Thursday, Oct 30, 2008
BIG news - US to guarantee mortgage loans with taxpayers money. Pity those without a home eh?
Bloomberg: Treasury, FDIC Said to Consider Guarantees to Stem Foreclosures
Scheme coming to UK very soon I'm sure. All it does is push the problem into the future.
The U.S. Treasury and the Federal Deposit Insurance Corp. are considering a program that may offer about $500 billion in guarantees for troubled mortgages to stem record foreclosures, people familiar with the matter said.
The plan, which might put as many as 3 million homeowners into affordable loans, would require lenders to restructure mortgages based on a borrower's ability to repay. Under one option, the industry would keep lower monthly payments for five years before raising interest rates, the people said.
Posted by tyrellcorporation @ 09:12 AM (886 views) Add Comment
22 Comments
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1. malct said...
problem, reaction, solution
wealth transfer on steroids
2. cornishman said...
They are only 'considering' the idea.
Probably until just after the election next week - when it will likely become someone else's problem.
Spin - to go along with the surprise 'rise' in new home sales and the current stock market bounce.
We'd better get back into the market before we miss out?
I don't think so.
3. malct said...
"They are only 'considering' the idea."
testing the water ?
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
"We'd better get back into the market before we miss out?"
yup BBC talking head pushing the same earlier - boom next summer
4. charlie brooker said...
The solution is to move to another country and stop paying your taxes to such a regime.
5. 51ck-6-51x said...
I think this is serious. They are worried about a renewed fire-sale in the U.S. housing market which would have further serious consequenses for the economy, eventually leading to runs on the banks, which the FDIC would not be able to payout against (without help from the treasaury in the form of hyper-inflation). Furthermore the FDIC is about as independent as a government agency can get - it's funded by the banks and it is in these banks interests to stem such a panic.
6. icarus said...
malct said 'wealth transfer on steroids' - once again in the guise of helping mortgage payers.
And most of these house owners bought to make a quick buck. When it all went wrong they 'just wanted a roof over our heads'. Ever heard of renting?
7. tyrellcorporation said...
Cornishman, I can really see this happening and I'm sure GB/AD will introduce a scheme like this in the UK soon. Large reposession numbers and unsold inventories are hammering the US market and this is what GB will want to prevent. The only way to do this is to keep people in their homes, vis-a-vis taxpayer backed cheap loans.
8. cornishman said...
tyrell
GB/AD have SAID much regarding 'helping hard working families' - but not actually DONE much.
I agree that anything is possible - but I can't see this happening. (famous last words...)
Having said that, I am coming to think that Brown sees things the same way that a lot of others appear to do - in that it is only the size of the monthly payments that matter - to make it affordable - not the size of the overall liability. So interest rates near zero would make most interest only mortgages 'affordable'. Oh dear.
9. planning4acrash said...
You can guarantee that policies from think tanks are rolled out world wide now. That is what they mean by a New World Order. Governance via soviet style agencies that sell ideas via controlled media but do not engage with law, debate, or democracy.
10. Marcus B said...
I wouldn't worry too much, if there is a general rule it's that the more those clowns called politicians intervene in markets, the worse they make the situation in anything other than the very short term. The problem in the US now is that the value of houses is falling below the value of the debt taken out to buy them, in which case 'investors' post the keys back to the banks. This plan might have some small positive impact at the margin, but it will also throw up a whole host of more serious problems elsewhere that suprise, suprise weren't anticipated and are potentially much worse. Will they never learn? No, they're politicians!
11. planning4acrash said...
All they need now is somebody like Obama to evoke a mass grass roots movement, poss via carbon concerns, and you have facism. It is our job to let people know that the emperor has no clothes. Cld Cameron have similar affect here?
12. Belfastboy said...
Surely this would lead to mass defaults, as everyone then decides, it is no longer necessary to pay their mortgage.
13. mountain goat said...
borrow $1000 and it's your problem
borrow $1000,000 and it's the bank's problem
borrow $1000,000,000 and it's the rest of the world's problem
14. Bertywooster said...
Everything Browne the Clown and nu labour does is aimed at a general election next year. They will say and do anything, irrespective of the consequences in the medium term, to get re-elected. Their a bunch of scallywags.
15. icarus said...
mountain goat - did you mean $ trillion (12 noughts)?
If so, yep, and it gets worse because China borrows through issuing bonds in the domestic market and these are leveraged against China's "assets", which include the $ trillion+ of forex reserves, mostly US $ bonds. China (and others in its situation) is like a leveraged financial institution with vulnerable assets. If those IOUs ("assets") lose value China still has to service its liabilities. So problems with US $ bonds lead to Chinese (and global) deleveraging. In this light Broon's call to China to use its reserves to shore up the world's financial system is just another posture.
16. icarus said...
....so any problems with the dollar leads to global deleveraging. So the value of the dollar has to be underpinned or everything collapses. Did the US stumble onto this or did they work this out before they started to run up deficits and debts?
17. mountain goat said...
icarus - yes good point billion is the country's problem and trillion is the world's problem.
Amazing how China and USA are locked in propping each other up financially as you say. Who blinks first?
18. malct said...
The “dirty little secret” of the US bank bailout
27 October 2008
In an unusually frank article published in Saturday's New York Times, the newspaper's economic columnist, Joe Nocera, reveals what he calls "the dirty little secret of the banking industry"--namely, that "it has no intention of using the [government bailout] money to make new loans."
As Nocera explains, the plan announced October 13 by Treasury Secretary Henry Paulson to hand over $250 billion in taxpayer money to the biggest banks, in exchange for non-voting stock, was never really intended to get them to resume lending to businesses and consumers--the ostensible purpose of the bailout.
Its essential aim was to engineer a rapid consolidation of the American banking system by subsidizing a wave of takeovers of smaller financial firms by the most powerful banks.
http://www.wsws.org/articles/2008/oct2008/pers-o27.shtml
19. malct said...
mountain goat and icaras - re CHINA - here's another view
A Win-Win Situation for China
by Sascha Matuszak
China currently stands alone in its ability to weather virtually any storm the banking crisis in the U.S. whips up. With almost $2 trillion in foreign currency reserves, China can afford to be unconcerned about an economic decline in the West that spreads throughout the world, hurting dependent and emerging economies from Pakistan to Panama.
China is not completely insulated from the economic crisis – a slowdown in orders from abroad and a credit crunch at home will hurt the Chinese economy like it hasn't been hurt before – but the difference is preparation. China is prepared, socially and economically, for a slowdown. The U.S. is not.
20. icarus said...
malct @19 - this person doesn't start to address the point I made. China's reserves aren't a load of money in a big piggy bank. They're in play and it's not easy to take them out of play to be used for some other purpose.
As for the 'dirty little secret' @18 - I already knew that, you already knew that, most posters on this site already knew that. It's a trickle-down game rigged for the tricklers.
21. malct said...
icarus - OUCH!
"There is no left, no right, only division, distractions and dickheads." malc t 20:17 - 30 oct 2008
22. malct said...
Quote from Eustace Mullins
"...the increase in the assets of the Federal Reserve Banks from 143 Million dollars in 1913 to 45 Billion dollars in 1949 went directly to the private stockholders of the [Federal Reserve] banks.''