Stimulus package...

[Larry Gude (Premo)]

Originally Posted by waggles

If they were serious about trying to shore up the economy, there are a couple of policy options, but none without sacrifice. They could require the mortgage industry to take the subprime mortgages and refinance them as 30 year fixed rate mortgages with reasonable interest rates. Sure it would be government telling private industry what to do - but lack of government oversight is one reason we have this mess (they lent people money who they knew or should have known couldn't pay it back...and now they can't pay it back! SHOCKING! ). This might stop some foreclosures and would help with the revenue streams of the mortgage companies.

...starting with this one, why does the government need to do ANYTHING about housing? Why should we subsidize one another's situations? Why not people just pay their mortgages or lose the house? Why not have the economy do it's own thing? Foreclosure for one person might mean a cheaper house for another. What's wrong with that?

Government interference with winning and losing, if you think about it, is interference with an individual on their most basic and private level.

If you become my keeper, if you have to help me pay for a bad decision, how is that fair to you OR me? Why can't you benefit from my mistake and get a nice house at a price YOU deem worth your money just like I did when I signed those papers saying the rate would go up in 5 years? What lesson do I learn, however uncomfortable? Why shouldn't I go get a second job if I'm coming up short instead of going to you and reaching into you pocket?

[Larry Gude (Premo)]

Originally Posted by waggles

The other thing that needs to happen is government revenues and expenditures need to get balanced. There's a way to do this that has some short term pain but yields long term gain. You balance out (through tax increases or spending cuts or a combination of both) spending and revenue, and then increase your revenue. You use this revenue to begin paying down the debt. As you pay down the debt, you decrease the amount of money needed for interest on the debt - and can use that extra money to further pay down the debt. Keep this up, and eventually you'll eliminate the debt and could eventually have a real tax cut because your required revenue would be much less.

...do we go about that when we've elected a bunch of people whose idea of balancing things out is to just make $150 billion appear out of thin air and give it to us like cookies and little kids?

The people we elect won't even freeze spending for a single year which allows the simple growth of the economy to close the deficit without causing any pain whatsoever.

My God, with a $12 trillion economy and a federal, excluding state and local, budget pushing 25% of that, when do we simply say government takes far, far too much to begin with?

The only 'pain' that anyone need feel is ELECTED representatives representing us is a fashion that doesn't border on the insane. Again, we elect these fine folks.

Republicans have been absolutely disastrous in terms of any kind of fiscal responsibility. Democrats are likely to be worse. There's a whole 75% of the economy as yet untapped.

[waggles]

Originally Posted by Larry Gude

...starting with this one, why does the government need to do ANYTHING about housing? Why should we subsidize one another's situations? Why not people just pay their mortgages or lose the house? Why not have the economy do it's own thing? Foreclosure for one person might mean a cheaper house for another. What's wrong with that?

Government interference with winning and losing, if you think about it, is interference with an individual on their most basic and private level.

If you become my keeper, if you have to help me pay for a bad decision, how is that fair to you OR me? Why can't you benefit from my mistake and get a nice house at a price YOU deem worth your money just like I did when I signed those papers saying the rate would go up in 5 years? What lesson do I learn, however uncomfortable? Why shouldn't I go get a second job if I'm coming up short instead of going to you and reaching into you pocket?

I don't think the taxpayers should pay for the mistakes these people made, however, if those mistakes look like they will result in a national recession, then perhaps it is in the people's best interests for the government to step in and do something to try to avert the problem (as an aside - those who speculated don't deserve any help in my opinion - they made a bad business decision and should face the consequences - it is those who purchased their primary residence under these conditions that may warrant assistance).

By this perspective, assuming a recession is caused by the housing mess - the actions of these two parties negatively affect a third party who is otherwise uninvolved, you could argue that government has an obligation to step in and try to prevent the negative externality from affecting the third party. That's just one perspective on government though, there are other schools of thought.

I do think any assistance given out should not be at taxpayer expense, should not "help" the lenders, and should be directed at individuals. What I suggested doesn't involve taxpayer money being used as essentially subsidies; rather, it involves refinancing current consumer debt into something that they will hopefully be able to manage. If it is refinanced and they still can't manage it, then, well, they should look to sell or face foreclosure.

Should they have done it in the first place? No. However, I'd rather have it serve as a lessen learned (and hopefully not forgotten) than to have the entire nation adversely affected by the irresponsibilty and greed of a few.
I do believe that individuals should be responsible for their own actions, however, if there is a way to resolve a situation that leaves less people worse off without imposing additional burdens on the whole, I'd say it is reasonable to pursue that course of action.

What this country really needs is some mandatory financial education at the high school level (before people are eligible to drop out). Given the financial challenges facing the economy in the future, it definitely couldn't hurt.

[Larry Gude (Premo)]

Originally Posted by waggles

I don't think the taxpayers should pay for the mistakes these people made, however, if those mistakes look like they will result in a national recession, then perhaps it is in the people's best interests for the government to step in and do something to try to avert the problem . .

...I still say, so what??? Why not let people and their lives dictate what happens? There are no highs without lows. There are no winners without losers. The government has a responsibility to not punish people who make good choices by making them pay for bad choices by other people. We've created this mindset where people don't even bother saving cash because there is no incentive to do so, quite the contrary. There is no incentive to pay off your house and hold onto it, quite the contrary.

Both parties have allowed a flood of cheap labor to come rolling in and it has removed the societal safety net of being able to go get another job because not only do illegals have them but they're doing them for far less than if we'd simply let the market and demographics of the American people alone and allowed supply and demand to work it's magic.

Foreclosures are a code word lie anyway. The only people losing are speculators; those who SHOULD lose when they screw up. Anyone else who bought a house and has a balloon coming up simply needs to come up with a few hundred more dollars a month to make the payment. That's a couple less dinners out. No second big screen this year. No Wii for the kids Christmas.

Think about it; If you're $300,000 mortgage ballooned from 6 to 9% that's about $600 a month more. That's $7,200 a year. You're gonna get a third back at tax time. That makes it about $5,000 more a year out of pocket.
That's a raise of about $3 an hour. Or a part time job at $7.50 of 10-15 hours a week. Or both. Maybe they gotta lose the Escalade and the $800 a month payment and go get a beater.

Point being they did this to themselves and we're running around accepting as an article of faith that these people were lied to! And they sure aren't going to lose their house, their kids home, rather than buckle down some.

[cwo_ghwebb]

Originally Posted by Larry Gude

...I still say, so what??? Why not let people and their lives dictate what happens? There are no highs without lows. There are no winners without losers. The government has a responsibility to not punish people who make good choices by making them pay for bad choices by other people.

Amen brother! Tired of this crap. When I've made bad decisions, the government didn't bail my stupid butt out.

[waggles]

How exactly does the private lenders refinancing outstanding mortgages to 30 year mortgages (essentially locking in the interest rate) make you or I, who made good choices, pay for the bad choices of other people?

I do agree there is little incentive to save - just look at the ever-decreasing interest rates on money market accounts and other savings apparati. I know quite a few other people my age who spend spend spend without realizing that real wealth is built by capital assets.

I guess I'm different in that I intend to buy a house at some point (once I raise enough cash for a nice down payment - which takes a while in this market) and pay it down while hanging onto it. No need to tap out home equity for "frills."

I agree that some people did this to themselves - but I know for a fact that there were real estate agents and financial persons pushing houses they couldn't afford.

A little bit of an aside, but I'm interested to hear what you would do in this situation. Let's say Habitat for Humanity built a house for a person (they worked on it too) in a town, say Fairfax. Their property values went up so high (artificially high, which most of the housing market has been) that they can't afford the property tax payments now because the value of the property has increased so much. Should they be cut a break on their tax or should they be forced to move out and back into public housing or an apartment?

[Larry Gude (Premo)]

Originally Posted by waggles

How exactly does the private lenders refinancing outstanding mortgages to 30 year mortgages (essentially locking in the interest rate) make you or I, who made good choices, pay for the bad choices of other people?

...lender offers a loan at a variable rate cheaper than a fixed rate with the understanding that if their cost of money goes up, the variable rate goes up with it. If it goes down, it goes down. Or, you can have a fixed rate a little more expensive that won't move.

So, it's gone up, balloon payments are due, etc. A bet is lost. The payment is due.

Now we're gonna go in and make this all better? Why not for those with a fixed rate, too? How about we give them a cheaper rate, too? Why should lenders who also made these offers get bailed out? Why should borrowers get bailed out? How come nobody is responsible for their decision? Can I have this guarantee on some stock purchases? What next?

[Larry Gude (Premo)]

Originally Posted by waggles

I agree that some people did this to themselves - but I know for a fact that there were real estate agents and financial persons pushing houses they couldn't afford.

...what? Send me a million dollars! You can afford it!

Is it my fault if you do?

[Larry Gude (Premo)]

...me a good read;

Fiscal stimulus folly#-#-#The Washington Times, America's Newspaper


Thank you

[tomchamp]

Originally Posted by Larry Gude

...me a good read;

Fiscal stimulus folly - - The Washington Times, America's Newspaper


Thank you

I read this earlier and thought about this thread...sorry for not signing.