Wednesday, Feb 18, 2009
Bailout President shows what he is made of
Bloomberg: Obama Pledges $275 Billion to Cut Mortgage Payments
“It will give millions of families resigned to financial ruin a chance to rebuild,” Obama said today in Mesa, Arizona. “By bringing down the foreclosure rate, it will help to shore up housing prices for everyone.” [No, no, no. High house prices are the problem not the solution. Keeping housing expensive is like a massive tax on family incomes. Let house prices fall you foolish man. Clueless just like the last one.]
Posted by mountain goat @ 10:03 PM (839 views) Add Comment
10 Comments
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1. quiet guy said...
Yes, it's mad but when you consider how much money has been throw at Wall Street, it's easy to see how this could be well received by angry, sickened American voters. Obama's economics may stink but politically this is quite astute. I wouldn't be surprised to see Brown try this as well. Not surpised at all...
2. james stephenson said...
What the hell qualifies Obama to steer America through it's toughest time for a century?
What qualifies Brown and Darling for that matter?
Brown is a megalomaniac - today he told us he is trying to convince the WORLD to follow in his footsteps. It's easy to say that now as we go into this thing and no one can yet see how disasterous or lame his policies are. People should simply look at the fact that his cluelessness helped get us into this mess. Not only did he do nothing to stop the different bubbles, but he told people he had put an end to boom and bust. The psychological effect of this was to allow people to believe that growth would never end and they chucked any kind of prudence & restraint out with the garbage.
I still hear people defending Brown and saying that he is the only man to lead us out of this. I have to swallow my contempt for such statements - only the wantonly ignorant could believe such a thing. Often the same people who are likely to believe that Obama is the man for the job, despite having achieved precisely nothing in his over-hyped life.
3. mountain goat said...
Sensible comment from FT Lex
US housing
Published: February 18 2009 15:13 | Last updated: February 18 2009 22:31
At best, stemming the rate of foreclosures will be a costly way of limiting the extent to which the US housing market overshoots. President Barack Obama’s housing plan, announced on Wednesday in hard-hit Phoenix, Arizona, might stop the slide in home prices due to neighbouring foreclosures by “up to $6,000 per home”, according to hopeful Treasury estimates. That is a weak justification for intervention on this scale. Hosing suburban lawns with once unimaginable quantities of public money will interfere with the purgative process by which prices fall to clearing levels and postpone the moment at which a genuine economic recovery can commence.
Compared with the resources lavished on Wall Street, $75bn for subsidies to homeowners at risk of foreclosure is a bagatelle. The foreclosure tide, triggered by double shocks of negative equity and rising unemployment, is probably unstoppable. Home prices in cities countrywide have dropped more than 25 per cent since 2006 and if unemployment hits 8 per cent by the middle of the year, the Boston Federal Reserve reckons some 8.4m homeowners will be unemployed, of whom 35 per cent will have negative equity. It is far from certain that the president’s plan will make any difference to whether the majority of the vulnerable keep their homes.
The administration is making it easier for Fannie Mae and Freddie Mac to refinance some $200bn of underwater mortgages, giving lenders incentives to reduce mortgage interest payments and brandishing the stick of court-ordered capital writedowns for those that do not. But ultimately jobless homeowners will struggle, even if mortgage interest payments are cut to the proposed ceiling of 31 per cent of income. The fastest way to get the housing market moving again is not to limit foreclosures, tempting though that is, but to allow prices to fall rapidly to market-clearing levels. This package will squander public funds in delaying that process.
4. Dellboy said...
I like this:
"Obama said he will support revamping bankruptcy rules to let judges reduce mortgages on primary residences to fair-market value as long as borrowers pay their debts under a court-ordered plan."
I would like to see borrowers and lenders each take an equal share in the value of assets backing loans. This will prevent banks from being able to pull the plug without taking some hit and will also force them to really care about the stability of the asset's value before agreeing to finance a purchase. One could even take it a step further and say that a borrower can ALWAYS sell the asset for fair market value and the proceeds will complete the loan payment even if the asset value has declined.
5. Stevie Dee said...
Mmmm.. I watched his speech.. not to help speculators on a rising market! not to help dishonest lenders! not to help people who could not really afford their home in the first place? Best bit.. "by bringing down FORECLOSURE rates it will shore up housing prices for everybody"
Amazing, surely this will help the speculator.. I wonder how they are going to choose the "haves" & the "have nots".
6. Crunchy said...
2. james stephenson said...What the hell qualifies Obama to steer America through it's toughest time for a century?
crunchy- Nothing but Wall St money and loads of pre election media coverage. Go figure!
7. Mym said...
"No, no, no. High house prices are the problem not the solution"
But they don't HAVE high house prices anymore, the problem of incipient mass homelessness is worse.
8. rm96696 said...
Is is only a matter of time before our government launches some half baked scheme to prop up house prices. Already an ex bank of england director has suggested printing money to buy houses.
9. 51ck-6-51x said...
Votes for sale! Votes for sale! Get 'em while they're hot!
Seriously this can't help the overall economic situation, it may stop prices overshooting to the downside so far, but will also surely delay the recovery.
10. a saver said...
rm96696 said "Is is only a matter of time before our government launches some half baked scheme to prop up house prices. Already an ex bank of england director has suggested printing money to buy houses."
If this happens, I'm probably leaving this country and I won't be the only one.
Cannot believe the way that people are looking to Obama to sort things out. He may have charisma by the bucket, but the US needs someone with a proven track record. Let us hope he will bring in some decent advisors. As far as putting a floor under US house prices is concerned, at least they have come down quite substantially already -unlike ours, which have only just started falling.