I may have a “moral” obligation to help my neighbor. Watch their house when they are gone, help them cut up a tree, or even help them paint. But do I have a “financial” obligation to help my neighbor? – I think not; and no government should make me.
The bailout or so-called “stimulus” plan is getting scarier by the minute. Insurance companies, Auto makers, you name it, all already getting large checks right out of the taxpayers pockets. Now we are moving to bailout what started it all – real estate.
The current plan on the table bails out those that cannot afford their homes – the most of which are not due to a layoff or loss of job, they are due to people that purchased homes they never should have in the first place. Despite that error in judgment the taxpayers will, most likely, be footing the bill for them to not only stay in their homes, but also lower their loan obligation.
This is not the bank themselves considering a workout plan with customers that are behind, this is the government making the bank wipe portions of the debt off. Of course the government will also come in and “assist” these banks with newly printed money; and guess whose money that is?
At the end of the day it creates the question, “Did it pay to have a conscience?”
By “conscience” I mean those people that did everything right. They paid their bills; they bought a house they could afford (or in some cases didn’t buy a house because they knew they could not afford it). What do they get? Many of them are upside down in their loans but are still trying to pay their bills. They sit and watch houses on all sides of them fall into foreclosure – sucking down their home values like an insatiable sinkhole – just because someone else tried to live beyond their means.
Was it worth it to the person with a conscience holding on to that pride and value system? Maybe they should have joined some of their neighbors and stopped making any payments to the bank – just wait for the government to come in with some help. At the end of the day the people that didn’t pay their bills may end up owing less then those that did.
Yea, I know, lots of good people are in bad positions. But even then, am I financially responsible for them? I think not. Countless people purchased homes on variable rates because they could not afford a fixed rate (even though it was around 6% at the time). What the heck did they think was going to happen? They would win the lottery? Refinance at an even lower rate? Values would double in a year and they would vacation in the Bahamas?
Here is the deal…
Some people should lose their homes – they bought something they could not afford.
Some banks should go out of business – they played a game of wanting high returns on high-risk loans. Well, they lost. Let the good banks step up to the plate.
Throwing taxpayer money at either group won’t change the outcome. The general consensus is that 40% of each group will be in the same position within 2 years. The government is not helping people up, they are just dragging down those that tried to do the right thing all along!
Fine, I suppose this is where you look for some witty insights to my mind. A "bio" of sorts. Here is the deal... I ride motorcycles, smoke cigars, golf, kayak, fly, race my car through the mountains, write (a lot), and travel extensively. I am almost old enough not to care what other people think about me...almost. ~Godfadr
Yep…I agree. While I have wanted a house, with my own yard and a place where I could have a dog, and mow my own lawn,a nd have a sense of privacy that this apartment doesn’t exactly offer….as I look at local houses, and the pricetags that come with them, I realize that my budget being as tight as it is where I’m at, it’ll only get me flipped upside down with higher payments and utility costs, property taxes, etc.
I can’t afford it, so I never went after it. And yet, here I sit, having to pay more for everything that got screwed up by irresponsibility of others on a grand scale. As for the extra $8 a paycheck I’ll be getting, I’m sure still rising costs will more than cancel out any seeming benefit of keeping that extra bit of my money.
the question is, Godfather…..what reality-based way does someone like me have to fight back on any of it?
I think we have an obligation to help those that are less fortunate.
I have to agree with you……how much help is too much? I’m always willing to help people that are willing to help themselves.
And not only are the banks getting their bailout, they’re also raising interest rates for those who are paying their bills and using the credit cards wisely. What”s up with that? Not only do we have to use our tax money to help them on the front side, we also need to pay more on the back side. No more holding balances on my cards.
I like the fact that Obama is holding these companies accountable,(i.e. let’s not buy that new Lear jet, or you’ll take a pay cut until the bill is paid, etc..) but what are we setting ourselves up for down the road? Godfather, perhaps you can shed some light of what you see possibly happening.
I think many of the people (we are speaking of) who are “less fortunate” put themselves in this situation because of greed, laziness, and stupidity. They need to take responsibility for trying to live above their means and making poor decisions, because these decisions are obviously not only affecting them anymore.
People learn lessons from making mistakes, if we take away the bad consequences, they will not learn, and this will become a vicious cycle.
My husband works in the medical field and he sees many people who claim that they cannot afford health insurance, yet they drive to all their appointments in big, expensive luxury vehicles. Of course, they are not denied medical care but I can’t help think that it is a slap in the face to all of us who pay for their medical expenses because they would rather drive fancy cars. Do you see a pattern here?
Where do we draw the line, because there really needs to be one.
Great points Chuck. I love the “accountability” issue. Of course they should have been holding themselves accountable all along. I kind of feel like it is a little bit of the parent stepping in and telling the child how to handle their money.
The greater issue, which both you and Rachel point out, is what kind of message are we sending? People, businesses, and politicians need to pay for their mistakes. Why change bad behavior if you feel that someone else will always step in and take care of you?
When I was young I abused my credit. My parents could have written a check and helped me out but they figured I got myself into it, I needed to get myself out of it – and more importantly, learn from my mistakes. I did, and to this day it was the best thing that could have happened to me – I never looked at money (or debt) the same.
I am very concerned about the potential “nationalization” of some banks. If it happens, it not only wipes out the stockholders it also gives the government control of lending. Banks competing for business is always good for us.
The current bailout is looking less and less about creation of jobs and more like a welfare program for businesses.
There’s absolutely nothing I can add to the great comments already made.
I don’t own my home, because I can’t afford to own. I don’t own a car, because I can’t afford to own a car. I’ve screwed up my life enough in the past with bad decisions, and like Godfather learned from those lessons. I’m still paying for them in one way or another. But I don’t live beyond my means anymore. The best feeling for me is that I can pay my rent, utilities, cable, put food on my table and occasionally buy a new outfit or two (like once a year maybe). I have little to no spare money, BUT my bills are paid and THAT is a great feeling!!!
I just hope it can continue since I’ll be out of a job come April 1st. But I have a feeling I’ll have a new job before what little severance I’ll be getting runs out, so I’m hopeful.
I agree. I do not own a home. Why should my taxes that I have paid for years go towards bailing out the people who did stupid things with their money.
Did they really need to spend 50 grand on that GMC Yukon XL to haul around their two kids? Or would a 25 thousand dollar mini van have done the trick, and saved them money in gas. Whats taht? Its not my business how they spend their money? IT IS NOW.
I want a list of everybody who has taken part in this bailout that lives around me. Why you ask? So I can go and use their house whenever I want. So I can use their trash cans when mine get full. Things like that. I have a right to do so now seeing as how I have equity in “their” house.
Godfather, you hit it on the nose. I am not old by any means, I screwed up a little as a 20 year old and got a car reposessed. You know what the great thing is about that happening? I have nothing else negative on my credit. Because I LEARNED and DEALT with MY mistake. Daddy just said “tough” and I am glad he did. Now my wife and me know better and live within our means.
Have you forgotten that cynical adage: “Profits are privatized, losses are socialized”?
From that point of view, things are going according to plan.
I am as fiscally conservative as anyone you will ever meet, however, I see this issue diffently. Almost everyone who purchased a house in the past five years is now “underwater” in their mortgage. Some of these people shouldn’t have made the purchase in the first place, but most are just ordinary people, who bought a house with equity rolled forward from a previous home sale. And that was what everyone did for decades, and was encouraged in the tax code.
In the normal course of life many of these people lost their jobs, got divorced, died, or had to move for one reason or another and found that the value of their home was less than the loan – so in order to make the sale they would have to come up with the cash difference. And of course, they couldn’t.
So, the only alternative was to walk away from the house and have their credit ruined.
I work in real estate and property management and this is happening to more and more ordiinary, intelligent, hard working people.
And, as the economy continues to weaken, more and more people are going to be losing their jobs and thus more and more people will find themselves in foreclosure.
So, if we, as a nation, make a decision to try to mitigate this with some sort of “bailout”, then who should we bail out? So far we have been sending money to the banks, but this hasn’t helped anything. So, the idea of helping homeowners directly is to slow down the rate of foreclosures.
If we decide that the best course of action is to let the free market solve this problem, then we shouldn’t be bailing out anyone. But, the politicians are afraid that if we take this course of action, then things will get worse. Who knows if they are correct?
Any why should anyone “help” their neighbor with their mortgage? It would be for the helper’s self interest – to halt or slow the rate of foreclosures and thus stabilize housing prices for everyone.
And, for those who are renters, if the rate of foreclosures continues to increase, it will force more and more people who were once homeowners into the rental market , thus reducing vacancy rates, and increasing rental prices. This is simple Real Estate Economics.
I, personally, don’t want to be forced by the government to pay my neighbor’s mortgage, but I do want to see prices in my neighborhood stop falling, and I want to see my neighbors stay in their homes, and I want to see the economy recover.
Of course, if some conservative economists are correct and the current stimulus bill leads to eventual hyper-inflation, then house prices will shoot up dramatically and the “underwater” problem will be solved, but of course we will have a new problem to deal with.