Good news, bad news.

The sub-prime and overall mortgage carnage is now likely to lead to a financial crisis whose cleanup and bailout costs will make the S&L bailout bill look like spare change. We are only at the beginning of this fallout but, already, several proposals and bills in Congress have been submitted to help millions of sub-prime homeowners on the verge of bankruptcy and foreclosure. The prospect of millions of homeowners thrown homeless on the street is already shaking politicians of every stripe. The relatively modest bailout envisaged by the first bills currently proposed in Congress will mushroom into a much bigger fiscal bailout of homeowners, borrowers and lenders once the garbage of sub-prime, near-prime and pseudo-prime toxic waste spreads around the economy and likely leads to a hard landing recession that will cause a much bigger financial and banking crisis.

It is true that it is a disaster in the making. I've been posting about this off and on for a while, and it's real. It's a big giant shitstorm, and the best thing to do is sell toilet paper I guess.

That's the bad news.

The good news, of course, is that part of John's business is reselling foreclosed properties. He's got 14 new foreclosure listings in the first half of this month alone, and you wouldn't believe the amount of money that is, especially when you consider the dam is just now starting to burst. We're just halfway through the month. For some context, and no this is not about "bragging" - he'd have to sell something like 3 houses at $100,000 each to make the same money I do.. and that's being generous to me.. and he's received 14 new listings in the first half of March. Do the math.... jeebus.

So.. who's fault is it? Is it the government's job to bail out people who don't know how to buy a house, or what kind of mortgage to get? The other day I saw a commerical for a mortgage on CNN. They said "Get a $200,000 loan for $800 a month". That's exactly the type of loan the causes people to get forclosed on a few years later. Why should the government bail out people who do stupid things like that? Shouldn't the legislation be directed at the misleading mortgage business, instead of bailing out stupid home buyers?

Figure, on a 15 year fixed rate loan, your payment should be about $1000 per $100,000 you borrow. When the payment seems too low to be true, you're getting scammed. The good news (depending on your point of view) is that the housing "bubble" will burst soon. There will be a glut of houses on the market, and the values will crash.. especially in areas that have seen artificial inflation.

I'm not thinking about the ZO6 anymore. I'm thinking something a bit more exotic.