Wednesday, February 18, 2009

Obama's Housing Plan

Obama rolled out his plan to stop foreclosures which is promising but has a couple of major flaws. Of course, I still reject the premise, some folks that couldn't afford a house in the first place probably shouldn't be living in that house, there is a wonderful alternative called renting. Foreclosure just may be a good thing.  Moving on, though, I find the absence of one detail particularly troubling.  Obama does seem to be broadly articulating a Bailie Mae strategy that I have detailed on this blog before but with one critical ommission: shared reward.  Obama proposes paying servicers and banks to reduce principal and interest down to a certain percentage of the borrowers income.  This is fine, but what is troubling is that the government, nor the bank, gets any share of the upside if the house is sold for a profit at a later date.  So the moral of the story to all of you readers is: Go fuck up something financially, get bailed out for fucking up, and profit handsomely*.

*I suppose one could make the argument that this is only fair since this has been what the government has done with the private sector for the last year, why not extend that principle to households.

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