No Government, No Force

Housing Crisis

Up thru most of 1972 I built custom homes for $15 per SqFt, decent homes with redwood exteriors, turnkey with appliances and carpeting for a small family cost about $17,500.  30 years later, you know it, that same house cost $120,000 or more.  You bought your house from a tract builder, and paid $200,000 with a lot,

Okay, you took an adjustable rate mortgage because you couldn’t afford fixed-rate.  Then a couple of things went sour, your ARM shot up and now the bank owns your house.  C’mon, you were in over your head when you signed that mortgage!.  So now you’re crying to the government to help your sorry ass because you screwed up?  Get a grip, people, it’s not my fault and I won’t pay taxes to support you!

But maybe the government will pass a welfare bill for you anyway, because I really have nothing to say about it, do I?  It’s called taxation without representation – today that’s supposedly okay, but I will disagree with that immoral bullfeathers to the day I die.

Well let’s look at what may have REALLY happened here.

The Fed opined that the economy had heated up a too much, so they tightened money.  Things slowed down, so maybe you lost your job?  For sure, when your lender saw interest rates rising, he caught you by the ARM and raised interest/payments over your head.  Happened to many folks, so don’t feel like the Lone Ranger. So there were a bunch of foreclosures on homes bought at inflated prices.

So the bankers start whining about their Owned-Real-Estate portfolios growing out of control, and the banks had lost their liquidity.  They couldn’t resell the foreclosed homes and they didn’t have $$ to make new loans, awwwwwwwww.  Bear-Stearns then became the first of many on the brink of disaster, so the Fed quickly gave them a huge loan guarantee which saved B-S’s butt while it was sold to someone else.  But then, realizing the foreclosures were continuing, the Fed acted to make more money available by dropping the discount rate, not once, but several times, down to record low rates!  This enabled the bankers to come to the Fed window and borrow needed liquidity.  By this the bankers were temporarily saved, but you?  You aren’t allowed in the line to the Fed window, that’s a banker’s-only club.

So all this manipulation by the Fed, plus the mushrooming national debt, have weakened our dollar to the brink of collapse.  So what should we expect the Fed to do next?  They’ll soon enough be tightening money again, in a misguided attempt to strengthen the dollar.  When that happens, I suppose we’ll see some more foreclosures, but we will also start seeing the bankers tumble, and that could be domino-time.  There’s really nothing much else to be done, it’s about over, folks.  It won’t matter one whit who wins the next election.

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