Class warfare

The current direction that our Congress and President are trying to take this country has but one outcome - Class Warfare unlike any we have ever seen. Are you a have, or a have not?

While I really want to blog on a number of different issues - reading the latest report on helping 'Main Street' has started to boil my blood. I have long believed that helping those in need was our responsibility from a moral perspective. I have never believed that changing policy based on social class was a good thing. Apparently I just don't get it. When an individual or family faces a hardship (unemployment, major health issue, loss of a family member), communities should act to assist as they are able. When someone foolishly enters into a loan that they have no ability to repay - they should pay the price. It hurts fewer people in the long run.The federal government has no business adjusting mortgage rates to fit an individuals financial needs. This is outright Socialism.

Consider for example: The Smith family that buys a home based on aggressive financing terms (40 year loan at 5% adjustable). They qualify for the loan that will absorb 40% of their gross income (personally, I think this is insane) . By way of example - the family makes approximately $55,000 a year and takes a loan on a $300,000 home - principle & interest of $1,821. A simple move of 1% on the adjustable note would move the monthly payment to $2018 (increase of $197) which would then equate to 44% of their income, if nothing else changed. This new payment is definitely a hardship for the family (a 4% move in debt ratio over a small period of time). Who is at fault? The bank? The government? The home owner?

Personally, I think all three are at fault but if the bank and government did not deliver the loan they would be considered not assisting someone with achieving the American dream. So, now what do we have? We have a situation that where the home owner needs help - and where is the help supposed to come from? The current plan of the government is to adjust the loan to make it fit the home owners lifestyle (more on that below). Restructure the loan (change the interest rate and principle) so that it fits within a 38% debt ratio. Who does it hurt after all? It hurts the bank, who now needs to lose money on the deal by changing the principle (devaluing all home prices) and interest at a rate below the agreed upon level (hurting share holders and employees of the financial institution).

To qualify for this program you will need to go through a 'uniform eligibility test'. This is code for - we will decide who gets to take advantage of this program.

What abut the family who bought a smaller house, paid a higher interest rate because it brought consistency to their lives (30 year fixed loan with a 32% debt ratio). Apparently there is nothing for them. This breeds a society that will continue to over spend and expect others to bail them out. Those who save are punished. Those that are responsible are left to continue paying for those who are not.

Again - a family that experiences a sever hardship deserves assistance. We should all continue to assist those in need through individual and community acts of charity - this is what is right. We should not be held accountable for people who continue to oversubscribe to societies wants. BTW, how many of the people affected in the mortgage crisis have cable television, a car less than 5 years old, a cell phone and a big screen TV? If you have all 4 of these and experiencing a housing criss where you can't pay the bill - the problem is not with the lending institution .... it is with you.