October 10, 2008
Save them, for they know not what they do
I don't know about you, but I feel really good about bailing out people who put themselves in this position.
The reality is, of course, that someone who is upside down on a home an walks away from it has suffered nothing more than the renter who walks out on an apartment and loses the security deposit; the defaulting homeowner had no equity in the house, so he was, in essence, nothing more than a renter with an option to buy.
So, aside from welching on an obligation -- something that Americans used to frown upon -- and having a bad credit history for a few years, it's not the kind of circumstance that requires the rest of us (who have been living within our means) to pony up the funds to keep these would-be defaulting renters in their too spendy digs.
Which is also why McCain's pandering on the issue -- he keeps blathering about stopping the decline in home values -- is so disheartening.
Home values are what they are; it's called a "market economy," with buyer and seller agreeing what the home's worth. The idea of the government inserting itself into the transaction and insisting that a home is worth X-amount of dollars more than the market will bear is a recipe for disaster, a cure far worse than the symptom.
About twenty years ago, we were suffering through another dip in home values, one deep enough that economists were counseling Americans to stop thinking of their homes as an investment, urging them to view it instead as -- get this -- "shelter," something they'd have to keep them, their loved ones and their nick-knacks out of the rain. Of course, within a few years, the market began moving again and homeowners began seeing the value of their houses rise.
The bottom line is that there's no compelling reason to alter the free market engine that has driven American prosperity through good times and bad.
But that would require some straight talk about biting the bullet for a while, honoring your word to repay a debt. And no candidate wants to say that.
Posted by Mike Lief at October 10, 2008 07:41 AM
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Comments
I take it then, that you would also agree that we should be letting AIG, Fannie, and Freddie, etc., etc., also sink on their own poor decisions? Not to mention GM, Chrysler, the airlines, particularly post-9/11.
I'm all for letting the free market really float free, since that's what the right has been asking for for decades, but let's let it float freely for individuals as well as corporations. A decade or two or five of depression, mass unemployment, homelessness on a par with the days of the Great Depression, starvation in the streets, and on and on. It would be a cleansing of sorts. Really separate the haves from the have-nots.
It's what the Right has long called for. And let's not have government intervention with any social programs other than existing obligations. Let's see how long people support this so-called free market system.
At least you'll be able to put to good use all those guns you've got. Quell a few dozen looters storming your house every week or two. Fun.
Posted by: Bull Butz at October 10, 2008 04:39 PM
I'm done hearing about how Obama is the socialist in this election. McCain voted for the bailout and then surprised the nation with his longing desire to bail out those who have entered into mortgages they never could have hoped to pay for. McCain has lost. It's just about going through the motions now. Obama looks steady during the debates and intellectually comfortable in his own skin. McCain looks off balance, old, inarticulate and desperate with his bail out plan. "My friends" McCain is a loser.
Posted by: Jimmy Dean at October 10, 2008 07:02 PM