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Posts Tagged ‘The Motley Fool’

Homeowners Hit the Lottery

Posted by Liberty on February 22, 2009

From The Motley Fool:

Homeowners Hit the Lottery

“Of all the government measures to right the economy, President Obama’s plan to aid homeowners seems like the most irresponsible to date.

Why? Not because it helps individuals rather than big banks. Given the choice, I’d much rather help average Joe nine-to-fivers than, say, Citigroup or Bank of America. Anyone would. No one doubts that losing your home is a personal tragedy. I have a heart, thank you very much.

Nonetheless, the proposal to spend $75 billion refinancing mortgages that wouldn’t otherwise be given the time of day is quite literally the epitome of subsidizing failure, without asking for anything in return.”

The author [Morgan Housel] points out the fact that the bank bailout money came with the stipulation that it eventually be paid back.  This mortgage plan does not carry the same requirement.  Housel also mentions that Obama claims the money will not go to speculators or house flippers.  The interesting point is, what really constitutes a speculator?

“What do you call people who bought houses that exploded in value in the previous few years with a ‘subprime and exotic loans with exploding terms?’  I’d call them speculators. What do you call people who bought homes without setting aside enough savings to cover an economic downturn? I’d call them speculators. What do you call people who bought homes that didn’t fit their income profile? By golly, I’d call them speculators.

No matter. We’ve been aiding Wall Street speculators for months now. But — and this is an important but — every dime of taxpayer money injected into failing banks, be it Goldman Sachs or Wells Fargo or AIG, is money demanded to be repaid to the best of their ability, and it came with equity warrants that offer taxpayers upside potential if and when markets recover.

This homeowner aid package has no such clause. Home prices fell after a period of undeniable gluttony (like they do in all markets) and now taxpayers are bailing out speculators (yes, I’m calling them that). Yet if home prices rise in the future (and they will), the bailed-out homeowner keeps the upside. Heads, they win, tails, you lose.”

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Posted in Arrogant politicians, Liberalism, Obama, Redistribution of wealth, Social engineering, Socialist economics, Stupid legislation | Tagged: , , , , , , , | Leave a Comment »