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The real estate that is mortgaged will not disappear. The paper value will decrease, but people can still live in the houses. The houses can still be sold. Why should the taxpayer bail out the guy who bought more house than he could afford, or the mortgage lender who gave an inflated loan to someone who could not afford to pay back the money?
You people are confusing the intrinsic, usable value of an asset with an arbitrary, artificial value concocted, in this case, by a bunch of swindlers.
Inflated house prices are on the same level as inflated stock prices that bear no relation to the profit-making ability of a company or the value of its assets were they to be sold. It is all smoke and mirrors. It is all a shell game.
The bailout is just a continuation of the Ponzi schemes that we have come to take for granted in the stock market. The value of Enron physical assets were no different when the stock price was very high than when the stock price plummeted to a few cents on the dollar. The ONLY difference was that, before the collapse, people were willing to pay, say, hypothetically $50.00 a share. A few days later, they were only willing to pay, say, $2.00 a share.
The buildings and other assets had not changed. The employees were the same. The contracts that they had signed were still valid. Because the stock price dropped, the myth was promoted that the company was now totally worthless.
The value of the paper issued by the financial institutions was inflated. Until people realized they were overpriced, they were willing to invest in these pieces of paper issued by the banks and mortgage companies.
The intrinsic utility value of the physical assets represented by the paper certificates is still there. What they are asking the taxpayers to bail out is the investment of the perpetrators and the suckers who fell for the scam. That is all.
I vote against a bailout. Protect the legitimate purchasers of actual houses, and protect the assets of innocent depositors in the banks that used the depositors' money to implement these schemes. However, do not protect or bail out the companies or their executives who perpetrated these frauds.
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