Quote:
Originally Posted by Aliantha
I said government. Not private industry. There's a huge difference there. Also, I didn't say refinance, I said 'rent to buy' which means the person has no ownership claim over the house until such time as they've paid the value of the mortgage off, say 25yrs.
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That is exactly what tw said. It's a huge difference. Private industry does this; not government. If possible, then private industry is already doing it and doing it far better than any government can.
There are too many homes and not enough people to lease these homes. Appreciate the problem. Lower income people - where so many of these loans exist - have been living well beyond their means.
Is this problem that people are going homeless? For the most part - no. Too many homes are now in this mess; too much product and not enough consumers. A mess that remain ignored while more money games masked the problem. Too many people in debt for so long that it is even appearing on spread sheets many years later.
Don't fool yourself. Spread sheets only report what was happening many years ago. Should we now bring in government welfare to further mask this problem?
Ridiculous is an idea that government will solve a financial problem. Government was already doing that years ago with money games that only made these problems worse. When money games and excessively low interest rates were not enough, then private industry played more money games: sub-prime loans and complex financial instruments. Home equity loans - borrowing money on home prices that were inflated by those money games and sub-prime loans. Meanwhile, everyone ignored the factor that spread sheets cannot measure – risk. Too many homes, too many Americans (at this income level) with massive debts, and America that was spending recklessly at 10% more than incomes (which also means no savings). Aliantha wants government to magically solve all this?
Put homes up for massively reduced prices. Yes, private investors will buy then and rent them at lower leases. Few are willing to do this. Even at reduced prices, few are willing to risk more capital because, well, where is a market?
Aliantha suggests government to, again, fix this market? More damage? Take these homes away from finance companies under martial law? Fine. A government already deeply in debt, going $hundreds billions further into debt, rewarding the companies who only made this problem worse with welfare, and then become landlord of still vacant homes. At what point do we end up with more Bronx slums that take decades to solve? At what point do we turn neighborhoods into 'the projects'?
Problem is not homeless people. But if we do as Aliantha suggests, then economics takes revenge years later - making many more homeless people. The problem is too many houses built for people who never had incomes to support them. Problem agrevated by an economy where the rich are getting richers and everyone else have a lower income. Problem created by the same government policies that Aliantha would further expand? What financial problem will government solve with financial welfare?
What Aliantha recommends creates more inflation AND real estate dependent on government (rather than private industry) while still looking for tenants who just do not exist. Meantime, when does the actual problem get addressed?
Never forget why too many homes exist. To make a recessionary economy look good, government dumped money into the housing market using low interest rates, tax games, etc. Government made things worse. When that still was not enough, then finance companies mortgaged those people further with sub-prime loans. Mortgaged more homeowners with home equity loans as homes values were inflated by those money games. Eventually we ended up with too many homes, an economy fully in recession if not for money being dumped into housing, and now Americans who are even poorer.
It was the cover page of The Economist. A falling brick labeled housing prices.
Worse, add the threat of stagflation, in part, due to these money games. Make this worse by having government step in, dump more money into an economy already under threat of inflation, and create another 'housing market' money game?
This is what bankruptcy does. Solve problems at the source. Same thing saved Chrysler and Ford. Gerald Ford (according to the NY Post) told New York City to 'Drop Dead'. As a result, NYC eliminated and fixed their money games. Why? Threat of bankructcy was the only reason every problem was solved. Every one asked for government welfare and (thank goodness) did not get it. Threat of bankruptcy finally killed off money games.
Let economics take revenge on an economy that has been lying to itself for four and more years. Too many houses and not enough people with incomes to support those homes. The sooner economic pains are addressed, then the less that pain will be long term, AND the faster private industry can solve this liquidity crisis.
Maybe if America was not spending $2billion every month on "Mission Accomplished", then the economy might have funds to minimize this problem without creating more inflation and other money games. Even bridge maintenance is being reduced. Let's not forget the brunt of an inevitable $1+trillion outstanding debt to pay for "Mission Accomplished". We have yet to see the damage created by money games played even in 2002. "Reagan said deficits don't matter".
Deja vue Nam. Money games in the late 1960s and early 70s to coverup a financial disaster and a war that cost $1million per day (as Nixon lied about the war and its costs) meant stagflation in the late 70s, masssive reduction of American standards of living, and everything worse. How to avoid reliving history? People responsible for irresponsible money games - homeowners and financial firms - must suffer the consequences.