More Pigs Approach the Bailout Trough

November 24, 2008 by  
Filed under Economics, Loans and Borrowing

The number of failing businesses and industries lining up for a Congressional bailout continues to grow.  The newest money pigs are the home builders.  Mr. ToughMoneyLove is not surprised but I am disgusted by this latest appeal for taxpayer intervention.   Before I explain why, let’s review the specifics of the builders’ proposal which they call “Fix Housing First.”  (Such a clever and patriotic way of saying “me first.”  I wonder how much some genius PR firm was paid to think that phrase up.    Weren’t we all supposed to learn in kindergarten that a “me first” attitude is impolite and selfish?   The other pigs at the bailout trough have made it clear that principle and reason are not in play because we are talking about money – big money.)

OK, back to the builders’ “me first” proposal.  The builder pigs want a tax credit given to home buyers equal to 10% of the value of new home purchases, up to $22,500.  Not only is this three times as large as the new home buyer credit Congress passed over the summer, but it would not have to be re-paid.   According to the builders, the existing tax credit is not working, meaning that the builders have not been restored to their formerly profitable ways. 

So, to be extra sure that more cash flows into the hands of home builders, the other component of the “me first” proposal is a government subsidy of mortgage interest rates.  Yes, folks, our friendly and caring home builder lobby wants the government to buy down new mortgage interest rates to 3% for the first half of 2009 and 4% for the second half.   This is starting to sound like the car loan business.

I think I’m going to be sick.

Why is Mr. ToughMoneyLove so disgusted by the builders’ proposal?  Because U.S. home builders were an integral part of the misguided enterprise that put millions of unqualified or over-extended home buyers into speculative condos in Las Vegas, overpriced tract homes in Florida and southern California, and bloated McMansions everywhere.  In partnership with greedy banks and clueless “homeownership for everyone” advocates, the builders inflated the housing bubble then blew it up.   Now they want to start the process all over again.

Yes I know that the money is going to buyers in the form of tax and interest rate relief.  But the money is coming from all taxpayers and will end up benefiting those who deserve it least:  those that created the housing bubble.

I was sort of hoping that by writing about this latest plea for taxpayer dollars, my feelings of disgust would moderate into mere annoyance.  No such luck.  Actually, now I’m feeling more vindictive.  The Mr. and Mrs. ToughMoneyLove retirement accounts have suffered severe damage this year.  It will take years to recover.  The home builders’ greedy disregard of common sense was certainly a causative factor in that damage.  So get your ugly snouts away from the money trough, builders.  I want you to feel my pain and then some.  Fix me first.  Then maybe we will fix you.

Now I feel better – a little.

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2 Responses to “More Pigs Approach the Bailout Trough”
  1. Outstanding post. I love this blog. It’s clear, accurate, concise…and no BS. I don’t know how many readers come here, but there are not near enough (if the sparse amount of Comments are used as a metric.) I send the link to all my friends. Hopefully they will get onboard. Thanks again for the update. (Fox News needs to subscribe. They’d love it, too.)

  2. MasterPo says:

    I’m leaving for DC soon. Going to ask for a piddly $25 million (I’m a cheap date). Hey, why not? 😉

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