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Well, apparently, it's official. Cheaters prosper, responsible people finish last and Virginia, there really is a Santa Claus. And if you got in over your head and can't make your mortgage, because of (insert any reason you like here), please hold out your hands. Your bailout... handout... teaser freezer... whatever entitlement you want to call it... is here, along with a big high-flying middle finger extended toward responsible homeowners who did not lie, take a stupid pill or buy more of a house than they knew they could afford.
Never mind that this bailout is an affront to responsible borrowers everywhere. Never mind that it sends the deplorable message that honesty is optional and even the lamest excuse acceptable. Never mind that personal accountability is now totally out the window in a world where it was already in short supply. And never mind that the people who aren't in trouble will be helping foot the bill for those who are. (And if you think taxpayers won't be picking up this tab, you might want to revisit history.)
What you should mind is this: When there's no reward for playing by the rules and no punishment for breaking them, how many people are going to play by the rules next time? And when nobody is playing by the rules, why have them? And what's it going to be like living in that kind of world?
When will people learn there is no free lunch, for every action there is a reaction.
This situation is the direct result of goverment intervention in the 2 previous recessions, and the psychological impact that intervention had on the public. In 1991 the Bush 1 administration intervened in the recession by lowering interest and fueling the speculation in the Tech bubble,many people who should have been wiped out financialy got off the hook and did not pay the price for their speculation. In 2001 the Bush 2 administration intervened in the recession that should have happened as a result of the wild speculation in the Dot Coms. The public took advantage of the low interest rates and simply re-financed, again dodging the bullit, and not really having to pay for their financial irresponsiblity. So now you have a public that has been convinced that borrowing is not only the way out of trouble but the road to getting rich. They lack the disipline that the prior 2 recessions should have taught them. Their view of reallity is scewed, in the back of their minds, they believe somehow the Banks and the Goverment will once again bail them out. What they do not understand is this time is different. This time there is too much debt. Nothing will stop this recession. The Banks, the Fed, and the Goverment are in panic mode. Their smoke and mirrors economy is crumbling.They want to postpone the worst of this mess untill they are out of office and hopefully defer some of the blame. They just need to keep the deception going a little longer.
If the lenders are not going to get to raise rates, why would they want to write any more mortgages? Hopefully this gives foreign investors second thoughts and cuts off new "funny money".
Well, apparently, it's official. Cheaters prosper, responsible people finish last and Virginia, there really is a Santa Claus. And if you got in over your head and can't make your mortgage, because of (insert any reason you like here), please hold out your hands. Your bailout... handout... teaser freezer... whatever entitlement you want to call it... is here, along with a big high-flying middle finger extended toward responsible homeowners who did not lie, take a stupid pill or buy more of a house than they knew they could afford.
Never mind that this bailout is an affront to responsible borrowers everywhere. Never mind that it sends the deplorable message that honesty is optional and even the lamest excuse acceptable. Never mind that personal accountability is now totally out the window in a world where it was already in short supply. And never mind that the people who aren't in trouble will be helping foot the bill for those who are. (And if you think taxpayers won't be picking up this tab, you might want to revisit history.)
What you should mind is this: When there's no reward for playing by the rules and no punishment for breaking them, how many people are going to play by the rules next time? And when nobody is playing by the rules, why have them? And what's it going to be like living in that kind of world?
Seems like we've already been living in that kind of world.
As bad as this one is, it is not unprecedented… will probably equal the S&L bailout in the 80's. Adjusted for inflation the dollar amount will probably be about the same.
Then we paid to cover dishonest S&L executives, condo developers, and realtors, as well as depositors. This time it is many of the same shysters and a bunch of ignorant (or dishonest) mortgage holders.
It seems we have plenty of regulators but very few that are capable or willing to do the job required.
You guys are painting a pretty picture. I think the poo is approaching the fan and it is going to splatter big time, all over everyone. Not like anything any of us have seen before. From everything I've been reading, we are beyond screwed. Time will tell.
I am curious about something, I am ignorant about an adjustable rate mortgage as in I have never had one. As I understand it the rate is adjustable over 3 percentage points.
SO why would you then take out an adjustable rate mortgage when the highest point is something you can't afford?
Are people really taking out an adjustable rate mortgage BANKING on that it will stay at the lowest rate?
I am curious about something, I am ignorant about an adjustable rate mortgage as in I have never had one. As I understand it the rate is adjustable over 3 percentage points.
SO why would you then take out an adjustable rate mortgage when the highest point is something you can't afford?
Are people really taking out an adjustable rate mortgage BANKING on that it will stay at the lowest rate?
We have met some peple that truly don't understand what an adjustable rate is. I had an adjustable rate mortgage years ago when the interest rates were falling and I paid extra every month-needless to say my payments went down every year and I paid it off very early.
Recently people were enticed by the initial monthly payment of an adjustable rate thinking 1. When the rates go up I will sell my house 2. They would be making more money at that jobs 3. Or they were just plain greedy and wanted more than they could afford.
It's the same world that turns a blind eye to illegal labor. What's the incentive for the honest businesses to hire legal labor? Let me tell you, there are a lot of incentives to hire illegal labor. And what if everyone hired illegal labor where possible? There'd be action to bail out social services.
Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
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There was really no choice for either the government or the banks in this. There had to be a bailout. The problem would have got worse and, like a cancer, spread to the rest of the economy if left unchecked. Since many of these "funny loans" involved little or zero money down, the banks would have taken a bath on the foreclosures that would follow. I think by moving fast to limit to damage that they did the repsonsible thing here. And it should be followed up with the even more responsible thing if reform including strict loan requirements and the end of "zero down" loans. All real estate loans should require at least a 5 to 10% cash down payment and a credit score of at least 675. It should be the law to prevent this in the future.
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