Government Enables Financial Irresponsibility

I read a recent article from Bloomberg’s Business Week about the residential real estate problems in Las Vegas entitled “Foreclosure Hits Las Vegas’s High End”.

Residential real estate valuations have been rapidly dropping and home owners (even those who can afford to continue to make the payments) are letting their houses go. Some enter short sales, others just move out regardless of their ability to pay their mortgage and let the banks foreclose. Should this be allowed without repercussions for those who can still afford their home?

Generally, there are federal tax law provisions which would make the discharge of debt taxable to the individual. Recent U.S. tax laws have provisions making certain debt discharges on forgiven personal residential mortgages nontaxable.

The U.S. Government has a direct hand in the issuance of residential mortgages through the GSE (government sponsored entity – in my opinion more irresponsibility) Fannie Mae. Our Fed controls interest rates. Our government is spending way beyond its income. Our most recent federal annual budget deficit is projected to be 1,000,000,000,000!

What message is given to individuals in this country when those who legally commit to a purchase are allowed to walk, tax free, regardless of their ability to pay? What message is given when we have a government spending far more money than they take in and their answer is to print more money? Will individuals soon be allowed to print their own money?

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