I have no problems with the govt spending money in productive ways (research, infrastructure, etc.). I don’t even mind if the govt extends unemployment and COBRA subsidies. I DO mind the govt rewarding reckless and fraudulent behavior. The borrowers and lenders are entirely responsible for the credit bubble and its aftermath. The sellers had nothing to do with it.
As a matter of fact, an argument can be made that people who sold to rent prevented the bubble from getting even bigger, and we provided addditional inventory to the market when inventory was at exceptionally low levels (it was a net positive to inventory if we sell and rent, as opposed to selling to buy), making housing MORE affordable to those who were looking to buy.
What is immoral? Selling a house for a profit (when everyone was beating down our door to buy at or above our price), or renting? Precisely which action is immoral in your mind?
In my mind, selling a house and renting is not immoral or unethical in any way. We did not rig the market or artificially constrain inventory (the reason I hate flipping) in order to make the buyer pay more. We were not greedy, and we priced our house below comps at a time when everyone else was pricing above recent comps.
It is not our business to know whether or not the buyer is going to be able to afford the house over the long-term, and I’m quite certain they would have been horribly offended if we were to have asked (though I did ask their realtor if she was sure they could afford it, and she assured me that they were “very qualified”). Whether or not they could afford the mortgage is entirely between the borrower and the lender. The seller has *nothing whatsoever* to do with that part of the transaction.
Our transaction was no different from any transaction you might engage in where you make money on a sale — whether it’s real estate, or stocks, or bonds, or selling a good or service you provide to customers in your regular business.
I manage our investments for extra income, and have certainly had a number of losses. At no point in time did I think the govt — or any other entity — was obliged to make me whole, even when my losses were a direct result of government actions (like bans on short selling, or lowering interest rates in between FOMC meetings, or other “emergency” actions).
If borrowers borrowed more money than they could afford, and if lenders made loans to people who could never pay them back, I’d say any resulting losses need to be borne by those who decided to take those actions. Note that the sellers do NOT play any part in these transactions.
Why do you believe people who made bad decisions (borrowers and lenders) should be bailed out at the expense of others who were more prudent with their finances?
Why do you think people who are reckless with their finances are more deserving of “home ownership” than those who have been patiently waiting and renting? Do you think these reckless people are too good for renting? Why do you think they deserve a bailout? I’d really like to know.
BTW, in case it’s not obvious, I do believe prudent behavior should be rewared over recklessness. There is no reason to hang our (bubble-sitters’) heads in shame, no reason to remain quiet in some dark corner. Even though we might have benefitted from the bubble, we were not responsible for it, or the losses that resulted from it.
