Saturday, March 7, 2009
Answer for speculators: Deal with it!!
February 22, 2009
The debate over the new Housing Bill centers on who should be entitled to relief and who shouldn’t. There are those that are upset because they feel punished by being forced to have their tax dollars used to bail out those facing foreclosures. Since they have abided by the terms of their mortgages, they don’t feel compelled to help out those that couldn’t. I can certainly sympathize with this way of thinking but the fact remains that something must be done about this epidemic. As projected, as many as 6 million Americans are in danger of losing their homes over the next 3 years. The one thing that people do agree upon is that there should be no help given to speculators.
Webster defines speculators as those who “take part in any risky venture on the chance of making huge profits”. That sounds awfully similar to what the banks did with our money. A couple of differences need to be pointed out. Though there is no denying that the banking industry as a whole made some incredibly poor investments; they did so in the hope of hefty returns that would have eventually trickled down to the public. This would have been seen in the form of substantial returns on CDS, IRAs, and basic savings and checking accounts. The results of a bank’s investments are available to anyone interested since they are posted publicly in places such as NASDAQ. Those interested are able to see if they are doing well or poorly. Shareholders and customers expect a decent return on their money when times are good. Due largely to the housing debacle, returns have been anything but decent.
Speculators, on the other hand, often invest based solely on the misfortunes of others. Years ago I worked for a large contractor and one of the other supervisors was able to purchase 10 homes in Houston for a total cost of $100 thousand (I missed that boat). This investment was predicated by the drastic halt in the growth of the city. Foreclosures were commonplace and many of these houses were sold at auctions for ridiculously low prices. When the anticipated comeback of Houston took place, he simply turned around and sold these homes making an exorbitant profit. The question today is whether or not these bottom feeders should be given the same opportunities as someone who lost their job and are now in danger of losing their home.
As far as I am concerned, the answer is an emphatic NO. While the average American struggles to make his payment in the midst of this pitiful economy; these speculators should have to face the same consequences as any other investor who lost money in the market. You don’t see people who are holding shares in a collapsing corporation looking for help. Why should it be any different for these speculators? Bottom line: You gambled and lost-deal with it!