Friday, February 20, 2009

A Big Bowl of Wrong

One of the biggest things on the web yesterday was the video of a CNBC reporter ranting against the Obama mortgage bailout plan, which this fellow (Rick Santelli) calls the "Chicago Tea Party". Those of us who pay some attention to what our money's doing got the video clip e-mailed to us by lots of friends and associates. Briefly, what Santelli ranted against was what he calls "the government rewarding bad behavior" - folks who bought waaay more house than they could afford, those who willingly lied on mortgage applications, and those amateurs who thought they could flip a house and make a small but quick fortune, and then got caught when the chickens came home to roost. Santelli, and a lot of folks like him, think the Obama mortgage bailout plan will do more harm than good.
We bought our suburban Madison home eleven years ago. As I've said before, we got a good deal on it, because the couple who built it in 1997 were going through a very bitter divorce and they wanted to unload it. Two years ago, our house was assessed (and appraised, by the way) at just about TWICE what we'd paid for it in 1998. While we paid a few thousand dollars below market value in '98, we didn't get so good a deal that the house was worth twice as much nine years later. Although the "comps" in the neighborhood supported the appraised value, my wife and I were pretty sure that our home wasn't "really" worth that much. Things were going up fast, but we were confident the huge growth in prices would slow. We didn't know it would be so much sooner than everybody thought. When we bought the home, I was 49 years old. I told my wife to pick out the house she wanted, and told her to make it a good one, because it was going to be the house they carried me out of with a sheet over my dead body. During one ten-year period in my younger days as an itenerant broadcaster, I lived in eleven different places. This was the LAST house, as far as I was concerned.
We didn't use our house as an ATM during the years of quickly appreciating prices. We made every payment on time. We shook our heads in disbelief at the prices some of our acquaintances were paying for crackerbox houses in tony Madison neighborhoods like Nakoma. 350 grand for 1450 square feet? No thanks. There are so many numbers being thrown around about the "housing crisis" that it's hard to put it in perspective. But the one that keeps coming up from Santelli and his crew is 92....the percentage of mortgages in the U-S that are being paid on time. So we're like the huge majority of people who have mortgage notes: we pay it on time. Our 401-K's have been halved; our houses are now assesed and appraised at what's much closer to a "true" value; for many of us, our pay has been frozen or reduced; and we're paying higher prices for everything.
To me, sacrifice is cutting out the "extras" in life so you can pay your bills on time. No more $4 cups of coffee, shopping for bargains at the grocery store, tightening the belt in general. So when President Obama says we're all going to have to sacrifice to make things better, I say "already there, Mr. President". Please don't ask me to "sacrifice" so the guy down the street who bought more house than he could afford and fudged the numbers on his mortgage application can be bailed out. I'm not moving just because there's a "for sale" sign in his yard. And let's stop throwing billions or trillions of dollars around without having some earnest, serious debate about it in D-C.

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