http://www.youtube.com/watch?v=bEZB4taSEoA
I'm late to this--the above video had been viewed 892,745 times on YouTube before I saw it, and some 9,983 comments were appended to it. There's also a story that Mr. Santelli backed out of a Daily Show appearance. But I feel compelled to respond, since I know his sentiments resonate with a lot of us.
Mr. Santelli asks how many people want to pay their neighbor's mortgage. Of course, no one wants to do that...but wait a moment. Think what happens to a nice neighborhood when suddenly, and I do mean suddenly, thirty to fifty per cent of the homes go on the market. The answer is simple--market values plunge. So if the overextended neighbor "with an extra bathroom" doesn't get help, the stable residents still take a hit no matter what. Now think what happens to a neighborhood when all those unsaleable homes remain vacant. In a short period of time it becomes obvious that no one lives in them anymore since the lawns die, papers and circulars accumulate on the doorsteps, windblown trash doesn't get picked up. Soon, kids start throwing rocks at the windows and graffiti appears on garage doors. In some cases, vagrants and drug dealers break in through the back and squat for a time. Pimps and streetwalkers soon follow. With so many vacancies, the balance shifts from owners to renters. Perhaps it becomes unsafe for children to play outside in this formerly "nice neighborhood" and so the parks are abandoned to the gangbangers.
At this point, the stable residents face a painful choice: should they stick it out, paying their mortgages even though they may now owe more than their homes are worth, or should they walk away, thereby compounding the neighborhood's blight? For some, the choice will be dictated by fears for their safety, perhaps irrational but certainly understandable considering the rapid deterioration they have witnessed.
And so, Mr. Santelli, I guess my answer to you, reluctantly, is: "Yes, I'll lend my neighbor a hand, not out of charity, but because it is in my own self-interest."
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3 comments:
Richard, it all shakes out when the market is left to fix itself. Those houses that were purchased by people who were overextended will be bought be people who *can* afford them.
Lorna
Yes, that's the way markets are supposed to work. But we're in uncharted waters and banks aren't lending. This means the people who can afford to buy, can't get a loan. So we're back where we started, with the necessity of the government to step in. To save borrowers who had no business buying homes they could never afford? I hope not. But now we're seeing responsible people threatened with foreclosure because they've lost their jobs due to the recession...and their healthcare, too, so they've got COBRA payments to worry about on top of everything else. I want to see the Fed help them stay in their homes until the economy regains its equilibrium.
I think "Santelli's Rant" and the downward spiraling markets are reactions to enforced transparency and the end of free wheeling market ways. Wall Street and the banking community are also a big part of the problem here - it is not just the homeowner who got in over their head. I totally agree with the scenario painted if something is not done to stop the foreclosures. I also believe there is a moral imperative at work here. Helping others is the right thing to do.
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