When will we learn from our mistakes? Or perhaps better said, “how will we ever learn?”
The government, like an over-bearing parent, is going to swoop in and attempt to fix the current housing crisis as opposed to allowing the natural set of consequences to play out. This isn’t Monopoly, this is real money, and this “rescue legislation” is definitely a case where they are going to do considerably more damage than good.
I don’t even know where to start. Let’s see…
Provide Fannie Mae and Freddie Mac an unlimited credit line to make housing loans. – Yea, and why not provide teenagers an unlimited credit card to use at the mall?
Provide bail out to an estimated 400,000 homeowners in trouble. - Don’t get me wrong, I feel very sorry for people losing their homes. Many were just hit with bad timing and 400,000 is not even a drop in the bucket of people in trouble. But many simply purchased too much house. When you can’t afford to make the (normal) amortized payments perhaps you should have been looking for a smaller house from the start.
Modernize the FHA and allow riskier loans. – You are kidding right? You did say “riskier?” Yea, that will solve it all.
The rest of the items included in the “rescue legislation” are similar but small in nature. Provide tax breaks for low-income housing, provide grants for communities to purchase foreclosed properties – none of which have enough dollars associated with them to last more than 5 seconds on the radar.
What has happened across the country is no doubt tragic, but it could (and should) have been avoided. Largely caused by greed, it only gets worse when no one learns their lesson – a lesson by no means limited to homebuyers.
Lenders need to learn you cannot create loans that jeopardize the borrower (or the economy for that matter). The lenders would have learned that lesson by the increased amount of loans failing (kind of hard to learn if you have a big bailout).
It is going to be tough for a lot of us but we need to let the natural order of economics take care of itself. We will emerge, at the end, stronger and wiser. The government needs to stay out of this one! What are your thoughts?
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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. ~ Godfather
I don’t get it. Why shouldn’t they help everyone out? It is the governments fault we are in this mess.
Godfather: Thanks Millen. I am not exactly sure what you mean that “it is the governments fault.” When are we responsible for our own actions. When someone purchases a house but can not afford the payments of a traditional 30-year loan and goes with “interest-only” hoping the market will keep going up and they will make a ton of money; something is bound to give. ~ I am not suggesting they don’t buy a home, just that they look for something more in their price range. Heck there are a lot of houses I would love to have but guess what…I can’t afford them.
“It is going to be tough for a lot of us but we need to let the natural order of economics take care of itself. We will emerge, at the end, stronger and wiser. The government needs to stay out of this one!”
Because only the richest and fittest and those who never screwed up their credit need houses, right?
Godfather: Thanks Helen, I am going to guess you are joking. I think it would be mistake to assume the mortgage crisis has any knowledge of demographics or social status. The foreclosures are occurring at both the blue collar and white collar level. Financial knowledge lacks at all levels. It will be tough for everyone involved – whether their own house is in jeopardy or not. The mortgage crisis keeps us from being able to address real concerns.
The bailout does not educate anyone nor teach personal (or financial) responsibility). Many people are already starting to take advantage of the situation or demanding more (some say that the credit card companies should be next due to the affect they allow people to borrow so much money).
Sort of joking. More like being sarcastic.
Speaking of which, our credit cards limits are so high, we qualify for what ever level of specialty that allows us to get free checks. Yea. BTW, we pay our credit cards off each month. We use them for convenience and ease of buying online.
I do think the idea of holding a house raising for everyone of age to leave home is sensible. Everyone needs a place to live. And people would take responsibility (instead of, maybe, blogging), the gov’t wouldn’t have to.
Nice post, you got some good points there – thank you.
Education is taught through lessons. Lessons are often taught through crises. Crises are overcome only with applied education. Let the masses who only sought possession through personal greed or ego fall. And when they get up, dust them off, and show them how to avoid it. Leave the government out of it.
I agree with Mike. Education is taught through lessons. Sure the government could have done some things different, but it is not their job to protect us from our own actions.
We all don’t want the government involved but are sure quick to say “they should have done something.” You can’t have it both ways.
When I went to college, I earned my degree in public adminstration. During that time, I studied a variety of government organizations and issues that they attempt to tackle. That being said, I have found very few areas where government actually does the job well. Usually, variousl levels of government involvement compounds problems and creates new ones. I have yet to see an example of when a government organization or legislative body has admitted that it was wrong or was responsible for creating a problem or making an existing situation worse.
A business that makes bad decisions and policies goes out of business (unless government jumps in to “save” them). I am still waiting for government to “go out of business.” I just wish that the feds would shut up and get back to the business of mismanaging their own cafeteria!