I think a problem a lot of us have with the proposals that are being presented in “do or die” terms is that they involve too little pain for people who gambled and took and enjoyed the upside as long as it lasted. (See vivid neighbor example above.)
We are very suspicious that this is yet another ruse to allow people who need to change their behavior, and who will only do so when forced, to avoid doing so for a little longer. To make us feel secure that the bailout is really needed, we want to see blood. Not enough to kill anyone, but more than a little scratch. Then we’ll know it’s being done because it’s genuinely needed.
And the blood needs to come from the various parties that benefited the most from the wild and crazy party that was allowed to get way out of hand. Let me offer my personal list:
1. Homeowners that borrowed more than the normal, non-peak, price of their homes.
2. Professional middlemen who loaned to the said homeowners. (mtg brokers, mtg bankers, mtg ins writers..)
3. Investors who handed their money over to finance the said mortgages.
4. Regulators and regulatory bodies that they led who claimed that they couldn’t tell when a bubble was a bubble. (Greenie, Fed, Treasury, FHA…)
5. Politicians who protected and encouraged govt subsidies and guarantees for the buying of homes with a high amount of leverage (The godfathers of FNMA, Freddie, FHA: Dodd, Frank, Schumer, and most dems; and the friends of Wall Street Republicans, like Cheney, and most supply-side Republicans like Kemp etc).
It’s 90% of the population, so it’s hard to see it happening, but it’s the “right thing”.
