Residual Forces

Rep. Keith Ellison (CAIR MN5) brought some of his DC buddies to tour some forec losures here in Minneapolis yesterday and one just can’t help but say, photo-op much? They announced some feel good, we pay for it, legislation while here.

Ellison and Emanuel, the Democrats’ fourth-ranking House leader, said a congressional proposal that would provide $300 billion in new loan guarantees to help refinance at-risk mortgages could make a difference in neighborhoods like north Minneapolis, where more than 500 homes have gone vacant. It would also provide $10 billion in loans and grants for local governments and nonprofits to rehabilitate vacant foreclosed homes.

Deficit spending to solve debt problems? Isn’t that just shifting the problem?

Houses were way overvalued due to the shortsightedness of Municipalities allowing massive development projects and refusing to build workforce housing. I’d been saying for years that we were in a housing bubble and as bubbles do, it popped.

Sure some of the foreclosures out there were people caught up in the greed that flowed up and down the ladder of the housing market, but most of the people were taking a known risk. House flippers and speculators were trying to cash in on the game while the getting was good. They were getting rich, basically, filling out paperwork. they tried to play the market by owning numerous homes and trying to buy low and sell high. They never had any plans of actually living in these homes. get rich by the sword, get poor by the sword.

Others were people just had bigger wants than they had means. They bought way to big and expensive of homes and, also, knowingly rolled the dice and took out interest only or balloon mortgages. I’ve seen the paper work for a mortgage, they make it darn clear how much you will be paying. These people may not have known it, but they weren’t guaranteed a quick and profitable sale.

And yes, there were a small number of people who were taken by crooks. Some of those may have fit into the categories above. Others were caught up in dealing with human pond scum. Unfortunately that happens and hopefully they will be out of business soon.

In the end the only people who will truly benefit from this $300 billion handout are the banks that were also willing participants in the risk. And let’s not fortget that Congress also had a role. they demanded that loans trickled all the way down the economic ladder and well, that meant making loans to risky customers. In the end, the only thing that can prevent this sort of thing again is to let the markets correct themselves.

Bailing out people the way Ellison wants is just going to bury the real problem.

Oh and of course RT Rybak stuck his foot in his mouth as usual.

Rybak and members of the Minneapolis City Council told the congressmen that federal dollars are needed to help cities deal with the large number of foreclosed homes. The city has spent more than $1 million just boarding up vacant homes. It also costs the city when criminals use vacant homes for their activities or set fire to an abandoned property.

Maybe if the feel good mayor would lock these criminals  and prioritize Police and law enforcement funding these criminals wouldn’t be running free and raising hell.

Congress can’t erase this problem. There were a lot of causes for the mortgage crisis, and there is only one real solution. Let it run its course. The absolute last thing we need to do is put every American taxpayer on the hook by dumping federal funds in with the hopes it will stop the problem.

Stop intervening! Markets work, but you have to let them.