Color TV's and Cheap loans
Tuesday, January 29, 2008 at 11:45PM In India, we get color TV's if we vote for a certain party at election time..
Here we get cheaper loans from every party!
Right now the race is on to give people tax breaks, cheap loans, etc. to show which new candidate will make the next president!
Things are not very different, when it comes to election time!
The concept seems to be very simple. Appeal to as many people who can legally vote by giving that demographic something that would appease them!
India lives in villages, or so they say. A color Television is something that may not be in abundance in the village home. So, even if there is no electricity to watch the TV, the concept of promising every household a TV is a gimmick that is bound to get the vote bank to your party's side.
Well, consumer electronics is cheap here in the US. If the political parties have to go that route to promise voters, they might have to think 52" TV's and Plasma! Too expensive.
It is an easier alternative to give taxpayers a 600 dollar tax credit!
1. It is government money. So the expense can be passed on to future generations as a deficit and no one will know any better!
2. It covers a much wider demographic of the vote bank.
3. Cash is king. They can buy whatever they want!! This is as good as giving the Chinese government and Walmart, a tax break considering almost everything here is made in China and sold at Walmart.
4. It is way cheaper than giving everyone big screen TV's!
The other tactic, is to let people who borrow way over their means, keep the loans that they should not have been given in the first place.
Still remember, calling into the local public radio program, "Forum", a few years back. I asked the panel why the banks are giving these cheap loans (now referred to as sub-prime!) when they have no way of getting their money back.
I am no economist, but a chain of events was obvious to me...
1. Banks give variable interest loans to people who cannot afford to pay the mortgage when the interest rate increases in a few years.
2. Fueled by these loans, house prices increase because there is more demand, less supply
3. People buy "investment properties"
4. The inevitable happens. Interest rates increase.
5. Foreclosures increase
6. More houses come on the market
7. House prices drop!
Now, the banks gave a loan for a 400k house at 600k! When they sell the foreclosed home, they get back only 300K. How do the banks make money??
Worse,the hardworking folks who actually can afford the house, and submit documentation in triplicate showing they can pay the mortgage(aka us), get the shaft because our house price also drops because of this scam!
How stupid are these banks?
The panelists were saying "The banks are not doing anything wrong by giving people cheap loans, without checking to see if they can pay it back, because the homes are worth the money and if the person does not pay the loan, the bank gets the house and recoups the cost". Duh!
Wish I could play back that program! Think it was some Profesor from Berkely or UCSC who gave that brilliant answer!
If there is one real Lowest common denominator in this world, it is Politics and politicians.
Now add to that, greedy banks!
ps. We are back! All four of us are back to normal.
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