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And if we bail out subprime mortgages, they'll be even more screwed. Home prices are significantly down now and will continue to go down for another year or so. If we bail them out, they get a 3% mortgage, while the rest of us pay 6%. Bailing these people out is rewarding stupidity and irresponsibility. That is unconscionable.
Eventually, the capital being put into the market by investors will start to bring prices back up. It's already happening here, and in many other areas, investors/speculators are buying up these foreclosures and renting them out, sometimes to the people who have been foreclosed upon.
It will benefit a few people though. Those coming out of college now, with a decent job, will have their choice of houses, at significantly lower prices than 3 years ago. I've gone from not being able to afford to buy a house when I graduate, to being able to buy a decent starter home in most of the markets I'm looking at. Investors will also benefit, though with a significant amount of risk.
Either way, the responsible people will be hurt, but if we bail out the borrowers/lenders, we pay in both deflated prices and inflated currency. Not to mention the message of "it's ok, the government will save you from your bad decisions". That's dangerous.
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