Yesterday I bought some new shoes. Truthfully, they are pretty ugly. But at the same time, I really loved them. That doesn't even make sense... but I don't care. I walked by them and picked them up b/c the ugliness caught my eyes. But then I slowly fell in love.
Today has been a very weird day. I've been kind of following the whole governmental bailout thing, but not super closely. I figure their is no reason to stress about it, b/c it won't do any good. Well this afternoon, their was an announcement that an agreement had been made. Next thing you know, we are hearing of a big blow-up and no deal. Tons of different theories are out there. Obama is claiming McCain is playing "presidential politics" with the issue and I tend to agree. At the same time, I think Republicans are waiting on McCain's decision, so they can go down the party line. I'm not really sure where I stand on this issue. I hate the idea of giving these companies money and think it should be avoided. But then you have Bush and others feeding us the line that something HAS to be done. Bush is saying that the entire economy is at risk. The markets went up sharply today because they thought the deal had been reached, but now the opening of the markets will be interesting tomorrow. This is some really concerning stuff and this country needs to get its act together.
Personally, I think their are better ways to fix this crisis. I don't understand why Paulson and the other leaders are so convinced that these mortgages will go up in value. Why would these people continue to pay on their mortgage? And if you really want to help the "little guy", why not give the money to him to pay off the mortgage instead of the big company? Aren't the big companies the ones who mostly got us in trouble? They knew the risk and should have never given out the mortgages. Also, I really have almost no sypothy for the home owners that got a house outside of their income level. Sure some were probably tricked, but you need to be informed! Another solution would be to have the government force these companies to come to them for a loan. Give the companies a loan and force them to pay interest. Then the companies would be responsible with the money. You would give them a chance "stay above", yet make them work for it.
If you have the time, these 2 articles are great reads into what got us into this situation. The second one is VERY in depth.
Corporatism, not Capitalism
Analysis: Reckless Mortgages Brought Financial Market to Its Knees
Here is an excerpt:
The changes in underwriting standards were pushed to accomplish what many called a “noble goal”—an increase in home ownership among poor and minority Americans—but the changes created a time bomb that was set off as soon as property values began to decline. The new rules involved eliminating verification of income or assets, little assurance of the ability to pay the mortgage, and virtually eliminating down payments.
Making it possible for otherwise unqualified people to buy homes increased demand and increased the price of houses. As long as housing prices rose, the problems inherent in not requiring down payments or relaxing other standards were hidden. While prices rose, no one had to default. Instead, if someone was unable to pay the mortgage, the obvious option was to sell the house at a profit. As long as prices continued to rise, people could accurately claim that the new standards did not have an appreciably different default rate than the old standards.
1 comments:
In Mexico, low income mortgages are socialized and handled with payroll deductions. In a land where government success is more rare than Republicans wearing Birkenstocks, this has been a raging success, at least in big cities where there are lots of factory jobs. Perhaps this is a good time to buy into medium-high risk mortgages and figure some way to finagle housing for poor families without costing the government anything. If Mexico can do it...
Government cheese! Woot!!
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