Lancaster County PA Realty Check: A Trillion Here, A Trillion There...

A Trillion Here, A Trillion There...

Apparently the powers that be have decided, belatedly, to do something about the profligate mortgage policies of the past.  The government will spend an estimated $700 Billion to buy up bad loans purchased by institutional investors.

Senator Everett Dirksen of Illinois used to say in the 1960s, "A billion here, a billion there - pretty soon you're talking about real money!"  This new plan makes a billion dollars sound like pocket change.

Some of the loans made in the past six or seven years have been made to so-called NINJA buyers - No Income, No Job, No Assets.  No matter.  If a buyer could fog a mirror, he or she could get a mortgage.

Now the chickens are coming home to roost.  In spades.  Could this train wreck have been seen coming years ago?  Of course - but for political considerations, both parties lobbied to make the American Dream of home ownership available to more and more people - even those with little ability to afford it.

Since no government project ever costs as little as initially estimated, this bailout will probably end up costing a trillion dollars.  Can we even get our brains around how much a trillion dollars is?  If we tried to pay such a debt by each contributing $10,000 out of our own pockets, it would still take 100 million of us to reach a trillion dollars.

I'd like to see some of the tens of millions of dollars pocketed by Mssrs. Raines & Johnson, former heads of Fannie Mae and Freddie Mac as those instutions went bankrupt, returned to the Treasury.  I'd like to hear an explanation from Christopher Cox, former senator and now head of the SEC, as to why he ignored the writing on the wall.

Part of the reason gasoline reached $4 a gallon was because the American dollar is losing value on the world market.  Think another trillion dollars printed, from assets that we don't have, is going to further erode the value of a dollar?  You're darn right.  We're all going to pay for this, one way or another.

 

Brian Schulman offers expert real estate representation for buyers and sellers of homes in Lancaster County, PA.  To learn more, visit http://www.FindLancasterHomes.com/

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Comment balloon 16 commentsBrian Schulman • September 21 2008 09:05AM

Comments

Senator Dirkson lived in simpler times.  My recollection is that of representatives who had more interest in the country than their own image and gain. 

Congressional members today often operate for the benefit of the party, not the country.

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) about 10 years ago

Brian, I'm at a loss or words on this whole subject.  I just don't get it.  A CEO destroys a company and gets rewarded millions.  How does this happen?

Posted by Bob Cumiskey, US Army Retired, Your Sun City Center, Florida ~ Realtor (A1 Connection Realty, Inc.) about 10 years ago

Hey, what's a few billion dollars amongst friends?

Congressional "leaders" (and I use that term loosely) are too busy pandering to special interest groups in an effort to further their re-election campaigns.....even if that election is 4-6 years away.

Posted by Craig Rutman, Raleigh, Cary, Apex area Realtor (Helping people in transition) about 10 years ago

You have good reason for outrage....we all do. There is plenty of blame to go around and the bottom line is greed.

It has been years since companies top priority has been to re-invest and make the company stronger....the priority now seems to be how much can I (and the stockholders) milk it for.

It's gone beyond political parties. I don't agree with any of the bailouts...the only thing the public will sit up and take notice of is when it hurts. We need to get mad enough to get rid of them all and start over! Sorry for the rant....

I've missed you!!

Posted by Joan Mirantz, Realtor, GRI, CBR, SRES - Concord New Hampshire (Homequest Real Estate) about 10 years ago

I had to say it,  Joan is right.. Reinvestment is key. The day of 2 party partisan policy may be coming to a close.

Posted by Trey Thurmond, College Station , Texas Homes (BCR Realtors) about 10 years ago

Brian,

I've been reading a number of news articles about this over the past few days and it concerns me greatly. What is happening in the USA has a very significant affect on the global economy and particularly on ours here in Ontario since we are so closely dependent on the USA with regards to our manufacturing exports.

This is a short term fix that will have dire consequences over the long run and it is the American taxpayer who will foot the bill in the end.

It's good to see a post from you, btw....I too have missed you!

Jo

Posted by Jo-Anne Smith about 10 years ago

Lenn, I'm not so sure times were simpler then.  We tend to forget the bad and remember the good.  However, Congress as a whole certainly seemed to be of a higher caliber.

Bob, the only thing I can figure is that we shouldn't be letting top executives write their own compensation without it being tied to performance.

Craig, when Congress spends its entire term trying to get reelected instead of serving the country, I suppose we shouldn't be surprised when they ignore real problems until it's too late.

Posted by Brian Schulman, Lancaster County PA RealEstate Expert 717-951-5552 (Coldwell Banker Residential Brokerage, Lancaster PA) about 10 years ago

Hi Joan,

That's the problem - the only time the people take notice is when it hurts.  Then it's generally too late for sensible solutions.  Sadly, we the people get more or less what we deserve in representatives, through inattention and partisanship.

Thanks for missing me!   :o)   I've missed having the time to be here.

Posted by Brian Schulman, Lancaster County PA RealEstate Expert 717-951-5552 (Coldwell Banker Residential Brokerage, Lancaster PA) about 10 years ago

Trey, I see no sign that party politics is coming to a close.  The only time the two parties chose to work together is when it became obvious that the wheels were coming off the economic wagon. 

This 4-year campaign season will continue until November 4.  We'll spend a couple of months while the lawyers argue about hanging chads.  After a one month honeymoon for the new president, the next 4-year campaign will begin again.

Posted by Brian Schulman, Lancaster County PA RealEstate Expert 717-951-5552 (Coldwell Banker Residential Brokerage, Lancaster PA) about 10 years ago

Hi Jo,

It certainly is worrisome to contemplate such debt.  In the long run, the cost of such government laxity is that the money itself will lose much of its value.  We can't keep borrowing money forever.  We can only hope that we won't end up like the Germans after WWII, toting their worthless cash in wheelbarrows to buy groceries...

BTW, I've missed our blog correspondence, too.   :o)

Brian

Posted by Brian Schulman, Lancaster County PA RealEstate Expert 717-951-5552 (Coldwell Banker Residential Brokerage, Lancaster PA) about 10 years ago

How right you are!

Let's hope that whoever wins in November, really has the people's best interests at heart...instead of their own.

Posted by Craig Rutman, Raleigh, Cary, Apex area Realtor (Helping people in transition) about 10 years ago

Brian - it appears it will already cost more before the paperwork is signed. Already there are complaints that it doesn't go far enough and is not inclusive enough.

Posted by Mike Saunders (Lanier Partners) about 10 years ago

Mike, we both know that this would have been entirely predictable.  Again, representatives are grandstanding before their constituents, showing how much government largess they can bring home. 

This happened during Katrina.  It's happening now with bailing out more borrowers whose homes are being foreclosed.  I have a lot of sympathy for those borrowers - but it doesn't change how our government constantly tries to expand its power and programs.

Posted by Brian Schulman, Lancaster County PA RealEstate Expert 717-951-5552 (Coldwell Banker Residential Brokerage, Lancaster PA) about 10 years ago

Brian ~ You could balme those NINJA loans on Charlie Rangel and Obama's ACORN community organizers putting pressure on mortgage companies to open up loans to unqualified buyers who just happen to be in their communities.

Posted by Broker Nick, Broker Nick Relocation Broker Service (South Florida Real Estate & Development, Inc.) about 10 years ago

Yeah, let's throw a trillion dollars at it and see if we can fix it!  You are so right, however I blame Congress for all of this.  They write the laws, they oversee the implimentation.

Posted by Jim Crawford, Jim Crawford Atlanta Best Listing Agents & REALTOR (Crye-Leike REALTORS®) about 10 years ago

Craig, amen to that!

Nicholas, those entities and others are blameworthy.

Jim, one of the reasons that Congress is all in a panic to do something - anything - is that they are afraid we might start asking what the heck they were doing while Rome was burning...

Posted by Brian Schulman, Lancaster County PA RealEstate Expert 717-951-5552 (Coldwell Banker Residential Brokerage, Lancaster PA) about 10 years ago

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