Well as it turns out the American public isn’t exactly that Cheeto-eating bunch of Homer Simpsons that so many want try to make them out be. But that doesn’t actually surprise me one bit.
Because when push comes to shove, Main Street actually has tens times as much common sense as Washington and Wall Street combined.
So when the news broke that Wall Street and Washington were putting together a plan to bailout people who bought homes that they couldn’t afford by making their adjustable rates fixed, I expected that the reaction would be pretty heated.
After all when polled, 70% of Americans have been steadfastly opposed to bailing out the foolishness of their neighbors.
One person who has covered this story time and time again has been CNBC’s Diana Olick.
Along with Rick Santelli, she’s been providing the "real story" that tends to get buried beneath the bullish shouting of folks like the cartoonish Dennis Kneale.
Her Realty Check reports have always been spot on and yesterday’s bit about the Paulson Plan was no different.
However, it was the common wisdom of the people that commented on her blog that really grabbed my attention. They pointed out the plan’s flaws in ways that cut to the quick.
Here’s a sampling of what they had to say about the bailout on Olick’s Blog:
- Terri M.:
I’m so angry I can’t even begin to tell you. This, in my humble opinion, is nothing more than trying to save Wall St. The proposal is going to be impossible, from a servicing perspective, to enact. This is still going to require re-underwriting. Reverifying income, reappraising because of lower values – just shaking my head (but my eye is starting to twitch from tension) - Mark:
Is it too late to sign up for an unsustainable loan? Count me in! I’d like a piece of the Speculator Relief Bill the government is brewing up (and handing out). - Karl:
No! The irresponsible over-spenders should not be given a mandated mortgage bailout. This mess is just the wake-up call to get Americans to stop drowning in debt. They must stop borrowing extensively every time they want something, but don’t want to wait and/or save for it. Let them all get second jobs or be renters! - Conlif J.:
Here we go once again with the government trying to bail out big business, it is not about trying to keep individuals in their home but to stop the financials from burning to the ground. They, the financial companies knew exactly what they were getting into. They were making so much money repackaging these loans to investors everyone had to get on the band wagon, they fell asleep while celebrating with their Cuban cigar and the wagon caught fire. They gambled and lost. Yes, gambled. Let it burn itself out. - J E:
This fix is outrageous. So now a contract can be annulled by the government. How about the investors who bought these loans based on earning a particular yield? Lets see, am I a party to any contracts that I now don’t want to honor any longer? I guess I should contact the government to get these contracts cancelled. This action shows the tyranny and corruptness of big government - Anonymous:
Why should we bail out speculators. If you took an ARM mortgage out that makes you a speculator. You gambled on where you thought interest rates were going. What makes me laugh is the amount of people that lost. Rates were at historic lows…WHERE DID YOU THINK THEY WOULD GO FROM THERE!!!!!!!!! Up Up and way. This country is turning into a JOKE.
So while the "Hope Now" story may look pretty darned good to Wall Streeters trying to save their own bacon, and politicians hoping to score some election year political points, the folks on Main Street can recognize a moral hazard when they see one.
In this case it’s pretty obvious.
So what do you think? Should we penalize the responsible to bailout the irresponsible?
