September 29, 2008

here, take my money

no really. i mean, you got yourself in all this financial trouble, you took risks, made mistakes i should totally bail you out.

alright, WTF?!?! i really don't know all there is to know about the bail-out plan or the financial crisis. but, i do know that individuals and financial institutions took HUGE risks and did not make educated decisions. i also know that this has been spiraling out of control for a decade or so. first off, individuals opted to take out arm loans that they planned to grow into. basically, they bought WAY more house than they could afford and now that their arms are up, the interest rates are rising and they are panicking, because they cannot afford their own houses - hence all the foreclosures. on top of that, financial institutions have offered loans to people, when they knew the people couldn't afford them. the institutions have also taken on and insured bad loans, loans they knew weren't good, weren't going to be paid off. BRILLIANT!

i have a few problems with this whole situation. first off, why would anyone grant a loan to someone who couldn't actually afford that loan? the purpose of a loan is so that you can pay off something in monthly installments. it is NOT so you can be flashy or live beyond your means. it's kind of true that you can't get a loan unless you have the money to back it up - there's a reason for this, we are currently living that reason. secondly, why would you buy a house that you can't yet afford to live in? yes, the american dream, i desrve the best, why not me? sure, i get all of those ideas. but, here's the thing...if you only make enough money to purchase a $200,000 house, then you deserve to live in a $200,000 house...NOT a $400,000 house, you don't make enough money for that. if you want that house, go get another job. i really don't care how you spend your money or what you buy. correction: i don't care as long as it doesn't affect me.

when i was looking for loans to purchase my house, i spoke with multiple lenders. they each asked me "how much can you afford a month? because you WILL be approved for more than you can afford." this didn't make any sense to me. i was under the impression that getting a loan was difficult, that i might even need a co-signer. although i thought these lenders were all very nice to warn me that i'd be approved for more than i could afford, i didn't really think too much about it. i did a lot of math and figuring before i even began talking with any lenders. i knew how much i could afford, just not how much they would be willing to give me.

here's my problem with this whole financial crisis: because the financial instituions made bad decisions and didn't safe-guard themselves AND because several individuals (or couples) were selfish in their purchasing power the governement is going to play big brother and come to the rescue. alright, so if i default on my loan, will the governement swoop in and help me out? most likely, no. hmm, ok, so the people who lived beyond their means and took on too much are grandfathered in to be being rescued. good, congratulations for you. i'll just sit over here, pay my increased taxes (because of the bailout), cut back in other areas of my life...oh, and continue to play by the rules like a good little citizen. the way i see all this: let's reward the people who screwed up, in-turn basically punishing those who did what was right.

i don't get very worked up about things, usually. but, this one hits a hot-button for me. i can understand debt and things happen that can delay pay-offs of loans, etc. i'm not arguing against those people at all. i'm speaking in collective, general terms. i have no idea what the answer is to our current problem, and i fear that without government intervention we face a terrible economic downturn. can't we find a different solution? at the very least, we MUST put regulations into place to prevent anything like this from ever happening again. (p.s. there were regulations in place after the depression, which somehow got overturned.)

1 comment:

adam wanberg said...

Very well said,

Today bud light salutes you mr. interest only house loan guy.

97 inch plasma, check. Playstation 1-4, check,
Maxed out Menards BIG card, check
million dollar endorsement from EA Sports to play MAdden 08, no check.

So grab an ice cold bud light out of your dad's fridge, O waster of the Washington. And clear the treadmill from your new place.