The Sky's Not Falling...

Here's an article that makes some good points.  The comment section is interesting as well.

The Sky's Not Falling (Click title to read it online)
By John Stossel
Wednesday, April 23, 2008

"Mortgage Crisis," shouts the New York Times. The Times has used the term "subprime crisis" at least 11 times. Not in opinion columns -- in news stories.

The columns are worse. Paul Krugman writes: "A lot of the financial system looks like it's going to shrivel up and have to be rebuilt."

The "financial crisis," says Fortune's senior editor, "is threatening to bring down the entire system, with dire consequences."

When the current troubles aren't a "crisis," they're a "disaster". That's what John McCain called them, while Hillary Clinton prefers "crisis," saying, "This market is clearly broken, and, if we don't fix it, it could threaten our entire housing market."

Wait a second.

Where is this "credit crisis"? Did the supermarket reject your Visa card? I still see Ditech commercials offering fixed-rate mortgages at around 5.5 percent.

Sure, some lenders are skittish while things play out. Some investment banks and brokerage houses are sitting on shaky mortgage-backed securities. But why call that a "crisis"?

Do we have 25 percent unemployment, as we did during the Depression? Do we even have 7.5 percent unemployment, 12 percent inflation and 20 percent interest rates, as we did during Jimmy Carter's presidency?

There's a been a loss of jobs in the past two months, but that comes after years of strong job creation -- 25 million net jobs in the last 15 years. At 5.1 percent, unemployment is low by historical standards.

And are we really experiencing a mortgage-default "crisis"? No. The Mortgage Bankers Association's 2007 fourth-quarter survey reports that foreclosures came to 2.04 percent of all mortgages. Many of those were speculators seeking flip profits rather than homeowners losing a dream house. During the quarter, only 0.83 percent of homes entered the foreclosure process. It may get worse -- in March, "foreclosure filings, default notices, auction sale notices and bank repossessions rose 5 percent," Reuters reports (http://tinyurl.com/6bb28q). But let's keep things in perspective: Ninety-eight percent of borrowers are not in foreclosure. Only a small percentage of them are even late in payments.

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 big 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.

This is not to say that lots of homebuyers aren't having a hard time. But the rapid rise and fall in housing values in some parts of the country -- and the rippling consequences at each stage -- do not justify scrapping what we know about economic success and turning to government control. Prosperity and stability come from people being free to innovate and produce -- and yes, fail. Bureaucrats, however well-intentioned, cannot know enough to manage that process. They are unqualified to give the green light to some innovations and the red light to others. Bailouts create irresponsibility.

I expect the silly people to say silly things. Here's Paul Krugman: "[I]t's puzzling that Democrats haven't been more aggressive about making the disaster an issue for the 2008 election. They should be."

Keith Olbermann even seems to find the "crisis" exciting. "You watch, this is going to make Enron look like the failure of a lemonade stand."

But the rest of us should get a grip. The best regulator of economic activity and source of knowledge is free competition.

Of course, government inhibits that in many ways. If we want to avoid disruptions like the current one, let's undertake a wholesale examination of government intervention in the economy. Freedom, not control, is the ticket to success.

 

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Very good read, CM.  Thanks.

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Amen brother!  One of the rare MSM guys who came in from the wilderness and now gets it!  Preach it Brother John!

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You know, in a way this is on the same level as how some of our "leaders" would solve the illegal immigration crisis.  What's the difference between bailing out those who foolishly took on a mortgage they couldn't afford....doesn't that punish those who ARE paying their mortgage, even if it means taking on a second or third job to do it?  And, compare that to giving amnesty (or whatever word you want to call it) to people who are here illegally.....doesn't that punish those who are still in their own homeland waiting for the LEGAL process to come here to be completed, as well as all those who are already here LEGALLY?

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And the banks who foolishly made high risk loans also deserve to suffer, just as employers who hired illegals only to find them deported for being illegal.  And the people who put their money and trust in banks who default for making bad loans deserve to suffer the consequences of making a bad decision, just as investors in businesses deserve to suffer the consequences of investing in businesses who failed or were punished for making unethical hiring decisions and hiring the illegals.  I'm not being facetious.  I'm just pointing out that there is a lot of downside to bad behavior and illegal actions anytime they are made by a company with fiduciary responsibility to others.

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I agree, Patsy and FeedFwd.

I actually saw an ad for a law firm the other day that said if you are an investor who lost money in the stock market, to call them to be part of a class action lawsuit.   If there were no risk in the stock market, you wouldn't make money.  Assinine.

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Oh my goodness, are you serious???  What's next?  Suing our parents because they didn't leave us multimillions?  Suing our kids if they didn't become rocket scientists?  Suing our boss because he doesn't pay us enough?  I'd say "sue McDonald's for serving hot coffee", but that's already been done, hasn't it?  Honestly!!  We're in Bizzarro World!  The Theme to Twilight Zone is our new national anthem.

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ConcernedMom said:

I agree, Patsy and FeedFwd.

I actually saw an ad for a law firm the other day that said if you are an investor who lost money in the stock market, to call them to be part of a class action lawsuit.   If there were no risk in the stock market, you wouldn't make money.  Assinine.

Next you'll have people wanting to sue the Vegas casinos because they lost all their money at the craps tables!  As Stossel says..."GIVE ME A BREAK!!!!"

This article is right on....everything today seems to be a CRISIS      I love John Stossel!

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ConcernedMom said:

Here's an article that makes some good points. The comment section is interesting as well.

The Sky's Not Falling (Click title to read it online)
By John Stossel

 

 

Are you kidding me? Try to sell a house!

marijam said:

ConcernedMom said:

Here's an article that makes some good points. The comment section is interesting as well.

The Sky's Not Falling (Click title to read it online)
By John Stossel

 

 

Are you kidding me? Try to sell a house!

 

Not being able to sell a house is certainly not a crisis.  And, when you buy a house, you realize that when you want or need to sell it, that may not be possible.

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Are you kidding me? Try to sell a house!

This is true, marijam, but what came first, the crisis or the fear of crisis spread by the media?

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Let's even say there IS a crisis selling a  house.....is that not a problem for the homeowner....NOT the government, AKA the rest of the taxpayers.  We buy cars too, knowing full well when we go to trade or sell them, we won't get a whole lot for them.  Sure, it's a royal pain the rear trying to sell a house, but homeownership is NOT a necessity of life.  It's just a nice thing to have a home in your own name.

And FW, I want my money back from Treasure Island in LV, Foxwoods and Mohegan Sun in CT, and Bally's in AC!!  How DARE they take my money!!!    

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Ya gotta know when to hold 'em

Know when to fold 'em

Know when to walk away

and know when to run!

Housing and real estate is an investment just like anything else.  Some investments work out well and others do not.  Sometimes you have to liquidate at an inopportune time and sometimes you can wait for just the right deal.  There are alternatives to buying a house, namely renting.  It has its own set of risks and costs, but the total exposure is quite a bit less for the renter than a new mortgage holder.  Low/no down payments and long term loans create leverage and leverage is a double-edged sword.  Some of us have learned the hard way, others have learned from the experience of the unlucky like me.

Some people live by the maxim that if you want something, you can get it fast, you can get it cheap, and you can get high performance/quality.  But you only get to pick 2 of those.  With real estate sales, as the seller, sometimes you are lucky to get only one.

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When the sale of a house is standing between you and a job in another state, it's a tragedy.  The crisis actually began two years ago. It just took this long to go national.

ConcernedMom said:

I agree, Patsy and FeedFwd.

I actually saw an ad for a law firm the other day that said if you are an investor who lost money in the stock market, to call them to be part of a class action lawsuit.   If there were no risk in the stock market, you wouldn't make money.  Assinine.

 

Are you kidding me?  There were laws broken and regulations too, whatever regulations remaining on the books that is.  These banks WERE engaging in unethical practices, I know, they tried to talk my husband and I into taking an ARM.  We were not uninformed and were able to find an honest lender.  It's stupid to blame people for being ignorant when not blaming those for being unethical.

marijam,

see my post approximately 4.5 hours ago.  There is negligence (actually lack of due diligence and/or education) all around and suffering all around, or there should be.  In cases where actual fraud was committed, the fraudulent ought to be taken to the woodshed, figuratively speaking.

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Are you kidding me?  There were laws broken and regulations too, whatever regulations remaining on the books that is.  These banks WERE engaging in unethical practices, I know, they tried to talk my husband and I into taking an ARM.  We were not uninformed and were able to find an honest lender.  It's stupid to blame people for being ignorant when not blaming those for being unethical.

Oh spare me your crocodile tears.  If the lenders were doing something illegal, then fine them to the extent possible under the law.  However, NO ONE made ANYONE sign their name on a piece of paper.  It's not the government's job to bail them out and save them from the little dollar signs in their eyes buying more house than they could legitimately afford.  Sure, it's sad.  Yeah, shame on unethical lenders.  But that's as far as it goes.  They deserve no more sympathy, and no more assistance than the two income family that buys a home and then one becomes ill cutting their income in half. 

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Socialism for the banks, but not for the little people huh?

Patsy said:

When the sale of a house is standing between you and a job in another state, it's a tragedy. The crisis actually began two years ago. It just took this long to go national.

Yeah? So it's a tragedy. How does that become MY responsibility to bail them out of their house? Guess they'll just have to suck it up and rent the house out when they move to another state. It is NOT the government's job to protect us from personal tragedies, troubles, and woes.

 

IT ISN"T THE GOVERNMENT"S JOB TO BAIL OUT THE BANKS EITHER!  LET"S GET BUSY WITH THOSE FINES, AND, HOW ABOUT HOLDING THOSE CEOS ACCOUNTABLE?  LETS HAVE THAT.