Is Speculation A Bad Thing?

Homeowner Rescue Bill Passed Despite Veto Threat, By DAVID M. HERSZENHORN,
Published: May 9, 2008 in The New York Times: http://www.nytimes.com/2008/05/09/washington/09housing.html

Under the Democrats’ plan, lenders could limit their losses from potential foreclosures by agreeing to reduce the principal balances of loans at risk of default. The borrowers, many with expensive adjustable-rate loans, could then apply to refinance with a more stable, 30-year fixed-rate mortgage insured by the federal government.

Housing Aid Bill Passes Senate Test By DAVID STOUT and DAVID M. HERSZENHORN
Published: June 25, 2008 in The New York Times: http://www.nytimes.com/2008/06/25/washington/25housingcnd.html?hp

The bill would create an affordable housing fund, financed by Fannie Mae and Freddie Mac, the government-sponsored financial institutions that purchase mortgages from lenders. In the first year after final approval of the legislation, the fund would provide about $500 million for the foreclosure-rescue campaign.


Soap Box Ravings is having a hard time trying to figure out why Congress is considering punitive action against oil speculators while at the same Congress is bailing out those who speculated in the housing market.

Do the words hypocrisy or pandering apply hear. Perhaps Congressmen/women speculate greater rewards from the banking industry than they get from the oil industry

Dictionary.com defines "speculate" as: to engage in any business transaction involving considerable risk or the chance of large gains, esp. to buy and sell commodities, stocks, etc., in the expectation of a quick or very large profit.

In a "hot" housing market when you buy a house, whether to invest in or live in, it is still an investment. When you purchase at the limit you can afford or expect to be able to afford you are a speculator. It does not help that the banking or financial institution may have encouraged the buyer to buy at their maximum. And even if they didn't encourage, perhaps neither did they refuse the deal because the subject was "on the line."

When you speculate and the market stays hot, that can be lucrative, when you do the same thing and the bottom drops out of the market the results can be devastating.

It is the same with the oil companies. When they strike oil, sometimes a lot of money can be made. When they drill a dry whole on land they paid a lot of money for, a lot of money has gone down that hole and the speculators lose.

It is interesting to Soap Box Ravings that we have two groups of people speculating, but one is a victim and the other is demonized.