When did this happen?

[the_mittens]

It's been a relatively slow work week so I find myself falling further and further into the abyss that is the internet.  I'm not sure exactly when it happened, but I got all opinionated about stuff.  I pretty much learned, this week, that if you ignore politics for 29 yrs, there is a lot of catching up to do.  I understand there's a lot going on

Comments

[f_o_n_y]

i'm still confused about the concept of the government as mortgage lender. i want to believe that those nearly-foreclosed houses all become public property, and we can go over there and sit on their patio.

[the_mittens]

Yeah, it's a little confusing how that would all work. The idea of a secondary market for mortgages was always difficult to wrap my head around. I understand the simplicity of essentially taking bad debt off a company's balance sheet and how that is VERY helpful to that company, but I don't totally grasp how the contract of the mortgage actually works if the government intervenes. The government isn't taking over the account maintenance, just providing the cash and sitting on all of this bad debt until the market turns around and then will unload all the bad debt when the property is worth something.

I kind of like the idea of having free reign of 1/3 of the houses on my block as a taxpayer.

[f_o_n_y]

yeah, i'm pretty sure that what the government is actually buying is the mortgage securities, not the mortgages themselves, so the company retains them. (does that mean the company can profit off them if the lenders actually DO manage to repay them? does that money go toward paying back the bailout?) the troubling thing is that they're actually supposed to determine a value for something that's essentially valueless now because of the much-higher-than-expected default rate. i love me some shady fiscal magic.

i'm going to wander into someone's house to use their bathroom, and claim it's my right as a taxpayer.

[the_mittens]

Yeah, the whole idea is straight out of The Land of Make Believe. We have no idea what the securities are worth because the banks have no idea what they are worth. All anybody really knows is that they're worth a hell of a lot less than everyone thought they were a couple years ago. Basically, all i think this will do is cause a second housing boom. If you've got good credit and money to spend, you're going to be in great shape. Everyone else is pretty much hosed.

[the_mittens]

Well, the bailout wouldn't really affect those that are defaulting on their homes. Some have suggested that more needs to be done to help those people, but that is a different issue. The bailout will protect the banks from holding the bag when all of those people eventually do default on their loans.

So far, nothing is in place to help the struggling homeowners on the brink of foreclosure. I don't really think there should be, either.

I think all of this basically slows the turnaround. Just like the T-wolves, if you really want to rebuild fast, you've got to blow it up. Would you rather have a couple years of really tough times or a decade+ of general shittiness.

[the_mittens]

I don't know about our grandkids paying for this, per se, but there will definitely be shocks felt for quite some time. We're feeling it everyday when our national debt rises and our dollar weakens. We feel it at the pump and at the grocery store. As our debt rises, the cost to borrow from other nations increases. The government has a credit score too...

Mostly, this sets a really bad precedent. It's bad news.