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Housing bailout - Get ready to pay up

The Democratic party, not unlike than the Republican party, is becoming more and more extreme.

As the housing correction churns on and housing prices fall to where they should be, the government is considering legislation to purchase these bad debts, these mortgage securities, taking them off the books of the financial institutions.

The associated press reported President Bush is asking for $700 billion to buy these failed investments from institutions heavily vested in them, hopefully preventing bankruptcy and financial unease around the world.

I've written many times on this subject and studied it broadly. I'm not going to spend much time going over it.

Essentially, in a mad dash to buy housing that was appreciating to the tune of 20 to 30 percent per year in some places, people ended up in homes they could not afford, banking on that increase to make a profit or refinance. Many individuals are now defaulting on these loans, which were sold as securities or investments by the mortgage brokers who initiated them. Everybody was paid high commissions on these risky, high interest, high payment loans that virtually anyone qualified for. The United States saw a shortage of housing as more and more people purchased homes, sometimes more than one.

Housing was treated as an investment by all parties involved. And any investment has some risk of loss.

Housing prices finally hit their peak when people started defaulting on their loans and walking away from their investment, Inventories increased and prices stopped increasing at their previous rates. And so began the downhill slide.

We are moving quickly towards where the market needs to be, where housing is affordable and inline with salaries and rent. Housing will be affordable, meaning 25% to 30%, not 50% to 75%, of the average household income.

We are returning to a traditional loan structure, where stable income and a down payment are required. But it is painful and many people and financial institutions are paying the price.

Where do you think the responsibility lies for this mess, and who do you think should pay for the cleanup? The Republican party believes the taxpayers should bailout the financial institutions.

The Democrats believe the taxpayers should bailout the individual homeowners.

Democrats are insisting the rescue include mortgage help to let struggling homeowners avoid foreclosures. They also are also considering attaching additional middle-class assistance to the legislation despite a request from Bush to avoid adding controversial items that could delay action. An expansion of jobless benefits was one possibility.

I've read many liberal articles declaring any bailout of "huge" corporations is a tragedy, and it's tough to escape the rhetoric being spewed by the Obama campaign that taxing corporations is going to solve our problems.

Corporations employ millions of employees, pay health care insurance premiums, contribute to 401k plans for millions, and are the arguable backbone of the United States. Corporations are vital to our economy and to the long term survival and well being of millions of employees, both responsible and irresponsible.

Unfortunately, the United States needs to bailout the corporations for the greater good of everyone. Have we forgotten the last time thousands of businesses failed? Did we forget what a world without credit and the flow of money was like?

Mark my words, taxing business, the wealthy, corporations, capital gains is not the answer. Taking from the hard working and giving to the unlucky is only going to do harm. And the government, if they are bailing anyone out, should be bailing out those who provide jobs and a future for millions.

There is only one thing that will save the "poor homeowners," foolish enough to enter into an investment they could not afford. Forcing lenders to renegotiate the mortgages at an affordable price, where the house should be, at current interest rates, regardless of their credit.

This would be an absolute travesty and not indicative of a free society. Giving the irresponsible homes would be blatant socialism, which I fear is the agenda of the Democratic party. But there is no other way. And many liberals are more concerned with the falling price of homes than with the state of our financial institutions. Many liberals and "experts" are convinced that this is the issue. The issue was inflated home prices and we are moving through a necessary correction now.

In my view, there is no way to get out of this cleanly. I should not have to foot the bill, and neither should my son. Taxpayers should not have to pay for John Doe who decided to buy a house to make a buck. No! They treated their house as an investment, they need to take the hit and learn their lesson.

I have been through some painful lessons in life, many financial and have lost money on investments, and I didn't expect a bailout. Many people have lost almost everything on investments and have used the freedom and the free market of our country to recover, and these people should be no different.