Racefish’s Weblog

Bailout Blues
February 22, 2009, 3:41 pm
Filed under: Economy, Housing, Legislative Foolishness, Rants, Socialism

OK, I’ve been gone a while but it’s something that really gets my blood hot. Obama’s Mortgage Plan is another one of those “taxpayer financed” ways of extending the reach of the Federal Government into the daily lives of productive Americans.

Answer me this; Why does Comrade Obama think it is the duty of the productive taxpayer to pay part of the mortgage of people who #1, couldn’t afford the house in the first place, and #2, gt into a house that a wise  person would understand was far beyond their ability to pay for and maintain?

We have to go back to the Carter administration. This was the feel good bunch that was responsible for double digit inflation and the failed rescue attempt of the hostages in Iran. The first housing bill passed during that time was aimed at getting people who were desirous of owning a home in on the ground floor with an adjustable rate mortgage. That in itself is a noble endeavor for those who are young, professionally oriented, and stable.

The program was expanded slightly during the Reagan administration and really inflated with Clinton. The G. W. Bush administration called for greater oversight of Fannie May and Freddy Mac. Senator John McCain also called for greater regulation. The result was that the Democrats continued to say that these GSEs (Government Sponsored Enterprises) were sound and were in no trouble.

The real-estate companies and lenders took the word of Congress and were betting on the housing market continuing to grow. Organizations such as ACORN and others put pressure on lenders to provide money for houses that would be purchased with federal guarantees through the GSEs. The result was that people who were on the low side of the income ladder, and had never had any experience managing credit, were placed in the untenable position of paying a mortgage hopelessly out of their range.

The inevitable number of repossessions has caused the housing market to collapse. Many pundits would label this the bubble bursting, but looking seriously at the problem. the overbuilding and over-selling was much of the problem.

Now, we have an additional problem of the cost of fuel, namely gasoline and diesel, being artificially inflated. There are many causes for that, but the inevitable result was the population cutting back on travel, recreation, and the availability of non-discretionary funds that would have been used for new furniture, clothes, electronics, and more.

Now Obama comes out with a plan to alleviate the borrowers pain. His plan is for lenders to refinance loans in limbo, and have the lenders “pay” half of the refinancing to bring the rate down to a “reasonable” level. The “Government” namely the Taxpayer would pay the other half.

If you bought into the “Hope and Change” that Obama’s campaign sold so well, I can only say I hope you wake up and oppose his radical Socialist agenda, or you will only have Change left in your pocket.


3 Comments so far
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One thing I disagree with Rush on, at least in part, is the idea that the home owners are responsible for buying a house they couldn’t afford. This just isn’t a fair statement. Speaking from experience, a potential home owner, especially a first-timer, goes to a bank to ASK for a loan, not knowing whether or not they will get one, or what the monthly payment will be. If a bank then tells you that you qualify, being as naive as a first-time home buyer is, the buyer automatically trusts the banks assessment. After all, they’re the experts, not the first-time buyer. And with an adjustable rate, home buyers do not understand how much their monthly payment will be in 2 years. Then throw tax hikes on top of that.

My point is that it is a bank’s responsibility to say yes or no based on the buyer’s income and existing debt. If the bank knows that the buyer won’t be able to keep up w/ the payments after a couple years, that’s the bank’s fault. Yes, budgeting is the buyer’s responsibility, but if someone tells me I can afford something, I’m probably going to believe them. Then when I can’t afford it, it’s not fair to say that I’m not being wise because I didn’t understand that I was getting into a house I couldn’t afford and maintain. And because most of the people who have been caught out by these bad loans are first-time buyers, the banks knew 10x more than they did going in. So, I do believe that there are a lot of home buyers that have been victimized by the Dem’s putting pressure on the banks to hand out bad loans, because those home buyers were blind to the fact that they were being given a loan they couldn’t afford.

Comment by wazneeni

I just noticed you said this:

The result was that people who were on the low side of the income ladder, and had never had any experience managing credit, were placed in the untenable position of paying a mortgage hopelessly out of their range.

Well, which is it? Are this people “unwise,” or were they innocent victims?

By the way, I think the correct course of action is to simply allow the banks to foreclose to allow them to get at least something back out of the houses, along w/ keeping tax dollars from providing yet another economic bailout. The home owners will go back to living where they did before, the cost of homes will come down, which will then encourage more investment in the housing market. Letting those people stay in the houses and sucking dollars out of the economy in the form of taxes will only halt the market even faster. However, no socialist democrat will ever admit those because that’s what they want…for all of us to live as “subjects” rather than free citizens. They don’t care about how much money they spend because as far as their concerned, it’s they’re job to provide us w/ want we need to live, and they control everything else.

Comment by wazneeni

Both. They were talked into doing it by agents who were told and really believed the growth in the market would continue. This was perpetuated by the Liberals in Congress who were also playing not only the numbers ga,me, but selling the poor on a dream that couldn’t possibly be fulfilled.

Comment by racefish

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