McCain says no to mortgage bailout

I have to agree with Mr McCain on this:

He says that “it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.”

McCain Warns Against Hasty Bailout

As I watched the housing bubble go unseemingly up up up the last few years, I followed several blogs http://www.housingbubblecasualty.com/

http://bubbletracking.blogspot.com/

http://piggington.com/

and others. The discussion was essentially that borrowers were screwing themselves due to the easy flow of cheap credit and stated income loans.

I myself, almost fell prey to the Stated Income loan - I was going to purchase a condo in SoCal based on my lender doing some paperwork magic (everyone was doing it after all and housing just was not ever going to go down). However, after we went into escrow I got a sick pit in my stomach and decided that I would not go through with the purchase/loan. It was a hard conversation as the condo was my best friend's and he and his wife were relying on me to purchase so that they could upgrade to their new $500K home. It was a difficult time for us for a while, but within a few weeks they had another offer and everything worked out for each of us (except perhaps for the person who purchase the condo in the end).

However, as I watched the home buying frenzy around my in SoCal - it was difficult to not get caught up in the idea that we were in different times. But, keeping me grounded were the blogs above with their voices of reason and graphs showing the EXTREME jump in housing prices that in my gut I knew could not be sustainable.

So, I'm a bit torn and agree with McCain that there should be no major bailout - especially for speculators. However, the thing we need to be careful of is that we let housing bring down the entire economy -- if it looks like that is the case, then I'm in favor of some kind of help from the government - even thought it pains me to say so. I don't want to see people loose their homes, but I don't want to see them get a free ride --- "oh you bought a $600K home and now you can't afford it -- here you go --- we'll knock of $200K from your mortgage if that'll help" -- that is not fair either. If someone buys a car they can't afford - does the government subsidize that when they can't make the payments?