"This Is Not An Expenditure. This Is an Investment."

That's what I just heard Paulson say about the $700 billion on CNN.  "As the economy grows, and as housing corrects, these assets should appreciate in value."

Comments

[Simon]

An investment is what I do with my own money. Having my money taken and given to someone else because it's really important and if I'd only think about it more I'd see that it's on my own interest really? That seems like something other than investment.

If this is absolutely necessary, then I suppose we have to do it. Very smart people tell me that we have to do it. Surely there has to be some kind of retribution against those that made it necessary.

[Outis]

All things being equal, this is probably true. The government may even make money off this deal, if it buys the bad debt at a good rate.

I wonder if the Bush Administration isn't seizing this opportunity partially to cover the inevitable Medicare funding gap. Viewed from that perspective this makes a lot of sense, if they can buy the assets cheaply enough.

[Outis]

Surely there has to be some kind of retribution against those that made it necessary.

Surely there doesn't have to be any retribution. Don't blame the executives of the firms in question - they were just playing by the rules set by Washington. The real perps are the ruling class that started pushing cheap mortgages for people that shouldn't have had mortgages to begin with. But those guys all have secure jobs, and there's no getting rid of them.

[Outis]

Previous Word Verification:

dacada

[realpc]

"Don't blame the executives of the firms in question - they were just playing by the rules set by Washington."

That makes no sense. Why would the executives create a disaster just because the rules didn't prevent it? Are you going to jump off the roof just because there is no law against it?

"The real perps are the ruling class that started pushing cheap mortgages for people that shouldn't have had mortgages to begin with."

Yes there were predatory lenders and they deserve to be punished. But no one was forced into buying a house they couldn't afford. The government should protect the public against scams, but people could try to be a little smarter.

I think this problem originated with the belief among Americans of all political parties and social classes that owning a home is always great for anyone and everyone. That idea turned out to be wrong, but lots of smart experts believed it.

You are trying to squeeze this disaster into some kind of class warfare scenario, but it just doesn't fit.

[Melinda]

Four and a half years ago I had a broker try to sell me an apartment that was twice as much as I could afford in an area half as good as the one I'm currently living in. When I told her it would be too much of a stretch for me, she replied, "I've found when I really want something, I somehow rise to the occasion."

Rise to the occcasion. What am I, yeast?

But she wasn't the only person I'd heard this from five or so years ago, and I cursed myself out for being chicken, "owning is cheaper than renting," blah blah blah. And now I'm glad I used my common sense. Because you can only rise so high before you explode.

[amba]

Quite a few real estate hustlers were into that New Age crap -- "put your intention out there and the universe will respond."

The prospect of golden parachutes for those who most profited from this Ponzi scheme (and who are probably big on preaching "Personal Responsibility" to their lessers) could turn me into a raging populist.

[karen]

"(and who are probably big on preaching "Personal Responsibility" to their lessers)"

Barney Frank's a New Ager??

[amba]

Not the same people, Karen. The two paragraphs were about different phenomena. The new-age one was about "spiritual" real estate agents who use astrology and "wealth creation" and "The Secret" and that kind of stuff to convince you to take a mortgage you can't afford. But they're small fry.

[realpc]

""spiritual" real estate agents who use astrology and "wealth creation" and "The Secret" and that kind of stuff to convince you to take a mortgage you can't afford."

I don't think there is anything wrong with that. Just don't buy the house until after the wealth materializes.

[amba]

Heh.

[realpc]

I don't think owning is cheaper than renting, necessarily, even in a normal real estate market. Paying rent may be throwing money away, but so is paying mortgage interest, home owner's insurance, property taxes, repairs and maintenance. Not to mention the time lost on do-it-yourself improvements. And not to mention the interest you don't get from savings or investments.

The only time owning is obviously cheaper than renting is when real estate prices are sky-rocketing, as they were. If the appreciation is over 5% a year, then you might do better than with other kinds of investments. But you still have all the stress and work of owning a house and yard.

I think owning a house is great for anyone who can afford it and has the time, but I think renting has been perfectly ok for me.

I really think the mania for buying homes was related to peer pressure and status. Everyone probably assumes I can't afford a house because I don't have one. If you care what people think you might have bought a house as a status symbol.

[karen]

Amba, i was making a jk. Tongue in cheek.

Franks dismissed any attempt to work @preventing this diseased beast back since 2003- and yet, has the gall to preach as if he had no responsibilty and can lecture (the Pubs)for his views. Like:..."(and who are probably big on preaching "Personal Responsibility" to their lessers)"

Sorry, they seemed to fit together.''We bought a cheap farm that was foreclosed upon- and when i got wind that the adjustable rate could take a hike-- i locked in and reduced our mortgage down to 15 yrs-- shaving 9 yrs off the payoff date. If it's in the wind- isn't it folly to wait for the storm to hit? Huh, Congress?

[Tom Strong]

If this is absolutely necessary, then I suppose we have to do it. Very smart people tell me that we have to do it. Surely there has to be some kind of retribution against those that made it necessary.

Simon, it's not often that I agree with you. So in the spirit of amity, I'd like to point out that I'm right there with you.

(Though I suspect we'll diverge again when it comes to the question of actually allocating said retribution).