Moral Hazard

I recently received our revised property tax assessment. And let me tell you it is a lot lower. So the good news is that our property tax bill is lower but the bad news is if we were selling today, we'd be selling at a significant loss. Now, I knew this was a risk in 2005 but I have to admit I've felt like a deer seeing headlights (I'm talking BIG freaking headlights) when the property reassessment came. So I've been internalizing this fact and current events for some time now.

It is disconcerting when you hear about the Feds bailing out Bear Stearns and most recently Fannie Mae / Freddie Mac. I think time will reveal if this was the right thing to do but for now the message is is pretty disturbing. Essentially the actions by the Feds say "privatize gains" but "socialize the losses." And that you're a fool for putting down 20% (which we did) when you could have put down 0% and just walk away when things got rough. The only positive of putting down 20% was that it allowed us to re-finance much more easily given our LTV but that positive pales in comparison to the flip side.

Now the above may be more bearable if we were planning to stay here long term but it's no secret that we don't want to. Renting out our place may be the most sensible option at this point but I've also thought a lot about the risk of the "next big quake" and what would happen if our house required extensive rebuild. Would the goverment bail us out as well?