This site is dedicated to stopping the government's planned bailout of the housing market. A bailout requires responsible Americans to pay for the acts of greedy bankers, mortgage brokers, flippers, and over-extended homeowners. In other words, the government wants you to pay for the blunders of others who knew, or should have known, better.
Equally as important, a bailout would permanently price out of the housing market all those responsible Americans who have been patiently saving to buy a house that they can actually afford. The current housing correction is necessary to correct for the historic run up in housing prices over the past decade, which has pushed the price of housing beyond affordability. By bailing out the housing market, the government will prevent housing prices from returning to affordable levels and thereby ensure that young families will not be able to achieve homeownership.
A government bailout of the housing market is both fiscally and morally irresponsible; it is an unfair subsidy being paid to the wealthy (bankers), the greedy (mortgage brokers, flippers, and yes some homeowners), and the incautious (some homeowners), with little or no benefit to those paying the bill (taxpayers).
Why should responsible Americans be forced to pay for the mistakes of others?
A bailout is morally irresponsible because it encourages irresponsible and irrational behavior. Here is a short list of the many "moral hazards" that a bailout enables:
- A bailout sends the wrong message about personal responsibility. It tells Americans -- and most importantly Corporate America -- in no uncertain terms that their financial decisions have no consequences; the government will pick up the tab.
- A bailout tells responsible Americans that they are suckers. If responsible American had been smart, they would have overextended themselves, purchased homes they could not afford, and taken out home equity loans based on the paper value of their property. Then, when the bill came due, they could just pass it to the government.
- A bailout allows banks, mortgage brokers, speculators, and refinancers to benefit from their abuse of the system. By doing so, it encourages these people to act irresponsibly in the future.
- A bailout will force Americans who acted responsibly to pay for those who did not. The average American -- who saved and scrimped for years to buy a house but could not because speculators and over-extenders boosted home prices beyond affordability -- will now be forced to pay for the homes of those who were less scrupulous.
- A bailout will have a disproportionately negative affect on the minorities and the youth. Minorities and Americans under 35 (scroll down the link for 2007 data) are disproportionately underrepresented among homeowners. While non-hispanic whites enjoy a 75% homeownership rate, less than 50% of blacks and hispanics own homes. Similarly, only 42% of Americans under 35 own homes, compared to 80% for Americans 55 and older. A government bailout will perpetuate this race and generation gap by propping-up inflated house prices, thereby permanently pricing minorities and a generation of youth out of the market. And in a Kafkaesque irony, these folks will actually have to pay to prevent themselves from buying homes (i.e., taxes).
A bailout is also fiscally irresponsible:
- A bailout props up over-inflated housing prices, thereby putting homeownership out of reach for young families and responsible Americans who realized that housing prices were out of control. The housing market needs the correction that the bailout seeks to prevent because houses are not affordable for the average American. "You cannot be both in favor of affordable housing and in favor of propping up home prices!"
- A bailout creates perverse incentives. Rather than punishing their behavior, it encourages fiscal irresponsibility among bankers, brokers, speculators, and refinancers. These folks all made money hand over fist in the past nine years (remember, refinancers received cash money from their refis to pay for Escalades, vacations, and stainless steel appliances; now they want you to pay for their benefit). Why change your behavior when you benefit from it?
- A bailout shifts the risks of falling market prices from financially secure banks to the American taxpayer. As a result, either taxes or the federal deficit will skyrocket! This is a government handout to the super-wealthy, and it is wrong!
- A bailout is contrary to the free market principles upon which our economy is based. It jams a huge wrench into the works, with negative effects that will be both severe and long-term.
It will truly be a sad day in America when our politicians vote to bail out the few from their irresponsibility to the detriment of the many who were responsible.
We, the American people, deserve better.
Make a stand. Take action!
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