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No Lessons to be Learned

23 Jul 2008

Congress loves the idea of a bailout for Fannie Mae and Freddie Mac and of course many on Capitol Hill are convinced that millions of Americans caught up in the housing crisis should be saved as well so they’re moving forward. Apparently the stock market likes the idea of the government coming to the rescue yet again because certain sectors like pharmaceuticals, mobile phones and Internet companies saw increases they haven’t seen in almost a half a decade. I understand that some people were victims of cheating lenders, and the law should slam the scammers hard but millions more liked the idea of buying a $750,000 house even though their income never soared about $50,000. And, if that wasn’t good enough, the lenders made sure that the deal offered extra cash just for moving in. So, the borrowers yelled at politicians to take care of them or their votes would go elsewhere and, voila, it’s done.

Now, Wall Street responds favorably by showing strong gains after the announcement of a deal and the cycle continues. Our nation’s economy is caught up in issuing and servicing debt. It used to be centered on tangibles like goods and services—now, it’s all about the paper and because we get a free pass we don’t learn the necessary lessons and when the Street posts big numbers, they don’t get the lesson and so we’re all but certain to repeat it again in the future. By failing to get back to basics now, our kid’s futures are in jeopardy but that doesn’t matter either because by then, the government will be raising them for us. We like that idea.

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Comments

July 24, 2008 4:30 pm Reply

Please please get this on the air.

This bailout really stinks to hell. I finally figured out a way to discribe this bailout and a word for it.

Described: It has a Front-end, Back-end and Middle

Front-end: They are happy, no lesson learned

1. They speculated with financing and got caught and now can’t afford theier homes

2. They get the current market value of their homes refinanaced a a low 4 to 5% rate

Back-end: They are happy, no lesson learned

1. The mortage company that took the write down from what you originally owed down to the current market value will get their money back from the “FUND” the government is creating.

Middle: Get kicked in the nads!

1. These are the people who purchased a home or took out a hefty equity loan they could afford ranging between 2005 to 2007 when housing prices shoot through the roof.

2. You get stuck with a higher interest rate that people who now have bad credit.

3. To top it all off, you are stuck in your home for at least 10 years because you owe at leat $100K more than it’s worth, because you didn’t need someone to refinance your house at market value, you are responsible.

July 25, 2008 5:49 pm Reply

Along with buying home way above what incomes levels could support there are many that took the following route and that is why they are in the predicament they are in now. I personally know 2 close friends that bought houses at decent prices and as the value of their homes increased they used that equity in their homes as a bank. They refinanced and paid off cars, bought big screen TV’s, new computers, furniture etc. Now that their homes have gone down in value and they can’t afford the higher mortgage they are walking away. The government is not even going to tax them on the money they are not paying back. They are losing their homes but are walking away with paid off cars, big screen TV’s, new computers, furniture,etc. What about the people that have homes that have gone way down in value, but keep paying the mortgage and car payments. Some have taken 2nd jobs to keep their homes, kept from buying things they could not afford, saved for and waited to buy the things they needed. Why isn’t the government giving a tax break to them? For example: Your house went down 30% invalue so you can write off 10% of that on your taxes. That is no where near what they are doing for the the home losers or any more ridiculous. Why does our government keep rewarding the scew ups and completely ignore the hard working people that take care of themselves? In the long run the taxpayers that pay their bills are not only taking care of themselves but are contributing to the bale out of others. In my opinion these people don’t derserve to be baled out of a situation they have created for themselves.

August 3, 2008 6:09 pm Reply

I AGREE WITH YOU GUYS. IF YOU REALLY CANT AFFORD WHAT YOU’RE BUYING DONT BUY IT! I KIND OF DID THE SAME THING (GOT 2ND MTG TO PAY OFF TRUCK GET NEW WINDOWS AND DOORS FOR HOUSE) NOW I’M PAYING FOR IT BY BEING FRUGAL IN MY SPENDING HABITS. I USED TO GET ABOUT 20 HRS O.T. WELL THATS GONE NOW CUZ I WORK IN THE RESIDENTIAL ROOFING AND BUILDING INDUSTRY,AND WE KNOW WHAT HAPPENED THERE. SO I WILL GET A SECOND JOB INSTEAD OF WALKING AWAY FROM HOUSE. I PUT TOO MUCH TIME AND $$$ IN IT TO WALK AWAY. NOW I’LL JUST PRAY THAT IT TURNS AROUND

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