The Bailout Society?

This excellent article in the City Journal tells us what some ordinary people think about mortgage bailout plans. Notable:

But Times readers aren’t biting. More than 400 online responses to the article ran 20 to one against any taxpayer rescue, citing principles of fairness and basic economics. Some readers pointed out that able-minded people are responsible for their own financial decisions, or that a bailout would punish people who behaved rationally during the housing boom. “I’ll be darned if my tax dollars have to go save some folks who couldn’t understand what ‘variable rate’ meant, or who bought beyond their means,” wrote one. “I have excellent credit and did not overextend myself. Any one who studies history could see the pattern and should not have gotten caught up with this recent cycle,” wrote another. “The changing housing market meant that I, a lifelong renter, would finally have a chance to purchase a home now that prices are being lowered,” noted a third.

A bailout will also encourage reckless behavior down the road, argued one correspondent: “Any so-called government ‘rescue’ will simply serve to encourage such irresponsible actions sometime again in the future.” And though disguised as compassion, a bailout would benefit a powerful special interest at the expense of the taxpayer: “Why should government reduce exposures these banks have?” another response asked. “They lent these dollars.”

My thoughts: Progressives are always advocating policies to create more affordable housing, but now that we’re getting it, they want less affordable housing. As a home owner, I don’t like having less to borrow against or having to accept less at closing. But it’s not a total loss. I must accept 10% less for my house at closing, but the housing I’m looking at is also down 10%. No loss. In fact, when transactions costs are considered, I may come out ahead, since many of the related fees are based on the home’s cost. I have less to borrow against, but perhaps that will just encourage me to be more disciplined in my saving.

This entry was posted on February 28, 2008 at 9:19 pm and is filed under General post. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.