You may not be familiar with the title phrase. The first time I read it was in a scifi story by Robert Heinlein. It means there ain't no such thing as a free lunch.
Some people attribute the Tea Party movement and the anger in general over the policies of the Obama Administration to racism. More likely it's directed at people that don't realize the truth of tanstaafl. Whether it's Health care ,Mortgage relief, or Economic stimulus packages it come down to the same thing people wanting something for nothing. People talk about the free health care that the Canadians and Europeans have like it is truly free not realizing the tremendous tax burden they pay.
Today's Plain Dealer details the provisions of the new Mortgage relief plan. While not something for nothing it does reduce actual balances to make mortgage payments much lower. This really sets my blood to boiling you see I like a bargain as well as the next guy but I don't expect my neighbor to finance my bargain.
Even the Stimulus follows this idea of wanting something for nothing. big banks and insurance companies took the rewards and want me to cover the risks. The unions and G.M. and Chrysler negotiated unsustainable contracts for decades living high on the hog (us). Now we own at least part of these auto makers to bad they are no longer worth anything.
You see this is the cause for anger serious problems don't call for living in fantasy land.
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Bob,
ReplyDeleteGreat post. The majority of people follow the rules and pay for what they buy. The responsible people feel like they are being played for fools when they see things like mortgage reduction. If I accurately assess what I can afford and buy a home for $175k and then someone else buys a home on my street they can't afford for a similar price and the government (meaning tax payers) magically reduces the principle it will in turn lower home values. In that manner it will penalize the responsible folks twice for the folly of the other home buyer.
The other problem with this program is it further removes fear from the equation. A good deal of the blame for the housing problem can be traced to people entering into agreements with an absence of fear expecting home prices will always go higher and they could just keep refinancing. No market goes up in a straight line. By interfering in the mortgage process the government is basically assuring we will have more problems in the future as they are telling people that they don't need to be careful that the government will make everything better if the consumer screws up.