Real Estate

Told ya so

Bailout: The Road To Hell, In A Nutshell, Backwards

September 21, 2008 in Politics, Real Estate | 7 comments

Was it greed? Was it capitalism? Was it super-greedy uber-capitalism?

Well, one thing’s for sure, we wouldn’t find ourselves having to bail out AIG, Freddie & Fannie, Bear Stearns, and the millions of flippers and defaulters if the real estate bubble hadn’t burst.

And, of course, the real estate bubble wouldn’t have burst if all the foreclosures and mortgage defaults hadn’t happened.

And all those people wouldn’t have defaulted and gotten foreclosed on if they hadn’t tried to buy too much house to begin with, via those vile subprime and other “predatory” (even “racist”) loans.

Which wouldn’t have happened if we hadn’t all thought real estate was a “good investment” and “always goes up”, and is “The American Dream” (which it’s not, “opportunity” is).

And, it’s important to note, Real Estate wouldn’t have “always gone up” (for 5 meager years) if the tech bubble hadn’t burst and Sir Alan Greenspan hadn’t depressed interest rates for way, way, way too long.

And those securitized rotten mortgages wouldn’t have been peddled so aggressively if Sir Alan Greenspan hadn’t depressed the interest rates for way, way, way too long, either.

(interlude)

Alan Greenspan wouldn’t have depressed interest rates for so damn long if the country wasn’t heading into recession after the demise of the tech bubble.

Of course the tech bubble burst because people finally realized that tech stocks don’t “always go up”.

(end interlude)

All those bad, securitized mortgages wouldn’t have (couldn’t have) been securitized if the banks, along with Freddie & Fannie, hadn’t lobbied for Republican Senators Phil Graham and James Leach to repeal the Glass-Steagall Act (a post-Great Depression law that banned banks and brokerage houses from intermingling their finances) which was passed 90-8-1, and signed by Bill Clinton.

The banks, along with Freddie & Fannie, wouldn’t have lobbied for Glass-Steagall to be repealed if the banks, along Freddie & Fannie, hadn’t been suddenly handling an ever-increasing amount of really stupid, bad mortgages.

Freddie & Fannie wouldn’t have been able to “revamp” themselves and “back” all those idiotic loans if Clinton hadn’t installed his buddy Jim Johnson and former budget director Franklin Raines (both of whom are currently high-level Obama campaign principals).

Clinton wouldn’t have installed his cronies to head up F&F (and change their rules) if the banks hadn’t cried bloody murder (lobbied) about how dangerous, and risky all these mortgages, now sitting heavily on their books, were.

And, finally, the banks would never have partaken in these super-risky mortgages in the first place had the office of Housing and Urban Development, at Clinton’s direction, not drastically increased the home ownership quotas for “minorities” and other, “less fortunate” citizens.

And Clinton would have never demanded that “minorities” and other, “less fortunate” citizens, had it not sounded so darn good. In theory. Politically.

And, well, that’s it. That is exactly what happened.

All of this with the obvious and important fact that throughout all of this the Government willfully failed to enforce laws already on the books, like you can’t loan money to someone who can’t prove their income (bank fraud) and you can’t give junk-rate securities a AAA rating when you know full well they’re junk (securities fraud).

(interlude)

By the way, it’s not too late to enforce these laws, and even collect money from the monumental assholes that perpetuated this mess. Both in Government and in the private sector. From Congressmen, to Fed Chairmen and Presidents. From wannabe BoilerRoom Mortgage Brokers to Wall Street CEOs. These jerks owe us money, and jail time.

(end interlude)

You know what they say about good intentions?

Whoever they are, they’re right.

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In Defense Of The Rest Of Us

June 18, 2008 in Politics, Real Estate | 2 comments

In Defense Of Common Sense

Dear Senators and Representatives,

This is an open letter regarding the “Housing Bill” you are currently considering in the Senate. And I have a message from your constituents:

DON’T DO IT!

Sure, there are a lot of people who are “upside down” in their mortgages, dealing with rising monthly payments, facing foreclosure, and some are even walking away from their homes…

But there are a lot more of us who aren’t.

It may surprise you, being politicians and all, but the majority of us out here actually passed second-grade math class.

And we know that buying a house is a big deal. A very big deal.

We know for instance that borrowing multiple hundreds of thousands of dollars requires more than a passing glance at a multiple-page contract. And, crazy as it sounds, might even require a lawyer.

We know that if a mortgage payment surpasses, say, the 50% mark of your monthly take-home income, then it *might* not be such a good idea.

A heck of a lot of us out here heard the term “adjustable rate mortgage” and thought, maybe, just maybe, that it might actually “adjust” at some point down the road.

Our supernatural spidey sense also told us that people with 5 maxed-out credit cards, 2 past bankruptcies, and make 40K a year *probably* shouldn’t be buying a 500K home. In fact, they probably shouldn’t be buying a home at all.

Some of us were actually alive, and paying attention when the dreaded “Tech Bubble” burst, way, way back in 2001.

Some of us lost money.

So, naturally, some of us had a sneaking suspicion, too, that “No Money Down!” might just not be the brightest of ideas when it comes to spending hundreds of thousands of dollars. Especially hundreds of thousands of dollars that aren’t yours.

And we raised an eyebrow when “Flip This House!”, the reality show, debuted across the country in 2005.

We raised another one when “Flip That House!” appeared on a competing network in 2005.

However, we were fresh out of eyebrows by the time “Flipping Out!” debuted, on yet another network, in 2007.

You get the point.

You see, a whole bunch of us saw this whole thing coming from a mile away.

And we did something crazy.

We DIDN’T jump on yet another get-rich-quick bandwagon.
We DIDN’T over-extend ourselves and buy more house than we could afford.
We DIDN’T sign multiple-page contracts without reading them.

Most important of all, we DIDN’T take on unnecessary risk and expect the Government, via our fellow citizen’s hard-earned tax dollars, to bail us out.

We continued to rent.

We did what some would call “the right thing”. Even though that was merely being fiscally responsible. And just barely, at that.

Call it what you will, we did it.

And you know what? We vote

Look. Don’t bail out these selfish idiots. Especially the banks.

And unless someone was absolutely, and provably defrauded, you must resist the urge to come swooping in like some super hero savior. Simply let the market do what it does best: work.

America can’t afford foreclosure relief.

No matter how many sob stories make it into our glorious 24-hour news cycle. Resist the urge with every pandering, political bone in your body.

Sure, it may temporarily “depress” housing prices, including some of those who weren’t directly involved in this whole mess. But remember, when we see a 30% drop in price of a house that was twice as expensive as it should be, is still 40% too expensive.

The truth is, despite all the whining, the market is still over-priced. Everywhere.

But perhaps the real reason for your concern is that you’re seeing your property tax coffers shrink across the country? Well, much like the infamous home owners and their home equity lines of credit, buying boats and plasma TVs with phantom equity, perhaps you politicians shouldn’t’ve have budgeted on a bubble either. Eh?

So please, if you can, suck your crocodile tears back into your reptilian tear ducts, and stop this bill. Stop this insanity.

DON’T DO IT.

Because if you DO bail these people out, even a little teeny, tiny bit, you will have not only done the wrong thing. You will have made doing the right thing no longer necessary.

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