White House Spokesman Robert Gibbs would like us to believe that Rick Santelli is an isolated crank who doesn’t know what he’s talking about… As Joel Stein points out he’s not:
A lot of optimistic people bought houses near the historic height of the market, say November 2005, for absurdly high prices, say $1.12 million, in places like the eastern Hollywood Hills section of Los Angeles. These people are very, very sad. Trust me on this. But the sudden drop in housing prices hasn’t made it any harder for these people to pay their loans. That’s because your home’s value is utterly irrelevant until you want to sell it — the same as your baseball cards, Hummel figurines or casual encounters.
The only people affected by plummeting real estate prices are the ones who bought a house that cost more than they could afford, hoping for a spike in value so they could sell at a profit or take out a new loan based on an increased value. Their home wasn’t just a place to live; it was an investment they thought they could liquefy at will. If we’re saving these poor souls from the 26.7% drop in their investment, we should give twice as much aid to everyone who has lost approximately 50% in the stock market since its peak. Especially those in Vanguard’s Tax-Managed Capital Appreciation Fund.
Meanwhile, mortgages held by the responsible people Obama says he is trying to help only go into foreclosure when the owners lose their jobs. But the best way to help them is through increased unemployment benefits and job creation.
The entire purpose of Pres. Obama’s Homeowner Affordability and Stability Plan is to help people who made poor economic decisions to escape from the consequences of their decisions. The simple reality is many of people who get relief under Pres. Obama’s plan will still default even after their mortgages are restructured… All he’s doing is kicking the can down the road and prolonging the instability in our banking system.