November 11, 2008

“We’ve got to keep Americans in their homes!”

This afternoon, I chatted briefly with one of those financial pundits who goes on cablenews quite a bit?though he?s known as a doom-sayer and is certainly not one of those ?Go, Wall Street, rah rah!? types. He really brought the housing crisis home, so to speak, when he discussed what will really happen once the government starts buying up all those mortgages about to be defaulted on and begins cutting the homeowners?or should be say squatters?new deals on their monthly rates.

Americans usually get all teary-eyed whenever they hear about foreclosures and usually collectively nod in approval whenever a politician says, ?We need to keep people in their homes!? But then in ?keeping people in their homes” and preventing foreclosures, the government is also preventing the market as a whole from bottoming out?and thus making sure that good honest saver like you and me won?t be able to take advantage of falling prices and buy a home. The government is thus rewarding those people who lied about their incomes, or rather lack there of, and lived beyond their means and punishing those who saved and lived responsibly. 

Steve Sailer has already blogged on ?Real Homes of Genius? (those cribs in da ?hood that became massively overvalued), but not all subprime homes were like this; many, in fact, were pretty gargantuan cookie-cutter, sheetrock palaces.

So, let?s imagine a Boobis Americanus who got a subprime loan for a 9000-squarefoot McMansion in Plano, Texas, much of which looks like this.

When Boobis applied for a loan, he listed his occupation as ?financial services? and said he had a 80K salary, even though he was actually a janitor at a corporate park with a lot of hedge funds, all of which have now gone under after their leverage schemes collapsed, destorying the savings of the ridiculously wealthy Plano parvenus. Boobis works at McDonald?s now (fitting for an owner of a McMansion), and he can?t possibly pay his $2500-per-month mortgage. Enter Uncle Sam, who wants to help him out?Why it?d be sooo terrible if Boobis lost his home, wouldn?t it? So, the government cuts Boobis a deal, allowing him to pay $750 per month on a 40-year mortgage.

Well, ever since Boobis?s girlfriend left him, the old McMansion has been getting pretty lonely, and so Boobis decides to take in some visitors, four of them. And since he?s such a nice guy, and all his friends are out on their luck in the financial crisis and all, Boobis only charges them $1000 per month in rent. Well, soon Boobis discovers that he no longer needs to work at McDonald?s, as being a landlord is pretty lucrative and doesn?t require much effort. And he now has a lot more time to enjoy his flatscreen, which he?s paying off in monthly installments. 

So there you have it, another good American lifted up from poverty through the power of the ownership society!

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