Wednesday, September 10, 2008

Letter to the Editor, NYT on Corporate Bailouts (Bear Stearns, Freddie Mac, Fannie Mae and Lehman looming along with the auto industry):

".... A profiteer's dream. We've privatized profits and socialized losses." Candida Pugh, California.

Rather a brilliant statement, I thought. The mortgage industry gave away money to anyone with a pulse - remember those Ditech ads on TV 24/7? Suddenly every house was a private ATM machine for cars, vacations, autism treatments? And then the market did what markets do, it changed course. What a mess. Of course, the people who made foolish errors are suffering. Maybe that speed boat or new car or second home wasn't necessary. Caveat emptor and all.

But what about the people who refinanced just to get by? Or who didn't understand the fine print that was smaller than an amoeba on that piece of paper held by the nice young man with the broad smile?

We sold our home three years ago. Just before the market in Cleveland (such as it was) collapsed. Thank goodness we got out.

So homeowners are falling like solidiers while the companies at the top are getting a bail out. I realize we can't let the market collapse - that's catastrophic for the country. But jeez, doesn't it seem that you and I pay for our sins the hard way and the companies and the people who ran them into the ground get off with half a Hail Mary and community service, in Palm Beach?

1 comment:

Josh Day said...

One thing to consider, which I believe is the driving factor behind all of this, is the inflated residential housing markets, in places like California especially, but also in any major city in the country.

My wife and I got married in 2005. She was 21 and I was 24. We lived in a micro yet cozy duplex from spring 2004 to summer 2006, saving. We took a special first time home buyer's class to become eligible for a HUD loan. We both had immaculate credit (700 plus).

Even so, we never could have afforded a home in Asheville, NC, where we lived at the time.

One of the houses we looked at on a so-called affordable housing tour was a one-bathroom residence built in 1920, in the middle of the projects. Yes, there was a kitchen and a second bedroom in this house, but to reach the kitchen and master bedroom... you had to pass through the one bathroom. I am not kidding. It was f'ing surreal and Alice in Wonderland-like. This house was 150 grand.

The only house that was shown that was under 100 k was an "experimental" green house that was not built on proper foundations, unfinished, had rooms exposed to the elements, and you could roll a marble from one end of the house to the other.

The guy showing these houses to the class called the house "quirky" and a "fixer-upper." The ladies who ran the class (COMMUNITY ORGANIZERS) were at a loss for words the entire time. Our car had broken windshield wipers at the time so we rode with the teachers, and later they told us how shocked they were at the state of the houses being shown/economy (2006).

And that's just asheville, NC, within the city limits. Not a big city by any means.

We left the city and bought a real fixer-upper in rural NC that was built properly. But we never could have afforded a home in Asheville, period!

It's scary. I don't think most people appreciate the so-called bubble and this housing crisis. It's bad news. When you have a 1 bed/1 bath house in a bad neighborhood in a minor city in California priced at 500 thousand dollars, this is not a good thing for anyone.