A reader writes:
I live in Santa Cruz California where the median home price shot up close to $900,000 at the peak of the real estate boom. My wife & I realized that there was no way that we could afford to buy a home responsibly, so we reluctantly decided to rent forever. Many of our friends who are financially reckless decided to buy condos with no money down adjustable rate interest only loans.
I don't understand why the government should bail these people out. If I had known that reckless financial behavior was going to be bailed out I would have bought one of these homes. I know that we need to fix the economy, but I feel like we are going to be punished for being responsible.
I understand the systemic dangers of letting a wave of foreclosures trigger another wave of collapsing demand. But I also know that I never took out risky loans, diligently paid back three separate mortgages, saved for my retirement, and now pay more than half my income to the government ... to give to those who gave in to greed, wishful thinking and recklessness. Another reader adds:
No one is talking about MEWs (mortgage-equity withdrawals), so it must be the elephant in the room. What really frosts people is not that their neighbors bought "too much house," because often it's the same as their house --- simply purchased at a much higher price. Rather, it's the Toyota Highlander Hybrid in the driveway, purchased with money from a MEW (via a cash-out refi), that pits neighbor against neighbor. The responsible neighbor is reminded EVERY DAY that he is paying for the irresponsible neighbor's Highlander, and probably the deck and the big TV as well.
Until there's a plan that deals with this inequity, the anger will not go away.
Nor should it.