Monday, October 13, 2008

Buy houses ... not stock

This is ridiculous: ["Bush to announce expanded bank bailout deals"].
Why is our nation buying stock in banks when we can just buy the foreclosed homes and allow people to stay in them and pay the money back to the government? Everyone wins: We get stabilized neighborhoods, people housed, the banks get the cash, and the government might get the cash later. With Bush's plan, the banks get the money and the government might get paid back ... but the people will be homeless. Isn't this ass-backwards?


Anonymous said...

No more ridiculous than the government buying hundreds of thousands of houses for people whom otherwise couldn't afford them. So much for a meritocracy.

At least by buying the banks, the government is doing what it can to ensure lending begins again, while also gaining an asset that can in turn be sold down the road, hopefully at a profit. If government were to buy all the houses, sometime down the road it would have to hike taxes simply to pay for the hundreds of billions it is essentially advancing the populace. That would be a disaster.

Tony said...

Well, no, by buying the homes, you guarantee that millions of people don't become wards of the state and drain needed services - services we will all pay for in the end when they are homeless. At least this way, we get an added benefit to the same thing that Bush is doing - keeping people in their homes.

Not everyone involved in this mess bought over their ability to pay. That is the big fallacy about this disaster. The economic disaster is global. That is bigger than a few million people buying homes they couldn't afford. The vast majority of this problem is not sub-prime borrowers - it was the housing speculators, investors, people buying homes they couldn't afford on non-sub-prime mortgages, and the sub-prime mortgages. Most folks would have had no problem paying off their ARMs had they not gone up so drastically.

Anonymous said..., that's not it at all.

Back to economics for you!

Tony said...

Not! Clearly the economics classes that have been teaching in colleges for the last three-plus decades have everything ass-backwards!