Tales from the Trail

When is a housing crisis like venereal disease?

February 20, 2009

If you’re among those upset that your taxpayer dollars may be spent in volume to rescue people who — for whatever reason — can’t make their mortgage payments, Federal Financial Analytics analyst Karen Shaw Petrou recommends thinking about it this way:

“Preventing foreclosures has a lot in common with treating syphilis. In both cases, you help some who are undeserving, but – in an economic collapse or a public-health emergency – one acts nonetheless. ”

Just as in an serious epidemic, you’d take care of the problem and leave moral judgements to others, the right course of action is to take action to halt the housing crisis and leave the debate about moral hazard to economists, she wrote in a note to clients on Friday.

Yes, it’s possible that under President Obama’s plan to prevent mortgage foreclosures, some borrowers who could make their current payments may score a “quickie refi” at potential taxpayer risk, Petrou says.  Others may abuse a provision that allows judges to reduce the amount of principal on some loans, she adds.

But give the Obama plan credit for trying to be fair by trying to weed out the the undeserving by limiting relief in certain ways, Petrou writes.

And in any case, the current crisis is the “the financial equivalent of a mortal epidemic,” she says.

Plenty of time to lecture about practicing safe credit later.

Comments
22 comments so far | RSS Comments RSS

And pray tell, what about those that were foreclosed on
six months ago ? Or those that avoid foreclosure until the
day after the official “end date” is decided by the powers that be? And what is the motivation for me to even
remain in a home whose value is so far underwater that
it may NEVER return to the full price that I paid for it
in the first place? Oh, and to compare the housing crisis to venereal disease is silly. I could innoculate the entire world for that affliction for around a billion dollars or so, give or take a billion. Now you tell me what it will cost for the housing bailout ?

Posted by homer | Report as abusive
 

Where is the wealth coming from to pay for all the bailouts and stimulus packages not to mention fund Medicare and the Social Security Ponzi game? You can’t dent an epidemic when you’re fresh out of drugs just as you can’t head off an economic collapse if you’re out of credit. Government creative financing gone wild won’t cut it forever; at some point we’ll need to eat our own debt, and when that day arrives foreclosures will be the least of our problems.

po

Posted by P!ssed Off | Report as abusive
 

This and the following stumulus will be the same as pouring a glass of water into the ocean. It will not resolve anything, GM and Chrysler should once and for all, file for bankrupcty as no one is buying their cars and bailing them out is a huge waste of taxpayer money

Posted by George P. Wilson | Report as abusive
 

Greediness by the finacial institutions by giving sub-primes home and car loans to ANYBODY on the street is the real cause of the economic disater, and Alan Greenspan could have done something while all this was going on, but, inexplicably decided to look the other way

Posted by George | Report as abusive
 

IMHO, the American taxpayer has just experienced the biggest heist in world history. And BTW, I’m one of those anybodies on the street, who’s a hard worker but didn’t have the best credit. I tried for a LONG time to get credit and was turned down. Been forced to rent my whole life…

So I say to hell with the banks and lending institutions. If my own mistakes make me responsible then so should theirs. Why should my hard earned tax dollars support commercial enterprises that never benefited me and entered into knowingly risky financial schemes.

Millions of people in America shouldn’t be loosing their homes to foreclosure because of job losses that come from acts of greedy lending institutions and their management. My local bank whom, I’ve patronized for years isn’t asking for a handout, and is getting by fine.

Maybe that is where the problem is. These mega-institutions just may be too big. An allegorical asteroid struck, and hit hard. If the big banks and financial institutions don’t survive, so be it. Probably a good evolutionary move…

 

I am sick and tired of working hard, saving for the future, and doing the right thing. I quit! I am going to get my piece of the pork and live a better life. Let some other sucker pay for the bailouts.

Posted by CWS, Sunnyvale, CA | Report as abusive
 

Mr. Santelli has a point. Mr. Gibbs has a point.

Mr. Obama’s point is that the privileged class is kicking and screaming all the way to the first serious increase in the top marginal rate since 1964.

That’s how Mr. Obama’s deficit (together with Mr. Bush’s deficit and Mr. Bernanke’s deficit) will be financed.

If along the way, some middle & working class homeowner’s are assisted…well…that’s just fine.

OK Jack
oklahomajack.com

 

It’s when everyone ‘s banging the same institution. In our case the dirty host is the federal reserve. Congress has sold their right’s to off shore banking institutions and trade agreements. They can no longer hold up their end of the deal and are breeching the contract (the constitution) they have with the states. Now is time for states action against the feds.

Posted by jason | Report as abusive
 

Let’s see where to begin..First, this whole crisis stated and finished with the top down big business being paranah greedy. Where did the money for the multimillion or billion dollar bonuses come from. The overinflated prices for the houses and the ridiculous interest rates and freezing or driving down wages. I happen to be one of those so called irresponsible borrowers. Purchased my home in 1999 w/ARM refi in 2000 and was chugging along until I received an email in 6/08 from my top down employer stating you are going to be making 40% less for the same job. It was almost as bad as being laid off. So, either you stay and work and look for something else, in this economy or quit. Makes unions look better and better. Well, 60% of something is better than nothing. Now the VD analogy does work. Except, I would rather call it the big G. It’s green and slimy and burns it’s way all over the world’s economy. Lastly, the top should foot the entire bill because that’s where all the money is. And the public service announcement should have their poster child MADOFF carrying the banner.

Posted by MARSHA | Report as abusive
 

Someone must have standing to take this to a Federal Court.

It seems to me that the Mortgage Bail-Out is clearly unconstitutional: a court forcing a renegotiation of a valid contract just because one of the parties cannot fulfill their obligations under that contract.

Make them file for bankruptcy and let the system clean up the mess.

JJ

Posted by Jon Jones | Report as abusive
 

The one problem is treating the financial crisis a an STD is that no one has forced the treatment on the syphilitic carrier. The disease is still being transmitted as we treat the symptoms of the infected. Focus on the laws and lawmakers that created the crisis at the same time, and a real cure occurs.

And if one chooses to apply medicinal analogies to this financial error; remember that the Hippocratic Oath says, “ I will prescribe regimens for the good of my patients according to my ability and my judgment and never do harm to anyone.”

Posted by dbaily2085 | Report as abusive
 

Hey Homer… I hate to tell you this but you should have paid your mortgage. It is not the responsibility of the US government to bail you out, if you got in over your head to bad, Why should the rest of us who pay their bills on time to be penalized? we shouldn’t, you got yourself into this mess when you signed the papers…….

Posted by Terry | Report as abusive
 

Someone must have standing to take this to a Federal Court.

It seems to me that the Mortgage Bail-Out is clearly unconstitutional: a court forcing a renegotiation of a valid contract just because one of the parties cannot fulfill their obligations under that contract.

Make them file for bankruptcy and let the system clean up the mess.

JJ

I am glad to see people are upset about this as it would seem most Americans have been asleep for decades, letting CEO’s blantantly rob the corporations they invest in and looking the other way when they know inside there will come a time to pay-seriously. We have a major problem with denial . . . .

Sure, plenty of people have standing to sue! But do you seriously believe that the courts are beyond political influence? Look at everything that happened under Bush. He started making laws to accomplish his goals and those “laws” are still on the books! What about the Separation of Powers Clause in our Constitution? Anything goes these days! There is no regard for what is legal!

Posted by legalbeagal | Report as abusive
 

Forget about fixes. Until secular demand improves and employment rates return to normal levels, nothing will help fix the problem. The trend is not our friend here and consumers are not ready to support prices at the moment.

Posted by A | Report as abusive
 

Hey Homer, since when is it my fault you bought a home that depreciated in value instead of appreciating? You signed the papers when you bought it and I think you will find I am not on your contract as a co-buyer. I don’t feel it is right that I should have to bail you out so you can be in a positive equity position again and then you use that positive equtiy position to borrow more of the government funds to suppliment your lifestyle that got you into this mess in the first place. If more people would have stayed in their first home instead of upgrading to a bigger home to impress the in-lawa and the neighbors, our country wouldn’t be in the mess it is in now. We wouldn’t have had the exaggerated economic explosion we went through using the housing market as a marker to raise the roof on the stock market and we would have been operating at the 5000 range on the DOW, hence we wouldn’t be in a depression right now. Hell they sold houses to people who weren’t, by any stretch of the imagination, qualified to buy them. Now the cow eating the cabbage is starting case gas. Well live with the flautulance brother, it stinks to high heaven, just like the loans the government made using our tax dollars to back them up, Fannie Mae and Freddie Mac.

Posted by valvepop | Report as abusive
 

I wanna show them all how little I really need to enjoy life. Cut those debt money chains, minimalism will set you free, reunite with your kids, honestly smile a little before the Grim Reaper takes it all away. Put your extra money in gold, never spend it, and love the one you’re with! Consumer spending accounts for 70% of the GNP, right? Stop spending you morons! After a good enema, those big corporations and governments can easily pick up the pieces without us.

Posted by Will DiJohn | Report as abusive
 

Please don´t unlatch me from your fat juicy credit, you voluptuous bankers. I promise to always be the supine obedient consumer you most yearn for. You made me feel like a god when you strutted my credit in front of me. I had to show the whole world how rich I felt after being with you. Let´s do it again soon. I know my happiness is just one purchase away.

Posted by David | Report as abusive
 

If Bush hadn’t been elected, we’d still have the surplus Clinton gave us. Bush destroyed that completely and hurled us into an economic abyss. I applaud Obama’s plan to help the people who were tricked into taking loans that they couldn’t pay off. Even though they were stupid to do so, it does not make us any better to let them suffer. However, CEOs and prospective homebuyers MUST start making better decisions or we will stay locked in the depression for decades.

Posted by Puru | Report as abusive
 

An inept and clumsy comparison. Perhaps a less troublesome one would be wildfire prevention. As an effect of wildlife “Conservationists” having a greater say on letting the forests grow without tending by man (aka – financial markets deregulation without oversight), we seem to suffering larger and more destructive financial “wildfires” as a result. A little bit of prevention would go a long way towards avoiding another huge blaze.

Perhaps we should look at hiring a few more Forest Rangers and a few less Conservationists.

Posted by nonbeh | Report as abusive
 

I have been put into a finanical vise. Due to the massive foreclosures, the markets have tanked, banks and investment brokers are not going to be able to provide New York state the tax revenue it normally recieves. As much as I would like to let these people get evicted from their homes, the less homeownes there are will force me to pay higher town and school taxes to make up the shortfall. If I had a say in the financial bailouts, I think we should of let those banks fail and give the tarp money to those banks that were not a part of this to renegotiaite these borderline fradulent loans. As for the public these signs of fiscal irresponsibility were there for many years, yet we still choose to ignore them and this is the price we pay.

Posted by harry | Report as abusive
 

My brother-in-law came up with the best stimulus plan I have heard of yet. He suggested that instead of giving billions to the huge corporations that helped to create the problem, instead give every adult citizen a debit card pre loaded with $20,000. The money cannot be saved, it must be spent. Make the cards expire in a year. That way the economy gets stimulated on all levels. People who are currently homeless can get into a place to live. Parents can buy their children clothes and food. Rich people can continue to support their favorite hotels and restaurants, helping to maintain jobs. Out of work people can start small businesses. Perhaps it’s time to try “trickle-up” economics instead of “trickle-down”

Posted by Reneene Robertson | Report as abusive
 

idea has been used by the banks etc ,they bought cars and houses they could not afford.

Posted by brian lee | Report as abusive
 

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