MORTGAGE SUBSIDY PLAN
The market has recovered from steep losses earlier in the day on news that the government will subsidize the bad decisions of homeowners. Essentially, if you bought a house and you’re having trouble paying the mortgage, the rest of the competent U.S. taxpayers will chip in to help bail you out of your poor decision.
This is even more ridiculous than the “stimulus” plan. The idea that they can manipulate prices and contain the losses in the housing market is beyond ridiculous. Housing prices are going to adjust back to their affordability levels regardless of what the government does. This sort of manipulation only provides band aids to a gaping wound. These are the kinds of programs that prolong the issues.
We cannot expect our capitalist market to begin functioning properly until we get over this ridiculous idea that we can manipulate prices through government intervention.
I really enjoy your blog, thanks for all the great posts. I agree with your thoughts on the mortgage subsidy plan. Holy shit, once they offer help to a small percentage of folks we better believe that presents a much larger percentage with the incentive to slow down payments to get help, too. This really upsets me. It really does. I'm at a loss right now to understand why people who make smart decisions now have to pay EVEN MORE to help out those who were and probably still are greedy. I think this is going to hammer stocks. Maybe not tomorrow, but soon enough. We can't keep letting the politicians lie to us and to themselves. Sooner or later somebody has to take the medicine. What a joke this has become. It makes me quite sad. …Thanks again.
I completely agree of course. It is remarkably stupid. There aren't many details out yet, but as of now this is looking incredibly misguided. Obama thinks he can prop up everyone. A capitalist system is not functioning properly if everyone is winning. There must be winners and there must be losers. This one tries to make everyone a winner and that means the system loses.
Totally agree with you. He has no idea. Reminds me of the youtube video of a woman at the Democratic National Convention, she was ready to cry tears of joy, "I don't have to worry about paying for gas now, I don't have to worry about paying my mortgage now, Obama is going to take care of me…" (or something to that effect). …Anyway, keep the faith, the market will churn and burn the losers fast enough, we just gotta be patient, wait for that fat pitch then go for it. This might be the set-up for a huge move down.
This wont end well.