Comments on: American Optimism, Russia’s in Trouble, But Good News for Oil, Breakthrough Med Tech, and More!

By: The New TARP, Stocks Cheap Enough Yet? Escaping the Global Recession, The Dububble, and More! - Contrarian Stock Market Investing News - Featuring Bargain Stocks

Thu, 29 Jan 2009 19:11:36 +0000

[...] level of energy investment that the world needs going forward,” insists Byron King, yesterday’s IEA report in hand. “Meanwhile, the U.S. government is spending trillions of dollars forward just to bail [...]

By: pagehype.com

pagehype.com — Wed, 12 Nov 2008 22:54:32 +0000

American Optimism, Russia’s in Trouble, But Good News for Oil, Breakthrough Med Tech, and More!…

Encourage people not to pay their mortgage, good job! ” Here’s the new plan: Fannie and Freddie will modify hundreds of thousands of distressed loans. In order to qualify you must be at least 90 days late on a mortgage payment, owe at least 90% of y…

By: Jahfre

Jahfre — Wed, 12 Nov 2008 20:08:27 +0000

Hi Addison and all,
It seems that the underlying assumption is that a lot of home owners want to be bailed out of a foreclosure. I don’t think that is valid.

Who would want to be bailed out?

1. Someone who loves their home and plans to stay in it for 20 years or more.
2. Someone who believes their home will one day be a valuable asset again.

What this really is amounts to a scheme to keep home inventories from landing bank’s balance sheets for as long as possible. Even after renegotiating contracts and payment schedules, it is cheaper for the bank to take a long-term loss while keeping the revenue stream flowing toward them today.

My guess is that every day more and more distressed home owners are losing confidence that holding onto their home makes any sense.

If I found myself in that kind of distress I’d walk away fast. In fact, I’d want to get out before the rush, be the first to have a “Walking Away Family Downsizing Sale”. I think the market for trading junk amongst neighbors is going to be saturated very quickly once the walk-aways start.

I don’t see this as a broad rescue of home owners but as a ploy to fool as many home owners as possible into continuing to make mortgage payments for as long as possible. For their sake, I hope home owners are paying attention to the prospects of the economy turning around before they lose their job or their health. It is time to brace for stormy weather not to pin your hopes on the forecast being wrong.

Jahfre Fire Eater