Friday, June 25, 2010

Government Intervention

Commiedreams still dreaming. Right to Rent: "When the foreclosure hurricane first hit, subprime borrowers absorbed the brunt of it. Homeowners who had been fooled with teaser rates suddenly faced balloon payments they couldn't afford. Others couldn't refinance because of prepayment penalties they hadn't been aware of. And some people had made bad decisions and were now paying for it with their homes."

One would think as loud and long as "progressives" have been screaming about the evil greed of Big Business, particularly bankers, that folks would not be so easily "fooled" by big business and bankers.

"From the outset of this crisis, little relief has been in sight for foreclosure victims. In contrast, the big banks were on the receiving end of a $700 billion bailout and have been given the right to decide which homeowners sink or swim ever since."

Although I'm against the bank bailouts, are you prepared to experience what would happen to the economy if the big banks fail? Would those fooled folks, clueless about their own mortgage contracts, be prepared for mass worldwide bank failures? Can the FDIC just print the money they need to cover millions of depositors, and by the way it could take years to get your insured funds. Can you tread water that long?

The five most foreclosure troubled states, last I read, were California, Florida, Michigan, Illinois and Nevada. Hmmm. Now why would those states rank the top 5 ...

"Instead of foreclosures increasing blight, crime and homelessness, neighborhoods would keep people in their homes who care about them and their communities. Instead of decreasing property values and tax revenues, and consequent layoffs and cuts in services, communities would be far more stable and better able to contribute to the economic recovery. And Baker points out declining property values-especially in bubble markets-mean that people are sometimes paying twice as much on their mortgage payment as they would pay to rent the same home."

"... consequent layoffs ... if layoffs come after the foreclosure then why are folks not making their mortgage payments? Rent the same house for half the price of the mortgage? How often ya think that's happening. How many folks used the "foreclosure hurricane" as an excuse to get out of the responsibility of home ownership? There's a huge problem now with renters trashing rental property - think losing a home and having to rent it will make them better caretakers?

Fact is most home loss/foreclosures are due to: Job loss. Divorce. Too much debt. Filing bankruptcy and the home liquidated to pay debts. You could say this hurricane is often caused by personal behavior. How many helpless victims will draw every last dime of unemployment insurance and government foodstamps/medicaid before getting serious about job hunting?

Other facts: Foreclosures are heavily concentrated in Latino and black neighborhoods, particularly Latino immigrants. Oh my, is that politically incorrect or what.

Some try to make the case that this is the result of heartless greed and taking advantage of helpless minorities by evil corporations. The truth is a lot of mortgages were given to people who turned out not to be creditworthy. The granting of such mortgages was encouraged by Fannie Mae and Freddie Mac, which promised to take them off lenders hands, and then injected $1 trillion of what turned out to be toxic paper into financial institutions all over the world.

"A right to rent sure beats listening to Obama administration officials continuing to promise to punish banks that aren't modifying mortgages and somehow never getting around to doing it. And it definitely beats continuing to watch our nation bleed generations of wealth, entire communities and human capital."

...bleed generations of wealth and human capital." Now doesn't that evoke strong emotions, sounds like progressive tabloid writing.

Another piece this week, from World Socialist website, a demand to nationalize public utilities, particularly Detroit's DTE:

"In an article that appeared on the Huffington Post web site Thursday, Mike Langford, the president of the Utility Workers Union of America (UWUA) and an executive board member of the AFL-CIO, called for private utility companies such as Detroit-based DTE Energy to be placed under “public ownership.”

The transformation of DTE into a genuinely public-owned utility, which serves the interests of working people, not the super-rich, requires a fundamental restructuring of the entire economy and breaking the stranglehold of the financial aristocracy. Not only would the utility companies have to be nationalized under workers’ control but also the banks and major industries.

Hahaha, "placed under" rather than confiscated, good one.

As in many cities and towns across the nation my local Board of Municipal Utilities is publicly owned and a member of APPA (American Public Power Association). I will grant that our area has one of the lowest rates in the state, but still comparable to Michigan's rates.

Supposedly a not-for-profit status – lowers costs and prevents any split allegiance between customers and stockholders, although you could be a bondholder. Still, our public owned utility cost goes up every year - as they have most everywhere.

Socialists fail to mention, as always, that regardless whether utilities are owned by for-profit corporations or publicly owned - your monthly utility bill has to be paid and profits have to be made to cover salaries, maintenance, improvements, repairs, upgrades, pay bondholders, and to fund attempts at keeping rates lower, etc. etc.

Publicly owned utilities shut power off for nonpayment too. Publicly owned utilities have the same problems as those in the private sector - corruption, cronyism, political agendas, lack of competition, subject to state and federal regulations, rising costs, becoming local monopolies, etc. etc.

In many developing/third world countries the public owned utilities more often than not provide service only to wealthier neighborhoods, to tourist spots, industrial parks, i.e. folks who pay for it. Barrios and shanty towns do not have utilities.

In China there are communes/co-ops where local government provides healthcare, education, heat, electricity, housing, basic foodstuffs, and even furniture. At the mere cost of 70% of your paycheck from the job the government has given you in a village-owned company. But, once a month the community bosses make inspections to determine that you are taking proper care of what has been provided, that you are still worthy of your cracker-box house, 1 child, couch and bed, the dim light bulb dangling in home sweet home. All part of your "benefits" package. These benefits are awarded on a point system - points for cleanliness, progress toward "behavioral goals", and obedience to the Party line.

Already in the US too many folks depend on the commune to provide housing, food, education, utilities, jobs, healthcare - once the majority is dependent, you can be sure of the necessity of implementing a point system. Nearly all the folks shut off today will be shut off under a "publicly owned" system. But we won't hear about it and such folks will be sent to some euphemistic "zone", so as not to mess the mood of those who are obediently earning their points.

Remember, "those who desire to give up freedom in order to gain security will not have, nor do they deserve, either one."

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