Comments on: Barack Obama Protecting the Stupid People From Themselves

By: Hal

Hal — Fri, 22 Feb 2008 18:28:31 +0000

Actually, it depends on how you look at it. 8 million home owners with negative equity starts looking pretty damn scary to a lot of people, and I doubt tired bromides regarding the self flagellation with invisible hands will have much impact on that fear.

By: Ed

Ed — Fri, 22 Feb 2008 18:01:09 +0000

Two forms of help are being proffered. One for the victim of fraud, the other the "struggling homeowners". The second just amounts to a subsidy of the mortgage industry. I believe that is not necessary and if fact would just prop up an industry that is just now getting a dose of reality due to the misnamed "crisis".

By: floyd

floyd — Fri, 22 Feb 2008 00:25:59 +0000

Many millions of people in this country pay more in real estate taxes than than mortgage payments. The taxes on primary residence real estate will continue to rise while politicians wring their hands over "high" interest rates, which are ,after all, voluntary!
The irony is deafening, since Obama was silent on real estate tax relief as an Illinois State Senator.

By: Hal

Hal — Thu, 21 Feb 2008 22:08:50 +0000

Not quite true. Around here, at least, there were a lot of people who got burned by their options and ended up literally owing multiple hundreds of thousands of dollars (sometimes millions), not simply losing any money they had invested. Rather than being a story about a few, it was uncomfortably common. Lots of people lost everything they owned in the process.

But back to the issue at hand, there's a non trivial number of people who have 2 houses - the bought the second on speculation. I have my doubts that this set intersects to any significant degree with the set of fraud which is actually the focus of Obama's proposal, though.

By: Tlaloc

Tlaloc — Thu, 21 Feb 2008 22:00:47 +0000

I don't remember anybody getting bailed out during the last asset bubble.

I don't think most assets are nearly as fundamental as the home. Losing your stock portfolio may hurt but it doesn't leave you literally with no where to go.

By: Hal

Hal — Thu, 21 Feb 2008 20:24:59 +0000

I don't remember anybody getting bailed out during the last asset bubble.

Good point.

By: jeff b

jeff b — Thu, 21 Feb 2008 20:12:06 +0000

I don't think we disagree really. If people were victims of actual fraud they should seriously consider legal action against their lender. But I doubt there's many cases of that going on. Certainly not millions. On the other hand, we know for a fact that millions of stated income, stated value, and undocumented loans were made. Are these cases of fraud on the part of the borrower? In those cases, should be the government be sending checks to the lender?

I tend to think that the government should stay out of this mess and let the jerks on both sides reap their rewards. I don't remember anybody getting bailed out during the last asset bubble.

By: Hal

Hal — Thu, 21 Feb 2008 20:06:15 +0000

Again, the operative word is "fraud". Someone who obtained a loan because of fraudulent practices isn't a jerk, isn't a criminal and I don't think you can fault them for thinking they could afford something they couldn't because of - you know - FRAUD.

By: jeff b

jeff b — Thu, 21 Feb 2008 19:58:26 +0000

I guess you've never tried to rent an apartment after getting out of prison, either. Those for whom foreclosure looms may be relatively less wealthy than mortgage borrowers in general, but there is a much larger class of people who could never even have dreamed of applying for a home loan in the first place. It would be more economically productive to get that huge underclass into the mainstream economy than to enrich banks by bailing out their borrowers.

By: Hal

Hal — Thu, 21 Feb 2008 19:48:33 +0000

They won't be "homeless" they'll just go back to owning a smaller/cheaper home or renting like everybody else I guess you haven't studied the recent (couple of years now) changes to bankruptcy law, and I guess you've never tried to rent a home with a bankruptcy, much less try to own another home. I agree with your general statement, but I don't think it's very accurate at all to characterize the issues as you have - especially considering that one of the largest populations hit by this, from the home owner's perspective, are relatively poor people. in fact, this population of the relatively poor is precisely where the most fraud was perpetrated. Those who were flipping almost are not the target population of Obama's suggestion - again, I'll point out "fraud" is the operative word here. Surely those who were deceived by fraud aren't people making poor decisions the should have known better about - despite Steve Verdon's "pimptastic" suggestion to the contrary.

By: jeff b

jeff b — Thu, 21 Feb 2008 19:37:25 +0000

They won't be "homeless" they'll just go back to owning a smaller/cheaper home or renting like everybody else. It is perverse that the government should be helping the wealthiest Americans, who can afford to buy a home, while at the same time neglecting the safety net for genuinely helpless Americans like the chronically homeless, the mentally ill, and the impoverished. And don't give me any bull crap about home ownership being the essential American dream: sure, the number of people who claim to own homes is at an all-time high, but their actual equity in their homes has been falling since the 70s. So in essence the term "homeborrower" is much more appropriate than the common "homeowner". We should stop subsidizing the leveraged speculation in real estate and use that money for a higher purpose.

By: Tlaloc

Tlaloc — Thu, 21 Feb 2008 18:47:11 +0000

I can sort of see offering some relief to those who have been the victims of fraud, but really, the people struggling to pay their mortgage?

How does the country benefit by people, even dumb people, becoming homeless? Your argument is bordering on social darwinism. Oh, and I'd avoid any more "pimp" comments. It really doesn't sound good.

By: Hal

Hal — Thu, 21 Feb 2008 17:44:10 +0000

rather John is acting in a most eponymous fashion.

Ouch! Good one.

By: Triumph

Triumph — Thu, 21 Feb 2008 17:30:41 +0000

And Triumph makes a great point about pimps. Odd the way Steve decided to use that particular word wrt Obama.

Thanks Hal. Here is a more appropriate example of pimping: When the lobbying firm Alcade and Fay send their little Vixen Vicki to Senator McCain to curry favor. McCain "pays" for Vixen Vicki's services with his vote supporting Alcade's clients. In this case, McCain isn't the pimp--rather John is acting in a most eponymous fashion.

By: Hal

Hal — Thu, 21 Feb 2008 16:53:23 +0000

The payouts to the 9/11 victims? The bailout of the Savings and Loan industry? I'm sure I can dig up others.