What's Da Buzz?

Most everyone has heard about what has been labeled the “Mother of All Bail-outs” or the Housing Assistance Bill.

The housing bill does little to impact us directly but it does impact us indirectly. For example, what does giving the IRS the ability to have every single credit card transaction of everyone reported to them have to do with housing issues? That is an invasion of privacy. Who is thinking that is a good idea?

But for those who it may impact, be very careful of whether or not to take advantage of the housing bill. As in everything (especially related to the USA Congress) , READ THE FINE PRINT!!

The details are outlined in this article on Will the Housing Rescue Help You? When you read through it, all of the options come with a price tag. There is no free money in this.

First, they have to print money to cover this and add it to the national debt and that devalues the dollar. More US dollar they print the less valuable it gets! There is no money provided for this in the general budget . Basic economic Law of Supply & Demand dictates the more there is of something with a fixed demand, the lower the value. The depreciation (pagbaba ng dolyar) of the dollar acts as an additional form of tax as what you could buy now takes more money to get the same thing a short time in the future. Too much and you hit a breaking point and inflation starts skyrocketing.

The second part is the tax deductions are only good for about 2 years. Then you have to repay them over the next 15 years so all you are doing is delaying your debt. Paying it off faster is wiser. Delaying debt only means a greater chance of the money not stretching far enough down the road. We all have to live within our means and that includes the expenditures of any government.

Third, using the FHA to help you reduce your ARM loan comes with a price tag. You cannot get ahead as you will have to give a portion of any proceeds of the sale of your home to the federal government.

Lastly, they decided to back the Freddie Mac and Fannie Mae (pretty much pag mamay-ari ni Uncle Sam) high risk mortgages with US Treasury notes. In other words, the value of the US dollar is now tied to worthless mortgages likely to default. And those paying the bill are those of us who are responsible with our money management. Those who benefit are those who dug the hole for themselves in the first place.

I think in this too the Philippines is much wiser. (kahit pa maraming di gusto kay Gloria) We, pinoys are left to get our own shelter and fund it. The government understands its limitations in that regard. No government can provide equally for all. Some will always swindle it away at the top and leave the majority in poverty.

Anah

Photo credits from www.ezrealestateguide.com