Ownership society about to bear fruit

That ownership society that President Bush always talks about sounds like a great plan: More choices in healthcare, ownership of a home.

But, choice alone does not give anyone freedom. Too many choices can paralyze consumers. I mean, really, how many different brands and varieties do we need? Same thing with healthcare. For some reason, Bush thinks that the answer to the problem of lack of affordable healthcare is to create more inventive ways of paying for it. This is great if you are healthy , have no children, and can afford to have money put away into a savings account. Somehow I don't think this is helping the lower middle class, who generally live paycheck to paycheck, and often because of those high medical bills.

Now, onto the real cornerstone of the ownership society: home ownership. This sounds great!! How can we go wrong by owning our own dwelling? Well, that would be true if we really were owning them. The housing market has changed so much that very few people can actually expect to own their house. Housing prices are sky high, inflated by demand, low interest rates, and creative lending practices, including interest only and negative amortization loans.

The housing bubble is about to burst. It cannot be sustained indefinitely. I saw the bubble explode first-hand in California, where the median home price has climbed over $600,000. That is insane!! Who can afford a house in CA? Well, more people than really should be able to because of the changing market. The problem is that these people are going to end up with upside down mortgages on outrageously inflated home prices. At that point, the ownership society dynamic reverses. Instead of the homeowner being in control, that person becomes owned and controlled by the bank. For a wonderful visual representation of this, check out the latest issue of Harper's Magazine.

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