Effor.com

The story is all over the news tonight.  Here’s the Washington Posts’ take.  A few choice quotes:

“But he (McCain)declined to embrace the kind of government intervention for individuals and institutions favored by Clinton and Obama, arguing that “it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.”

It’s about time someone said that the government shouldn’t bail out stupid people.  However, I don’t agree with McCain on who is deserving of being bailed out.  McCain also said “We have a responsibility to take action to help those among them who are deserving homeowners.”

Many (probably most) of those facing foreclosure were never “deserving homeowners”, they were idiots who lived beyond their means, they took out interest only or adjustable rate loans, and they somehow act surprised when the bill for their overspending comes due.  See my post earlier tonight for a prime example of this.

So obviously I disagree with McCain on the details, but at least he’s saying that not everyone should be bailed out.  On the other hand, Obama and Clinton seem to be in a contest to see who can give away more taxpayer money.

The same story attributes this to Clinton: ”McCain’s plan, she said, does virtually nothing to ease the credit or housing crisis. “It seems like if the phone were ringing, he would just let it ring and ring and ring,” she said.”

Cool - the less the government does to “ease” the credit and housing “crisis” the better I feel about it.

And - in what has to be one of the most futile efforts ever - Obama today “outlined what he called a second stimulus package that would cost about $30 billion and include assistance to individuals and areas hard hit by the housing crisis.”

Idiot. The Fed loaned $38 billion today, and is approaching $500 billion in new money give aways since September.  That much money hasn’t headed off the current credit and housing problems - and the $160 billion stimulus package coming soon to a mailbox near you won’t make a dent in it either - so why would Obama think $30 billion will have any impact?

Let’s put it this way:  All three major candidates are wrong on these issues.  The only consolation is that McCain is less wrong than Obama and Clinton.  But none of them have a clue, and I don’t see any hope that they’ll get smarter before election day.

gk

I’ve seen this a couple of times over the past few days, but here’s CNN’s version of a story about “homeowners” simply walking away from their homes.  I say “homeowners” because most of these people put little or no money down, they took out teaser rate ARM’s, interest only - or even negative amortization loans - so they’ve never had any equity to speak of anyway.  They didn’t “own” their homes, they were renting them.

A couple of quotes from CNN’s story - here’s the headline:
Homeowners: Can’t pay? Just walk away
More and more borrowers are watching their house values sink while the cost of their loans skyrockets. What to do? Skip out on the mortgage all together.

Yeah, that’s a good plan.  Just “buy” a nice house which you can’t afford, then stay there for a year or two until your rate adjusts and you can no longer pay for it.  Then mail the keys to the bank (hence the term jingle mail) and walk away.   Next thing you know they’ll be wanting a bailout from the Fed’s…

Another quote: The Los Angeles-based writer bought two properties in Hancock Park, west of downtown, using no-down, interest-only mortgages in 2006. He paid just over $1 million for both.

Often they chose hybrid adjustable rate mortgages (ARMs) that came with low initial payments. After a few years, interest rates on these loans reset higher. But buyers thought they could count on the increased value of their homes to refinance into affordable, fixed-rate loans.

Question - If you couldn’t afford a fixed rate loan on a house 2 or 3 years ago when rates were at a 40 year low, why the hell did you think you’d be able to afford to refinance before the interest only or ARM reset?  Were you counting on a huge raise that never came through?  Or did you just get more house than you could afford on a 15 year fixed rate loan?  If so, you’re too stupid to be a homeowner anyway.

Go ahead and blame it on predatory lending practices, blame it on your real estate agent, blame the economy, blame the house pricing slump, blame your neighbor - just be sure you don’t take responsibility for your own decisions, because that would mean you’re an adult.  And if you did any of the things above, you’re not an adult. 

You’re also not a victim, you’re the cause of the current mess.  You’re the one walking away (or defaulting) on a mortgage that you promised to pay.  You’re the one who is causing banks to lose money because you lied about your income on your application.  And when those banks write down a loss on your loan and their stock price drops, you’re probably bitching the loudest because now it’s hitting your 401k and Roth accounts - although maybe I’m giving you too much credit - anyone who did the above loans is probably not bright enough to plan for their own retirement - you’re counting on Social Security. 

I normally don’t call people names, but if you fall into the category of the people above - you are stupid.

gk