Auto companies, banks, and now mortgages. What is next on the bailout list?
The mortgage rescue plan by President Barack Obama’s team offers $75 billion in incentives for banks and investors to reduce struggling home borrowers’ interest rates and make other changes to loan terms. The money will come from the second half the $700 billion federal financial bailout. The goal is to keep 4 million homeowners out of foreclosure and halt free-falling home prices.
In reality, this will do the opposite . . .
By slowing foreclosures, the bailout bill artificially keeps housing prices higher. It won’t allow the market to determine where housing prices should be, or where the bottom of the market is right now.
And for many of these people, it will just delay a future foreclosure because these people should not have been given mortgages in the first place.
In David Brooks’ column titled “Money for Idiots” in the New York Times, you think he gets it. He says, “Personally, I hate the idea of 10 guys sitting around in the White House trying to redesign huge swaths of the U.S. economy on legal pads.” But despite the title, Brooks comes out in favor of the bailout:
“To stabilize that communal landscape, sometimes you have to shower money upon those who have been foolish or self-indulgent. The greedy idiots may be greedy idiots, but they are our countrymen. And at some level, we’re all in this together. If their lives don’t stabilize, then our lives don’t stabilize.”
Sounds like saying taxes are a patriotic duty.