Last week’s Wall Street Journal had an article about how we, as U.S. taxpayers are now in the rental real estate business via Fannie Mae.
Fannie is now allowing homeowners facing foreclosure to stay in their homes and rent from you and me for a year. Fannie has already indicated that you and I will be willing to extend the leases. Problem is, you and I are not getting the rent checks.
This is yet another band-aid being applied to the U.S. housing decline that our government is not allowing to succumb to its final bottom. Stimulus and band-aids are keeping the “economic patient” alive but not treating the condition. The deficit for our heirs just keeps going up. Yes, George Bush never met a spending bill he did not sign either.
Fannie refused to disclose how many homeowners we will be renting to. Nice. Wow. #$%#%^#%^$.
Real estate industry insiders call this the “shadow inventory” of homes that will likely have to be foreclosed upon, thus, at that time, adding more pain to the very slow recovery out of this recession that this author expects.
At least we do not have to fix the toilets!
Investing lesson (Charles Ponzi pictured below)
Ponzi schemes, in the end, never work. How will all the shuffling of money by our government from one hand to another eventually end? In grade school, it was called musical chairs. I fear our offspring will be the ones left standing when the music stops. This is not political commentary; it is agnostic, economic reality. As grandma always told us, “Kids, there is no such thing as a free lunch.” Never has been, never will be.