John Stossel echoes a point I was trying to make via email to Sis B:
Politicians love a "crisis." John McCain, Hillary Clinton and Barack Obama all think that the government should bail out homeowners who can't pay their mortgages. When they say the government should do this, they mean the taxpayers, including those who are paying their mortgages. They also think the government should regulate the lending and investment industries further.
Why?
Because "crisis" justifies making government bigger.
It's why we now have a global warming "crisis" and in previous years we had "crises" over avian flu, the Y2K threat to computers, imaginary cancer spikes caused by pesticides, killer bees flying up from Mexico, and uncontrolled population growth leading to a "Population Bomb" that will bring "riots and mass starvation" by the year 2000.
In my email, I mentioned the HBO series John Adams and remarked how deeply it struck me when John Adams told Congress that it wasn't his place to give his opinion when they were deadlocked. Imagine any politician today saying it's not his place to give his opinion! Nowadays, politicans tie millions of dollars to their opinions and give both out freely. And imagine telling our early presidents that they need to help people pay for their homes or stop the spread of disease. No way that was the government's job back then. But it sure is now. Hurricane hit your city? Free trailers for everyone. And here's a voucher to go buy a new Gucci purse.
The term "predatory lending" just gets my goat. Forced lending? Ha. You can't make someone borrow money from you. If you make $30,000 a year and bought a $400,000 house, it's no one's fault but your own. I wish John Adams could be here today to stare incredulously at those people's faces and tell them to get real.
Posted by Sarah at April 23, 2008 08:48 AM | TrackBack
The problem with the media and politicians overblowing crises is that when a real crisis appears, it will not be getting the attention it needs. You know, like the little boy who cried wolf.
I, too, don't understand predatory lending and don't think the government should bail anyone out of it. Whatever happened to "Caveat emptor"?
Posted by: Sis B at April 23, 2008 09:41 AMAbout "predatory lending," on the one hand I agree that people are idiots for biting off more than they can chew. However, it also annoys me that credit card companies and mortgage brokers etc. don't loan out their money responsibly. In fact, they purposely give credit to people they KNOW won't be able to pay back on time, because that is how they earn money in late fees. They purposely give a mortgage to a family who really can't afford that kind of house, because they can get higher interest rates that way.
I do think it's a two way blame street, and I don't believe that those in debt are victims. However, I do think it's atrocious that those who actually understand finances etc, purposely abuse this knowledge and do not educate their customers. They hide the nasty details and only advertise the good details. If you are in business, your aim should be to serve your customer in the best possible way. It shouldn't be to screw them over...however that is what credit lenders do. So in my opinion, if your success is based on how many people you can screw out of money, that isn't good business.
However, like I mentioned before, I don't feel too sorry for those who have been screwed over, because no one put a gun to their head to take that credit, and usually they were in no need for any credit before they took it.
And in no way should we bail out any one, because there is no lesson learned...and why should someone be allowed to stay in their 4000 square foot McMansion, while my husband and I exercised fiscal responsibility and have a much smaller house? It sends the wrong message. And both the lenders and the lendees need to learn a lesson here.
I'd say we have a crises of stupid people in this country.
Posted by: tim at April 23, 2008 03:22 PMMy husband used to work for a paycheck advance company. For many it was helpful and no one was forced to take out a loan. At one point a politician decided the military should not be charged the current rate and made the rate to low for the company to make money. They would lose money at the rate required. So what did the company do? Stopped loaning money to soldiers. The net effect? No loans when they may have needed it.
Posted by: Amy at April 23, 2008 08:19 PMA lot of the problem with housing is due to that fact that just about everybody believed, until a year or so ago, that houses would appreciate in price at 10% per year, more or less forever. If this had been true, it would have made sense to max out your borrowing. But it wasn't true, and indeed couldn't have been true. But there were very, very few stories, in the general media or even in the business media, raising red flags on this.
One of the porblems with crisis orientation is that people get so preoccupied with the *current* crisis or fad that they can't see the next problem or opportunity coming.
Posted by: david foster at April 24, 2008 08:33 AMIs it wrong of me to be thankful for the stupdity of others?
Should I feel guilty about watching, waiting, reading, investigating all in hopes of making the best possible home purchase for me and my family?
OH wait....I'm an American and with that comes freedom to make my own choices, not read junk mail and NOT believe everything the media and society would like me to believe is the NORM.
As I remember the "American dream" was 2.5 kids, a dog and a house with a white picket fence. I don't remember seeing any small print stating the house had to be a minimum of 3500 sq. ft. on 2+ acres and exceed my income.
It's early and my thoughts are all over the place, but man that felt good!