patrick.net

There was a bubble. Caused by greedy people (this includes the "little" people who thought they would "get rich"). You can't make parallels between the GD and now with regards to consumer protection. Back then there was no FDIC, no social security, etc. You could have done everything right (kept your savings in conservative bank savings accounts) and if your bank failed you lost everything. That sucked and I agree the govt should have stepped in and helped. But now, with the FDIC, etc the only reason someone could have lost money in this crash is if they were invested in risky assets. If your money was below FDIC limits in a bank (ANY FDIC-insured bank) your money would still be there.

Foreclosure moratoriums would hurt people like me. People who have done everything right. I'm sitting here with a large down payment, ready to buy when prices get back in line with fundamentals. All the "help" the govt is doing now is punishing me. How come stupid people get govt help and I don't? This argument that bailouts cost us money is a red herring. As they say, two wrongs don't make a right. The govt bailing out the banks is the wrong thing to do but it doesn't change the fact that these homes should be foreclosed on and the market should be allowed to find its true value.

As for the costs... If someone was truly lying and fraud committed they should be thrown in jail and the people they hurt should be given as much restitution as possible (but not from the govt, but by selling the assets of the person or company who was convicted). If those assets aren't sufficient to recover your losses then well, you chased higher yields by investing in riskier assets. Welcome to the real world.

But what happens to all of the honest and hard working people who slaved for decades to pay off a house only to see its value drop to a small percentage of their investment?

Anyone who bought a house decades ago and paid it off is not hurting. In fact, even people who bought 15 years ago should be doing quite well.

House prices need to fall to affordable levels. Policies to bolster house prices are attempts to save the clowns who overpaid or over MEWed during the bubble runup, at the expense of savers and future homebuyers.

grywlfbg says

But now, with the FDIC, etc the only reason someone could have lost money in this crash is if they were invested in risky assets.

Correct. The average Joe should be investing in insured CU or Bank laddered CDs, after paying of credit card and car loans, of course.

1) The international part is good news - it means we will not have to bail out at least some of the morons who played that game. And litigation is expensive enough to severely limit the number of those wishing to sue.

2,3) Few cared about paper billions on the way up, why would anybody care about paper losses on the way down? And do not forget helicopter Ben is hard at work to print many more paper billions right now.

4) Slaved to pay off 3 annual incomes in 30 years? Dump an already paid off house??

5) I am one of those US taxpayers and I am sure I will suffer no matter despite the fact that I had nothing to do with this mess.

I have waited for RE estate prices to somewhat normalize but they did not. My savings will be burned by inflation. As a taxpayer I contributed to bailouts but I did not get any equity in those banks in return. Do you really want me to sympathize with anybody who played this rigged game?

She was able to keep her home during the great depression because Roosevelt put a moratorium on all foreclosures for several years.

FC moratorium for people who did not bid more than they could really afford for a house isn't a bad idea.

IE, temporarily turning amortizing loans into negative-am loans at lower rates for a year or two to help people through the present employment crisis.

But I believe this is exactly what the government is doing!

The core problem is that much of the employment activity -- loan brokers, RE agents, home construction, big box retailers, durable goods manufacturers, and luxury goods and services -- of this decade was driven by the home price appreciation of 2003-2007.

In 2000, Americans had borrowed $5T secured by their property.
By 2007, the peak, this had risen to $11T!
(right now it's around $10.3T)

$850 billion per year in increase indebtedness. $850B per year flowing into the economy not from work but from signing a mortgage, re-fi, or HELOC.

$850 billion divided by $50K per job is 17 MILLION JOBS directly funded by nothing but increased homeowner debt.

FC moratorium isn't going to solve this core over-reach problem. From the looks of it, we may see attempts to counter the baked-in deflation with inflationary monetary policy, but there's something called the liquidity trap that prevents this from happening -- the Japanese have been pump-priming and spending like crazy but their economy is still decrepit and at best flat.

Foreclosure moratoriums would hurt people like me. People who have done everything right. I’m sitting here with a large down payment, ready to buy when prices get back in line with fundamentals. All the “help” the govt is doing now is punishing me. How come stupid people get govt help and I don’t? This argument that bailouts cost us money is a red herring. As they say, two wrongs don’t make a right. The govt bailing out the banks is the wrong thing to do but it doesn’t change the fact that these homes should be foreclosed on and the market should be allowed to find its true value.

Great points grywlfbg.

ZippyDDoodah says

Foreclosure moratoriums would hurt people like me. People who have done everything right. I’m sitting here with a large down payment, ready to buy when prices get back in line with fundamentals. All the “help” the govt is doing now is punishing me. How come stupid people get govt help and I don’t?

Great points grywlfbg.

+2

Where is my bailout?

Troy says

$850 billion divided by $50K per job is 17 MILLION JOBS directly funded by nothing but increased homeowner debt.

Excellent post, Troy.

The cure will be the upcoming debt unwind, with falling wages and lower prices.

There are people with much at stake that need to preserve the current inflated values of housing. These people do not want discovery because that would would be good for us common folks. Whats good for us is not good for them.

There is a great deal of money to be made by the elite while the government passes bailout after bailout. They dont want this opportunity to pass.

Desperate times call for desperate measures. Oh yes, they are taking them. Any one notice they raised the ceiling fo fannie and freddy. Extend and pretend.

This post below more than any other I've seen on Patrick reflects exactly the right sentiment about all of the crap that went on and (amazingly) continues to go on in housing. I am on the same page. It's gotten so that now I don't want to even think of buying or subsidizing the pathological greed of a realtor/broker in any way, let alone "investors" (what a boring ass investment).

I have been saying all along, if you want to extend amnesty to people who bit off too much, let the government enact a program wherein they cosign as guarantor on a lease agreement. In other words, let them RENT. This would be a boon to commercial rentals, and also help inventories correct and start moving at a healthier rate.

There was a bubble. Caused by greedy people (this includes the “little” people who thought they would “get rich”). You can’t make parallels between the GD and now with regards to consumer protection. Back then there was no FDIC, no social security, etc. You could have done everything right (kept your savings in conservative bank savings accounts) and if your bank failed you lost everything. That sucked and I agree the govt should have stepped in and helped. But now, with the FDIC, etc the only reason someone could have lost money in this crash is if they were invested in risky assets. If your money was below FDIC limits in a bank (ANY FDIC-insured bank) your money would still be there.

Foreclosure moratoriums would hurt people like me. People who have done everything right. I’m sitting here with a large down payment, ready to buy when prices get back in line with fundamentals. All the “help” the govt is doing now is punishing me. How come stupid people get govt help and I don’t? This argument that bailouts cost us money is a red herring. As they say, two wrongs don’t make a right. The govt bailing out the banks is the wrong thing to do but it doesn’t change the fact that these homes should be foreclosed on and the market should be allowed to find its true value.
As for the costs… If someone was truly lying and fraud committed they should be thrown in jail and the people they hurt should be given as much restitution as possible (but not from the govt, but by selling the assets of the person or company who was convicted). If those assets aren’t sufficient to recover your losses then well, you chased higher yields by investing in riskier assets. Welcome to the real world.

They will "extend and pretend" as long as possible until there is no way to hide the truth. I think they will fail in the end. It is just a matter of time.