October 21, 2008

Put me down as unimpressed with the Bush administration’s actions of the past month to prop up the financial markets and bail out Freddie Mac and Fannie Mae. I mean, when does the Great 2008 Government Giveaway stop? You know the next people showing up at the government’s door will be one or more of the major U.S. automakers, followed shortly thereafter by an airline or two.

Like many, we got our 401K statements in the mail the other day – down 32% for the year – but I don’t see anyone on the horizon coming to bail us out. Oh that’s right – we can’t be bailed out, we (the taxpayers) are the ones doing the bailing out. That makes sense.

The whole Fannie Mae and Freddie Mac thing should have people ready to throw all the politicians out of Washington. I mean, the whole housing crisis is/was not a crisis at all. To me, a housing crisis means there are people living on the streets because they have no place to live due to a lack of housing. But that’s not what happened at all. In this case, banks were pressured by the Democrats – you know, the “champions of the people” – and their Fannie/Freddie flacks to give out loans to people you wouldn’t even lend a $20 to with confidence.

Now granted, there were some predatory lenders out there trying to make quick money off of people they knew couldn’t afford the paper they were signing, but more often than not, people were buying properties they couldn’t afford or using real estate to get rich quick, and they got burned. And now there is great weeping and gnashing of teeth.

A prime example: There was a guy in my office who would spend his entire workdays on the phone with realtors buying properties up left and right so he could turn them over as quick as he could – in some cases, no more than a month or two – so he could turn a profit on them. Talk about greed and stupidity. What happened to him? He got in towards the end of the bubble and all of a sudden had several properties on hand that weren’t worth what he bought them for, and he couldn’t turn properties over to make his payments. Now everything’s in foreclosure and last I heard (he ended up getting terminated) he was considering bankruptcy.

The thing I don’t understand – then again, there’s lots about the priorities of people today I don’t understand – is this: what was wrong with the idea of renting until you have enough money saved up to buy something? Wasn’t that the way it was always done? Such a concept seemed to serve this country well for a long time. But no, we live in a country where immediate gratification trumps logic, and people believe they have a right to everything – affordable travel, affordable housing, affordable health care, etc.

Sure, these are crazy times. And I have no doubt that there are a lot of people losing sleep over the fact they live in houses they can no longer afford, or on properties worth far less than what they originally paid. But real estate is cyclical, and it will come back again. To me, real estate was never a good short-term investment to be treated as a commodity, anyways. To own a house and a little piece of land is something both precious and a privilege, and it’s about time things get back to that frame of mind.

Filed in: Uncategorized by The Great White Shank at 01:54 | Comments (5)
  1. The condo right next door to me is for sale…it is gorgeous, has the best neighbor in the world. My fantasy would be that you and Tracey move in. It has a fabulous view of the water..we have a pool, sauna rooms, exercise room…I have a canoe for friends to use. Canoeing up the creek is my place of solitude.
    Having you both living next door to me was wonderful…besides, I always had a martini buddy. The weather is cool, the leaves are changing..this is the place to be in October. MOVE BACK..MOVE NEXT DOOR…Tracey needs cheese grits.

    Comment by Jana — October 21, 2008 @ 4:46 am

  2. I don’t think this crisis has ever been a “rent versus own” problem and I don’t think it’s been a “loans to bad risks” problem. Well, not mostly anwyay.

    These are mostly adjustable rate mortgages that never got refinanced before they ballooned. They’re mortgages that have second mortgages or equity lines of credits attached that people can no longer borrow against because their equity went down the tubes. Most of the foreclosures, most of the distressed properties, and most of the people who are simply leaving their keys in the mailboxes are not the 100k-variety properties. They’re the 300-400-500k properties that people are over-extended on. People who got loans because of Democratic pressure on lending institutions are partly to blame but favored sons/daughters of the Republicans are partly to blame, too. This crisis wasn’t caused by the rich or the poor. It is on the irresponsible portion of the middle class.

    Comment by Rob — October 21, 2008 @ 8:05 am

  3. Thanks for the comments, guys. Jana that place next to you has been available for years, what;s up with that?

    And Rob, of course, you’re correct that one can’t blame only the Democrats for what’s going on out there. But any time you mix equal portions of so-called “good intentions” with good old fashioned American greed this is what you get. A stain and a pox on both national political parties, the depths of which they have taken this country we’re all gonna find out in a year’s hence. I’d like to be an optimist, but 2009 is going to be a very bleak year. But that’s OK, Barack will save us…yeah right.

    Comment by The Great White Shank — October 21, 2008 @ 10:00 pm

  4. Actually, the place next door just went back on the market…the woman who owns it bought one down the street that was bigger…before she owned next door, another couple owned it and they moved. So, it has always been occupied but the owners moved. It is gorgeous inside..gourmet kitchen with cherry cabinets, fireplace, skylights, huge bedrooms, office area, basement(partially finished)…and the best perk….ME as a neighbor.

    Comment by Jana — October 22, 2008 @ 4:23 am

  5. No one will save us, GWS. We will save ourselves, as usual, and whoever is in power at that moment in time will take credit for it. I’d bet my house on it. 🙂

    Comment by Rob — October 22, 2008 @ 10:19 am

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