Posted by: Marvin Remmich | January 6, 2011

FORECLOSURES-Politicians and the Banks

“Why do golfers play in dense fog?  For the past two days, I have seen golfers trying to find their golf balls in the fog.  Kind of reminds me of the current real estate crisis.

 With undervalued housing prices, a global debt funding gap, jumps in CMBS delinquencies, foreclosures up 57% from a year ago, and swallowing shadow inventories, we are trying to find the answers to the current crisis.

   Thomas Sowell writes in a ‘Townhall Daily’ article “Saving the Housing Market’ that home sales are down more the 25 percent and inventory of unsold homes is about 50 percent higher than it was the same time last year”.  He further writes “rescuing particular people (in this case, folks in foreclosure) at the expense of other people – whether the others are taxpayers, savers or prospective home buyers – produces votes.  It also produces dependency on government, which is good for politicians, but bad for society”.

Mr. Sowell has a point.  Most of us are paying the prices and will continue to pay the price for government dependency in the real estate market.

 Subsidizing delinquent borrowers who spent more than they could afford or banks who lent them the money is not the answer.  That’s our money these politicians are giving away.

 The answer lies in a quick resolution to today crises so that Americans can move forward.  Delinquent borrowers will have to live elsewhere and Banks and their depositors will have to suffer the losses.  As for the politicians who were involved in making Banks make these bad loans, the American people should, at the very least, ostracize them for making such bad policy.”  Per Walter Barnes.

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