Comments on: Project Lifeline

By: James Wheelock

James Wheelock — Fri, 19 Dec 2008 10:44:06 +0000

Let me agee with you nearly whole heartedly. The only part I disagree with is allowing things to just go without any effort to slow it. I make this comment because of the nearly impossible job of correcting a rapid deflationary spiral. If that begins it will not be solely an adjustment in home pricing it will impact the whole world throwing us into a world wide depression. As a rapid collapse of property values would yank out massive amounts of capital from the financial markets. And what alot of people do not realize is that we have a fractional reserve banking system which means that banks can loan out 89% of all money taken in on deposit. Then that money is spent somewhere then winding back up in a bank where they again loan it out at 89%. This cycle turning over several times ends up turning 1 dollar into 9 dollars. So, each reduction of 1 dollar from the financial markets becomes the removal of 9. This is why if it happens to fast things disinegrate.

The federal banks of the world are trying to make a inflation play to prevent such a rapid disappearance of capital. Which I whole heartedly support, with that said what the treasury is doing isn’t the answer. They are squandering our tax dollars and blowing smoke up you know where.

If we want things to stabilize and correct properly then we need to reestablish the secodary market for mortgage backed securities. The bailout funds should have been used to do this by giving loans of 70-80% of the purchase price of mortgage backed securities requiring the investor to bring the rest in cash. Then the government would recieve 100% of their loan back until the investor lost everything. This would leave an investor with skin in the game but give a reason for them to take on the risk everyone is now avoiding. It would reestablish the movement of capital allowing for pricing to correct in an orderly fashion.

By: dave in NYC

dave in NYC — Mon, 08 Dec 2008 23:33:32 +0000

I think if the big banks are going to be bailed out, then why not homeowners underwater on their mortgages. Both made bad decisions.

By: Las Vegas Real Estate Agent

Las Vegas Real Estate Agent — Sun, 24 Feb 2008 01:50:54 +0000

Sam you make several good points. And circumventing the free market is never a good idea. It would be far better to allow the market to run its natural course and to let it do so quickly.

Al yes IF the government would offer a real solution I would be interested. I just don’t think that will happen. All of these “feel good” stop gaps are simply playing politics with the economy and slowing down market recovery IMHO. Like Rhonda stated in her real estate blog, “Before we can begin recovery we need to hit bottom.”

Jim if the government does a bailout our tax dollars would go toward keeping homeowners in homes that they could not afford to begin with. And we would be rewarding bad behavior. So if they buy a car that they can not afford is the government going to step in and pay for their car?

Sharon the government is doing great harm by not being honest with the American people. They are prolonging market recovery and thus allowing this to infect the real estate industry as a whole. We are seeing responsible homeowners lose equity as protracted market uncertainties drive prices down.

By: James Boyer

James Boyer — Fri, 22 Feb 2008 22:40:18 +0000

I think I am with the crowd that says, why should my tax money be used to bail out the people who were not responsible enough to pay there bills, and not responsible enough to protect their credit. I can understand incredible situations, but incredible situations does not equal even 10% of the foreclosures.

By: Project Lifeline | 30 Day Foreclosure Freeze | Missouri Real Estate and Living

Sat, 16 Feb 2008 23:01:33 +0000

[...] popular Las Vegas real estate blog has called for the government to either come up with real solutions or be honest with the American [...]

By: Al Rosson

Al Rosson — Sat, 16 Feb 2008 15:29:29 +0000

Well don’t even get me started eveyone wants to put the blame on the Mortgage Brokers for this foreclosure tsunami. Well I have a question why were these loans even available in the first place? The entire system needs to be revised like a lot of other programs in this country. Now that our government has realized that these loans should have never been allowed in the first place the pass the buck and pass it on to everyone they can but themselves. The least they could do is to step up and offer a real solution to the problem not this bandaid fix that carries as much weight as a one! IMHO

By: Sam Dodd

Sam Dodd — Fri, 15 Feb 2008 23:45:36 +0000

The question I have to ask whenever this is brought up is…”What ever happened to people believing in the free market?” and “Why the hell should the government take my money(Taxes) and save some one who was irresponsible from foreclosure?” And “Why does it always seem these government programs really benifit the lending institutions and not the actual home owners?”

When congress can answer those questions I would be interested in seeing a proposal until then its all fluff.

By: Sharon Sevedge

Sharon Sevedge — Fri, 15 Feb 2008 19:15:06 +0000

I agree totally that only those unaffected by foreclosure would or could receive any solace from the feel good “news items” issued by the government. It is time for our government to fix IT or be honest and say they have no intention to fix IT.