The Financial Engineer: Do we really want to bail out vandals?

It seems that the subprime “victims” are reacting to their foreclosure situation by vandalizing their own homes. Evidently these folks who are not making payments on their homes are angry with the lenders who want to reclaim their property. These are grown adults, right? How can anyone have sympathy for people like this?

And just to add to the irony, the lenders are offering up to $1000 to these people to leave their homes intact. In other words, the subprime “lendees” are actually getting paid not to smash in the walls and tear out appliances!

Given all of the media coverage, one might think that our neighborhoods are going to be barren before long. So, just how extensive are these credit problems? George Will on ABC's ThisWeek stated that of the 55 million mortgages in the US, only 4 million are in trouble. He seemed exasperated by the whole situation. And I have to agree, it’s hard to believe that such a small percentage could rock the entire housing industry, financial industry and stock market the way it has. The media and the politicians have painted this situation to be so dire that reportedly we are now at a five year low for consumer confidence.

If all of this is getting you down then maybe you would like to read this CNNMoney.com article that provides three reasons for optimism in the midst of dropping consumer confidence. I listed those top three reasons below and added some additional rationale as to why we should all be enjoying this recession. ;)

1. Low mortgage rates. This is good news for homeowners who want to refinance into a fixed rate loan.

Yes, right now is a great time to be a buyer. Home prices are dropping some 20% in many areas. This leads to even more good news: since home values are decreasing, then so will property values and eventually property taxes. Woohoo! If you own your home, you’ve got to be pleased with that and if you are looking to buy, well, you are sitting in the catbird seat.

Don’t buy into the media hype and the fear mongering. They want everyone to be worried about the declining value of their home. It is not an issue unless you plan to sell right now. Surely you have planned further ahead than just the next year or so. Besides, moving is way too expensive and disruptive to the kids social lives, anyway. You might as well plan to dig in and stay put for awhile.

2. Consumer incentives. If you're in the market for a car, the time to buy is now until the end of the summer.

Yes, right now is a great time to be a buyer. I know I am repeating myself, but it’s true. Now is the time to go out and buy the car you have always wanted. Car dealers are ready to deal, offering cash rebates and low loan rates. Not only are cars a good buy, but other consumer goods, as well will be discounted. It’s a great time to have some extra money stashed away.

We have had some good times over the last several years. Given the rising stock prices, increasing salaries, low inflation and low cost of living – surely you have stashed away some of those rewards just for this occasion. We all know good times don’t last forever. That’s why we save our money during the favorable years to be prepared for the inevitable fall.

3. Buy the recession. When the market plunges, it's tempting to cut your losses and pull your money out of the market. But market declines can provide opportunities for investors looking for investments at bargain prices.

Yes, right now is a great time to be a buyer. This is the moment investors always dream about. It’s time to break open the piggybank and buy into this stock market decline. You don’t want to miss this great opportunity to buy low. If there is any doubt, just take a look at the greatest investor of all time, Warren Buffet. He has a ton of cash stacked up and he’s been on a buying spree.