Sunday, October 5, 2008

Evicted Sharecropper

This picture was taken in 1939, and shows an evicted sharecropper. Sharecroppers worked the land, and provided a portion of the crop back to the owner of the land. If the land did not produce, the sharecropper was evicted, which is what had just happened to the poor soul pictured above. When you see pictures like this, you wonder what happened to the person the next day. Did he find food to eat? How did he support his family? Did he ever recover from this tragic event?

Anyway, it looks like congress passed the $700 Billion bailout package. Last week I had expressed my opposition to the package. Their was some lively discussion on the post, with many people expressing support for the bailout. I think we can all agree on the fact that we are facing a crisis, and I think good people can disagree on what should be done about it. To me, the whole problem stemmed from the fact that there was too much easy credit in the system, and too many people were buying houses that they could not afford. This led to artificial appreciation of house values, as their were too many "buyers" who probably should not have been in the market. People then borrowed against these inflated house prices, and that spurred large consumer spending. Now, as the bubble bursts, we have a painful process to go through as the whole thing unwinds. My problem with the bailout package is that the fundamental problem to begin with was too much easy credit, and too much free money floating around the system. As this imbalance tries to correct itself, we try and "fix" it by pumping even more money into the system. It is as if we are going to throw money at it and hope we can keep the bubble inflated. I think that is impossible . . . we should take our medicine now, and then hopefully rebuild to a more rational and balanced endpoint.

5 comments:

  1. What makes the situation even worse is the lack of accountability.
    No one is having to repay the millions they made mismanaging Fannie Mae and Freddy Mac, which led to the disastor in the first place.
    And our legislators took no action when questions started arising as far back as 2004.

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  2. Hi,

    I resent pinning this crisis on home buyers like myself. Where I live you can't find a new house or one that isn't run down or in a safe neighborhood for $100,000. You are stuck by the very people who not only created this mess, but compounded it. Besides that, market value has gone down in my hard hit neighborhood while the county tax assessor has increased the values fpr tax revenues so there is 20% or more disparity in value!

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  3. I am tryimg to get a copy of the final enrolled bill so I can see for myself what the Senate and Congress has wrought. I would hope that an administrator has been established to watch over the disposition of the money and that freddy mac and fanny mae will be merged and shrunken to a fraction of what they were. If not, I will fight for a bill correction as soon as possible. Handled properly, this bill could barely avert a severe market "sag" that would really give us an idea of what the Big Depresson was like. Before we condem it though, lets give it a chance.

    Now, my real gripe is the number of so-called riders that were attached to the bill to get it to pass. I am concerned that there are a large number of "bridges to nowhere" hidden in there. I will look to see if any of them were inserted by any of my representatives or senators and begin to push them to retract them from the bill. Lets all get a look...action is more meaningful that just griping.

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  4. Hi anonymous, when we went to buy a new home, we made sure to buy a house we could afford on our salaries, on a fixed rate mortgage, with a good down payment. We did not over extend ourselves, we researched the types of loans available to us, and we have savings just in case one of us loses our job. Maybe not YOU in particular, but many people did not ensure they could afford their house payment, they did not press for a fixed rate loan, they did not live within their means or plan for hard times. So, yes, in some ways home buyers are at fault for the crisis. BUT, banks and lenders are equally or more responsible for extending credit to people who could not secure it. The home value inflation definitely fed into the problem and won't correct itself for many many years, if ever.

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  5. I think we Americans have lived for too long on debt. I can't fully blame the commom citizen, because easy credit created inflation which required you to borrow to afford the basic needs of life. There has been major mismanagement by those n charge as well as unrealistic lifestyles by us citizens in some cases.

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