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I've just about had it with stupid people that do stupid things being bailed out by the government. Sorry, but it's starting to get on my nerves.
The straw that broke the camel's back is the announcement that Sen. Hillary Clinton is trying to put forward a measure to save the poor idiots that bought the huge houses with the interest-only Adjustable Rate Mortgages (ARMs).
Here's the deal. Sen. Clinton is talking about putting ~$30 billion (same amount as the Bear Stearns bailout EARLIER this week) into a fund to guarantee loans for people that are about to default on their mortgages because of upward adjustments of their ARM's. In addition to that, she wants to put a moratorium on interest rate increases, AND LOWER EXISTING RATES TO ~3.5% for 5 years.
Now, I've GOT to throw down on this. I realize that there are a lot of people out there that are facing foreclosure, but it's because they DID SOMETHING STUPID. There wasn't a mortgage bandit going around the neighborhood forcing people to sign up for mortgages at gunpoint. If they got into something they can't handle, then they should have to face the consequences.
What About the Responsible Ones?!??
If you were responsible and got a mortgage you can handle, you've been paying on it and watching the whole Subprime show from the sidelines. But now, it's turning out that you really should have acted stupid and gone out and gotten the super-sized house and run up all your credit cards. The government has gotten into the habit of bailing out any sector that seems to be having any troubles, now they're shifting to individuals. Where's the justice?
How is it fair, that being a fiscally responsible person in America nowadays nets you zilch, but being a fiscal IDIOT get you rewards and special treatment by the government? We started down this path by bailing out any big business that did something stupid (Airlines, Telephone companies,etc,. With the exception of Enron, which had already turned into a business black-hole before anyone noticed). Why SHOULDN'T the government decide to start rewarding failure in individuals. That seems to be the life lesson that's taught in America nowadays.
Compare Apples to Oranges
As a person and family that's always paid their bills, lived within their means, and have never been late on the mortgage, I don't QUALIFY for a refinance, rate reduction, handout, or anything else that the other families qualify for.
For the families that have maxed out their credit cards, gotten the house you can play baseball in, and the 57 1/2 year interest-only ARM mortgage, they get financial relief and a refinanced mortgage AT A LOWER RATE THAN ANYONE ELSE IN THE COUNTRY FOR 5 YEARS!!.
This sends mixed signals to me and my children. America is now saying that it's the land of opportunity AND we'll bail you out if you screw up, in preference to those making good choices. Why even bother anymore! Do something stupid, get a handout, buy something you can't afford, get a rebate. The whole cause-and-effect cycle is out of whack in the U.S. nowadays.
Rewarding stupidity isn't going to make anyone learn from their mistakes. America is the land of opportunity, but that opportunity also includes the opportunity to fail.
What do you think of all the handouts and bailouts going on recently?? We'd love to hear your comments.
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March 25th, 2008 at 6:54 am
I'm with you 100% on this. It sickens me that people driving cars they can't afford, wearing clothes they shouldn't have bought with credit cards they can't afford the minimums on are now getting bailed out for the mortgage they just "HAD TO HAVE" to keep up with the Joneses, who are also probably broke.
While I sit here... using a budget, paying off my debt, sitting in a rental while we save up for a house. It doesn't seem fair. The government is NOT to blame for these people's problems, so they should not be helping them out.
This Mom's last blog post..Send Your Prayers
March 25th, 2008 at 7:21 am
I understand your frustration, but please be careful in your venting. There is method to the madness of these proposals. Maybe it is a bailout - but only in the short term. You, sir, who have never been late on a mortgage payment, have the opportunity to refinance your mortgage at any time. Now would be a good time as the Fed has dropped so drastically. Since you have such a good track record, chances are primo that you will be approved. You just have to do the leg work. Now these schlubs who made a bad decision are being bailed our with little work, yes. However, I guarantee you, their FICO's are in the toilet. The mass number of foreclosures that are going on are bad for the economy. Very bad. As you noted last week, it's not just the stupid folks who took out ARM's that are suffering - perhaps it's the renters who live in those houses, who pay their rent on time, who are feeling the squeeze moreso than the homeowners. The point is, the short term consequences seem unfair, but the long term consequences will benefit the nation. And it's a good bet, that these folks who did make bad decisions WILL most likely learn from the near brush with homelessness.
March 25th, 2008 at 7:41 am
It's a pretty crazy mess. I think maybe flogging lenders who gave out subprime mortgages would be a good place to start.
March 25th, 2008 at 8:45 am
AMEN. I think that's all I can really say. If I try to say more, I'll work myself into a coronary.
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March 25th, 2008 at 6:00 pm
As for refinancing, even with a pristine FICO, and a good history, the odds of me getting a 3.5% loan are pretty much zero. The credit crunch is causing banks to INCREASE requirements (big down payment, verifying employment, etc, etc. ) basically what they SHOULD have been doing before. But if you notice, the mortgage rates have been going UP, not down. The cut by the Fed won't be felt by us refinanciers for a number of months, if ever.
As for the renters, they didn't dig themselves into the mess, they're just innocent bystanders within the blast range.
Great comment, and I thank you for the thought and time put into it.
March 25th, 2008 at 10:49 pm
Great post - I agree completely that bailouts shouldn't happen.
Mike
March 27th, 2008 at 8:06 am
Let's hope this is just a case of a presidential candidate blowing smoke to get into the White House. If she actually does this ( if elected )..... I can only imagine the uproar from responsible citizens.
We pay taxes to support other people and their irresponsibility? I'll pass, thanks.
Llama Money's last blog post..Diversify your Cash
March 27th, 2008 at 11:10 pm
The Dems won't win anyway...so no opportunity to bail anybody else out.
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March 28th, 2008 at 5:27 am
March 31st, 2008 at 2:43 pm
I couldn't vote for McCain..... no one who wants to stick it out in Iraq gets my vote. All other issues come secondary to that in my eyes..
Besides that single issue, I'd vote for him in a heartbeat.
Llama Money's last blog post..Diversify your Cash
March 31st, 2008 at 9:28 pm
As a very frugal student that's amazed by her fellow students that think they can afford new cars, tuition, and expensive dorm rooms without income... I would say the "bail-out" lesson is already engrained in otherwise intelligent people. First, it starts with the parents, then when that well is dry, they continue the downward spiral.
I made a promise to myself that I would do everything I could to graduate without debt. So, I studied, and failing to get sufficient scholarships through that route, I enlisted. I actually have saved money in college through part-time jobs and winters without using gas heating. I admit, I'm crazy frugal. But, when I talk about IRAs and CDs, my classmates get envious. Even if the IRA is tanking...
I haven't had a chance to think about a house. Do I really want to subsidize people as a completely innocent person that actually reads the fine print? My parents taught me a valuable lesson. They bought too much when they were young, leading to a rather lean childhood for my brothers and I. Now, how to pass on the frugality without depriving my future kids...?
April 26th, 2008 at 4:02 pm
The American government prints money. Four $100.00 bills cost $0.10 - yes! ten cents to print! and Bush has the crank in his hands! Never ever save money, always borrow to the limit, it is bad business to have any outstanding credit, you will lose it to inflation and the government's money machine! Never mind fair! honest! frugal! - only noble idiots and paupers believe this tripe! Get real! Look at the price of a house, car, loaf of bread, whatever, over the last century in 10 year increments and ask yourself if interest rates keep up or are just a banker's way of kicking your ass! Default on the bastards and walk away laughing! This time Bush seems to have pushed a little hard, and eventually the end will come and we will all go bankrupt, and just start again! In the mean time, the Arabs and the Chinese, holders and respecters of the value of paper, must be feeling a little stupid when they look a what the billions of dollars in paper they hold will buy, at it's new, deflated value! Bush stole billions from the oil barons and the Chinese and they are too damned ashamed to complain. The oil they shipped is burnt, the toys they sent are in the landfills, the money we paid them with is worth less by far, and we are ready for the next round of suckers, probably India or Russia or Taiwan! Our only fear is that they might catch on and go to the Euro, but I'm sure that the boys who control the Euro have a few games up their sleeves too!