JPF Home Page Forums Stop The Bailout

Just a couple of bailout thoughts.

I have lived through owning bad investments before. Since I managed to survive, I consider the condition survivable.

My wife and I were the proud owners of a little house in the little lumber mill town of Cascade Locks, Oregon, when the timber market collapsed in the late '70s. Four of the five lumber mills in our town of 800 people closed, and never re-opened. For most of the next ten years, our house was worth less than the $8500 we paid for it in 1977. (For a while, the county was saying it was worth only about $3,000.)

And so what? That the house was worth less than I paid for it meant only that I wasn't going to be selling it any time soon. (We still own it, in fact.) There was a mortgage on the place, and I still had to pay it off, even though I was paying more than the house was worht. Again, so what? My main concern was being able to make the payments (which was occasionally difficult).

The primary people who would be hurt by a real estate collapse under normal conditions (and we do not have normal conditions--I understand that) are those who deliberately bought things they could not afford in expectation that prices would go up and the market would remain "hot." And I'm sorry--they were wrong. The lenders who financed and encouraged such activity get bit, too, under normal conditions. It does seem that we're bailing out the lenders without bailing out the guy who is stuck with the unaffordable house and mortgage. But I wouldn't bail out either one, myself. (I am a firm supporter of Mike "the Foot" Dunbar for President.)

Now, the collapse--and the bailout--are going to have rippleeffects throughout the economy, just like the timber market collapse had ripple effects through my hometown in the 1980s. And a lot of folks who had not done anything wrong will still get bit through no fault of their own. And I frankly don't see a lot being done to help them, either.

Joe