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Last night as I was trying to fall asleep the news of the day kept rumbling around in my noggin. I couldn't get my head around the fact that some people were opposed to the third leg of the Obama rescue plan. I am referring to the housing bail out plan designed to stop the hemorrhaging of foreclosures. I will call those oppositionists the 'complainers'.
The people against it are complaining because they don't want to be forced to pay for their neighbors mortgage because 'said neighbor' lied to buy a house they couldn't afford. (I will refer to those people as 'losers'.) The mantra goes like this: Why should I pay for the houses of people with their extra bathrooms who bought a house they couldn't afford when I have been responsible and played by the rules and made my payments on time?
The first point I would make is that this is a gross exaggeration of the people who are losing their houses. Yes, some did buy houses when they clearly couldn't afford them, but others were just as responsible as the complainers. They made their mortgage payments on time, could afford the house when they bought it, but, through no fault of their own, are now unable to make the payments. Usually, this unfortunate circumstance is due to the loss of the job of one, or both, of the breadwinners. To the complainers I would say, "Be careful because you could be next."
The second point I want to stress is that those losers won't be bailed out. It's the people who have equity in their houses that this program will help. The irresponsible losers have no equity (remember the banks were happy to sell them houses with no down payment). Not only did the losers obtain the house with little or nothing down, but all the payments they have made have gone to interest. Ergo - no equity.
The third point I would make is, if the government doesn't stop the downslide of the housing market the complainers own houses will continue to lose value as the foreclosure signs go up around them. An abandoned house deteriorates very rapidly and is a magnet for squatters. Would the complainers rather have a drug dealer next door or the neighbor who was evicted? I grant you that this might seem like an extreme argument until you look at some neighborhoods where the foreclosures were many.
The fourth point I want to stress is, if nothing is done the economy is done for. The housing bubble started this big hole we are all in and it must be addressed along with bailing out the banks and auto industry. If it isn't stabilized, new homes will not be built and how many jobs will be lost because of that? Just as the auto industry has other businesses dependent on it's survival, so does the housing industry. Just think about all of the things that go into a house. From the Realtor's first selling the lot to the last piece of furniture, hundreds of jobs are at stake. Isn't this what the stimulus package is supposed to do? I thought the whole object was to 1) create jobs and 2) save jobs.
The complainers are classic examples of failing to see the big picture while they focus on their own narrow view. It is crisis time. We all have to sacrifice because we are all in this mess together.
9 comments:
It is a tough situation. I don't know what the end will be. I heard the housing market is really down in Phoenix. The problem now is you don't know how to fix this and a lot of empty house isn't going to be good.
I agree with everything you say, except, don't forget, some of the people who don't have any equity in their houses used to have equity but don't have any now because the value of their house has dropped so much. And that is made worse by foreclosures around them. It's a downward spiral.
Rain, you are right. Biden was probably right when he said there was a 30% chance that they will get it wrong. But in unchartered territory we have to try.
20th Century Woman, I should have gone into the loss of equity due to the falling price of the house. Thanks for bringing it up.
hi, I have been having trouble being able to post, hope this goes thru!
This is a bad sitiation we're in and your right we need to stick together. We have had many foreclosures in our neighborhood, the banks have fixed them up and they are for sale. All of us keep our eyes on these houses to make sure no one breaks into them.
But our hearts broke each time someone left, we felt so helpless. The only thing we were able to do is give them groceries, it makes me want to cry right now.
Great post, Darlene. Aren't you proud of what our president said and did tonight? And the Republican response was so lame. I can't believe that he quoted the Bush mismanagement of Katrina as an example of how government never works.
Thank you for a rationally passionate (or passionately rational) post!
I'm in such a panic right now, Darlene. My husband's office was informed today that there will be 30% staff cuts. There's a meeting later this week, and we're not sure if that's when the announcement will be made. For those who are fortunate to keep their jobs, management (my husband) will be rolled back to the pay step of last year, plus one day/month will be unpaid furlough to at least the end of the year.
I absolutely have to get back to yoga to get through this fearful time.
p.s. I really do love Biden!
You are right...but this is just such a mess. I am worried about those greedy souls who bought 5 or 6 houses and now are having them foreclosed. This really impacts that neighborhood and the stimulus is not going to fix that very soon.
I have a pet theory that if the government went out and paid off the mortgage for each house on which less than (some figure, we'll call $100K), the homeowners would then spend their money for items that would increase jobs in their areas.
Great post, Darlene. You hit the nail on the head when you wrote that the complainers are not seeing the big picture. This is not about punishing people who made a big mistake. This, as you pointed out, is about stopping the slide into economic collapse.
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