Thursday, May 3, 2007

Sub-Prime Bailout: Where will the money come from?

New York Democratic Senator Chuck Schumer has the answer. He wants $300 million in Federal money to help subprime borrowers keep their homes.
So the answer to the question is: you.
You will pay for it.
Unfortunately 70% of Americans believe that the "Federal Government" is some giant building with arms and legs that walks around and "does shit".
Wrong. The government is us! We fund it. Federal money is the people's fucking money!
Will someone in New York please explain that 7th grade Civics fact-of-life to their idiot senior senator?!

$300 billion dollars. Why?

Where will this "federal money" come from?

Why now interfere on the side of arrogance, stupidity and financial ineptitude in a market economy?

Why now interfere to help people keep their homes, who lied on their stated income loans and who, for all practical purposes, have no business whatsoever owning a home in the first place?

What economic and legal precedence are we trying to establish?

How will market's react?

What message does this federal government interference send to renter and homedebtors who pay taxes, who controlled their greed, who ignored the overexhuberance of the corrupt real estate industry, who chose to live within their financial means and who chose not to carelessly mortgage away their futures?

In case you have forgotten, Mr. Schumer, the above described individuals are your constituents as well.
The correct answer is to allow the market to correct itself. Indeed such a serious correction is economically painful and catastrophic for many American families, some of whom had only the best intentions - wanting to own an abode to live and raise a family. But the correction serves other import functions. It shakes out the investment crooks, flippers, liars, illegal opportunists and - to be frank - the financially inept. Good people and financially inept people are, in America, not mutually exclusive.

This comes across as cold and perhaps Darwinesque to say. I don't mean that subprime borrowers get no help at all. But I don't like the idea of allowing loan do-overs that, under normal market lending standards, would make no business sense at all.
Most of us support and believe in the merits of a laissez faire capitalist economy. Hard times like these remind us how imperfect that system can be.
Taking money away from people who didn't gamble to bail out other people who did, is irresponsible and unrepresentative of Senator Schumer and any of his supporters.
Of all industries in the United States, the real estate market is the one in most need of a market correction. Only the American oil industry makes as serious challenge from second place.
The real estate industry also requires a healthy dose of cartel-smashing government regulation.

That, alongside grand jury hearings of the N.A.R. for fraud, are the only government interference worthy of discussion right now.


MLS Listing FSBO said...

Basically from renters. Yeah it will come from solvent homeowners, too, but it will artificially maintain/prop up home values so in a way it is out one pocket (cash), in the other (equity in house) for that group.

ocbear said...

There is a long line of public interest lawyers to help the poor. There is a long line of Tort Lawyers to help the "defrauded". Let the legal system do its job. I bet Chuck is a lawyer.

Morgan said...

It all makes perfect sense! Charge the fiscally responsible people who can afford their housing payment, who didn't use their homes as ATMs, who are current on their property taxes and income taxes and CHARGE THEM FOR IT!

That's the way to reward the rational Americans who didn't get swept up in the craze. In fact I think the federal government should bail out all bubbles - I was really disappointed when they didn't step in to bail out those hundreds of dot-com companies. I mean should have been spared. That puppet was a national treasure.


Anonymous said...

FU CHUCK!!!!!!!!

Phoney politician. Not a peep out this guy when the party was raging.