Monday, October 6, 2008

Foreclosed House

The house across the street has a notice of foreclosure.
The unpaid mortgage is for $200,000.  But what with
the broken windows and damage the house is worth....
well, what?  Nobody is going to pay $200,000 for this
crappy little house.  Ever.  I think it is worth about 
$20,000, tops.  But the bank probably will not
sell it for that.  So there it sits.  Meanwhile there
are all the "derivatives," which were sold for more
hundreds of thousands, based on the "value" of this
house, which the market says is basically zero.  Now
multiply this situation by many thousands, and you
get some idea of the current financial crisis.  Now
our government rides to the rescue!  They buy the
mortgage for $200,000 or maybe less.  Now what?
The house still sits there unsold, and the "derivatives"
remain basically worthless.  OK, the government
sells the house for $20,000.  Great, we the people
take the loss.  And Wall Street parties on!

2 comments:

Ben said...

I like parties.

Kyia said...

Buy it for $20,000, turn it into an underground party house and YOU, the businessman/investor will profit!! $$$$$$$$$$$$