American Elephants

It’s not fair, it’s not fair, it’s not fair! by The Elephant's Child
March 2, 2009, 11:22 pm
Filed under: Freedom, Liberalism, Socialism | Tags: , ,

Much of the current economic turmoil began with congressional action that forced banks to make home loans to people who couldn’t qualify under standard prudent banking practice. This was well-intentioned law, but ultimately destructive.

Now the federal government is planning to spend (another) $275 billion in order to aid homeowners who borrowed  to buy homes that they could not afford.  Keeping them in homes that they cannot afford allows them to escape foreclosure, but at what cost to them?

The mortgage is not the only cost for a home, there are taxes and upkeep.  A home that is not maintained loses value. Unpaid taxes pile up and foreclosure is again probable. When we bail out their mortgages and allow them a lower cost loan, can they repay that one?  Are we on the hook  for the whole 30 year term?  Can they afford the upkeep?

Economist John Tammy points out that we are ignoring how federalization of homeownership is blatantly unconstitutional.

Advocates of the Obama housing plan say with straight faces it’s not fair that buyers purchased houses that are in certain instances worth much less today. But if we apply the illogic of such reasoning to its logical conclusion in the business world, companies such as Webvan, eToys and would still be in business, wasting human and financial capital in ways that would leave our economy even worse off.

The reality is that investors in anything frequently find that what they’ve purchased is worth less, but far from a call for more government handouts, this is often a signal telling them to cease throwing good capital after bad.  And these failures teach us what not to do in the future.

Liberals always have good intentions.  They want things to be — fair.  A childish wish, to be sure.  Everybody should get just one scoop. No fair if someone gets two.

There’s a reason why Grandma always said, “But honey, life isn’t fair.”

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