Maggie's Farm

You bought a house two years ago, no money down, with a one-year teaser interest-only rate. You knew what you were doing: you gambled that in a year you might be able to make the second year's payments and, if not, the house would have more equity in it. That equity would belong to you.

Can you really blame the mortgage broker?

Or, maybe, you bought a second house or two to rent out, as an investment a speculation, with that same deal, planning to flip it when the time seemed right.

You had no skin in the game, except for your hope for wild profit - it was all the bank's money. You had nothing to lose.

Now the house is worth less than your buying price, and you can't keep up with this year's payment because you didn't get the promotion you hoped for. Logical (if dishonorable) person that you are, you consider dumping your committment and going back to renting again - or hoping that the taxpayer will somehow rescue your reckless real estate  investment gamble.

Well, not to worry. The Dems want to bail you out. McCain thinks it's nuts, and so do I. Am I a heartless Scrooge? In truth, buying a home mortgage is no different from an LBO, or buying options on margin. Didn't these people ever play Monopoly?

Newspapers and pandering politicians call these unlucky gamblers "homeowners," but they aren't. They own nothing but debt and a contract.

As prices drop, houses are becoming more affordable to credible buyers instead of crazy gamblers. And, in ten years, there will be another housing bubble. You can bank on it.

If your house is an investment, and not a home, sell it then.

Editor's note: There are comparable moral hazards with rescuing the banks. See Fed eyes Nordic-style bank nationalization. I am not convinced that we are at that point. Power-people see every problem as an opportunity for a power and/or money grab. Just label it a "crisis."