Thursday, January 29, 2009
How It All Came Crashing Down
An article about the current economic crisis, How It All Came Crashing Down, was recommended to me by a friend of mine via blog post. I decided to check it out, because I was basically uninformed about how this recession has come about. I was shocked. To be honest, all of the investment in housing, and selling houses for more than you bought them, just before the mortgage rate changes...it all sounds kind of like those pyramid schemes where, yeah, sure, the first few waves all end up just fine, but eventually there's going to be someone who won't join, or who won't buy this ridiculously expensive house from you, and you lose it all. And then I was also shocked about the people that could still afford to make their house payments who walked away from it anyway. It's definitely an interesting world. I hope things get better before I start making huge financial decisions, like buying a house.
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Actually, you really want the housing market to get worse before you buy a house. I don't think that the government should do anything to help any individual or institution that was aware of the game they were playing. People who were lied to when signing their mortgage should have the recourse of a fraud suit against the mortgage company, but anybody who signs a mortgage that they know they can't actually pay doesn't deserve to keep the house. By helping banks restructure loans and helping consumers pay for their overly-expensive house, it just perpetuates the problem to future generations of home-buyers.
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