It is fine with me if our government helps the sick and the hungry and those in need.
But when our government takes the resources of one class of citizens to protect the investments of another class of wealthier citizens, something is rotten.
Our government is spending trillions of dollars to reinflate the housing market. The government is buying trillions in bad mortgage backed securities through the Federal Reserve. Fannie Mae and Freddie Mac are making hundreds of billions of dollars in loans which private banks refuse to make because they make no business sense. The FHA is guaranteeing loans made with a 3.5% downpayment, and after the $8000 dollar tax credit this basically puts the government in the no money down 100% home loan financing business.
And then to top it all off we have this cockamamie foreclosure relief program.
Our government has simply created money out of thin air to hand this largesse to homeowners. This will be paid for by the poor and folks that rent through inflation. There is no free lunch in this world.
The new health care program will be made much more expensive because of this massive transfer of wealth to homeowners.
The government cannot give to the landed class without taking from the landless class. The government cannot give to the rich without taking from the poor.
Trickle down economics does not work.
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I posted the above earlier under a slightly more inflammatory title. Of course the resident lunatics contributed the usual idiotic mindless invective that greets any diary discordant with the party line.
But scattered amongst the wasted bits and bytes in cyberspace were some intelligible points that need to be addressed.
It was noted that there are poor people that own houses, and therefore boosting the cost of housing must be helping poor people.
Now there are obviously two classes of citizens in our country, citizens that own homes and citizens that do not own homes. Certainly there are wealthy people that do not own any real estate and there are poor people that own real estate, but the real estate owning class of citizens is certainly much wealthier by any measure than the landless class.
Further the trillions of dollars that the government gives to the homeowning class takes from the landless class. There was nothing in the comments refuting this very important point. Our government's housing policy seriously increases disparity of wealth in this country.
The claim was made that giving trillions to homeowners raises all classes. This is very similar to the argument that Reagan gave for his trickle down economics, and in my opinion pure nonsense. If the government sends everyone checks for tens of thousands of dollars but decides to exclude certain classes of citizens, the citizens that do not receive checks get screwed not lifted.
We all know that because of stupid government policy, people were enticed to take on way too much debt to pay way too much for a house. Now that housing prices have fallen these people are taking losses. An appeal was made in the comments for the government to cover these losses. Most housing loans in this country are non-recourse. If the bank wants to make a loan without sufficient capital, than these people can just walk away from their bad investment decision and become renters. This will lower the cost of housing.
Our government should be lowering the cost of living not raising it.
Here is a good quote I found at patrick.net
If the government makes the mortgage payments for someone behind on their mortgage, the ultimate beneficiary is the bank that made the bad loan. They get the money in the end and the poor person still has a high probability of default despite the aid from the government. There is no difference between a program that bails out people who are struggling with their payments and the bailout of AIG. Ultimately, the money ends up in the hands of the big banks. The real loser in the entire equation are the people who rent. The supply of homes available to buy is artificially reduced. The supply of homes to rent also becomes artificially reduced. As a result, home prices are elevated beyond their true market value. Rents are elevated beyond their true market value. And in the end, these programs need to be paid either through inflation or higher taxes. So, basically, the renter has to finance a program that makes his/her cost of living that much higher so people who can’t pay their bills get to live in their homes temporarily at a very low cost and big bankers can have their giant bonuses.
But it is not just the mortgage modification program that is egregious. The mortgage interest deduction targets the wealthy. Fannie Mae, Freddie Mac and the FHA throw trillions at the housing market raising the cost of housing at the low end(under $729,000.00) which obviosly raises the value of real estate for the wealthy. And the Federal Reserve buying trillions in bad mortgages is just taking money from renters and raising the cost of housing(living) for everyone.