Poker Anyone?

The Sky Is Falling! The Sky ...
Again?
Will It Ever Stop?!

These liberal democrats just don’t have anything else to say do they?
It’s either George Bush’s fault, Dick Cheney’s fault, or Alberto Gonzales's fault! But, it’s always bad! This is really getting old.

I would hope that the Democratic Party was above name calling and finger pointing, but it is not to be. They’re sliding further down the slippery slope to oblivion! Soon they will cease to exist as we have known them. They will become the Liberal Party or the Progressive Party or some other version of communism. It’s happening right before our eyes!

Now it’s the economy!
It’s going to hell in a hand basket if you believe the liberals.
You see it’s all about bad credit. Too much bad credit.
And, of course it’s all George Bush’s fault!

As I’ve said before, I believe this irrational view of the real estate market has been propagated by the liberal media. They just can’t stand prosperity. As early as 2000, I was hearing about the “real estate bubble”. It wasn’t just a West Coast thing. It was happening everywhere and people didn’t know what to make of it. Prices were climbing at astronomical rates. In some markets as much as 25% per month! What was causing this phenomena?

The short answer is, the usual suspects, Supply and Demand. Market forces combined to create a very vibrant environment for growth. We were seeing 100,000 new Californians every month! Builders couldn’t build homes fast enough so what inventory we had became very valuable, almost overnight!

Homes that sold for $150,000 in 1999 were selling for $230,000 just a year later!
For the first time, young buyers had easy to get money at their disposal.
90%, 100%, and in some cases even 110% financing was available to first time home buyers!

It was an unbelievable time for real estate professionals. Many of us had never seen such a market! I doubt we will see such a market again. But it was understandable. There simply wasn’t enough good, suitable housing to go around. People wanted NEW! They weren’t going to settle for a thirty year old house that needed lots of repairs, and they didn’t have to. The new homes were available and they were easy to purchase.

Now, the media is crying that the sub-prime mortgage markets are failing. They say the mortgage industry is a bunch of predators that preyed on unsuspecting home buyers. They say that if Uncle Sam doesn’t bail them out the failing markets will affect our entire economy and we will all suffer.
That’s a bunch of BULL!

First, let’s consider the facts. Less than 2% of the sub-prime mortgages are in arrears. That means 98% of the so called sub-prime mortgages are being paid on time! That’s hardly a sign of a failing market!

But, yes it is true that some investors exploited the “easy to get capital game” and took some terrific risks. But isn’t that the Capitalist Way?
With risk comes reward, and sometimes, failure.
If the lenders over extended themselves then they will have to pay the price. If the borrowers have over extended themselves, then they will have a price to pay as well.

The lenders were gambling that the market would continue to grow as it had for the last several years and the borrowers gambled that their home’s value would continue to increase at the 20% per month rate. These people were playing high stakes poker with their house as the chip!

It is not the role of government to bail out these poor poker players!
The role of the government is to protect me and my money, to protect you and your money.

Not to give some of my money to those that took a bad risk!
Not to give some of your money to help a failing institution, that made some very bad decisions, to stay afloat.

This isn’t like the Savings and Loan fiasco of the ’80s. This is simply greed at work. Many of these home owners shouldn’t have been in this poker game to start with. It was only through the availability of “cheap money” that they could even afford the anti.
Many bought houses with only $1000 as a down payment!

They made a terrible call in a very high stakes poker game!
Now they’re going to lose their home because they have max’ed out their credit cards and their adjustable rate loan just went from 4% to 9%. And it may go higher. These sub-prime lenders can adjust rates till the cows come home if they want. But they know they can only go so far and then all is lost.
Suddenly the borrower cannot pay the freight and the lender has to foreclose.
The game is over.

But, the government should not interfere with this process. Let the affected parties fail. That is how societies sort things out. The good things survive and the bad things go away.
The cream comes to the top, as they say.

But of course, the liberals are crying foul. They say it’s all George Bush’s fault. He’s too distracted by the Iraq war to solve this kind of “crisis”. He hasn't been paying attention to domestic affairs.

Mrs. Bill Clinton says we should bail them out. It’s our duty to bail them out.
Others in congress say that we spend billions of dollars for the war in Iraq, why not stop spending for the war and divert the same money to the economy?

These people never quit. I sometimes think that they stay up late every night just to create new ways to blame our President for some new ailment of the country. But, my feeling is that all this is related to the hue and cry over the 2000 election and all things related to George Bush ever since.

I wouldn’t be at all surprised to find out that Mr. Soros is behind all of this. It stinks of manipulation on a grand scale and that is his forte’. He enjoys watching people cringe and wring their hands in worry. I can easily envision Mr. Soros sitting behind his desk with several monitors watching his handiwork play-out over at CNN, ABC, NBC, CBS and Move-On.Org. I’m sure he has spent millions to create an atmosphere of mistrust and panic with the hopes of cornering the US Dollar just like he did with the British Pound.
I wouldn’t be at all surprised.

But the sky is not falling! We are not going to lose everything! Our economy is strong and vibrant. Everyone who wants to work has a job. The only industries that are in trouble are the industries that have failed to plan for the future and have taken enormous risk at the wrong time.

My advice is to not listen to the rumor mongers. Do your own research. Stop reading the liberal newspapers and get some real information about our economy and see for yourself how the markets are fairing. From my vantage, the future looks pretty good. I think real estate will continue to appreciate and investors will learn from their mistakes.

Live your life and be kind to your children. Smile everyday. Save a buck when you can, but go ahead a get that new TV.
And remember one important thing ...

Not everyone has the skills to play high stakes poker!