There is not a 'government-driven' movement towards irresponsibility; it begins wholeheartedly with wall street, financial institutions, banks, yada yada... Banks are now allowing people to 'squat' in homes they could never afford, and in a truly phenomenal recent event, they are erasing credit card debt. http://seekingalpha.com/article/104230-the-free-lunch-approach-to-finance?source=headline1 The Free Lunch Approach to Finance Graham Summers November 05, 2008 Over the last week, the media has been abuzz with numerous bailout plans to help homeowners in danger of losing their homes. The New York Times reports there are at least four plans in the works. The problem with virtually all of these plans is that they punish the prudent and reward the⦠Honestly itâs hard to phrase this appropriately. The American dream to a large extent entails home ownership. The problem with Dreams â American or otherwise â is that theyâre not based in reality. Weâve now got a situation in which millions of Americans are living in homes they cannot afford. Many of them have simply stopped making mortgage payments and are essentially squatting. Banks which are already broke and donât need to spend the extra money filling out foreclosure paperwork have helped facilitate this. The most recent example is JPMorgan, which just announced it will freeze foreclosures on $70 billion worth of mortgages for up to 90 days (three months). Other banks have implemented similar schemes. But what about the people who saved their money and only bought homes they could afford? Those who exhibited prudence and lived responsibly now look like fools making mortgage payments while their neighbors squat for free. To me, all of these issues hinge on the fact that weâre talking about homes. If this issue was related to cars â minimum wage employees started buying Ferraris or Porsches â or jewelry â high school teens started buying Tiffanyâs diamonds using their allowance â there would be no debate here. The powers that be would simply say, âthese people lived excessively and have dug themselves into a ditch. Itâs their problem, not ours.â However, because weâre talking about homes, everyone is uncomfortable saying anything like this. No one wants to be seen as the guy who throws his fellow Americans into the streets. But the reality is that the US left reality and entered fantasyland about five years ago when people who would never have been able to afford a home previously started buying houses. I realize that the story is more complicated than this. There were predatory lending practices, complicated mortgage structures that hid the real monthly payments from the financially unsophisticated, and more. But the fact remains that for whatever reason, there are now millions of folks living in homes they cannot afford. And the Feds and banks are now doing what they can to keep these people in these homes. Doing this has multiple implications. It provides plenty of incentive for folks who CAN afford their mortgages to simply stop paying, which not only increases the problem but will end up costing Americans more money in the end as we pay off these future nationalized debts over the next couple of generations. It also opens the door for lax rulings on other debt markets, most notably credit cards. Itâs not a huge jump to go from writing off homeowner debt to writing off credit card debt. Indeed, several large banks have grouped together to ask the government to allow portions of consumer credit card debt to be forgiven. The pilot program could affect as many as 50,000 people and could forgive as much as 40% of an individualâs credit card debt depending on his or her financial situation. Whatâs next, car loan forgiveness? Student loan forgiveness? Itâs getting to the point where thereâs no real reason to work hard or make money: Your bills could potentially only be food, clothing and energy. Iâm not saying that facetiously. If credit card and mortgage debt are forgiven, the monthly household bills drop big time. Is this the new American retirement program â Forget about savings and working hard, just stop paying debts and bills, squat in your home, and earn enough to pay for the groceries and heating bill? Has the formerly impossible âfree lunchâ begun to exist in America?
Bad enough they give food stamps for years to able bodied people, now everyone has the hand out. I may have to get on line.
How is this any worse than increasing my taxes. Wether you rob me now or sign me up to make future payments on a loan I don't want it amounts to the same thing. Given that most in the US don't pay any meaningful amount in taxes and even less as a percentage of their income it will be the so called rich (read productive Americans) who will end up footing the tab for all this government largesse. What it amounts to is a stealth tax.
Whooooo!! I dont even pay any tax anyways a i trade through an sb firm not 3rd party broker, so im already getting all the benefits for free that everyone ele has to pay for in tax!! And then as soon as i saw the credit crunch coming i got 2 creditcards out, maxed them out to over £8,000 in a few days, and then just ignored the banks calls and stuff till they eventually now just giving up and just chucked all my debt in with the rest of the huge smoldering pile to be bailed out by the government, who only get that money from all the people who pay it to them in tax!! LOL What a lovely beautiful cycle... The only people who actually get fucked are the people who do pay tax!!
Just a thought. If there's a record of forgiven debt, can't the IRS come after you for taxes owed on it cuz they consider that income? Seriously, if your house is worth 250K, you owed that to a bank, the bank forgives half and draws up paperwork that reflects that, can/will they issue a 1099 of some kind to the IRS on your "capital gain" ????
this is what used to happen, but the mortgage relief act of 2007 that bush signed will temporarily change this for certain debt forgiven in 2007-2009
It constantly amazes me what some people dream about when they are asleep. But it is repeating the dream whilst they are awake that reveals their inner thoughts and behaviour