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Stupid Is As Stupid Does

August 14, 2008

Tom Hanks, who played Forrest Gump said, “Life is like a box of chocolates….” and Americans still think they can eat the whole box and not get sick. Ben Bernanke and the Feds (that’s not a rock group, but the Federal Reserve) are still playing the shell game and building on the house of cards. They will do anything to keep us from facing financial reality. Every year must be better than the last and the party must go on. Let’s break out another box of chocolates.

Who Wants Cheaper Auto Insurance?

NOT!

Why did we think that we could offer people 100% financing with nothing down and think they’d care about keeping the house in good shape? Why did we think we could offer 125% loans and hope that inflation and growth would continue forever. Let the good times roll. And why did we think we could make sub-prime loans (no qualifying, no money down, no vested interest in anything, bankruptcies welcomed, and illegal immigrants honored) to anyone who would volunteer to buy a home without dire consequences?

Well, those dire consequences are knocking the door down!

The home loan losses are now officially over $500,000,000 and hearded to ONE BILLION! Fannie Mae and Freddie Mack are being administered oxygen (free money from the fed) and last rites (Fed take over if needed). Home foreclosures are sky-rocketing and crushing the entire world financial market(s). Oh yes, and YOUR HOME is worth anywhere from 10-40% less than it was 2 years ago. How’s that working for you?

Hey, that’s better than yesterdays’ report which showed that nearly half of all new home buyers in the last three years now owe more on the home they bought than it’s now worth.

Oh, but that’s better than (if you’re a bank), making a loan for $65,000 less than two years ago on a home in Detroit, sustaining massive losses and then finally selling the home for $1.00! Yep, you read that right, you can buy a home in Detroit for $1.00- click here!

That’s what doing stupid things does- in the real estate market!

Written by Ernie · Filed Under Daily Commentary 

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