Tuesday, October 14, 2008

Should the U.S. Bailout Homeowners?

This morning when I dropped off my children I had a parent tell me that the government should pay off every one's loan. Thank God it was before the kids' morning prayer because I was able to pray for this man. The funny thing is that I can't blame him for thinking this way. After all the government is setting themselves up for its citizens to think like this. They preach personal responsibility but only for individuals not for CEO's and officers of major corporations or for people that continue to have children that can't afford them.

Being in this industry yes I would love for anything to happen that would stimulate spending but that would be selfish on my part to encourage the government to be irresponsible with our taxes just so I can benefit. I'll stick to hard work and perseverance and know that in time it will pay off. In the meantime my kids and I are not eating out and ramen never tasted better.

The problem that I see is that we continue to ask what can our country do for us and no longer ask what we can do for our country as our former president JFK once asked us to do. Now we are asked to share the wealth but we can't ask somebody to stop having kids unless they can afford them. We are asked to take our hard earned money to pay for these companies that are failing while the officers that ran these companies to the ground collect multi-million dollar paychecks. Why are the people of our country not up in arms about this. Why do we allow these politicians who are terrible economist and accountants to do whatever they like with our money?

What happened to the billions of dollars that many of these financial companies said that they had. Shareholders were investing in these banks because they stated that they had money. Did they put it under a giant mattress? I believe that these companies tightened up because they knew eventually the government would eventually come and bail them out. Just like they have in the past with the airline industry. For a while I started to think that maybe I should try to be a CEO for a major corporation and run it into the ground. Sure seems like you get rewarded for that type of behavior. The problem is that I don't like to fail. I teach my kids that it's not okay to fail. Now the government is telling my kids that it's okay to fail and it can also make you a lot of money. I believe in learning from our mistakes but not to learn that it's okay to continue to make mistakes.

It saddens me that the media only follows the two major parties in our politics. I myself believe that my ideology is more in line with the libertarian party and wish I could see more of them on the news. Since I don't I'm online trying to find the truth about how these new policies affect me and the economy. I wish the American people would start to do the same.

My answer to the gentleman that suggested the government payoff mortgages was that although it would be nice it is not necessary. In southern California I witnessed people buying and knowing what they were getting into. I also heard mortgage brokers trying to push option arms because they would make so much money from them. They were trying to maximize what they could legally make. Did they ever advise borrowers that if values stopped rising or started to drop that they would have a difficult time getting out of that type of loan, some did and some didn't. Were borrowers stupid for not reading their documents, the simple answer is yes. They relied on what the lender told them and that's it. The tough questions were not asked. Yes it's difficult to read the fine print but you don't always have to get into the fine print to see that you are getting suckered into something you shouldn't be buying. My thoughts are that if the banks were told that they are not getting help then they would figure out a way to fix things fast. Loan modifications, faster approval on short sales, and common sense underwriting are some simple solutions that should have taken place at least in the beginning of 2007. Lending standards now require prices to drop some more or for people to get raises so that they can afford and qualify for loans. I don't see raises happening anytime soon. The banks were too greedy to accept some of these simple solutions because they themselves did not know that the market was going into the toilet.

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