Tuesday, September 04, 2007

Buckets of Our Money

I thought "no bailout crowd" was in the minority but even the LATimes seems to be getting it. The smart people already know the system isn't fair. What the politicos and big money types never counted on was the visceral reaction to having that rubbed in our faces. There also seems to be some forgetfulness as to an old concept called "consent of the governed."

LATimes:
Is America really pro-bailout?
Politicians are sorely misreading public opinion of imperiled homeowners who bought into the bubble.
By Peter Viles

September 4, 2007


President Bush announced his intention last week to reach out a hand to the "many Americans" who "may have been misled" in the sub-prime mortgage market. Two days earlier, presidential hopeful Barack Obama called for fining "predatory lenders" to bail out "hoodwinked" families. L.A. City Councilman Richard Alarcon wants a $5-million revolving fund to "help homeowners on the verge of foreclosure." The news media report on families losing homes, disabled owners facing foreclosure and newlyweds being tossed into the street.

Here's one tale of sub-prime woe you may not have heard. Casey Serin, a twentysomething real estate investor in Sacramento, bought eight houses in four states with little or no money down, couldn't sell them and couldn't pay the mortgages, and so naturally began losing them to foreclosure. He then began keeping a self-pitying online diary he called Iamfacingforeclosure.com.

Serin hasn't drawn much notice from politicians or the media, but real estate bloggers have so vilified him that CNet's news.com granted him the title "world's most hated blogger." And cases like his help explain the disconnect between public opinion and bailout-happy politicians and the elite media: According to a recent Fox News poll conducted by Opinion Dynamics, there's 70% opposition to a taxpayer sub-prime bailout.

"It is amazing all the sympathy we are seeing from politicians for people who knowingly took out loans they couldn't afford, often lying on their applications to do so," commenter "srl" posted at the LA Land blog I write for the Los Angeles Times....
You can find thousands of similar comments on scores of "housing bubble" blogs. I asked Patrick Killelea, whose blog (patrick.net) has long predicted the current housing crisis, to quantify his readers' feelings about a bailout. "It is easy to quantify," he replied. "100% against."

How can these people oppose helping out their fellow Americans? Easy. Many or most of them saw this crisis coming years ago -- not through any real estate wizardry but by observing the signs that have been in front of us through most of this decade. In large parts of the United States -- and in all of Southern California -- the housing market turned into an obsession, a mania. So when the mortgage industry nearly collapsed this summer, Americans were fully versed in 100% financing, "liar loans," "teaser rates" and "flippers." There was no mystery here, no unforeseen "perfect storm."
...
But it's striking how little attention the views of the anti-bailout bears have gotten. Politicians, by rushing to the defense of recent home buyers, give the appearance of endorsing price stability at historically high levels. This makes little sense in Los Angeles, which ranks among the least affordable markets in America when housing prices are matched against income levels. Why should government favor today's owners over tomorrow's buyers?
...

A blog commenter on the edge may not sound very menacing, but this point of view is widespread, well supported and worth listening to as we deal with the remains of the housing bubble.

14 comments:

Salt Lake Mortgage Guy said...

First!!!

serinitis said...

Now was this the real Nigel or someone playing games?

I love the article. I also think it is accurate about how people really feel.

Sweet Cashback said...
This comment has been removed by the author.
Sweet Cashback said...

This just adds to the discussion of investment vehicles: Article

It just seems that anything dollar related has a bad MURST factor....

Wonder by when the "Dollar stores" will transform into the "1M Dollar stores". It will be cheaper to use dollar bills as wallpaper then buying real one.

Peripheral Visionary said...

The opposition to the bailout is very easy to understand: just ask what percentage of homeowners have been making their payments vs those who have fallen behind on an exotic loan. While the tendency is to feel bad for someone who falls into financial hardship, the general feeling post-welfare reform has been that the government shouldn't be involved.

I'll also point to another cause for the opposition: Hurricane Katrina. The U.S. collectively felt terrible about the plight of the hurricane victims and thought that the government had mishandled the situation. The government responded by throwing tremendous amounts of money at the situation, most of which has been wasted or stolen. Not surprisingly, as the next disaster has hit, this time a financial one, the people do not want the government rushing in and wasting money.

The Democrats, in particular, need to take a big step back on this one. They're in classic "vote buying" mode, thinking that pushing massive tax dollars out to people in a financial crunch will help pad their vote counts. They need to do their math, they might win a few votes from speculators but lose a lot of votes from middle-class families who aren't behind on the mortgage. If they become known as "the party that used tax dollars to bail out the house flippers" they could be in trouble come 2008.

Read President Bush's proposals very carefully: at no point did he promise spending any tax dollars; everything was proposed as a regulatory change, nothing more. I'd say he's reading the public sentiment better than Obama and Schumer are.

Legion said...

@PV

Exactly about the Katrina government bailout, what a waste of money.

Want to hear another one? How about the world trade center families who had money thrown at them if they lost family members. I personally know one woman who was about to divorce her husband who worked in the WTC, of course when she got handed a 4 million dollar check, she suddenly became a grieving widow.
So let me get this straight, something bad happens to you, and the governement sends you a check? How about all those previous airline crashes, how about car accidents? Are they going to payoff all those people in the recent bridge collapse? Why get life insurance then?

H Simpson said...

Not only do I have zero compassion for fraudsters and dolts looking for a get rich quick scheme, I want to see their banks get theirs.

In their zeal for getting rich quick, they over looked standard operating practices.

It seems the SOX compliance rules are not going to nail them, so lets see their investors sue the living sh*t out of them for negligence. Whether they win or lose, they are going to suck up a lot of capital and personal health trying to defend themselves for the next 5 years in the courts.


Seven years ago, the big 7 accounting firms took it on the chin for not doing their jobs. This time it is going to be the bankers and the stock firms that sold these toxic offerings.


And before I leave, let me ask you all a question. Even with all the consolidation in the banking industry in the past decade, have you noticed more and more new banks opening up? Can business be that good, or have the scammers figured out if you look legit, you can escape detection?

H.

Sac RE Agent said...

thank you to the la times. hopefully the rest of the media will catch up to how americans feel.

Bill said...

Saw an aricle in today's WSJ about homeowners dropping wind coverage from their private insurance because of the expense.

At least some of them must be thinking "Uncle Sugar will just throw money at us again when the next Katrina hits, so why should I pay"

IIRC, WTC compensation was similar - those who paid for private insurance had that subtracted from their government payout.

>most of which has been wasted or stolen

Funny Circus Bears said...

Casey who?

ratlab said...

A mortgage bailout is just mortgage welfare.

Unless I get a cut of the bailout, no one else should either. It's like the welfare moms that keep having kids.

Tav said...

I think the poor homeowners should be bailed out because they were misled. I agree with Jim Cramer, Chris Dodd and Barack Obama that the government should do something.

The real parasites here are those homeowners who can afford their mortgage. They're pieces of RethugliKKKlan trash as far as I'm concerned.

sid_finster said...

I see Tavington is back to trolling, but from the other side of the aisle. *yawn*

formul8 said...

Ok, will the goverment bail me out of that stock I lost my azz in a few months ago?

I think it was ticker symbol NEW...

Just like anyone who buys something in speculation or whatever, if you lose- you lose.

SAY NO TO THE BAILOUT!!!

BTW, what has ol' Snowflake been up to lately?