The Lunatics Have Taken Over the Asylum

I understand that the country voted for change in November, but is this really what we had in mind? It's seems like we now have a government that has completely lost it's mind and is running amok, spending hundreds billions, probably trillions, of dollars with no real idea of whether any of this spending will make a dime's worth of difference to solve our current economic woes.

We get corporate bailouts followed by "stimulus" plans that nobody read, followed by mortgage bailouts, and every time one is announced the stock market plummets, 401Ks get smaller and the public confidence goes down.

As this because we feel the government needs to "do something" even if that something makes the situation worse not better. Has anyone ever considered that sometimes there are events in our lives that are just too big for the government to stop?

If a hurricane were heading toward us, would we start clamoring for the government to "do something" to stop the hurricane? Of course not. Why? The hurricane is something too large for the government to do anything about. If it were to try all the resources used to try and stop it would be wasted. The government can warn us it is coming, tell us to get out of the way, help clean up the mess after it has passed and even help us rebuild. But stop it? Impossible.

Has anyone ever considered that we may be in the midst of an economic and financial hurricane that is simply too big and too powerful for the government to stop? Has anyone considered that all the money (debt) being used to try to stop it is simply being wasted and we will have nothing to show for it but the debt payments?

As a real estate broker, times are tough and we all hope things improve soon. But it's hard to see that doubling down on the irresponsible policies of the previous administration is the way out. I am personally tired of listening to all the chatter about what the economists say. In my opinion, economists are nothing more that a modern version of the court astrologist.

What would seem to work is common sense. If too much risk, too much debt an too much spending got us into this mess, then less risk, less debt and less spending would get us out. Since the lunatics in the government are doing the exact opposite, it's hard to be confident. God help us all.

Will The Government Bailout Help the Real Estate Market?

After all the hoopla of last week, the government passed a record Wall Street bailout package with the hope of easing the credit crisis. Now the question that is being asked is "Will the government bailout help the real estate market?"

From what I know of it, I can't figure out how it will. Much of the talk of the bailout seemed to center on unlocking the credit markets which experts had said were "frozen". That all seems odd, because mortgage financing wasn't frozen. During the entire crisis, there was abundant mortgage money available to qualified buyers. In the current financing climate, a qualified buyer is one who has money for a 10 to 20% downpayment (depending how how they plan to use the property), a good credit profile and can verify both employment and income. Since mortgage money wasn't frozen, I don't see how the bailout can help us there.

Another theme that was voiced was the need to help people who are behind on their mortgages so that they can stay in their homes and avoid foreclosure. I guess the idea there is that with fewer foreclosures on the market the oversupply of housing will be less. In our area, there are foreclosed homes on the market but they represent a very small percentage of the total inventory. There are homes on the market where owners are behind on their mortgages and face foreclosure, but those too are a relatively small percentage of the homes currently for sale. To what extent the bailout will help these people I don't know. But even if it does, it will impact a small percentage of the total inventory.

So when it is all said and done, it's hard to see where the bailout will help firm up the real estate maket in any meaninful way. It looks like we can expect prices to decline further which means we will have more of the problem that led to the bailout in the first place. Does that mean we can look forward to another bailout? Only time will tell.