Ron Paul: The Moral Hazard of Regulation

[Paulie]

Sure you could. But none of these people that made bad mortgage decisions would have affected the market if the banks hadn't turned around and sold them again and again to the point where the entire economy hangs in the balance. They would have hurt the borrowers and the lenders that made them only.

You have no idea what you're talking about, do you?

 

[Turboswede]

Ok I am sick and tired of everyone saying the financial collapse of the housing market, then the economy, was the Democrats fault or the Republican’s fault, it’s just a natural part of the market’s natural boom and bust cycle. Everyone was making so much money for so long that there was no desire to stop and get off the merry go round.

It was millions of individuals making individual decisions based on the information available at the time and it resulted in a large portion of the American public running their personal finances on the same principle as a corporation. That model will not work for the individual because, unlike a business, when a family implodes that’s it, they come and take your house away and you are out on your ass.

That’s why there are some basic rules that any small business owner needs to follow, pay yourself first, never mortgage your house for the sake of the business, never use you own money because financing a business is risky. The business venture just about everyone was taking was real estate speculation which has always been a popular one, but instead of using investor’s money they were betting their family’s financial future and, frankly, that pisses me off.

People took risks based on the idea that the upward trend would never end and extrapolating real estate growth rates from prior year data when they should have been looking farther back. The really sad thing is that, before the bankruptcy laws were changed, most people could do a “chapter 20 (get the joke?)” bankruptcy and keep the family home, with the changes to the code that won’t work so the market becomes glutted with houses and prices are driven even farther down.

I am just worried now that the bailout is not doing what it was supposed to, kind of like that scene in Apollo 13 where they shut down the fuel cell relief valve but the O2 just keeps drifting off into space.

 

[Turboswede]

If I had signed an ARM, and I was on the verge of losing my house or already lost it, I would man up to my stupidity in falling for such a ridiculous offer. I would blame no one else but myself for it.

Do you have a family to support? Just curious.

 

[Paulie]

Do you have a family to support? Just curious.

Yes, but my having a family to support does not change the fact that I would man up to my mistake. I'd sooner bring my family to my mother's house to live, and regroup, before I let the rest of the US taxpayers bail me out of my own stupidity.

 

[Kevin_Kennedy]

I am just worried now that the bailout is not doing what it was supposed to, kind of like that scene in Apollo 13 where they shut down the fuel cell relief valve but the O2 just keeps drifting off into space.

The bailout can't help, it was simply fuel on the fire.

 

[Ravi]

You have no idea what you're talking about, do you?

Funny, I was thinking the exact same thing about you.