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« Bomb Kills 68 in Iraq, Next Assessment Might be Kept Secret | Main | This Campaign is Sooo Emotional: Should Obama Adviser be Fired? (Updated) »

March 07, 2008



In fairness, regular folks who downsized (empty nesters, folks moving away from expensive neighborhoods, et cetera) were also winners as a result of the real estate bubble. And of course, the builders, agents, and banks who won during the bubble are getting killed right now. (On the other hand, I bet there's some speculators out there who sold short on the pre-bubble market and made a killing.)

We are in a "market correction", and anything that forestalls that correction - either cutting lending rates or freezing forclosures - is simply delaying the inevitable. Even worse, offering relief to those who speculate and lose simply encourages people to invest recklessly (for another example of this, look at the S&L crisis of the late 80s).

Obviously this situation sucks and I'm not without sympathy. I know people who have put $50k into a house and are still upside-down (i.e. they owe more on their house than the current value of the home). This sucks for them, but they made terrible financial decisions. Signing a mortgage that you know you won't be able to afford down the road unless your house appreciates is just crazy.

The government is not going to be able to keep everybody in their new $400k 6k sq. foot houses in the suburb development that they bought with a tiny down payment and a big subprime loan. People are going to have to declare bankruptcy, banks are going to have to write off a ton of debt and take big losses, and with some luck the real estate market won't see such irrational exhuberance for a long time. The government should provide assistance to poor families who are put out of their homes, and can slow the process somewhat, but they can't and shouldn't stop it.

D. Cupples


We DO agree on stuff. I edited the piece since putting it up (took out the short para re: some of the people who benefited).

I think you're so right about harms coming from delaying the inevitable. You put it perfectly ($400 K, 6K sq ft house).

I also agree with what you said re: a bail out's encouraging bad behavior (like the S&L scandal).

What do you think our "leaders" will end up doing?


Inaction is something this government is reasonably good at. I think that the current administration is going to avoid doing anything too dramatic, and by the time the next one is in, we will be pretty close to the end of the correction.

real estate portal


Today real estate business is became the best business in all over the world.You require a lot of information to enter into this business.
In this business you require a information of houses all over the world,legal laws ,insurance services ,store/packing services etc.
I saw one website that will provide all information for you.Even YOu can add business there.They are providing services over the world.
YOu require just one click to enter into real estate business.

San Diego Lasik - Betty

Good post! As a tie-in, I came across another post that reported that Moody's Investor Services recently issued a report showing that 40% of mortgages re-worded in 2007 are now again in default! The full post is at The site has a very good 7-17-08 post on the coming next wave of foreclosures. Thanks for the read .... Keep up the good work!

D. Cupples


Thanks for the info

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