As I opined last August, bailing out home owners is a bad idea. I still have not seen a single instance of what the left calls “predatory lending.” I have seen plenty of examples of buyer and lender greed, along with an equal if not greater amount of apathy and/or ignorance.
The New York Daily News has a feature article today on Marlo Saab, an “ideal candidate” for assistance under the president’s new plan. Reading the details makes me want to start skipping my mortgage payments. This home owner bought a $555,000 home three years ago with no money down with an $80,000 salary. I’m not Stephen Hawking, but even my simple mind can see that the math doesn’t work out. Factor in the cost of living in New York City and it seems even more unimaginable that Mr. Saab could afford this home.
In 1996 with a $45k salary I qualified for a mortgage of around $250-300k. Did I overextend myself and get the most house I qualified for? No. I was taking home about $2500 a month, I felt that I could allocate half of my income to a mortgage. This resulted in me purchasing a modest starter home for $108k, with a mortgage payment of $1,200 or so. Fast forward to 2007: My family relocated and we rented a house for more than two years until we could find one that met our needs and our budget. When we were ready to buy again it took us six months of tedious searching to find something that we liked, met our needs, and most important: was within our budget. Thanks to a good down payment and my diligent search efforts I now have a home with a similar mortgage but I make much more than I did back in 1996.
Thanks to MichelleMalkin.com and www.makestickers.com for this image.
Now President Obama is asking me to help pay the mortgages of thousands of people that didn’t do the research, take the time, or just didn’t care. What motivation do I have? What motivation do others have not to repeat the negative behavior that got them into trouble in the first place? As a parent, it is not my job or responsibility to keep my children happy at all times and at all costs. Sometimes the answer is a firm “no.” Other times we have to do things that the child does not like. For the good of America President Obama needs to learn how to say “no” to the mental children in our society that can’t act appropriately.
I think this quote sums up my feelings appropriately: “Which is most blameworthy. those who see and will steadily pursue their interest, or those who cannot see, or seeing will not act wisely?” (George Washington to David Stuart – March 28, 1790)
I found a very interesting brief article at time.com today. Read it. Here’s the part that caught my eye (emphasis mine):
Do not be fooled. The $700 billion (ultimately $1 trillion or more) bailout is not predominantly for mortgages and homeowners. Instead, the bailout is for mortgage-backed securities. In fact, some versions of these instruments are imaginary derivatives. These claims overlap on the same types of mortgages. Many financial institutions wrote claims over the same mortgages, and these are the majority of claims that have “gone bad.”
At this point, such claims have no bearing on the mortgage or housing crisis; they have bearing only on the holders of these securities themselves. These are ridiculously risky claims with little value for society. It is as if many financial institutions sold “earthquake insurance” on the same house: when the quake hits, all these claims become close to worthless — but the claims are simply bets disconnected from reality.
Follow the money. Average Joes and Janes are not the holders of the other side of complicated, over-the-counter derivatives contracts. Rather, hedge funds are the main holders. The bailout will involve a transfer of wealth — from the American people to financial institutions engaging in reckless speculation — that will be the greatest in history
So basically, most of the money Congress is begging us for is needed to bail out financial institutions that have created and benefited from multiple fraudulent financial schemes, all for profit and bonuses. These financial institutions used less than stable home loans as collateral or capitalization to support their own loans. That’s like a consumer using his only car as collateral for multiple home improvement loans. That’s like claiming the same hail damage on your car to your insurance company two or three times.
To me this behavior is criminal. Politicians pawning this off to the public as a dire emergency that Americans need to approve is equally criminal. The American people deserve better than this. Kudos for all that voted against this legislation. Let me quote the Time article again:
Let financial institutions fail, merge or be bought out. The faltering institutions will see their shares devalued and will be likely to be taken over by stronger institutions — as has already started happening. This consolidation of the financial sector is both efficient and inevitable; government action can only delay the adjustment.
And one more thing: In the world I live in I sometimes need to work long hours, nights and weekends. I dont give a crap if Congress worked all day Saturday, how dare Nancy Pelosi convene until Thursday. If this is such a friggin’ emergency, don’t you think that it merits their attention NOW? Get back to work you spoiled, out-of-touch officials. Then again, I think the bailout is pure crap so maybe it makes sense for you to stay home where you can’t hurt America more than you already have.
