I have been looking at the impacts from the proposed bailout... I see three possibilities:
- As the federal government goes on their trash run, picking up the bad debt from Wall Street, the banks will once again be ready to loan money. Qualified consumers will be able to get loans again, and with the pent up demand, real estate will start to move again. We will have tested the bottom, found it solid and found a path to recovery. I call this the "Band-Aid falls off by itself."
- As the federal government finds itself with all of these properties, they will realize that the value they represent is diminishing EVERY SINGLE DAY. And, in order to stop the bleeding that we are doing, they will move to divest themselves of the property ASAP. That means that they will need to price them to move. Values will plummet, but it will effectively kick-start the buying. We will find the bottom, and from there a path to recovery. I call this "Ripping off the Band-Aid."
- Since the federal government has never been good at doing anything quickly or particularly well, this won't be much different. And since this project represents such a huge amount of money, they will want to insure maximum damage by overseeing it themselves. Properties will trickle onto the market, devoid of any real value because it has taken so long to move them through "the system." We won't know where the bottom is, because consumers will see false pricing from the government homes. The path to uncertainty will be unclear. I call this "Peeling the Band-Aid agonizingly slowly."
So, what do you think?
Aloha Lane,
What can I say? I'm pissed off that the government is sticking all of our children with this debt. Government for and by the wealthy.
I don't think they should get in the middle of the mess since I believe they will screw it up in the future. If George thinks it's a good idea who am I to argue with him his track record on fixing the economy is stellar.
Lane,
there is some potential hope in this fiasco. I would think the feds learned from the RTC experience in that they followed Wall Street's agenda and put short term gains/loses over long term profits. If there is some way they can arrange for a long-term hold strategy, there could be some tax payer profit from the gambit. However, most of the "players" have short-term perspectives since that is what drove them in their corporate upbringing.
I say let's go into banking. If you make money you get to keep it. Lose money, the government bails you out. How 'bout Diamond Cashcow Bank and Trust?
Lane,
I like the #1 solution to the problem but in listening to the news, and we all know how the media is, I sorta think it will be the #2 soultion that will be done.
We wanted banks out of real estate now we have the government in real estate!!! What next???
Lane - well, how will they handle all the foreclosures yet to come? We all know they are out there...This is a mess.
Lane....check out a blog by Tim Maitski, one of Atlanta's own, that has a couple video clips from Ron Paul. I'm thinking he's got some ideas there....we are just having the gov't step in and correct the market and take over some big companies. Is this the right thing to do? Should we let "nature take it's course?" What would that mean to our economy and to people in general?
It's a tough call....I think somebody had to do something, but like you say how long will it take for the band aid to come off and the wounds to heal?
Scare me.....
Let me think about this ,,,, the government has 700 billion dollars of housing inventory all of it devalued. The government now "owns" Fannie Mae and Freddie Mac and it regulates or guarantees FHA and VA loans.
If the government holds on the the property, sort of like having an oil reserve that is just sitting there, and is able to influence interest rates and guaranteed loans ... what does that mean?
Tic, toc, tic, toc ... buzz times up! No more federal deficit!!
Now if Alaska can own the oil reserves and Palin can negotiate a check to be written to EVERY citizen of the state, I say elect McCain Palin. They could then take over Wall Street and NAR. We could take Diamond Dwellings business/social network and surrender it (for hundreds of millions of dollars) to the government where the government could then dispose of all the inventoried property, make the loans to people that don't qualify, we could blog all day and 5 to 7 years we can start this all over again.
Don't you love it when a plan comes together.
Rick
Bill - It has nothing to do with "the wealthy" and more to do with "the dishonest."
Terry - A few years ago I might have agreed with that. But, the problem is that it is too big. We needed to deal with this ages ago, not pass it off...
Bill - I would love to think that, but I think if the government holds these properties for a long time they will be worthless.
Susie - I say we get into "Property Disposal"... I smell some federal contracts.
Don - I'd almost be happy with #1 or #2. I fear #3.
Susan - They will pick them up on their daily trash runs.
Thom - I like Ron Paul, although I think he gets a little short-sighted sometimes, and ignores the short sight at other times.
I see an arrow sticking in the chest of our financial system. The time to deal with it was before it got to the chest... but it is there. The natural path is to push it through, but that will kill the financial system. Obviously, there needs to be a different way to handle the arrow.
Rick - Um. No. ;^ )