Unfair Mortgage plan
- Thread starter millionaire7
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Quote from gnome:
What's the number? 90-95% of the people do NOT have a "mortgage problem". Why should they be forced to pony up to bail out those who do? Many of which never qualified for a mortgage in the first place.
With all due respect, your figures are far too simplistic for such a complicated issue.
Merrill Lynch says that 2 out of 6 mortgage holders in this country are upside/down. According to their analysis, if housing prices fall another 15% nationwide, that number increases to 1 in 2.
I know for a fact that 27.5% of a major metropolitan area is upside/down from 2004 on . . . And I know of a county in that same metro area that is 76.5% upside/down, from 2004 on.
Now, I don't pretend to know what the threshold is for a homeowner that is upside/down on his mortgage that would make him "walk" away.
But if layoffs and unemployment continue to surge, there is a very strong chance that the American economy will go the way of Japan in the 90's . . . stagflation for an entire decade with Zombie banks the rule of the day.
I'm not sure what the ANSWER is, but in my opinion there is a very high risk of just such an outcome.
P.S. By the way, you conveniently overlooked my question to you a few days ago on this thread:
http://www.elitetrader.com/vb/showt...153891&perpage=6&highlight=gramm&pagenumber=5
I think you're right.
We've had a 25 year credit bubble, and it's unlikely to be unwound within the next year or two.
Then, there's the "wages" issue. Many of our middle class, well-paying jobs have been shipped overseas.... NEVER to return. And the Asian low-cost labor genie has been let out of the bottle. Can't be put back in.
This burst credit bubble will most likely lead to a rethinking by American consumers... don't "borrow to consume"... and "save", just in case. THAT'S going to be a big knock on our real GDP.
Then we've got the Boomers retirement and Medicare demands hitting the economy soon.... not financially prepared... looking to the Gummint once again for the solution.
We might have to be FORTUNATE to limit the damage to a Japan-like deflation/malaise...
Japan also had to re-align its industry, which is largely manufacture, to meet the challenge from China
by the way, do your guys think the mortgage will work?
by the way, do your guys think the mortgage will work?
Unfortunately, we're doing the same thing Japan did to creaete a 15 year recession.
While some people may be upside down in their mortgages, it doesn't mean that their neighbour who made prudent decisions should be forced to pay for the bad fortune, mistakes or even outright fraud of their neighbours. If we are "all in this together" then that means we have no personal responsibility and it's perfectly okay to use government to rob others to shore up our own losses. Who would willingly create wealth in a country where one only needs to demonstrate need to get what they want? Furthermore, if too much risk got us into this mess then how does government robbing Peter to pay Paul mitigate that risk when the protocol is that profits are private and losses are shared? That's the problem of moral hazard and countries which have undertaken to increase moral hazard have all suffered economic declines.
Because of this, even people who have to go through the hardship of foreclosure are better off if they simply lose their house and start over than if they are bailed out. The "common good", as it were, is to let people suffer the consequences of their actions.
BTW, I think the other poster is right. According to a Tampa Bay newspaper, around 8 million mortgages are upside down nationwide. I don't know how many mortgages there are nationwide, but I do know that Florida has about 4.5MM, so 8MM (even twice that) seems like a small percentage.
Catscat, you're a moron. The Japanese 15 year recession had nothing to do with excess government intervention.
Quote from gnome:
What's the number? 90-95% of the people do NOT have a "mortgage problem". Why should they be forced to pony up to bail out those who do? Many of which never qualified for a mortgage in the first place.
If responsible home owners have to subsidize those who were not, then why not create a "market" where they will be able to "bid" on those outsized houses with swimmin pools and fancy kitchens/bathrooms. The "bids" is their current mortgage payment so that, if reasonable to the banks, they will be rewarded by moving to the presumably better/bigger houses whereas the irresponsible homeowners move into the smaller/shabbier ones on reworked terms. So all parties feel they gain something in the exchange. I know that sounds crazy and that it is so simple and fast, and no politicians used to spending OPM will go for that, but I am just venting my anger and frustration in a constructive way.