"Perhaps you could explain the following:
"From newspapers and radio:
"More and more people have mortgages that are worth less than the worth of their house, so that these people have negative cash flow. As if that were a bad thing, and I do not even understand. If your job has not changed, and you could afford your mortgage, then nothing has changed. The value of your home decreasing would decrease your taxes (theoretically), and if you had to sell, so what? This is a great opportunity to purchase a home as well. Now, if you have lost your job, then it is another matter, but it has nothing to do with the decreasing value of your home. People should not be borrowing against their home as a matter of principle. It is probably those people who are in dire straits, and they should be!"
And, so I said:
It is mostly those who risked and took out mortgages at the adjustable rate, lured by low monthly payments to start with which then went up beyond what they could afford, thinking perhaps that they could re-finance, scoop up some resulting cash (if the prices kept going up), and thus keep on riding the wave. Well, the wave receded and they fell flat on their backs.
Additionally, even if mortgage payments did not go up, prices of other items did, thus reducing the available cash for other purposes (repairs, medical costs, entertainment, transportation, etc. etc.).
In my view, unless I can be reasonably certain to be able to afford future higher payments or be able to sell the home at a higher price, I would be really stupid to get into the variable rate mortgage deals I can not afford. In my view, those who did should lose their homes.
The reality is that all this hubbub about rescuing homeowners is another lie and deception. It has nothing to do with being humane but has everything to do with keeping the top echelons afloat and opening huge holes for future speculation and huge rip-offs of our money. How can you explain huge daily ups and downs in the stock market? Some, possibly those who actually have an influence on the direction market goes, are pocketing huge, unheard of super-profits.
These times are fantastic for speculators who also dare to manipulate the market as our attention is being kept elsewhere, they are reaping gigantic profits (4-6%, or even 1-2% daily is huge). If I had the desire to gain in this way I would be a very happy guy these days. You don't hear Buffets and the like complain, do you? I've got nothing against him and his ilk, more power to them!
This is like some whales fish. First they circle and circle tighter and tighter around and below a school of herrings, frighten them into a "corner," and then just scoop them up with open mouths without them even knowing what befell them. Like sheep running behind a blind ram and peacefully falling off the cliff. Except this ram is not blind but pretends he is and has a golden parachute attached to his back.
I could go on and on about this. I am not angry about it. I just continue to be disappointed in human race, disappointed in those who are willing to follow false prophets, follow something without knowing what it is they are really following. But, you know that's how I am. I want to understand before I accept. I am not much of a believer, which sometimes drives you mad.
And then he said:
"True. However I do agree with your analysis. I believe very little of what I hear. I ask questions as well. However, tango* is different from economy. And related to economy, one can be frozen and do nothing. I like you, have no sympathy for those who made poor decisions or were conned into doing so."
I thought this was sufficiently interesting, so -- here it is.
* my friend and I share passion for tango.
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