is focused on “Global Warming” and a “Comprehensive Housing Bail-out Plan” for people who made bad decisions with their borrowings.
They’re playing us for sheep and they keep getting sent back to Congress by us. Conservatives throw their garbage out. Liberals put it back in the refrigerator.
If they really want to do something constructive, they could offer the “Comprehensive Mental Evaluation” plan to all Liberals.
They have a responsibility to themselves, their employers, and their industry. If a large number of lenders become bad actors and create loans that the borrower will have trouble paying, then the whole industry is at risk.
Ultimately, it’s the borrower who signs the bottom line so they must face some responsibility. But a lot of people don’t get how this stuff works. They can be duped.
novaculus – Your expert insight is definitely appreciated.
Do you have any thoughts about how the administration might implement their plan from a legal perspective? At first, I thought the department of the treasury was limited to only U.S. chartered banks, but then I envisioned pressure being exerted through the FDIC… Either way, I would certainly appreciate a layman’s explanation for how they might do this.
They shouldn’t even call it that. If you pay no principle you aren’t even buying the place.
I don’t have a problem with credit being available for those who might not qualify otherwise (subprime lending). It’s a chance for an otherwise hardworking person to own a home if they don’t overbuy, and they accept the responsibility involved. The government needs to butt out. In a bubble market, many people are expecting values to rise forever, or feel there will always be a greater fool.
Ignorance is no defense when it comes to the law. Why should ignorance be an excuse when it comes to the largest purchase of your life? Get a real estate attorney for advice. Can’t afford one – ummm, can you really afford the house?
How is “the monthly payment is X” duping someone?
jsr said:
I couldn’t agree more. Whenever government gets involved it creates perverse incentives, yet never reverses field in the face of the eventualities.
I spent 10 years in the subprime mortgage field and I can attest to the fact that there was enough greed, duplicity and fraud to go around among borrowers, brokers, lenders, appraisers, investors – and government.
The subprime mortgage industry can be traced back to the red-lining and discrimination hysteria of the late 1980’s and early 1990’s. Politicians saw an opening and began demanding “community reinvestment” type loans, and special programs for “un- and under-served” segments of the population. ACORN filed a few suits and won settlements with a few lenders and all the rules for underwriting changed.
There was always an element of wishful thinking in the subprime industry, but the risky loans extended to poorly qualified borrowers were offset by loans to qualified borrowers like salespeople, physicians and others with non-W2 income and the booming housing market. In the past 5 years or so market share became more important than rational underwriting and portfolio risk management.
That linked with the renewed interest on Wall Street for subprime mortgage backed securities with their higher rates. Real estate speculators drove loan volume through the roof and Wall Street bought it all. ARMs sounded the death knell for the industry because they essentially said anyone and everyone can qualify for a loan.
The market works if we would just let it. Let the investors, brokers and lenders get burned. I love the fact that many lenders have closed their doors, even though that has meant I have been unemployed for the last year. Next burn the speculators and greedy borrowers out of the market.
Just as the Smokey the Bear ads over decades to “Prevent Forest Fires” has led to the enormously damaging wildfires of recent years, the same will happen if the government intervenes in the financial markets and prevents the appropriate market response now.
And do we really think that once they protect one class of borrower or investor that they will stop with the real estate market?
Gee, another “comprehensive” plan from DC.
Somebody check Websters.
Is comprehensive a synonym for socialistic?
Copy of note sent to C.I.C….regarding islam and banning public discourse:
It is a shame that your organization is behind the banning of truth, especially when the truth focus’s a light on ” real Islam”…..Why not start by cleaning up most of your own racist literature that fuels the ongoing death and destruction…yeah!!! the same death, racism, ignorance and destruction we here about day in and day out!!!!! And start by purging the Quran…that would be a great start!!!! I’m glad our little country has been virtually free of the disease called Islam…..and I will do everything in my power to inform those around me…everyone, from family, friends and politicians….Islam is the personification of hate and intolerance disguised as a “religion”.
OOOOP’s wrong area!!!
Michelle: Bravo on being the voice of reason and the likely liberal target. The liberals will no doubt see you as a big meanie (perhaps another Worst Person award?
)
Your work is greatly appreciated. Hopefully the true fiscal conservatives of the GOP will start to wake up and take a stand. While the FBN host (sorry, don’t know his name) hinted at the potential political risks, I think that would only be an initial reaction. I believe there is a rather significant, and unfortunately silent, majority of us out here that feel 100% in line with you. A wise conservative leader would prove his belief in his fiscal policy stance by acting now, not later.
When will government stop treating the populace like children to be protected instead of the adults whom they serve?
Hmm. Sounds like one of the prime tenants of fascism.
Hey, America. If you want to make adult decisions, be prepared to accept adult consequences.
Suck. It. Up.
Preach it, sister!!
Ya have to love that from the stock exchange floor.
Kudo’s!
I thought a (Work out plan)was for the gym.
And that is an IRISH strawberry picker?
We call that “rent”.
UUUUGGGGHHHH.
I’ve ben saying this for years. UYER BEWARE. f you can not aford it then do ot buy it. Ilearned the hard way and pent ten yearwrkingmy but off to get ou of th credit card tr. Now they want me to pay off someone eles home loan.
If this were any othe business say like wal mart. The government would let it go nder. But bcause the slick loan companies ame up ith financin for way over priced, over evaluated homes. Peope dd not pay attention to he small print. It is called a balloon payment. But hey gt to have the new bass boat le the Johnsos down the block.
This bail out is absurd and outlandish, smacking of pure socialism. The estion hs ben asked and I ask it myself. Where areth conservatves?
I get tired of irresponsible adults expecting a bail out or hand out from the government.
How the government can legally step in with regards to a private contract is really beyond me. Where are the lawyers?
I am a no reliefer.
Physically mature adult walks into lending agency and comes out with a loan “product” that eats his lunch within 24 months.
At any time did this physically mature adult read the paper he signed? Did his physically mature adult wife read the paper they signed?
Oh! It wasn’t written in Spah-neeth. (Spanish)
Or- It wasn’t written in crayon at the 2nd grade level.
Simple problem: most homebuying Americans and uninvited guests are a) economically illiterate (oh! aint I a snob!!!) or b) functionally illiterate and cannot read *anything* (double snob!!!)
Ignorance is not the lenders fault. And the lenders only fault in this are loan officials who sold these “products” to unqualified ignoramouses.
Now, let’s look at the “investors” who have ended upside down in this whole mess: they are being pounded into the sand by their habit of ignoring two basic rules of the market—
1) You make money on real estate when you buy real estate. (Pay what it’s worth, not what the market says you can get when you sell it. If you pay what the market says you can pay when you sell it— congratulations, Nut-who-cannot-feel-itself— you LOSE!
2) You don’t buy at the top of a real estate market, unless you are buying a house in probate at a HUGE discount (see #1), or in foreclosure, or as a result of owning a tax lien certificate on the property (again, see #1)
Anything else— by the time you pay capital gains and deduct your costs of ownership— is a wash.
Scrub a dub dub.
Do not let the government delay the pain. It’s like the war in Iraq— we delayed it in 1990, and paid for it the past few years.
The butchers bill has come due. Do not let the bankers sell their mistakes to the next generation.
We do not need a dollar any weaker, nor do we need to be selling more consumer debt to China.
Pay to play. That’s what the rest of us are doing.
Mule— you need to spank that turkey and end her projection onto your family.
G’head! You deserve some peace and she’ll thank you for it when she’s old and gray.
Sorry about the last entry … a little miffed over this policy.
Given the weight of comments so far, I strongly suspect that my point of view below will prove wildly unpopular; but as one who, like others here waited a long time before he afford to buy his first home I make the following observations not as a Hillary-shill or a Bush-bot but rather as a realist.
I have to agree with one point that Rusty makes, the Feds have been in the bail-out business for a long time now. Two notorious examples that have occurred in my lifetime include pulling Chrysler’s nuts out of the fire and the Savings & Loan fiasco.
Speaking of “bail-outs,” one may argue that Social Security and Medicare/Medicaid – indeed, most any form of government assistance, including Welfare, Food Stamps, AFDC, etc. – are “bail-outs” to some degree.
As a people, for better or worse Americans are not the same “rugged individualists” that our forebears were. People have come to expect that the Federal government will act as Deus Ex Machina if the impact of letting the market sort things out becomes too psychologically painful.
We conservatives may not like it, but there it is. We can’t turn back the clock to a more self-reliant time.
We also have to consider additional factors weighing on this decision, such as:
- What would be the impact on the housing market and the lending industry if we just “let it be?” Both of these sectors are volatile right now because of the present foreclosure increases.
- And if the housing and lending sectors remain unstable, what will the effect be on Wall Street and the investor class? We’ve already had a taste of that, and it’s not pleasant.
- And if Wall Street starts sniffling, the rest of the economy catches cold. We’re already hearing speculation of “recession” lately; do we want to make it into a legitimate prophecy?
- Lastly, it was brought up during Michelle’s interview that Republicans are not in a good position PR-wise to be seen as confirming the stereotype of “the party of the ultra-rich, greedy capitalists who don’t give a damn about the ‘little guy.’” Does anyone here doubt for a second that the donks and their media megaphones wouldn’t milk this for all it’s worth to club Republcans into 2008? It’d be effective, too.
I note that Michelle had no good answer to that argument; she just deflected it by saying she’s not a politician. Well, if the Republicans let themselves get outflanked on this issue, it’d be a safe bet that there’ll be more Democrats in Congress next year than there may otherwise be.
If that happens – and if our objection to this “bail-out” is based on a general aversion to government interference in the market – then as they say, “You ain’t seen nuthin’ yet.”
Michelle suggests a program of “Suck It Up.” I suggest that’s exactly what the Bush administration just did. If we want to avoid a veto-proof donk majority in both houses of Congress – or worse, a 3-way donkey lock on the House, Senate and White House with Hillary holding the reins – then it comes to a choice of the lesser of two evils.
What’s it going to be? Another “bail-out,” or Donkeys pushing another “New Deal/Great Society” on all of us for the next 2-4 years and a Republican minority unable to do a thing about it?
Choose.
The U.S.Government should be in one, and only one home buying program; the VA Home Ownership program. If you get tricked by the mortgage company with some new-fangled scheme, tough luck sucker. It took me three weeks of waiting and many forms of fiscal proof of worth to buy my fisrt home, even with the VA guarentee. A lot of people got to buy a home, now they get the fun of keeping it by paying every month for 30 years. If you could’nt afford it, and still tried to buy it, shame on you; not the rest of us who did it the hard and correct way!
These people make me sick, always stepping forward like some kind of hero offering their pathetic public pablum for over-extended future democratic party recruitees!
Also among the guilty — mortgage brokers. Even some people with the best FICO scores (740+) were being steered into sub-prime loans.
An article from Monday’s WSJ, plus some great interactive charts: http://online.wsj.com/article/SB119662974358911035.html
–Ken
Madame Mao Speaks.
I saw on the news tonight that the states hit hardest by the “housing bubble” are California, Florida, Michigan, and Ohio……. All key states for the 2008 presidential election and/or states with a high number of electoral votes……… Anyone else see a coincidence here???
Sadly, this is just more proof that the (centralized) federal government is an institution of career politicians who willfully and blatantly ignore we the people whom they are supposed to represent. Unless we can restore power to the state governments and limit the powers of the federal government (As per that little thing called The Constitution) this process will continue until this once great and proud nation has been completely destroyed.
The greatest experiment is failing rapidly and we the people are the only ones who (legally) have the power to change it.
James Felix #43:
You hit the nail on the head. The next bailout will be all those businesses who depend on cheap illegal immigrant labor crying to the feds for help.
*ahem* back on topic…
As for RR #77, look at the four states involved besides their number of electoral votes.
California has a RINO governor and is losing its wealthier residents to other states, being replaced by those who probably have no business taking out large loans.
Ohio and Michigan just elected (or re-elected) Democrat governors which aren’t helping their states out of the economic doldrums high spending and taxation (by both parties, sadly) have wrought. I’m intimately familiar with the situation as a refugee from northwest Ohio who moved to the Eastern Shore of Maryland.
Florida’s issue is a huge jump in property taxes, which is sending snowbirds out of the state in droves.
Overall some excellent, well thought-out comments.
Michael Swartz
http://www.monoblogue.us
Actually, I think most of the issues in South Florida at least were because of investors buying numerous condos in Miami and then walking when they could not make their money back. At least the one report I specifically remember was referring to the vast numbers of condos in Miami being purchased by investors. I wonder now how many of these “investors” we will now be paying for their follies? Talk about illegal redistribution of finances!
Thankfully my house is paid for. However, my children’s homes are not. Get the camel’s noses out of their tents!
Michelle, I’m wondering why you are in Baltimore so much now? Please be careful of the buses and the Democrats!
I’m not getting some of the lending practices I’ve seen even in my neighborhood. Some buyers have gotten mortgages that were 125% of the home sales price. Naturally they could walk and be out nothing.
Wonder what others here as far as buying and how many have used those home equity loans to buy depreciating assets?
Got my place back in ‘98 for 20% and 7 1/2% interest. Prices actually quadrupled in that time frame up until the past two years and have since sagged. The far left leaning local rag beats the drum about drastically sinking values, even when they are relatively small drops overall.
I’d like to move, but then my taxes would soar for sure. With the homestead rules, my property taxes can only rise 3% annually and thus new neighbors are paying four times what I do.
Just saw the H.A.. piece with the boss.Ironic that the head of this piece should be “SUCK IT UP”,because that is not what I’m doing. I’ve got to say ,Michelle,
how did you get so Freaking smart so young?Screw thebest choice for President in 2008 is D’s and the R’s the the M’s.Its about time Michelle has finally gotten the respect that she so richly deserves.MALKIN FOR PRESIDENT.
oops, meant to say screw the D’s and the R’s,the best choice for president in 2008 is the M’s.
Absolutely such products will be chosen intelligently. Businesses choose these things all the time. The only “difference” is (hopefully) the business has thought through the “whatif” scenarios and planned accordingly.
My wife and I have bought several assets using loan products with balloon payments coming due in some point in the future. We’ve just made sure we’ve paid it off before the balloon comes due. Quite simple. (Of course, to do that, you have to make sure you plan and act accordingly). To take such products away, penalizes the prudent.
BAIL ME OUT- BRO