Monday, September 3, 2007

Bailouts

Normally, I don't like bailouts. Why should taxes make up the money from bad loans? From bad business decisions. To keep the rich just as rich as they think they ought to be?

Bush has suggested that high-end house loans should be bailed out.

Of course, the poor people will be left to drown ... uh, go under financially; but the half-millionaires will be rescued.

Why does that stink even worse than the usual bailout suggestion?

Bailouts in particular rescue the incompetent rich. The housing market is going down. Bush will figure out some way to rescue those with deep pockets. I hope that Congress refuses to play. Too many financial institutions have bought into the get-rich-quick of real-estate turnover. It's time to let them all just crash.
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1 comment:

BadTux said...

Note that "half-millionaires" consists of half of California. You cannot buy a miner's shack in the desert here for less than $500,000. Unfortunately the "conforming loan" limit has not been raised to match actual housing prices, so people have been forced to get "jumbo" loans at higher interest rates just to buy a 1 bedroom condo in a bad part of town.

Personally, I think that's insanity, and have been renting because when rents are half what my mortgage payments (rent to bank) would be, it makes no sense to rent from a bank (mortgage) rather than rent from a landlord. People kept telling me about housing as an investment and I kept shaking my head. I've been there. I saw $100,000 houses in Houston suddenly become $15,000 houses in 1984 when they had their big oil bust. Hundreds of thousands of people lost all equity in their homes and the price of houses took ten years to recover. A house is a place to live, not an "investment", unless you intend to live there for 10 years or more and even then there's no guarantees. And frankly there isn't anywhere here in the Silicon Valley that I want to be 10 years from now, this is a pestiferous rat-hole whose only redeeming quality is a few pockets of ethnic foods amongst the strip malls and sterile office blocks.

- Badtux the Housing Penguin

September 13, 2007 at 9:27 AM

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