As one of those folks who has a mortgage he can afford to pay -- something I in fact pay a lot of money toward every month, something I went through a lot of planning and work to obtain, something I work hard to continue to afford -- I am supposed to be hopping mad about proposals floating about to spend federal money to "bail out" all those deadbeats and stupid-heads who got themselves into mortgages they couldn't afford, not to mention the financial institutions who funded them. "Why," I am supposed to be asking, "should my tax dollars go to people who can't add, to the greedy, to the lazy, to the speculative investors in 'cheap' real estate when I've been prudent, hard-working, and etc.?"

To which I say, as Horace did, "When your neighbor's wall is on fire, it becomes your business." Yeah, I'm peeved that some folks were so unscrupulous as to sell mortgages they could reasonably know couldn't be paid back. And that some other folks were so dimwitted, optimistic, or gullible as to take out those mortgages. And that other folks got into trouble by overextending their investments in property. I'm peeved at all that.

I'm also peeved that a lot of folks are also facing disaster because of factors that weren't under their control -- economic downturns eliminate their jobs and suddenly change, unexpectedly, their ability to pay that mortgage. That sort of thing could happen to anybody. Including you and me.

But, ultimately, it doesn't matter. The greedy, and the gullible, will get bailed out here, and should get bailed out here, because the alternative, though more "just" is even more harmful to society, to our economy, and (self-interestedly) to me as part of that society and economy. Nobody benefits when banks go out of business. Nobody benefits when millions of people are foreclosed upon. Everybody gets hurt. Including me.

It's like welfare, or any other social welfare system. Yes, you can point to people who game the system, people who are lazily on the dole, who exploit loopholes to get out of working, etc. You can also point to people who are legitimately in trouble and need help. And the numbers involved are such that, Scrooge's invocations of workhouse and "surplus population" notwithstanding, it's in society's interest to perhaps unfairly reward some rather than allow others to suffer (and, indirectly, bring ourselves to injury, both morally and socially).

So, no, while the whole sub-prime mortgage thing and the resulting economic tsunami do, in deed, irk me mightily (and worry me more than a bit), I don't automatically reject any "bail out" as an unjust theft of my Hard-Earned Money. 

My neighbor's house is on fire, metaphorically. It's stupid for me to complain that he should have chopped down the dead grasses and bought a tile roof, and thus choose not to help him. Not only because mercy is better than strict justice (if not, who could rest comfortably?), but because my house may well be next.

Filed under :: Big Business :: Politics & Law

I do not mind some sort of relief for folks that were ripped off by preditory financial institutions, but I do not want any bail out for all those screaming "Greed is good!", "Deregulate! Deregulate!" or that Pure Chicago School Capitalism actually works.

So, no to Privitizing Profit and Socializing Risk. Let the non banks like Bear Sterns fail...no bail out, no help.

I'm of two minds here. 1) People victimized by predatory lenders do need some sort of bailout. THe average person has zero understanding of Real Estate or Finance and really should have far better mechanisms in place to help them understand what they're really getting into (I'm a RE Broker and see a LOT of ignorance about RE, and I don't even sell, I simply manage property).

The large companies that buy and trade commodities who are being hurt by buying and trading the insufficiently secure mortgages should be given a limited buyout and forced to divest themselves of any portion of their organization that actively made or approved shady loans. These companies are (unfortunately) the backbone of the modern stock market and letting them die would have dire consequences for the economy.

2)Mortgage companies that suffer from this scandal should reap what they sowed. Like any other predatory lending organization: Payday loans, car title loans, etc. these vermin need to be exterminated and the predatory mortage brokers are the worst of the scum and need to be destroyed by the market forces they've generated.

So, social justice and economic justice need to be served on both sides of the proverbial coin.

I agree with your comments, both of you, with two side notes:

1. I'd rather see the needy helped even if it means some of the guilty go free. I don't want to incent future reckless behavior -- but that's secondary the overall economy at the moment.

2. Arty, you doubtless have a better perspective on this than I do, but ignorance is not an excuse. "THe average person has zero understanding of Real Estate or Finance and really should have far better mechanisms in place to help them understand what they're really getting into." If they have zero understanding, that's at least partially *their* responsibility before committing to these sorts of expenses. I do agree that better education (both formal, in school, and ad hoc at the point of borrowing) is important, and clarity and disclosure of terms (and their actual implications -- "This means that next month you'll be paying X -- and in 30 months that will jump to Y.") But people need to also take responsibility for finding that sort of thing out, too, and for planning around it.