I was having a break room conversation with a co-worker today who brought up some excellent points about the current mortgage/housing crisis.  The conversation led to some excellent points that should be made to remind some of the 'soak the rich' idiots of just who they wind up hurting if they get the results they so desperately desire (including Hillary Clinton and the cast of characters running for President of the United States on the Democrat side of things).

Lets say you wanted to buy a home, and you wanted to live in a nice neighborhood.  Most people want that, no?  So, you start talking to a broker, or perhaps a Realtor^(tm) (in case you don't know it, Realtor is a trademarked name, so should always be followed with that ^(tm) thing. Something I learned along the way years ago, though I'm not a Realtor^(tm) and don't play one on TV ) and start trying to find out how much home you can afford.  You might quickly see where this is going as many people that took (and possibly still take...) that approach heard great little sales pitches that said something along the lines of: "oh, don't worry about how much you can afford... you let me (broker/agent/Realtor^(tm)) worry about that!" or perhaps something more along the lines of "Let me show you just how much home you can have right now!"

Hopefully you're still following along here, and you might even be a step ahead of my writing, but either way, I'll continue.  What happens next is that the broker/agent/etc., worked the numbers and helped the home buyer get into more house than they could afford on the premise that the buyer was going to most likely be moving out of the home within the next 3 - 5 years when they too would cash out on the big run-up in housing prices and they too would collect enough profit on the sale of their last home to invest into the purchase of their next even larger home.  Basically the idea was that the buyer would be investing in (most people would call it speculating, whether intended or not) the home with the idea of taking money out later.

Oops, did I say out later?  How about out almost right away.  Oh yeah, many home owners were cashing out immediately, if not sooner.  They were taking the equity that they supposedly had in their homes so that they could tap 10's of thousands, if not 100's of thousands in home equity and then use that money to buy whatever they needed/wanted with it.  In effect the home owner was getting 'rich' on buying the home even if they didn't intend to stay in it too long (and many didn't intend to do so, or at least didn't intend that the price they paid now was the value they'd have available later).

Now, take a second and look back into that last paragraph a bit.  There's a dirty word there.  The word that begins with an r and ends with an ich.  You see the word?  That target for all that is taxable (if you are a liberal)?  I see the word very clearly.  RICH.

Yep, people that couldn't afford the homes they bought were R I C H.  They were rich because of the value of their home and/or the anticipated value of the home that they got converted into cold, hard, liquid funds to buy their Lexus cars with, or their big screen HDTV, or other toys for the rich and affluent.

Now it is these very same people that are crying for bailouts and assistance from somebody, anybody, most especially the politicians.  They aren't looking at themselves in the mirrors and wondering how they could be so foolish, instead they are screaming for burning at the stakes of the CEOs and employees at places like Countrywide Mortgage.  Now don't get me wrong, as I'd gladly say that the mortgage brokeres, builders, bankers, and others that were profiting on all of the mess were at fault and many of them should be forced to pay, but those people didn't hold guns to the heads of the home buyers.  The buyers should have known what they were in for.  They shouldn't have assumed that past performance in the market is an indicator of future events, and yet they did.  (Hell, if some had assumed that past performance was an indicator, they'd have known that the blowout was coming as the market has done just the same in the past...)

Anyway, these people that were wealthy are now crying for help, and who do they expect will help them?  U N C L E  S A M.  The U.S. government.  But who provides money to the U.S. government?  The taxpayers.  So I'm being asked to help pay for the debts of a home owner that was foolish when they bought their home (and were getting rich on doing so) even though I am but a trailer trash living individual trying to live a modest live, on a modest income while caring for my family's needs and wants.

Uh, yeah, how about we soak the rich and pay off this mess.  Oooops, just what RICH are we talking about again?  The formerly rich?  The never were rich, but thought that they were?  The well to do that may have lots of paper gains, but haven't ever really profited or lost because they aren't cashing out in the marketplace (and instead are keeping their money on the sidelines or locked up in a virtual freezer for all intents and purposes)?

Just what rich are we speaking of and just what happens if you do soak the rich and they take their money out of the market place further hurting the liquidity of the mortgage lenders as well as driving down the price of investments which might be sold as assets to help the idiots that bought the overpriced homes but couldn't really afford them?

Yeah, that rich.  Pssssshhawww.