Bailouts? Hmmm…

Bailouts? Hmmm…
M.D. Wright

I don’t know how I feel about this. Of course we, the taxpaying public, have to foot the bill for all the predatory and immoral lending that banks, mortgage loan companies and credit card institutions engaged themselves in. When I was little, you couldn’t even THINK about getting a line of credit, buying a house for more than double your income or buy a car that cost 30% of your take home pay (which has become very commonplace) unless your credit score was pushing 800, you were white and had plenty of collateral. Now, a homeless person can get a $50,000 line of credit with no questions asked.

I have watched several people (first-hand) acquire a mortgage on a $200,000+ house and they were making less than $50,000 a year (with several thousand in other debts, mind you). I don’t get it. How does this happen?

Meanwhile, throughout the 90s, people just became more and more loose with their spending, eventually resorting to running up credit cards and lines of credit, taking out second mortgages on their homes and robbing themselves of their 401(k)s and other savings. Now, a lot of those same people are being foreclosed upon. It’s sad.

I sat and watched with my Real Estate buddies around 2000-2001 and we all shook our collective heads (pause) at the people who were getting ARMs (Adjustable Rate Mortgages) and Interest-Only loans on houses. While the market is good and property values increase (and while there is relatively little variance in the FED rate and mortgage companies being bought out — as is customary), this is a moderate-risk, potentially high-reward venture. When the Housing Market bubble began to lose air around 2002, 2003, then those people (if they were wise, they would have prepared at the time) began to pay exorbitant mortgage payments, in some cases QUADRUPLING what they were previously paying while the Housing Boom was taking place. In other words, you had people paying $900/mo. on a mortgage, paying, in some cases, nearly $3,000/mo. Naturally, as many middle class families are, they were close to the break-even point when they signed the mortgage, so such a swing would kill their wallets.

Likewise, with credit cards. Everyone had 3-5 credit cards in 2000. Many with over $7,500 balances (yours truly included, although I was debt-free in 2003 and again ran up thousands in business and education debts later… along with the purchase and subsequent blind costs of owning a brand new Nissan 350Z at the time). Most figured as long as they were working, they’d be fine. Not true. Just like the housing situation, as long as the economy is good, there’s no problem. When the minimum payment due increase took place in February 2006, the minimum payment tripled for many people who were already in the red.

Credit crunch + Housing Crash = COMPLETE DOMINATION when you are living check to check.

All I know is I want a bailout for all this student loan debt and credit cards, since General Motors, AIG, Fannie Mae, Freddie Mac, Circuit City (and probably Starbuck’s with their 97% losses in the 3Q) along with any other company that did not make their outrageous “bottom line” by bending everyone over with their crazy prices and moving jobs overseas. Do not get me started. I feel very strongly about this.

I feel no pity for these companies who have made a living from getting over on consumers by predatory and reckless lending.

In the midst of all this, the New York MTA is claiming losses (huge shock), even though rideship is up, more than ever — up from an already skyrocketing number since July 2006 — and therefore they think raising fares again. What is it going to be now? $2.50/ride? $6 for the express? $12 for the Verrazano? When I first started college, the train was $1.50. Perspective. When I was 9 and we still used tokens and what not, it was 75¢!!!



Feel free to share your thoughts here...

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s