Better And Better

If you don't draw yours, I won't draw mine. A police officer, working in the small town that he lives in, focusing on family and shooting and coffee, and occasionally putting some people in jail.

Tuesday, December 04, 2007

Why is this our government's bidness, again?

Yeah, I'm quoting Tam again. While her main post about ludicrous federal intervention into subprime mortgage contracts is really good, the best part is in the Comments:

PS: The problem's not going to be fixed by legislative bandaids.The problem will only really be fixed when dumbass investment firms are going bankrupt while sitting on vast portfolios of worthless tract homes and millions of dumbass middle class homeowners have had to sell the plasma TV to come up with an apartment deposit after getting evicted from their foreclosed crackerbox.

Nobody learns nothing from a bailout.

Damned straight.

It has to hurt, and risk businesses (hell, markets) going under, or no one will avoid it next time.

But what the hell-- it isn't as if the money's not free, right?

I make a decent little wage, I don't do drugs, I don't gamble, I don't have any expensive hobbies, I never travel, I have two paid-off old reliable beater cars, I have a small TV and the least-expensive satellite entertainment plan I can get. My wife works, too. Still, I'm living in a little 1100 square foot rent house in which my girls share a bedroom until we can find a house that we can afford to live in, and make the down-payment with the profits we made from the last house we sold.

That's called "reality."

My family is anything but special, in this regard. We are doing nothing extraordinary.

Why does everyone feel the need to have that which is extraorinary? If you can't put anything down, why do you think that you can pay for a 2700 square foot house? If you find that you're about to be foreclosed on, why is it my duty to bail you out?

And why is our government doing this? For the homeowners? For the businesses? What about for the taxpayer?

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At Tuesday, December 04, 2007 12:52:00 PM, Anonymous Matt M said...

With luck the house prices can come down enough that you can afford to buy one. Not a new, grand, 100% brick, pool included, gated community, 2-and-a-half storey house, but one you can spend you life in without spending all your money on.

People were making foolish choices, over the last several years. We watched them make those choices, and we will now watch them deal with the fallout.

At Tuesday, December 04, 2007 4:09:00 PM, Blogger Hammer said...

The government is afraid of instability, and pissing off the banking interests.

I'm sure bailing out irresponsible deadbeats is good for a few votes.

At Tuesday, December 04, 2007 6:06:00 PM, Blogger 5150Wife said...

What I don't understand is why so many millions of Americans got into ARM's in the first place. Mortgage rates were at historical lows for fixed mortgages...I don't understand why people needed to go with an ARM.

As un-PC as it is, if they were stupid enough to go with an ARM, that's not my (or my government's) problem.

What's that old cliche? A lack of planning on your part doesn't constitute an emergency on my part. Or something like that.

At Tuesday, December 04, 2007 7:16:00 PM, Blogger Old NFO said...

5150wife, the actual quote is piss poor planning on your part does not constitute an emergency on my part...

The sad part is that yet again no one wants to be responsible for their actions...

Many of those who overextended were playing house based on the fact that they thought this would never happen so they wouldn't get caught.

As far as I'm concerned, they do not deserve to be bailed out, they need to be held accountable, and so do the banking interests that made the irresponsible loans and got paid one hellva commission on them.

At Tuesday, December 04, 2007 7:19:00 PM, Blogger William the Coroner said...

It's the governments business because they're bought and sold. Look, the asshat mortgage companies tried to maximize profits. So they made risky loans. They shouldn't have. Just like in years past the credit card companies made risky loans. Hell, my cat, Murphy, got a pre-approved credit card.

If you maximise profits, you gotta make risky loans. If you don't make risky loans, you're not maximising profits.

I can't think of a way to punish the idiots that made the loans without trashing neighborhoods. I'd much rather have the loan companies eat the loans than have 10 houses in foreclosure around mine.

At Tuesday, December 04, 2007 10:13:00 PM, Blogger Matt G said...

William, the best enforcement will be self-enforcement by companies that know that they have less of a margin of profit, because they don't have a bailout awaiting them. Good userers have known to avoid making loans that would require the employment of shylocks for years. It's just good bidness.

At Wednesday, December 05, 2007 6:03:00 AM, Anonymous Jason said...

Though if people were capable of "self enforcement", then there wouldn't be much of a need for police officers, or the rest of the judicial system.

At Wednesday, December 05, 2007 8:20:00 AM, Anonymous Anonymous said...

I found this on another blog; it summarizes my feelings pretty closely (with the exception that I've never worked in the mortgage industry)

'I resent being told my tax dollars should go to bailing out people who bought too much house or spent their equity too quickly because they failed to plan ahead and think "what if...."

I've also worked in the mortgage industry, so I can tell you that the people buying too much house were not the only greedy ones in this train wreck.

Lenders loaned money based upon stated income (no verification) to get more loans in the portfolio. Brokers encouraged applicants to lie (or lied themselves) so they could get a bigger commission. Non-profits (ACORN, etc.) encouraged profligate lunacy in lending so they could over-emphasize their role in getting poor people into housing and get more political influence in local governments (CRA, DAPs, Silent Seconds, etc.).

There is plenty of blame to go around, but the ones being asked to foot the bill in bailing everyone out appears to be the ones who didn't overextend, lie on applications, or phony up a housing crisis...the rest of us.'

St Paul

At Wednesday, December 05, 2007 12:18:00 PM, Blogger Matt G said...

Jason, I'm talking about companies who should know better.

At Wednesday, December 05, 2007 12:23:00 PM, Blogger Matt G said...

Just how hard are lending companies looking at their risks before they're buying mortgages from other lending companies?

How much harder would lenders vet their initial loans, if they knew that they couldn't sell them off, and would have to keep them?

At Wednesday, December 05, 2007 12:31:00 PM, Blogger Matt G said...

6 years ago, when my wife's and my combined pay was about $45k a year, a loan broker offered to lend us a house loan with payments up to 40 to 50% of our monthly earnings. I laughed and laughed at him. Ostensibly, we were eligible for such a loan because of our good credit, but that wouldn't last long, if half of our gross went into a house payment every month! Not when we were that close to the bone. (1 kid and another on the way, commuting, 2 cars...)

Good lord.

At Wednesday, December 05, 2007 4:26:00 PM, Blogger Not Afraid to Use It said...

Great post, as usual. I cannot believe the lack of responsibility that runs rampant today. It pisses me off to no end...

At Thursday, December 06, 2007 10:48:00 AM, Blogger CrankyProf said...

Personal responsibility? Fiscal responsibility/ In America? Are you NUTS?

Now, pass me the batter-dipped, deep-fat-fried lardballs. I wanna watch Dancing with the Stars" on my new big, flatscreen that I used my last three car payments to buy.

At Friday, December 07, 2007 9:52:00 AM, Blogger Brandon said...

I completely understand the more conservative opinions on this issue.

Myself and my fiancee make a decent wage (she's a teacher and I am a first-year accountant) but we rent b/c we have average/marginal credit and I have boat loads of student loans b/c I was not born with a silver spoon and got the five years of drunken irresponsibility called college paid for by my Mommy and Daddy.

Back to my point...the details of the "mortgage bailout" is as follows:

1) The government is not spending a DIME of the public's money. This is all voluntary on the part of the mortgage industry.

2) The poster that brought up "maximizing profits" is spot on. The government suggested, self-imposed rate freeze is not a bail-out for consumers, it is to keep the mortgage business out of the real estate market. With a falling dollar, shaky personal credit and debt ratings, an unstable job and housing market, and the glut of home inventory, it would BANKRUPT almost every financial services/mortgage company in the country. This is an act of self-preservation on the part of the mortgage business, which ultimately spares our economy on a macro level.

What would happen if the rates were allowed to adjust in January?

Within six months, the number of foreclosures would skyrocket...more people would be out of their homes that they couldn't pay for...their fault for sure for signing the note on too much house or not understanding interest rates.


1) The mortgage and financial services firms would tank...sending the stock market into a tailspin, probably starting a long, dark recession.

2) The values of your 401K/investments would be 50% almost overnight.

2.5) With a glut of homes on the market, the equity in your home would be eroded within a matter of 4-6 weeks b/c of free market economics (supply/demand). Do you want your house to be worth 20% less?

3) If you are a government employee, good luck with your pension fund, as the majority of municipal and state pension funds are 80% into SIV paper, which mostly comprised of....TADA! Sub-prime mortgage investments!!!

4) Massive layoffs would begin to happen, not only from the mortgage business, but banking, lending, insurance, financial services, construction, hauling, etc. Any industry that is involved with housing in any way. This floods the job market, making labor plentiful and jobs scarce, causing the mean starting wage to remain flat or fall.

5) Suddenly, responsible, tax-paying, hard-working people who have done nothing wrong are being pinched by this mess. A guy that has been working, putting away 6% in his 401K, and paying his bills is laid-off, and working for half his salary 'cause it is the only work he can find. Forget pulling your 401K money out, b/c the $40K is now $20-25K, and taxes will eat another 28-40% of that.

6) And, worst of all...

The DOLLAR will tank on the world market. No confidence in our fiat currency.

Imagine $8 gasoline...


Is it so bad that the mortgage industry imposes a moratorium on rate adjustments, while they give consumers a bit of breathing room?

You know what else this does for the mortgage business? It gives them an opportunity to sell these people NEW loans without adjustable rates. There is a positive outcome for all.

It is a win-win-win:

The adjustable rate mortgage holder, the mortgage industry, and the rest of us.

*end soapbox*

What do you guys think?

At Saturday, December 15, 2007 6:03:00 PM, Anonymous D.W.. Drang said...

"Why is this our government's bidness, again?"
Because politicians think they can get voted that way.


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