Love Affairs With Debt

My little burg received $2,389,651 in grant money from the U.S. Dept. of Housing and Urban Development -- money, of course, coaxed from the cold, thin air -- for the Elk Grovian Neighborhood Stabilization Program. With this, our city proudly announced the offering of a previously foreclosed unit for sale, $215,000.

Here's my rub -- the housal unit has to be sold to a family making no more than $87,720, likely one of a dozen or so other restrictions like having to be first time buyers, etc.

I have always maintained that one should never engage a mortgage for more than 2x annual income, yet this program mandates this rule be broken. Not only will the new owners owers begin their debt servicing with a larger debt to income ratio than average, if our current deflationary economy continues their debts will only become a larger millstone around their necks...without even mentioning the possibility that unit values may still fall another 10%, 15%, 20%, and being so burdened they might end up becoming housal foreclosurists themselves in 2016.

OK, you say, this new family will drop down $42,300 from their savings for a down payment -- thereby meeting my 2x criteria and with skin in the game will not foreclose in the future. Uh-huh. With banks paying savings interest at 0.4%, yep, there must be millions of such families out there with loads of down payment cash.

OK, you say, this new family would be able to afford such a mortgage with today's rates. Uh-huh. If you look at the location of said housal unit, square in the heart of a jobless city, you can be assured that Elk Grove will gain a whole lot more sales tax revenue from the 30 years of perpetual selling of the 2.3 motorized vehicles needed to shuttle these owners to jobs elsewhere. The city will gain a whole lot more in property tax revenues from this family paying 1.5% of $215,000 rather than something more affordable for such an income. We will have artificially inflated prices along with enslaving another Elk Grovian couple into perpetual debt servitude, both with an "afordable" mortgage and "affordable" car payments.

This was an exercise in blowing borrowed federal monies because it's "free," and if Elk Grove didn't, some other city would have. Another two million, atop countless other millions, to stimulate the housal market, to shore up current borrowers (and their votes) to the detriment of future borrowers. This same shit was what caused our economic crisis in the first place -- people spending money they didn't have on more housal unit than they needed.

On that note, you may perhaps understand why I could care less if our economy never recovers, as we continue to do every fool thing possible to perpetuate Americans love affair with debt servitude.