It’s like NFL coaches. There are a bunch who are perennial losers. They coach a team, the team doesn’t do squat, the coach gets fired. Then he gets hired by another team and the cycle starts anew. ”

Same reason people still keep electing these bozos in Congress (both R and D) and still listen to Jimmy Carter. I don’t know what that reason is…unless it’s that they are familiar and it’s easy.

Can you believe how they’re patting themselves on the back today for “saving” us?

It truly beggars belief.

If it’s been said and I missed it, I apologize, but Thomas Sowell made a good point about the “golden parachute” stuff:

” What really sets some people off is the fact that a CEO who has mismanaged some corporation into losing billions of dollars is rewarded with a severance package worth millions.

Think about it. If the CEO’s decisions are costing the company billions, it is a bargain to get him out the door immediately for millions, rather than having his departure delayed by either internal struggles or battles in the courts.”

Sowell is right, I suppose. I guess it’s one of those things where you’ve just got to hold your nose and do it.

It’s like NFL coaches. There are a bunch who are perennial losers. They coach a team, the team doesn’t do squat, the coach gets fired. Then he gets hired by another team and the cycle starts anew.

You don’t think we’re ALL going to pay, one way or another? Everyone who uses credit, responsibly or not, will be hurt to some degree.

I completely agree with you. The problem is that a lot of people are apparently willing to be lulled. When the sub prime mortgages first appeared it was apparent to me at least that the outcome would be disastrous. In the absence of some miraculous event what happened was completely predictable. Yet even today I still see schemes being advertised for homes with special promotional interest rates well below prime for the first 6 or 12 months after which they go into space orbit or financing schemes where one does not pay until 2020. Right! Read the fine print and see what happens if you are one second late with a payment.

The hope is that the lulled will benefit from the experience only if they are allowed to suffer from it. If they are bailed out, that sets expectations that such a bailout will happen again. And, consequently, the lulled never learn from their experience. They are like the people who continually build houses in flood plains and on areas of the beach that are hammered with storms and expect government insurance (read: you and I) to bail them out when the inevitable happens. Then they rebuild and wait for the next disaster. I can assure you that if these folks lost the value of their homes just one time due to a storm or a flood, they wouldn’t rebuild in the same place. Once burned, twice shy. But if never really burned, never really shy. I think these people should be made to pay for their folly – I don’t think the rest of us should pay for their folly because odds are we’ll be paying for it again down the road if these folks never learn.

1. It is fundamentally unfair and would be the largest heist in the history of the world.

2. Where are we going to find a trillion dollars? (Don’t believe the $700B figure–government programs ALWAYS cost more than their proponents say they will.) Either we increase the deficit further (which is unacceptable, especially when we get hit with the unfunded liabilities of Social Security and Medicare coverage for all the baby boomers set to retire in the next decade or so), we just print more money (hello, inflation!) or we tax each man, woman, and child in the U.S. an extra $3000.

3. There is no assurance this will work. What if we jump off the debt cliff and the economy collapses anyway?

4. The big factor in this downward spiral (aside from governmental incompetence and private-sector malfeasance) is artificially inflated housing prices. For years, housing prices have headed toward the stratosphere, driven by ever-increasing demand, which in turn was driven by increasing availability of bizarre financing schemes, which made more and more people eiligible to buy homes they really couldn’t afford. More and more demand and a fixed supply equals higher prices. Now, in many areas, the average person (or even many with an above-average income) simply cannot afford to buy a home with a fixed-rate mortgage. Bailing out homeowners who really could not afford their homes in the first place is unfair to responsible renters who are saving to buy a home they CAN afford, because it props up artificially high housing prices. Housing prices need to keep falling and it escapes me why everyone should be a homeowner. There is no shame in renting–if someone can pay an interest-only mortgage they can afford rent on an apartment.

All valid arguments. I hope the congress can man up to the task. But somehow I doubt it.

You’re right. I missed a decimal point.
You’re wrong about the proximate cause. It’s the guy who brought the lion to town.

My reward for being fiscally responsible is that I now get to watch my tax dollars help bail out people who bought bigger homes than I did. (And I’m just talking about the earlier homeowner-bailout bill, never mind the monstrosity they want to pass now.)

Is this a great country, or what?

Yeah, it’s a great deal for all.

I would say the ability of a lender to issue a mortgage and then sell it (thereby removing his financial incentive to only loan money to those who can pay) is the caged lion in your example. And the Democrats and investors both are the kids with the blowtorch.

If there had been some mechanism by which lenders were held accountable for bad loans, this mess couldn’t have happened.

The lending institutions were forced by the politicians to make substandard loans in an effort to ensure that anyone who wanted home ownership could get it whether able to afford it or not. The politicians are the ones who brought the caged lion to town; the institutions who bought the large packages of these substandard notes are the kids with the blowtorches.

I guess a more accurate example would be that a man with a gun (the government) forced the man with the lion to leave it caged in town. In that case, the proximate cause would be the man with the gun.