After vowing to change gears on this blog here I go jumping two feet into a political blog. Oh well.
In case you live under a rock let me point out to you that the housing market is in the dumps. As a result much of the US economy has taken a dive right along with it. There are doubtless many reasons for this but one of the leading contributers is the vast number of home forclosures. People left and right are losing their homes that they can no longer afford. You don't have to look long or hard to find at least one home in each neighborhood that is bank owned or right on the verge of being taken away from the family who currently owns it. A lot of the problem was that home interest rates fell so low so fast that people who would never have been able to normally afford a home of their own suddenly found themselfs in a situation where home ownership was a reality....sortta. These people were drawn into loans with extremely low interest rates to begin with that gradually went up over time. These Adjustable Rate Morgages (ARM) can be great if you plan on flipping the house quickly or only living there a couple years. But people tomorrow will forget the plans made today and when suddenly their low precentage, interest only payment started going up they were stuck. In the begining of the housing boom they could refinance their house for more than they paid for it and draw money out. But towards the end the house of cards started to collapes and they were stuck with no options other than lose what they had.
Whos fault was this? The home buyer? Certainly. Say what you will but no one put a gun to their head and forced them to buy a house that was beyond their means. Be honest, if you only earn $35,000 a year you have no business buying a $500,000 house but people were doing it because they felt if they qualified for the loan that must mean they could afford it. This of course wasn't the case and the result is evident.
Another cause, however, was so called fair housing. It started in 1980 with Carters Fair Housing project. The actual language of the Executive Order is so complicated only a lawyer could figure it out but the long and short of it was that morgage standards should be relaxed so that a larger percentage of low-income and first-time buyers could qualify for loans. The hope, of course, was to help more people throughout the nation realize the dream that is home ownership. For the most part this worked. Unfortunitly it paved the way for a much more disasterous plan because we all know that in politics if something works perfectly well it should be altered until it doesn't work at all.
In 1993 Hillary Clinton started her fair housing project and the movement was quickly picked up by her husband and then president Bill. This bill was designed to further relax the standards so that even lower income people and even homeless people and those with no income at all could get a loan. How was this done? The Executive Order stated that no home loan could be denied to any person for any reason even if they couldn't afford it. The rates, fees, and structure of the loan could be made to look unattractive as to turn the perspective buyer away but if they insisted the morgage broker had to sign the loan. This is where the trouble started.
As people who couldn't afford to buy homes bought homes the housing industry as a whole started to go down hill. The Fed would adjust interest rates to try to keep it afloat but in the end what resulted was more and more people buying homes they couldn't afford. The banks are to blame too. They were hoping that they could loan money to people who really couldn't afford their higher ARM but would stay in the house anyway and "make it work". This way they would make more money from the higher interest rate. Either that or they could get their hands on some of these forclosed homes and sell them for more than they got them for. Problem is that they suddenly had so many of these properties on their hands they got screwed. So did everyone else.
So here is the bed that we've made, America. We're all to blame. We elected these people, we voted on these bills. We didn't rise up and yell "ENOUGH" when we saw things going the wrong way. Like pigs we ate the free corn that the government was feeding us until suddenly the gates were closed and we were stuck. So now we have a 700 billion dollar punishment. Is this enough? Can we finally as a nation open our eyes and pay attention to what these politicians are doing with our money? Guess we'll see
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After watching the debate last night I lament the future of this Country. Both candidates repeated the same thing over and over again. Even the moderator became frustrated because they were being so long winded about their responses, in excess of the agreement they had both signed regarding the rules of the debate. McCain reminded us over and over again that he as "proven record" of reaching over the isle to work with Dems. The trouble is he only could quote Feingold and Lieberman as the Dems he's worked with. His economic package includes more bailouts, and his energy plan is almost entirely comprised of building nuclear plants. Obama is for change. He mentioned that a few hundred times. Never did mention what the change was, or how he intended to do it, or how he intended to pay for it, though his tax-and-spend record leads me to have a general idea. He's going to work with Venezuela and Iran for energy, two countries who have shown a real propensity for working with us when we need something, they're so friendly and all. Economy wise he claims to want to cut taxes for 95% of Americans, mostly the middle class, though I've heard that song before, and it doesn't end like that. In this version of "The Devil Went Down to Georgia" the Devil kicks Johnny's ass and throws him in a flaming pit for all eternity just because he can.
I don't see the solution to the housing crisis getting any better. Lets face it folks, we got ourselves into this mess through greed and poor planning. It's not the governments responsibility to bail us out, it's our responsibility to accept what we've done and live with it. Does that mean some people are going to lose their houses. Yea. It does. I may be one of them!