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07.01.2008 0

King Canute Returns

  • On: 07/16/2008 21:01:49
  • In: Economy
  • “[The king is] [s]o great, he could command the tides of the sea to go back.” – An advisor to King Canute, who was convinced that the powers of state were limitless.

    In Big Government’s latest effort to turn back the tide, Philadelphia’s Sheriff, John Green, has stopped sales on foreclosed homes for the month of April, and wants to get a court order to suspend them indefinitely. In short, the City of Brotherly Love is now pioneering the practice of principal – and principle – free loans!

    “Sheriff John Green said on Friday he would halt sales of foreclosed properties in April and would seek a court order extending a moratorium for an unspecified period.

    “His action follows a nonbinding resolution passed unanimously by the Philadelphia City Council on Thursday calling on Green to stop the sales to give borrowers more time to seek a settlement that would prevent them from losing their homes.

    “Philadelphia becomes the first U.S. city to halt foreclosure sales in the current crisis, although Cleveland and Baltimore are considering similar measures, said ACORN, an advocacy group for low-income families.”

    Now, let’s put this in perspective. What Philadelphia homeowner in his or her right mind is going to continue paying their mortgage after their own government shouts, “Olly, olly oxen free!” And what lender in its right mind is going to finance homes in a city that officially encourages its citizens to go on the lam?

    The biggest winners from the moratorium, as the politicians would lead us to believe, however, are not the families. It is the lenders and Big Government, both of which would be saved millions of dollars in lost revenues:

    “Lenders would take about $158 million in losses; homeowners $23 million; and local government $62 million if the foreclosures go ahead, the council’s resolution said.”

    In other words, 89% of the benefits of the moratorium will go to the banks and government.

    Who would’ve thought that turning back the tide could be so lucrative to the very people who caused the water to rise?

    ALG Perspective:
    These misguided policies are creating all sorts of incentives to be dependent upon government: for homeowners who want to skip payments, well, they’re covered by government. And for banks that want to give out dodgy loans, yep, they’re covered, too. Is there anything that Big Government can’t muck up?

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