1. Let GM and Chrysler go through Chapter 11. They will emerge stronger and in shape to take on the competition. Think about the steel industry and the convulsions they went through. Today, the U.S. steel industry (what's left of it) can compete with foreign companies. Otherwise, we are looking at bailouts for our bailouts.
2. Stop driving good people away from AIG. We now own this company and need the good people to stay. Otherwise, we will never get our money back (probably won't anyway, but at least we will have a shot at getting something if the A Players stick around).
3. Root for Michigan State this weekend. Michigan could use a winner.
4. There is snow on the ground in Chicago (thought I would toss that one in to amuse the East Coasters).
Off to Washington to rally. Back on Thursday and I will fill you in on what I see.
W
Tuesday, March 31, 2009
Sunday, March 29, 2009
Democracy At Work
Wednesday, April 1, there will be a Rally inside the U.S. Capitol building on the issue of the CPSIA (Consumer Products Safety Improvement Act). Currently scheduled to testify are an assortment of Congresspeople, Senators, former Governors, business leaders and concerned citizenry. They will be testifying on the many ways that the CPSIA itself needs improvement and amendment.
This Rally is the culmination of an extraordinary grass-roots effort against the powers-that-be (i.e. Representatives Waxman and Pelosi, the Environmental Lobby and "Big I" Inertia) to change this flawed law. Utilizing tactics similar to those President Obama employed to win election, the small businesspeople behind the Rally have actually gotten through to many of our elected officials on the need to change the law. There are now 60 different legislators who have sponsored more than 11 pieces of legislation to amend the CPSIA. This is extraordinary, considering only 4 Members of Congress voted against it in the first place.
It has been an uphill battle, for sure. My brother, Rick Woldenberg, has led the charge nationally on this issue (and organizing the April 1 meeting). Rick has rallied small business leaders (and large business leaders) to the cause. Rick was early to recognize the dangers of the law and he spoke out publicly when others were too afraid to do so, at a CPSC hearing in November. Others have come to learn that Rick was right about the wide-ranging reach of this law and have also now spoken out.
The correct outcome has yet to occur (that is, amendment, or repeal, of the CPSIA), but it looks increasingly likely. Whenever that time comes and the law gets corrected, this will have been a great example of the power of our Democracy. Where citizens can come together and raise their voices up to affect change in Washington.
I leave on Tuesday afternoon for Washington, the Rally is Wednesday morning. After the Rally, we will visit our Senators and Representatives' offices to voice our concerns about the law. Then, we will take our positions back in the trenches and keep up the fight until the objective is reached.
I will keep you posted.
This Rally is the culmination of an extraordinary grass-roots effort against the powers-that-be (i.e. Representatives Waxman and Pelosi, the Environmental Lobby and "Big I" Inertia) to change this flawed law. Utilizing tactics similar to those President Obama employed to win election, the small businesspeople behind the Rally have actually gotten through to many of our elected officials on the need to change the law. There are now 60 different legislators who have sponsored more than 11 pieces of legislation to amend the CPSIA. This is extraordinary, considering only 4 Members of Congress voted against it in the first place.
It has been an uphill battle, for sure. My brother, Rick Woldenberg, has led the charge nationally on this issue (and organizing the April 1 meeting). Rick has rallied small business leaders (and large business leaders) to the cause. Rick was early to recognize the dangers of the law and he spoke out publicly when others were too afraid to do so, at a CPSC hearing in November. Others have come to learn that Rick was right about the wide-ranging reach of this law and have also now spoken out.
The correct outcome has yet to occur (that is, amendment, or repeal, of the CPSIA), but it looks increasingly likely. Whenever that time comes and the law gets corrected, this will have been a great example of the power of our Democracy. Where citizens can come together and raise their voices up to affect change in Washington.
I leave on Tuesday afternoon for Washington, the Rally is Wednesday morning. After the Rally, we will visit our Senators and Representatives' offices to voice our concerns about the law. Then, we will take our positions back in the trenches and keep up the fight until the objective is reached.
I will keep you posted.
Stimulus Package . . .
My family did our part to stimulate the economy last week by spending (and spending) a week in Orlando at Disneyworld. We visited all four parks multiple times. Rode the big rides and saw the shows. We had a package that included all meals, Disney resort hotel and park tickets. It wasn't quite a bargain, but it wasn't too bad either.
I am here to report that the parks were filled with people (except Universal), and the hotels packed. So there are people still spending money out there.
That's why you haven't heard from me in a week. But, I'm back . . . and about to post about the CPSIA Rally in Washington on Wednesday this week. So, stay tuned . . .
I am here to report that the parks were filled with people (except Universal), and the hotels packed. So there are people still spending money out there.
That's why you haven't heard from me in a week. But, I'm back . . . and about to post about the CPSIA Rally in Washington on Wednesday this week. So, stay tuned . . .
Thursday, March 19, 2009
Shameless Scoundrels
Further to John Galt's comment regarding Chris Dodd . . . from today on bloomberg.com
"Last night, Senate Banking Committee Chairman Christopher Dodd added to the criticism, saying he weakened a provision dealing with executive pay and bonuses in last month’s stimulus legislation at the request of the Obama administration.
The Connecticut Democrat had proposed restrictions on executive compensation at companies that received money from the government’s financial-rescue fund. It was changed as the legislation was negotiated between the House and Senate.
“I did not want to make any changes to my original Senate- passed amendment but I did so at the request of administration officials,” Dodd said in an e-mailed statement. "
Nice job, Chris. You're a stand-up guy. NOT!
The rats are jumping ship . . . already. President Obama has been in office for, what, 8 weeks, and already the scoundrels in Congress are abandoning him. Because the heat has gotten too high and they value their own skins more than solidarity with a new President trying to deal with the worst economic conditions since the Great Depression.
These are our Nation's leaders? This is as good as it gets?
Remind me again why we put up with this level of public servant? Chris Dodd has been in the Congress since 1975. Why? Why do we keep re-electing people like this? Again, we deserve what we get if we keep re-electing people who never take responsibility for their actions and are not held accountable for anything.
Toss 'em all out. Let's start fresh. Keep dreaming . . .
W
"Last night, Senate Banking Committee Chairman Christopher Dodd added to the criticism, saying he weakened a provision dealing with executive pay and bonuses in last month’s stimulus legislation at the request of the Obama administration.
The Connecticut Democrat had proposed restrictions on executive compensation at companies that received money from the government’s financial-rescue fund. It was changed as the legislation was negotiated between the House and Senate.
“I did not want to make any changes to my original Senate- passed amendment but I did so at the request of administration officials,” Dodd said in an e-mailed statement. "
Nice job, Chris. You're a stand-up guy. NOT!
The rats are jumping ship . . . already. President Obama has been in office for, what, 8 weeks, and already the scoundrels in Congress are abandoning him. Because the heat has gotten too high and they value their own skins more than solidarity with a new President trying to deal with the worst economic conditions since the Great Depression.
These are our Nation's leaders? This is as good as it gets?
Remind me again why we put up with this level of public servant? Chris Dodd has been in the Congress since 1975. Why? Why do we keep re-electing people like this? Again, we deserve what we get if we keep re-electing people who never take responsibility for their actions and are not held accountable for anything.
Toss 'em all out. Let's start fresh. Keep dreaming . . .
W
Wednesday, March 18, 2009
I'm a Populist????
I have been accused by a good friend and respected co-worker . . . of being a Populist. All because I called for breaking out the pitchforks and chasing financial scallywags through the streets (what's wrong with that?)
Really? A Populist? I do not think of myself as a Populist. I am just an outraged taxpayer who is feeling let down by our leaders, both in Government and in our Nation's leading corporations.
It is hard not to be cynical about what is going on between Wall Street and Washington. Financial products are created, packaged and sold. At every step along the way, investment bankers, lawyers and accountants make (lots of) money. Whether the financial products they create are sound, or not, the fees get paid. Those same investment bankers, lawyers and accountants use some of their profits to pay lobbyists to make sure Congressmen like Barney Frank do not interfere in the Big Game. This goes on for years and years. Fortunes are made.
Then, when the house of cards finally falls down (as it was going to do at some point), those same Congressmen hold hearings to accuse the lobbyists ("j'accuse!"), and their clients, of financial malfeasance. And, the bailout checks get cut to AIG, Bank of America, Citi, Goldman, etc, etc, etc . . . and the bonus checks get cut to the bankers and traders (who got us here in the first place).
And, at the end of the day . . . as the scallywags head off to the Hamptons for the Summer, us taxpayers are going to be handed the bill for all of this. And, that will most definitely impact our standard of living in this country, as well as, the prospects for economic health on a macro-level. Possibly for a very, very long time. Am I angry about this? Yes, I am. And, I'm not alone . . .
So, if this all makes me a Populist, then I suppose I am guilty.
Really? A Populist? I do not think of myself as a Populist. I am just an outraged taxpayer who is feeling let down by our leaders, both in Government and in our Nation's leading corporations.
It is hard not to be cynical about what is going on between Wall Street and Washington. Financial products are created, packaged and sold. At every step along the way, investment bankers, lawyers and accountants make (lots of) money. Whether the financial products they create are sound, or not, the fees get paid. Those same investment bankers, lawyers and accountants use some of their profits to pay lobbyists to make sure Congressmen like Barney Frank do not interfere in the Big Game. This goes on for years and years. Fortunes are made.
Then, when the house of cards finally falls down (as it was going to do at some point), those same Congressmen hold hearings to accuse the lobbyists ("j'accuse!"), and their clients, of financial malfeasance. And, the bailout checks get cut to AIG, Bank of America, Citi, Goldman, etc, etc, etc . . . and the bonus checks get cut to the bankers and traders (who got us here in the first place).
And, at the end of the day . . . as the scallywags head off to the Hamptons for the Summer, us taxpayers are going to be handed the bill for all of this. And, that will most definitely impact our standard of living in this country, as well as, the prospects for economic health on a macro-level. Possibly for a very, very long time. Am I angry about this? Yes, I am. And, I'm not alone . . .
So, if this all makes me a Populist, then I suppose I am guilty.
Tuesday, March 17, 2009
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AIG Bonus Outrage Hypocrisy
He doth protesth (way) too much. Congressmen are up in arms over the bonuses being paid at AIG. Barney Frank declaring that he is outraged. Outraged, I tell you!
There really is no shame in Washington, is there?
The biggest heist in mankind history is in process and the big outrage is about several hundred million dollars for some 600 people at AIG, a corporation that is now 80% owned by the U.S. Government. I am by no means belittling the $450 million in bonuses. That is a lot of money, for sure, but to me, this is the Wizard of Oz, keeping you looking in one direction so you do not notice the outrage that is happening elsewhere.
Taxpayers are being robbed blind, not by a few hundred million, but by the tens of billions of dollars. Example: we are pouring $170 billion into AIG, which is funnelling the cash out the backdoor into the coffers of Goldman Sachs and Deutche Bank, who then turn around and pay out BILLIONS of dollars of bonuses to themselves. It is a closed loop of taxpayer money from Treasury to AIG to Goldman to the bank accounts of Goldman investment bankers.
Another example: State Street CEO Ronald Logue took home $29 MILLION last year. Here are a few highlights from State Street's 2008 performance: stock down 71%, realized losses of $9 billion and they received $2 billion in TARP funds. TARP money in, corporate performance awful, $29 million in bonus money paid out to CEO. THAT is something we should be outraged about.
Get out the pitchforks, but let's make sure we are chasing the right people.
W
There really is no shame in Washington, is there?
The biggest heist in mankind history is in process and the big outrage is about several hundred million dollars for some 600 people at AIG, a corporation that is now 80% owned by the U.S. Government. I am by no means belittling the $450 million in bonuses. That is a lot of money, for sure, but to me, this is the Wizard of Oz, keeping you looking in one direction so you do not notice the outrage that is happening elsewhere.
Taxpayers are being robbed blind, not by a few hundred million, but by the tens of billions of dollars. Example: we are pouring $170 billion into AIG, which is funnelling the cash out the backdoor into the coffers of Goldman Sachs and Deutche Bank, who then turn around and pay out BILLIONS of dollars of bonuses to themselves. It is a closed loop of taxpayer money from Treasury to AIG to Goldman to the bank accounts of Goldman investment bankers.
Another example: State Street CEO Ronald Logue took home $29 MILLION last year. Here are a few highlights from State Street's 2008 performance: stock down 71%, realized losses of $9 billion and they received $2 billion in TARP funds. TARP money in, corporate performance awful, $29 million in bonus money paid out to CEO. THAT is something we should be outraged about.
Get out the pitchforks, but let's make sure we are chasing the right people.
W
Monday, March 9, 2009
Think about this next time you fill up your car.
Today in Saudi Arabia, the news came out that a 75 year-old woman was sentenced to 40 lashes, 4 months in prison and criminal deportation for "mingling" with 2 unrelated men in her home (one of whom she raised as an infant). A grandmother. Sentenced to be lashed and sent to prison, for visiting with a man she breast-fed as a baby.
My next car is a Prius.
My next car is a Prius.
GAZA WAR: UN School "Massacre" Update
(NOTE: I am re-printing a piece from a February 16 posting because it merits repeating. In the ensuing three weeks since, I have seen not a single article in any Western news outlet on this subject, which just confirms the last sentence below . . . sadly.)
Excerpt from February 16, 2009 posting . . .
Remember during the Gaza War, there was a news story about a UN School that was hit by Israeli artillary? At the time, news reports indicated that 42 civilians, including lots of children, were killed there. At the time, it was reported that the Israeli attack was unprovoked. International outrage at Israel's "disproportionate" response peaked after this story was reported.
Then, a few weeks after the incident, it turns out that there were witnesses in Gaza who came forward and testified that there was a Hamas mortar crew firing from right next to the school. And, questions were raised about the number of casualties at that time. Now, there is another story about this incident. Turns out that the latest estimate is that there were not 42, but 12 people killed at the school, and 9 of them were Hamas operatives. And, that the Israeli shells did not actually hit the school, but outside the school where the mortars were being fired from. Israel is providing the names and ages of the casualties in Gaza, to set the historical record straight. It is hard to dispute when you have the facts in hand.
But, you won't find this story on the front page of the New York Times, or the Guardian in London . . . nope. It would create too much egg on their faces to report this story. Just let the lie live, and save face.
All for now,
Woldy
Excerpt from February 16, 2009 posting . . .
Remember during the Gaza War, there was a news story about a UN School that was hit by Israeli artillary? At the time, news reports indicated that 42 civilians, including lots of children, were killed there. At the time, it was reported that the Israeli attack was unprovoked. International outrage at Israel's "disproportionate" response peaked after this story was reported.
Then, a few weeks after the incident, it turns out that there were witnesses in Gaza who came forward and testified that there was a Hamas mortar crew firing from right next to the school. And, questions were raised about the number of casualties at that time. Now, there is another story about this incident. Turns out that the latest estimate is that there were not 42, but 12 people killed at the school, and 9 of them were Hamas operatives. And, that the Israeli shells did not actually hit the school, but outside the school where the mortars were being fired from. Israel is providing the names and ages of the casualties in Gaza, to set the historical record straight. It is hard to dispute when you have the facts in hand.
But, you won't find this story on the front page of the New York Times, or the Guardian in London . . . nope. It would create too much egg on their faces to report this story. Just let the lie live, and save face.
All for now,
Woldy
Friday, March 6, 2009
Abe, I agree with you . . .
Yesterday, on pajamasmedia.com, Abraham H. Miller wrote . . .
"The government rewriting mortgage contracts constitutes a greater threat to the viability of the political system than letting real estate values find a natural price point in the market place. A contract is a property right, and like it or not, before any society can remove itself from the state of nature and embrace human rights, there must be property rights. No society has ever had human rights in the absence of property rights. That is why the ineluctable outcome of socialism always has been and will be corruption and oppression."
Check out my March 2 blog post below . . . Abe and I are in alignment.
"The government rewriting mortgage contracts constitutes a greater threat to the viability of the political system than letting real estate values find a natural price point in the market place. A contract is a property right, and like it or not, before any society can remove itself from the state of nature and embrace human rights, there must be property rights. No society has ever had human rights in the absence of property rights. That is why the ineluctable outcome of socialism always has been and will be corruption and oppression."
Check out my March 2 blog post below . . . Abe and I are in alignment.
Thursday, March 5, 2009
A little break from reality . . .
A few questions to take your mind off the stock market . . .
1. Who would have won a fist fight between Sonny Corleone and Dirty Harry?
2. Who would you rather have a beer with, Jerry Seinfeld or Bob Newhart?
3. Which show was better, M*A*S*H or All in the Family?
4. Who was more annoying, Alice, on The Brady Bunch or Lovey, on Gilligan's Island?
5. If you could have one album to listen to for the rest of your life, which would you take, Beatles White Album or The Band by The Band?
6. Which is a bigger time-sink, Facebook or Wikipedia?
7. Who was wimpier, Thurston Howell, III or Herman Munster?
8. Which movie made you cry more, Terms of Endearment or Ordinary People?
9. Who was cuter, Mary Richards or Laura Petrie?
and finally . . .
10. Who would have won a sword duel, Zoro or Braveheart?
(NOTE: I won't do this very often . . . I promise!)
1. Who would have won a fist fight between Sonny Corleone and Dirty Harry?
2. Who would you rather have a beer with, Jerry Seinfeld or Bob Newhart?
3. Which show was better, M*A*S*H or All in the Family?
4. Who was more annoying, Alice, on The Brady Bunch or Lovey, on Gilligan's Island?
5. If you could have one album to listen to for the rest of your life, which would you take, Beatles White Album or The Band by The Band?
6. Which is a bigger time-sink, Facebook or Wikipedia?
7. Who was wimpier, Thurston Howell, III or Herman Munster?
8. Which movie made you cry more, Terms of Endearment or Ordinary People?
9. Who was cuter, Mary Richards or Laura Petrie?
and finally . . .
10. Who would have won a sword duel, Zoro or Braveheart?
(NOTE: I won't do this very often . . . I promise!)
Wednesday, March 4, 2009
Bernie Deserves No Mercy
This week, we learned that Bernie Madoff's wife has substantial assets, including $45 million of bonds and $17 million of cash (the bulk of which she mysteriously decided to withdraw a couple days before Bernie turned himself in - timing is everything in life). Plus an apartment here and there. It adds up to just under $70 million in assets. That sum, she says, and he says, is unrelated to his alleged (do I have to say "alleged" when he confessed to it?) ponzi scheme.
Every time you think you've heard it all, something new comes along. Do these two actually think that anyone believes this?
In my view, Mr. and Mrs. Madoff deserve no mercy from the courts. Whatever they have, should be taken away and given to the victims (especially because you know damn well that there are assets tucked away in places the Feds will never look). If there is justice in this World, the Madoffs will be left penniless, just like the folks who entrusted Bernie with their life-savings, and, once convicted, Bernie will spend the rest of his days behind bars. The man literally stole from widows and orphans. Who does that?
Whether, or not, Mrs. Madoff was involved in the alleged scheme, we will most likely never know. But, we do know that she benefited mightily from it, as did good 'ole Bernie. And, that wrong should be made right.
Take it all.
Every time you think you've heard it all, something new comes along. Do these two actually think that anyone believes this?
In my view, Mr. and Mrs. Madoff deserve no mercy from the courts. Whatever they have, should be taken away and given to the victims (especially because you know damn well that there are assets tucked away in places the Feds will never look). If there is justice in this World, the Madoffs will be left penniless, just like the folks who entrusted Bernie with their life-savings, and, once convicted, Bernie will spend the rest of his days behind bars. The man literally stole from widows and orphans. Who does that?
Whether, or not, Mrs. Madoff was involved in the alleged scheme, we will most likely never know. But, we do know that she benefited mightily from it, as did good 'ole Bernie. And, that wrong should be made right.
Take it all.
Monday, March 2, 2009
Enough, Warren!
Is anyone else sick and tired of hearing Warren Buffett's magnificent musings?
Okay, so the guy is (very) rich and he has been (very) successful over a (very) long time, but I would say that his track record over the last year ain't so good. In fact, it "sucks eggs", to quote my seven year old. Which leads to the question . . . why should we care what Warren thinks now? This is one screwed up market and he doesn't have a clue what is going to happen next. How else can one explain his bone-headed moves over the last year. Warren has poured billions of his investors money into stocks that have continued to sink, big time.
And, don't give me the explanation (I was going to say "crap") about how if you have a long enough time horizon, these are great moves to make, and blah, blah, blah. Folks, as of the market close today, if your time horizon was 12 years, you have not made a penny in the broader stock market. Not one red cent.
Yes, someday stocks will go up again. But when that day is, nobody, not even the (formerly) great (but still very rich) Warren Buffett, knows. And, the fact is, you may be better off over the next 12 years buying Treasuries at 1.5% than following Warren any longer.
Sorry for two postings today, but I couldn't resist.
Woldy
Okay, so the guy is (very) rich and he has been (very) successful over a (very) long time, but I would say that his track record over the last year ain't so good. In fact, it "sucks eggs", to quote my seven year old. Which leads to the question . . . why should we care what Warren thinks now? This is one screwed up market and he doesn't have a clue what is going to happen next. How else can one explain his bone-headed moves over the last year. Warren has poured billions of his investors money into stocks that have continued to sink, big time.
And, don't give me the explanation (I was going to say "crap") about how if you have a long enough time horizon, these are great moves to make, and blah, blah, blah. Folks, as of the market close today, if your time horizon was 12 years, you have not made a penny in the broader stock market. Not one red cent.
Yes, someday stocks will go up again. But when that day is, nobody, not even the (formerly) great (but still very rich) Warren Buffett, knows. And, the fact is, you may be better off over the next 12 years buying Treasuries at 1.5% than following Warren any longer.
Sorry for two postings today, but I couldn't resist.
Woldy
Moral Hazard
Does this term ring a bell? It should, because our Government is in the process of creating a significant moral hazard. Namely: bailing out homeowners to lower their monthly payments and giving the power to judges to reduce mortgage principal on loans (i.e. private contracts are now open to revision by judges, as they see fit).
This is not good for the economy in the long run. Yes, we feel empathy for the financial situation that many, many people find themselves in as a result of taking mortgage offers that appeared too good to be true. But, no, it is not our responsibility to pay for their mistakes. Our system rewards (or used to) sound decision-making and sometimes punishes those who take higher risks. Push more chips into the center of the table and you risk losing those chips. You could also win, but that choice that is up to you. The old Risk-Reward Model we learned about on Day One of college Economics.
The unintended consequences of removing (or mitigating) the risk are, well, unknown right now. But one thing is for sure . . . they aren't good for our broader society in the long run. We may be better off letting the proverbial train hit the wall then trying to cushion it. Yes, that means more people will face foreclosure. But, that does not mean those people will be rendered homeless. There are options for people who can not afford to own their homes. Renting comes to mind. Living with relatives also comes to mind. Are those as gratifying as owning your own home? No, they are not. People could also buy smaller, more affordable, houses. There are options for people who can not afford to live in their current houses besides re-writing private contracts and taking away the risk side of the equation.
Do I sound like a Republican? I voted for Obama, for crying out loud!!! But, I am also a University of Chicago trained lawyer and at U of C (which is where Obama taught, by the way), we learned about things like moral hazard.
Finally, allowing real estate values to naturally descend to the point where the value proposition becomes compelling to investors is the best way out of this mess. That very thing is starting to happen in markets across the country. Artificially propping up the residential real estate market by re-writing mortgages en masse will just prolong the agony we are going through and in the end, we will all be worse off.
But, no one wants to hear this view right now. It is out of style. Because it is perceived as too risky. One question: how is Obama's direction working out for us so far? "Nicht so gutte", if you judge based on stock market reaction.
Pay me now, or pay me later. I would rather get it over with, personally.
All for now . . .
And, then there's the question no one wants to talk about . . . where is the money going to come from to pay for all these renegotiations and mortgage principal reductions? From other taxpayers, that's where. From the people who did not reach past their financial wherewithal to purchase homes. From the people who acted conservatively. Those people are going to get really whacked by all this, in the form of higher taxes (yes, Virginia, even the Middle Class will soon join the ranks of those that have received tax increases), and surging deficits that will someday need to be repaid.
Is this how our system is supposed to work?
This is not good for the economy in the long run. Yes, we feel empathy for the financial situation that many, many people find themselves in as a result of taking mortgage offers that appeared too good to be true. But, no, it is not our responsibility to pay for their mistakes. Our system rewards (or used to) sound decision-making and sometimes punishes those who take higher risks. Push more chips into the center of the table and you risk losing those chips. You could also win, but that choice that is up to you. The old Risk-Reward Model we learned about on Day One of college Economics.
The unintended consequences of removing (or mitigating) the risk are, well, unknown right now. But one thing is for sure . . . they aren't good for our broader society in the long run. We may be better off letting the proverbial train hit the wall then trying to cushion it. Yes, that means more people will face foreclosure. But, that does not mean those people will be rendered homeless. There are options for people who can not afford to own their homes. Renting comes to mind. Living with relatives also comes to mind. Are those as gratifying as owning your own home? No, they are not. People could also buy smaller, more affordable, houses. There are options for people who can not afford to live in their current houses besides re-writing private contracts and taking away the risk side of the equation.
Do I sound like a Republican? I voted for Obama, for crying out loud!!! But, I am also a University of Chicago trained lawyer and at U of C (which is where Obama taught, by the way), we learned about things like moral hazard.
Finally, allowing real estate values to naturally descend to the point where the value proposition becomes compelling to investors is the best way out of this mess. That very thing is starting to happen in markets across the country. Artificially propping up the residential real estate market by re-writing mortgages en masse will just prolong the agony we are going through and in the end, we will all be worse off.
But, no one wants to hear this view right now. It is out of style. Because it is perceived as too risky. One question: how is Obama's direction working out for us so far? "Nicht so gutte", if you judge based on stock market reaction.
Pay me now, or pay me later. I would rather get it over with, personally.
All for now . . .
And, then there's the question no one wants to talk about . . . where is the money going to come from to pay for all these renegotiations and mortgage principal reductions? From other taxpayers, that's where. From the people who did not reach past their financial wherewithal to purchase homes. From the people who acted conservatively. Those people are going to get really whacked by all this, in the form of higher taxes (yes, Virginia, even the Middle Class will soon join the ranks of those that have received tax increases), and surging deficits that will someday need to be repaid.
Is this how our system is supposed to work?
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