Bloggers' lobby: Stopthehousingbailout.com

Recently I had a conversation with a fellow journalist about government efforts to ease the mortgage crisis. I was explaining to this person that mainstream media accounts of the issue very often ignore the anti-bailout sentiment that dominates blogs like this one. The journalist was confused. Opposition to a bailout? Here in liberal L.A.? On a blog on the L.A. Times website? "Your readers must be rich," she told me.

If I had been drinking coffee, I would have spit it out. I explained that, no, as far as I know, that's not the case. In fact, many of them can't afford to buy a house in Los Angeles, and they're upset (not the word I used) at government efforts to support inflated housing prices in one of the nation's least-affordable housing markets.

With that conversation in mind, I pass along an e-mail I received this morning:

"Along with NationalBubble.com and Patrick.net, I invite you to join our efforts to stop the planned government bailout of the housing industry. We believe that it is not the government's role (i.e., not the taxpayer's burden) to bailout irresponsible lenders, brokers, and borrowers.

"Accordingly, we have created a website www.StopTheHousingBailout.com (currently hosted on NationalBubble) that is designed to be a clearinghouse of information for a movement against the bailout. The website is in its infancy, but currently consists of a statement why the bailout is wrong and several links to efforts to stop the bailout (e.g., a petition, a pledge, anti-bailout apparel, links to contact political representatives, etc.).

"We ask that you consider joining forces with us to stop the bailout. A band of bloggers against the bailout can be a powerful political weapon. Moreover, a united front will present a newsworthy story for the media. By banding together against this ill-advised bailout, we can be heard beyond the readership of our collective pages and make a difference. Together, we can present a stronger message than the sum of our individual voices."

Your thoughts? Comment? E-mail story tips to peter.viles@latimes.com

Comments

[puckhead]

I think that the problem is that everyone has a different opinion of a “bailout”. If you ask people, “do you support gov’t assistance to people who bought homes that they cannot afford?” And then ask people, “do you support gov’t assistance to financial institutions to help prevent a collapse of the economy and a drepression?” You probably get two different responses even though both could be defined as a “bailout”.

[IToldu2CashOut]

I've written letters, emails, etc, but the only one who seems to listen is John McCain. Unfortunately on almost every other issue I don't agree with him. Probably going to vote for a third party. I'd love to vote Obama but he'll have to change his tune. Locally I plan on voting against the incumbents.

[mike]

itoldu2cashout??

this has nothing to do with who you vote for. the person you vote for will bend to political pressure after they are seated anyway. this is about BEING the political pressure that the robot in office bends to.in other words, throw a dart at the ballot and pray that enough people see things your way to make the robot THINK about POSSIBLY really making some kind of descision for the greater good of the masses.

[alvin]

stop "the" bailout?

shouldn't it be stop "a" bailout, since no specific bailout plan has yet passed congress let alone been signed into law.

people point to the FHA plan and the change of conforming loan limits and the rate freezes and most recently the fed's intervention on bear stearns as tax funded bailouts, but the reality is that none of these "bailouts" have put even a dent into the deflating bubble, let alone required any serious tax payer funds.

for that, a bill will have to be drafted and passed in both the house and the senate (several have tried and failed so far), then signed into law by the president.

consider that during the S&L bailout it took YEARS to get the funding passed by congress. And that was for a government obligation to fund the FDIC. The only obligation the government has this time around is if agency MBS start defaulting - which hasn't happened yet - and even that is merely an implied obligation.

that all said, i am totally against any kind of large bailout (short of staving off a massive depression!), and hope this whole idea never gets the momentum to actually go any further than just talk...

[tew]

The description of your conversation with the other journalist is a reminder of just how completely out of touch most journalists are, especially ones from rich cities. It seems many must spend all their time outside the newsroom with artsy folks (bohemians with trust funds), at charity events, hanging with their NGO friends and, in LA, with the entertainment crowd - not exactly a well rounded representation of the wealth of knowledge and diversity of opinion in society. They tend to have no businesspeople, engineers, or real working middle class friends. Hey, I'm sure their are plenty of journalists for whom this characterization does not apply, but it sure seems like it.

[bode]

To paraphrase Winston Churchill, what if using public money to prevent a catastrophic recession is is the worst option, except for all others? Peter (and everyone else) focuses on this as if we can separate the US housing market from the US economy, and I don't believe things are as black and white as the blogosphere would like.

We do have a solid data point of what it can mean to not use public money to intervene is a time of financial uncertainty: it was called the great depression. Past performance is no guarantee of what the future holds, but doing nothing is just as dangerous and doing something, that much is certain.

I know everyone here likes to talk their book; that is, they don't own a house in Southern California, and would like to buy one for less than the cost of construction. It would have been interesting to have Bear Stearns actually go bankrupt, the same way it would have been interesting to watch a nuclear warhead test in Nevada. A vicarious thrill, but not good for you.

I don't want my tax money wasted helping out shady morons who engaged in obviously stupid and/or illegal behavior during the housing bubble. But I also don't want a collapse of the US economy. You talk like they're totally separate, but honestly, I doubt it. There's moral hazard in Bear Stearns going for $10, and Countrywide for $6. Maybe, just maybe, that's better than a chaotic collapse.

[John]

i believe that people who think that if we do not do SOMETHING we will all be fine and dandy are ignorant to the realities of the situation.

The economy is in a mess. SOMETHING must be done.

Personally I would favor something along the lines of the stimulus package that just happened. If you are giving handouts, handout to everyone.

The reality is that this is not going to happen. The people who were stupid and made bad decisions get help.

Wake up! The gov operates like this. Think about welfare, subsidized ANYTHING, and you will see it always happens.
When was the last time a mother got turned down for welfare because she made a bad decision to drop out of highschool and get knocked up?
We still foot the bill and will continue to do so in this crisis.

[ckim]

I'm worried about what puckhead said:
", “do you support gov’t assistance to financial institutions to help prevent a collapse of the economy and a drepression?” "

Is there a way to let the bubble burst and not devastate the economy. I mean what good is it to have low home prices if a lot of people are out of work? If someone can put my mind at ease on that point I'll gladly start email politicians.

[go]

Mere coincidence the taxpayers' $100 billions are spent by former wall street executive (treasury sec/goldman sachs former ceo) on his friends' (and future employer) wall street banks & other wall street companies during election year (just in case dems win, the republicans are afraid they won't be able to do this anymore for a while)
using excuse of foreclosure problem before possibly dem president uses that same $ to help family homeowners avoid getting kicked out of homes.
Republicans learned their lesson from when after bush sr, bubba spent the peace dividend cutting the deficit. This time the republicans are trying to spend any dem president's peace-dividend ahead of time on tax cuts for rich, oil industry (already making $100 billions profit) subsidies, wall street bailouts, no-bid $10 billions iraq contracts.
The military does seem more advanced, but they could have done that without actually fighting iraq war. Without actual iraq war, military could have been even stronger than it is now.

[Santa Barbara Real Estate Voice]

Great post and a tough call. I am a Realtor here in the Santa Barbara and Montecito area and we have started to see our share of short sales and foreclosures in the last 6-9 months. Most of these tend to be in the lower end condo level or entry level home values...which for Santa Barbara is $300,000 to $750,000.

Our high end ($2 million and above) on the other hand has not even blinked and prices are stable and even rising. Currently I have 2 "deals" with short sales right now and there are a lot of issues. I am for sure getting the phone calls from neighbors who have been diligently paying their mortgage for the last 7 years and now they are seeing some serious bail outs down the street and they are back to owning 0% equity in their homes.

There are seveal people to blame but first and foremost it starts with our credit card culture and lack of saving in my eyes...from here it trickles down and depending on what angle you take, a different person seems to take the brunt of the blame.

[Hugh Jorgan]

Peter,

I have already written letters to my Senators and Congressman (posted on the blog a few weeks ago), decrying the bailout being considered in Congress. To date only my Congressman has responded, and the content of the response was that Congressman Miller (42nd) was diligently working to make the bailout happen! This from a Congressman that represents South OC!

Our elected "leaders" have never been more out of touch with the sentiments of the voting public. Let's not just visit an anonymous website, or wear slogans on our t-shirts. Send a message your politico will really understand.

Send a tea bag along with your letter. The tea bag symbol works! Last time it was done because the rat bastards gave themselves a huge raise. Let's do it again and force these bozos to reckon with their constituents!

Send a tea bag to each Senator, to your Congressman, and to the Presidential candidate of your choice. Do it today before it's too late.

[anonymous]

Hugh,
I'm with you. Waxman, Feinstein and Boxer all came back to me with BS about the poor homeowner who got into a jumbo they couldn't afford with zero down and how they plan to help them out. Meanwhile Uncle Sam prints more money, lowers interest rates and my salary deteriorates and I will never be able to visit Europe because the worthlessness of the deutchmark, excuse, me, ahem, US dollar. I am voting against the three mentioned above, against Hillary and against any pro-ballout pols. This from a lifelong bleeding heart liberal democrat.

BTW - please explain the 'tea bag' reference. And I'm sure it's not in reference to private parts. When was it last used as a reference and is it's root from the boston tea party. Thanks in advance.

[John]

Without a bailout, the economy as a whole won't go into an economic tailspin.

We're still going to need to eat, drive, work, live, etc., and the markets for goods and services will still exist.

A few million homeowners that should never have had homes will go back to being renters, while a few million renters that have been patiently waiting for homes they can afford will become homeowners.

The mortgage brokers / realtors / bankers that are out of work will have to retrain, causing a boom in the massage school / life coaching / flakey job of your choice training industry. The union training programs and trade schools will see a surge in applications for people who actually want to work.

Mexico's economy may benefit by having some of its hardest workers back South of the border again, especially if the Mexican govt. can continue the crackdown on the drug/kidnapping trades so Americans will want to travel more and do more business there.

GM, Chrysler and Ford will finally have to make some decent small cars, as SUVs aren't going to sell very well with gas at $4 a gallon and people living on an austerity budget. Or they won't and Honda and Toyota will own them by 2015.

A lot of B.S. will be flushed out of our economy if we don't have a bailout. (No more B.S. economics, no more B.S. jobs, no more B.S. predictions about the future, no more B.S. neighbors living large on home equity loans, no more B.S. politicians telling obvious falsehoods about how money works.)

Of course, the same will be true even with a bailout, as the length of time it will take to orchestrate, and the complexity and standards that will be in place, will ensure that the bailout is largely irrelevant.

Hard work, honesty, and foresight will be important.

Denial, laziness, and greed will be punished.

[Gallop]

Peter,

This blog isn't exactly a representative sample of the population. Dissenting opinions get shouted down pretty quickly.

[let it burn]

bode:

In every debate over the merits of a taxpayer-funded bailout there's always a person like you - the guy who turns to the anti-bailout priced-out bitter-renters (like me) and says "even though you've already been screwed once, you need to bend over and get screwed again because the alternative is to get screwed over even worse."

No. Not buying it. Not anymore. Bring on your chicken little-like "chaotic collapse." I'll take my chances. Ever consider that maybe a collapse is just what we need to build a populist movement strong enough to address the out of whack balance of power that favors the mega wealthy at the expense of this country's abused and dwindling middle class?

The flaw with your attempt to persuade us to accept even more abuse, is that people like me really don't have anything to lose anymore. Oh, we're going to lose our jobs in the big scary depression? Big whoop. Why am I working so hard anyway? It's not like I have anything to show for it, nor will I if I follow your advice.

A bailout just sends the signal that it's okay for the next round of economic raping and pillaging to begin. Maybe you're a glutton for punishment and you're fine with living on your knees - but count me out!

We don't need anymore apologies for the robber barons who are wrecking our country. Grow a backbone or shut up.

[eternal summer]

why can't these uber rich idiots that got even more uber rich through this whole thing use THEIR MONEY???? People, we need to focus on the man behind the curtain; the ceos of the banks, investment firms, home builders, all of the top people in this mess & MAKE THEM PAY! the people who are getting the 22 million paychecks while their companies become toast. we keep giving & giving these big companies all kinds of stuff so you can keep your lousy 50k per year job while you get to subsidize the functioning of the company with YOUR TAXES while the leader makes 10 times or more what you do? meanwhile they are exporting your jobs to cheaper countries while trying to stop any small business competition they possibly can. yes, we need to raise our voices & demand that the top dogs pay! who the hell do you think is buying these 10M+ houses? have you seen a 1M house in LA these days? they're garbage. some don't even have A/C or HEAT! the super rich are letting us argue the price of bread while rome burns....

[Chris]

I'm an ultra-liberal West Hollywood resident and I can't wait for the housing bubble in Southern California to continue to burst. A government "bailout" probably will only serve to help keep prices artificially high and we'll all be paying for it with our tax dollars.

I make double the median salary in LA and there's still NO way I can afford a reasonable two-bedroom house in LA. People are still listing their houses at 2006 levels.

I'm so sick of everybody wanting a handout. What happened to saving your money until you can buy a house you can afford?

I'm glad I didn't get caught up in the ridiculous bidding that's gone on in the LA housing market the past few years, but if the government is going to bail everyone out, then maybe the smart move would have been to buy a house I couldn't afford with no money down and wait for Uncle Sam to "help" me out. Crazy!

[Motowne]

Please explain the tea bag method?

[dclogang]

Borrowers, Lenders, Agents and some appraisers are the ones to blame.

The good news is that in the next few years home prices will plummet to affordable prices. In the meantime my wife and I will save and will move into a home we can afford it.

Japan had a similar boom and bust. Japan's Gov't also gave a bailout. It didn't work for them so why would it work for the US? Read this. http://homeguide123.com/articles/US_Housing_
Bust_vs._Japan_Housing_Bust%3A_What_We_Can_
Learn.html

[Sara in the IE]

If memory serves, and I like to think that it does, didn't a similar housing bubble burst in the late 1980s-early 1990s? One in which real estate seemed to flat line? Yes, it did, property values went from inflated to deflated in a number of months. Perhaps there wasn't talk of "bailouts" then as the economy was not as "global" as it is now.
It is not fair to bail out corporations that chose to make risky investments involving sub-prime credit; if the government doesn't bail out individuals or corporations the market and economy will eventually correct itself. Corporations, individuals, the government- all should be responsible for their own financial failures. If I can't make my payment, I don't appeal to the gov't to bail me out- I deal with it as a mature and responsible individual; why is this such a hard concept to grasp?

[silverfern]

I signed the petition, even taking into account the different POVs re: the term "bailout".

At least they encourage folks to write their congressional representatives. I'm feeling more cynical now than I was a few weeks ago.

I'd like a market correction w/out causing a huge economic mess; the question is, "how"?

[Dean Venture]

When did housing and speculation on housing by investment firms become the foundation of our economy?

And if our foundation is so flimsy, then how many coats of paint (bailouts) will it take to keep it standing?

I'd rather have a depression now rather than hand my kids a house of cards economy.

[Andrew Z]

John,

That might be the best post I have read on this blog to date. Nice work.

[Mike S]

Thanks for 'getting it' Peter and speaking up on our behalf.

[NoWayinLA]

I didn't sign the petition, if only because it needs major work. They've repackaged the moral hazard argument too many times in order to fill space. If you're sloppy like that when approaching a lawmaker, it just gives them the impression that you're too angry to understand the real issues, like they imagine they do. The anti-bailout crowd understands the situation much better than the reality-disconnected Congress, but they don't know that. So make the argument smarter.

The risk to the overall economy of not having a bailout is grossly overstated. The Great Depression happened because of systemic failure in the banking system. The entire banking system, however, does not have exposure to poor lending. We'll see a lot of the giants fall... Citibank, BofA, WaMu, etc. But there's a lot of little guys, banks with local scope, and credit unions, which did not get caught up in the frenzy, and they're poised to fill the void.

The Fed acts as if no mortgage lending can happen with a systemic failure in the bond trading market... but home financing happened long before CDOs were born, and will continue long after they're gone.