I accidentally erased the name of the previous commentor and can't remember who it was. Anyway, I read this article and had much of the same questions/reactions as you, David. I think the article briefly touched on it, but the fact of the matter is that the rich can "afford" to lose their vacation home or a pure economic investment. For many middle and working class people, their home is of more sentimental value than that -- it is the culmination of years of hard work, a result of scraping by to save up enough for a down payment, the feeling of accomplishing something that their parents didn't, but always wanted them to. In other words, a home is an emotional investment, not just a financial one. Notwithstanding all of the memories created in a home that an average human being would value, it is much, much more. In fact, it is probably the only thing that demonstrates their material success. So, no, it may not be rational; but when emotions are involved, it rarely is.

Another thing that is glossed over is that rich people can simply move to one of their other homes, or start a business and maybe buy a home on a line of credit approved for the business. Working/middle class people just don't have that option. When they walk away from there home, where would they go? The homeless shelter or the streets, that's where. Not only are people's retirement accounts depleted, so they have no cash reserves, but there credit is completely shot. In most places, this wouldn't even allow you to rent an apartment, much less try to pull yourself together and buy another house. I think what the rich are doing is absolutely self-interested, but what's so wrong with that? My problem with the way the article was framed was that it basically implied that, by not doing so, working/middle class people have demonstrated that they're not rational, or capable of acting in their own self-interest. I simply do not believe this is the case.

-- JenniferGreen - 10 Jul 2010