February 19, 2009

"The government is promoting bad behavior...."

Drudge is running the flashing siren over this.

299 comments:

1 – 200 of 299   Newer›   Newest»
mcg said...

It's fun to watch, but a flashing siren? Come on, Drudge!

mcg said...
This comment has been removed by the author.
mcg said...

Olbermann will probably call for NBC's divestment from CNBC shortly, demanding that, at a minimum, it henceforth be called just "C".

madawaskan said...

Well a lot of things aren't even being talked about yet-February and January are historically and cyclically suppose to be when the market wants to go up.

It isn't. Even against that historical trend and psychological environment the markets are down.

In January if the S&P falls for the past thirty years it has been bad news.

Another thing that hasn't even begun to be priced into the markets yet-is the minumum wage law that will go into effect shortly.

Sure it would be great to improve minumum wages in a vacuum but guess what happens in reality?

Companies-whose profit margins are getting squeezed-when you ask them to up the minimum wage-they comply by firing those they can't afford.

Unemployment is heading for double digits.

Freeman Hunt said...

What a great clip. Santelli is my favorite person today.

Those of us who didn't overextend and got mortgages we could afford are supposed to pay for people who live beyond their means? What the hell?

When do we say that enough is enough when it comes to the government stealing our money to buy votes? It's ridiculous.

m00se said...

Can't say as I disagree with the traders. This is just rewarding those people who were not bright enough to not overextend themselves either in buying their residence or investment property.

Oddly enough, this vindicates to some degree, the Democrats in their anti privitization stands to Social Security. Seems that a good portion of the electorate is too dumb to handle their own affairs. Particularly if you think this is a good policy.

I dunno what we're going to be left with at the end of this "crisis". I do know I'd like someone to pay off my mortgage...

Freeman Hunt said...

Dovetails with the cruddy corn fuel.

Freeman Hunt said...

And thank you to Santelli for mentioning Cuba. You want collectivism? Feast your eyes on the results!

Randy said...

What's the government going to do next year and in 2011 when the next wave of mortgage resets hit? Their bleeding-heart forgiveness plan will raise the costs for all those homeowners when their ARM's reset. And there will be another wave following that if the millions eligible for the government's plan actually take the offer: it is nothing more than a highly subsidized 5-year adjustable mortgage after all. What are those people likely to do when the subsidies disappear and their payments revert to market rates forced higher by the increased risk caused by government intervention?

AJ Lynch said...

I watched the Charlie Rose show last night.

Guests included a few well-konwn economists including N. Roubini.

Roubini claimed the govt will have to do an accross the board universal mortgage principal reduction. He suggested it could be expedited using zip codes!

How scary is that?

Henry Buck said...

It's not just that the government is promoting bad behavior, but it is making suckers of those who were careful, didn't overextend themselves, and saved for unexpected hardship. It's one thing to promote bad behavior, its another magnitude of ineptitude to penalize good behavior.

AJ Lynch said...

I love the flashing siren- Drudge uses it sparingly.

1jpb said...

Rush is really transparent today, as he describes the topics of his show today you can read along at home by keeping Drudge on your porn-boxes.

traditionalguy said...

The defect in Marxist Economics is always the same: Once you take everyone's property and have it redistributed, the next thought in ALL humans is that there is no reason to work for what's free for the taking. Next the Party declares an emergency that REQUIRES a Police State threatening everyone with Murder unless they go to Show Jobs that produce nothing. Voila, there is more crisis.Now you have to conquer more countries where some property remains to be stolen, after all it's a crisis. Voila, the Police state needs show trials and murder of 1/3 of the people to keep order, after all it's a crisis.

Sofa King said...

Wow 1jpb, way to be substantive.

Don't you have something you want to say, about how it's all Bush's fault anyways?

ElcubanitoKC said...

The deal definitely screws people like me, first time buyer, trying to find a fair/non-inflated price. We'll be back to the 3/4 of a million dollar 1 bedrooms in no time, and the cycle will beging all over again. I am not going to risk my financial future by buying something of the sort with some byzantine mortgage scheme. However, that would be the only way to do it. *sigh*

I hope more people realize that, but I won't count on it.

1jbp, did you spike the kool-aid this morning?

Randy said...

No, EKC, we won't be back to those prices any time soon. We will instead prolong the time it takes for prices to fall to where they were going anyway. Then they will fall further because mortgages will be much more riskier as a result of government and court intervention & invalidation of legal contracts. So, you will ultimately find good bargains but you'll pay a lot more in borrowing costs.

Maguro said...

If this scheme is supposed "save" the housing market it won't work anyway. It is beyond the government's power to re-inflate the housing bubble.

Smilin' Jack said...

Well, like everybody else, my first reaction was that Obama's program is an outrageous ripoff of responsible taxpayers. But let's not jump to conclusions before we know all the details. For example, is it retroactive? That is, can I buy a penthouse on Central Park West and have Obama pay the mortgage for me?

If not, then I revert to my original opinion that it's an outrageous ripoff of responsible taxpayers.

peter hoh said...

Of course it's wrong for the government to promote bad behavior among the regular people. Instead, government should focus on its core mission of promoting bad behavior among really rich people.

Seven Machos said...

Well, it's all true what these people are saying. This is going to cause huge problems down the road in the form of inflation, except in the housing market, where we are going to see confusion everywhere.

Bissage said...

[The scene is a geodesic dome on a barren planet far from Earth.]

BILLY PILGRIM: It looked like the end of the world.

TRALFAMADORIAN: What looked like the end of the world, Mr. Pilgrim?

BILLY PILGRIM: Dresden, after the bombing.

TRALFAMADORIAN: Don’t be so egocentric. We know how the world ends and it has nothing to do with Earth, except that it gets wiped out too.

BILLY PILGRIM: Really? How does it end?

TRALFAMADORIAN: While we are experimenting with new fuels, a Tralfamadorian test pilot panics, presses the wrong button, and the whole Universe disappears.

BILLY PILGRIM: But you have to stop him! If you know this, can’t you keep the pilot from pressing . . .

TRALFAMADORIAN: He has always pressed it and he always will. We always let him and we always will let him. The moment is structured that way.

Mr. Pilgrim, a pleasant way to spend eternity is to ignore the bad times and concentrate on the good.

-- “Slaughterhouse-Five” (1972)

JohnAnnArbor said...

I bought a house that I could afford. If we go down this route of rescuing mortgage holders, I was clearly a fool; I should have overextended myself and bought a house twice as big and then waited for the rescue on other people's money.

As it is, I'll be the one paying for the irresponsibility on all sides, lenders and lendees. Great.

Seven Machos said...

Peter -- All those bad-behaving rich people should be in jail. Why aren't they? Why isn't there a WHATEVER crisis to hear about?

Oh, right. It's because all the perps are Democrats. Move along. Nothing to see here. Let's deflate the value of the dollar. That worked in Argentina, eventually, maybe.

Seven Machos said...

Everyone should refinance in the next two years. Everyone. Because borrowing rates are going to have to go through the rough in a few years.

Joe said...

I loved Rick's point that if the multipliers were so awesome, why doesn't the government just spend a trillion dollars a day?

Gahrie said...

I am a sucker. I bought a house I could afford, didn't refinance when its value tripled on paper, put money into a retirement account, and a rainy day savings account. I pay all of my taxes on time.

I'm so pissed.

President Jefferson was right.

And the next time we put explicit rather than implicit language in the Constitution to hamstring the Left.

Lem said...

Getting politics involved was Bernanke and Paulson's biggest mistake

The dynamics of our rapidly decelerating economy are not a mystery. Fear begets fearful actions. Employers cut costs and refrain from hiring. House shoppers pull back. What were good credit-card loans on bank balance sheets become bad ones. Good mortgages turn into bad ones. Nobody wants to buy a car, so auto jobs are lost.

To blame politicians is at once churlish and unavoidable. Nobody really is in control of the dynamic. Economists and philosophers talk about "path dependency" -- how a small act can shunt events onto one path or another, producing a cascade of consequences that were far from inevitable.

Ben Bernanke and Henry Paulson, in a phone call last Sept. 17, decided to involve political actors in the bailout following the Lehman debacle. They had good, legal, democratic and constitutional reasons for doing so, but it was a terrible mistake.

k*thy said...

Seriously JAA, you’d trade your sense of honesty and responsibility for a larger cashout at another’s expense? I doubt it.

Hoosier Daddy said...

Those of us who didn't overextend and got mortgages we could afford are supposed to pay for people who live beyond their means? What the hell?

Well I'd say that was the same kind of attitude that led the revolt for welfare reform. Why should I or you have to pay for the piss poor life decisions someone else made?

Pogo said...

I feel a bit foolish now, having lived well below my means so my daughter borrowed nothing for college and my son won't owe a cent either.

All that time I could have lived in a fine house and drove nice cars and went on cool vacations overseas. We should have sent the kids for a "semester" in Europe and bought ATVs and Jet-Skis and a vacation home.

What do I have to show for my deferral of gratification?
No help for me. And my taxes will be higher to pay for the spendthrift's errors.

I never thought I'd be the patsy, but here I am. Thanks Barry, and Congress.

It seems pretty clear this action will speed our economic collapse. I'm not really sure there's a goddamn thing we can do about it, but getting drunk before a big test never seemed a good choice to me before, so pardon me if I don't join your Democratic bacchanal.

peter hoh said...

Gahrie, it's only a Left-Right thing if you ignore the way the Right does this too.

Patm said...

Go, Rick!

I've been steaming since yesterday when AG Holder - our African-American AG, under our African-American President called America "cowardly" on race. We've spilled blood for equality. My father took risks to help black workers, and Holder has the nerve? And then Obama's speech. Between the two I was already furious. Then I read about the cop pulling the guy in OKC over for having an "anti-Obama" sign (stupid sign, but he should have been free to fly it) and THEN I come here and see Althouse "afraid" to headline a funny and real comparison (see here: https://www.blogger.com/comment.g?blogID=6329595&postID=533581699806343374&page=1 ) and all I can think is WHAT THE HELL IS GOING ON?

This is still America, isn't it? We're still free to talk, laugh, joke, gather, opine and object, are we not? No nation is perfect but are you telling me that in just 4 weeks time everything we have known about the goodness, justice and exceptionalism of America is dead and buried in the name of some dubious fascist collective?

Four weeks into this presidency, and Althouse is "afraid" to post something? We're "racial cowards?"

I'm furious. Point me toward a protest and I'm there.

1jpb said...

Patm,

I think the next Malkin protest is in Kansas this weekend.

Have fun! And, don't forget to report back, for those that can't join you.

1jpb said...

And, don't forget to bring a clever(?) home made sign.

madawaskan said...

Well...Santelli is alluding to the fact that we should protest by not paying our taxes-

Damn I think he got that idea from the Democrats-On Daschle,Geithner,Rangel..

on Cupid, Comet and Vixen...

Obama is Santa Claus-for some people.

JohnAnnArbor said...

Seriously JAA, you’d trade your sense of honesty and responsibility for a larger cashout at another’s expense? I doubt it.

No, I wouldn't. My point is that honest, responsible people have every right to be seriously pissed off right about now.

AJ Lynch said...

Yeah Pogo, I collect postcards and I might have gotten a few from those trips you did not take.

Think of the postal workers who lost their jobs. Selfish that is what you are.

Michael Hasenstab said...

This bit of news was lost below Drudge's flashing banner.

Tighten your life jackets. The second economic tsunami - infation - is heading for our beach.

Hoard your dubloons. They'll be handy next year for buying groceries.

AJ Lynch said...

This Santelli thing may have really started something.

If so, I predict an awful lot of congress critters will decide they will not run for re-election.

Curtiss said...

The new polarization: Those that carry the water vs. those that drink the water.

ElcubanitoKC said...

1jpb, dissent is still the highest form of patriotism. Isn't it?

Randy, great points.

Pogo said...

I'm game for a Chicago tea party.

A truly great idea.

chickenlittle said...

This Santelli thing may have really started something.

I hope so.

garage mahal said...

Obama is just like Bush. He's nothing like Bush. Look, over there! Drudge has a siren going!

Pogo said...

Yeah, garage, this Democrat clusterf*ck has been really great so far.

Gahrie said...

Welfare, Social Security, taking the economy off the gold standard, forcing the banks to make sub-standard loans, and nationalized medicine. Which of those is a rightwing program or idea?

The Obama bailout..how is that a right wing idea?

Sure there are crooks and kooks on the right...but it is the Left's stated policy and programs that are destroying the country.

Methadras said...

Calling Mr. Barely and empty suit now would just be redundant. He's already proven that he is completely and utterly incompetent. The parasites are going to win. Bread and circus.

garage mahal said...

Democrats are just ruining everything Republicans have built up. Damn shame I say. Happy Ann?

Ron said...

Curtis: more Kool-Aid than water, perhaps?

AJ Lynch said...

Is there a date for the Chicago Tea Party? I'll go too. Hope the Cubs are in town while I am there.

sonicfrog said...

I'm already starting the "Rick Santelli For President" campaign on my blog!!!!

1jpb said...

What, Rick for pres?

Is he the new Palin or JTP?

Pogo said...

Geez, garage, play some defense, willya.

Tell me how great this trillion dollar spend-a-thon is gonna be for the nation, how it's gonna solve our economic problems.

Face it, the New Deal, The Great Society, and now Obama's Second New Deal are total disasters in the long term and the long term just showed up for dinner

And it's having us for the entrée.

The answer to every critique of this total Democrat economic debacle isn't just so's yer Ma, garage. Step up.

Telling me, ya, but the GOP supported the same stupid programs is worthless.
Yeah? They were totally wrong, too.
Thanks for the insight.

And as can be seen here, Obama and the Dems are so bad, Rick Santelli or some other demagogue is ripe for stepping in and fomenting a second American revolution.

Joe R. said...

Why should I or you have to pay for the piss poor life decisions someone else made? Everyone who is towing this personal responsibility line seems to be forgetting two things:
(1) Foreclosed homes drive down the prices of everyone's (even the responsible owner's) home value.
(2) The government and the financial industry has promoted, prodded and financed people into houses they can't afford. Particularly, the lenders have (and had) a moral and fiscal responsibility to ensure that their clients could afford the home they were financing. The piss poor life decisions include the government that we the people elected and then allowed to do this.

ricpic said...

Rush is really transparent today...

Translation: He's shining a spotlight on the leftist assault on the responsible working class, middle class and upper middle class.

chuckR said...

Gotta agree with the traders, whose words would have had more force had they thought to include the bankers and Wall Street's parimutuel bettors in their condemnation. I grudgingly concede we had to save the system, but those guys should have been tossed out on their ears. If they are so goddam smart and indispensable, then how come their companies are so goddam broke?

Daniel said...

First, it's so cute that everyone here was so responsible in their home purchases. Nice work!

Second, it's pretty remarkable that no one seems to even conside that if your dumbass neighbor (not you, oh responsible one) overextended himself and goes into foreclosure, your home value goes down. Then if you lose your job, can't make payments on your house and have to sell, you'll find it's worth much less because next door is sitting empty or is going for 20% less (this is independent of other market driven declines in housing value). So now you owe more on the house than it's worth, you therefore can't sell, you can't make the payments, and you go into foreclosure, without having been irresponsible (don't forget, you and 20 others, all of whom post on this board, avoided the debt spending that propped up the American and global economy for the past many years -- but you got screwed anyway). Your foreclosure means that two houses now stand empty or are severely discounted, further reducing house values in the area. (Plus, the bank's in more trouble because foreclosures are expensive and it can't even recoup the original loan amount.)

There's a balancing act between preventing foreclosure (which causes an over-reduction in housing prices, including a neighbor effect, and puts already screwed banks in even bigger trouble) and limiting moral hazard, which is important but not the only applicable concept from economics.

There's a lesson here. There are other people in society. What they do and what happens to them affects you. Whether you like it or not.

Leland said...

WOOT OFF!

oh wait, different flashing siren...

1jpb said...

ricpic,

You forgot that he's also shining a spotlight on BHO's plan to reinstate the fairness doctrine.

1jpb said...

And, he occasionally shines a spotlight on folks who have planes that aren't as good as his.

Man of the people.

AJ Lynch said...

Daniel:

You are right Man!

But 95% of us are tired of paying and paying for the 5% who never get their shit together Man!


How about we enact some kind of maximum lifetime guvmint for all?

Once you have sucked at the taxpayer teat for too long, you are cut off forever!

AJ Lynch said...

"maximum lifetime guvmint.." should have read "maximum lifetime guvmint benefits".

Pogo said...

Joe R: forgetting two things:

No we're not.

Neither item you discuss requires the conclusion that even more bad money must be spent.

That's just plain idiocy.
The failures will happen regardless of how much money the gummint throws at it.


Daniel:
It's so cute...
Asshole; I hate responses like yours, you smug sonofabitch.

You seem to believe we can simply print money to spend our way this trainwreck. Bullshit. We should let the contraction happen, because happen it will, and soften the blow for the new destitute with welfare, or make things far far worse by spending even more money we do not have and drive inflation to Weimar levels.

You both seem to favor the latter, and you are completely wrong.

ricpic said...

How do you like the taste of Obama's excrement sandwich, America?!

Paul Zrimsek said...

No, Daniel's right: Responsibility is pretty quaint and amusing.

garage mahal said...

Every serious economist knows that spending hundreds of billions building roads, bridges, and hospitals is only for Iraq! Iraq has a surplus in their coffers. It's working perfectly. Talk to the hand Dhimmis!

Randy said...

Taking Daniel & Joe R's arguments to the logical extreme, foreclosures should be illegal. Hey, that might work. Everyone gets to stay in the house they're in. No need to pay any more than you want to.

Aside to Daniel: 50% of my neighborhood is so far under water, this legislation will do nothing for it. So the foreclosures will continue apace anyway. Anyone among the other 50% who takes the government offer is going to end up in foreclosure in 5 years when their subsidy disappears and their rate adjusts. Not going to help them in the end. They'd be better off walking now, renting, and saving the money. The banks won't but they will be.

JohnAnnArbor said...

I would be in favor of making lenders--of any kind--have an "idiot cover sheet" for all loans.

It would look something like this, in at least 20-point bold font:

"You are taking out a loan for $200,000 from First Twenty-third Bank. You are taking that loan out for 30 years. With the 6.25% interest rate, the total number of dollars you will send us is $(big number). If you fail to make your payment (number) times, you will lose the house you purchased with First Twenty-third's money."

The loaners had ZERO incentive to make sure the loanees could pay back the mortgages, since the loaners SOLD the obligation to stupid buyers that happened to be big banks that are now failing (nice risk assessment, guys! Why did Chase get it right and y'all get it wrong?). That (the selling the obligation) should be made either illegal or regulated.

Mark said...

Daniel: yes, foreclosures drop everyone's house values. This is the natural result of a bubble in house prices - a bubble caused by government interference in the market that artificially spurred demand (low rates set by Fed, government tax breaks for homebuyers). House prices need to drop for the market to reach a healthy equilibrium again. There is no way to avoid that without making other things worse. There is no free lunch. Government does not have some magical power to avoid the laws of economics.

Liberals seem to always want to act as though there are no natural laws of economics, and that government force can overcome them. It's the same kind of thinking as doctors who think illnesses are cured by giving enough pills of the right type. All you do is mask the causes of the problems and make other things worse.

This pay-for-the-deadbeats'-mortgages plan of Obama's has to be Exhibit A of why our money will become worthless under liberal rule. There is no sense of fiscal restraint. The Republicans were bad too, but they were bad in the ways Democrats are even worse: massive new spending on government schools, for example. The Democrats' idea of fiscal responsibility is to take more of people's money. With them it's always "needs" that come first, and then you steal enough via taxes to pay for the "needs" - which somehow seem to expand every generation.

AJ Lynch said...

I guess the forclosure / underwater mess is a bit of a regional issue? Is it not?

Arizona, Florida, Caleeeeefoorrrnnya, and Nevada.

Just nuke those states and blame on Al Quaeda. It would be cheaper

rocketeer67 said...

Second, it's pretty remarkable that no one seems to even conside that if your dumbass neighbor (not you, oh responsible one) overextended himself and goes into foreclosure, your home value goes down.

Okay. And your point is? That somehow it’s smart or obligitaory of me to continue to let my dumbass neighbor screw me by public theft, even after he’s already screwed me by his private irresponsibility?

No thanks. I think I'll limit the damage.

chuckR said...

Daniel@12:39

Its a home, not an investment. You still own the liability if the value dips below the mortgage amount, as it did for me in my first house. Ride it out. Have enough money saved for a cushion against a job loss. This will impose constraints on you. Hyundai, no Beemer, local vacation, not the south of France, etc. The constraints the stimulus will impose on you, your children and your grandchildren look far worse to me.

1jpb said...

ricpic,

How do you like Savage's nicknames for (your leader) Rush? "The golfer" seems like a good fit. "Hush Bimbo", "Dumbo", and "Rush Limbo" ain't terrible.

And, there are Pawn Vanity, The Wall Banger, The Lepper-con, The No Spine Zone, and Hazmat Sludge.

Of course, in the world of professional conservative vitriol, the Weiner Nation can't touch Levin.

A fun bunch your professional conservative leaders are. No wonder they control the R party.

Shanna said...

Foreclosed homes drive down the prices of everyone's (even the responsible owner's) home value.

Maybe they need to be driven down, though. Maybe the cheaper home prices are just fab for people who can afford it. Yeah, it sucks in the short term, but resetting mortgage principle for people who f’d up is not the answer to a long term problem. Those people are just going to be irresponsible, again, some more and then what? Another reset?

Personally, I’m kind of pissed they’re talking about doing stuff for first time home buyers when I didn’t get s*** 4 years ago when I was one.

MadisonMan said...

The phrase throwing good money after bad comes to mind.

Lem said...

Palin 2012

Pogo said...

1jpb said...

Unable to defend their policies on any rational grounds, the left comes out swinging with their second-best defense, funny name-calling.

TMink said...

Henry Buck said...
"It's not just that the government is promoting bad behavior, but it is making suckers of those who were careful"

Yep. But I think that this blantant example is just opening our eyes to how they have been doing this all along.

Take AFDC for instance. They use the money of responsible people to pay for the children of a parent who is irresponsible. (I know there are tragic situations, I am not talking about those.) If the parent acts more irresponsibly, by having more children she cannot afford, the government sends her more. That is punishing the responsible in order to subsidize the irresponsible.

Or how about disability? I have people on my caseload and people whom I know that really need a hand. This is not directed toward them. The father of one of my patient's is on disability for his addiction. Shit. I know another person who is on disability for ADHD. Shit shit.

Interesting times are coming. Atlas will more than shrug, I think he will throw a few punches.

Trey

cardeblu said...

I guess I'm one of the "cute" ones, according to Daniel, but I do agree somewhat with his domino effect and outcome.

The thing is, though, that the solutions being tried will most likely make that actually occur, not stop/stem it, and on a much broader scale.

1jpb said...

Lem,

What do you think about the NRO mutiny?

Pogo said...

Great post, Trey.

Sloanasaurus said...

This Mortgage plan is a major overreach. Everything is free. Borrow as much as you want. Spend it all. Enough already!

Obama and his circus of clowns are ruining our prosperity and this country. I can't wait until Obama nationalizes banks, destroys the dollars and ruins the lives of tens of millions. How great that will be for all of us. And on top of that he wants to regulate CO2 so we can apparently all be a little cooler in our misery.

Obama could be the worst preseident in history only after a month of being in office.

LarsPorsena said...

"Foreclosed homes drive down the prices of everyone's (even the responsible owner's) home value."

I really couldn't care less.
These are the same assholes who don't mow their grass. My home is where I live. It's not an ATM.

Everyone should contact their local property tax assessor and get a re-adjustment of value if you are affected.

bearbee said...

Bad behavior 101

Get Your Obama Check

The government's giving back billions to the public to stimulate the economy. Find out how I got $12,000.

I paid $2.99 and Obama gave me $12,000 in less than 30 days. Get yours today!


I'm ordering today to get mine.

ricpic said...

Conservatives have something you'll never understand, 1jpb, the confidence to trade jibes with each other. That's what autonomous individuals - as opposed to lemmings - do.

Sloanasaurus said...

Second, it's pretty remarkable that no one seems to even conside that if your dumbass neighbor (not you, oh responsible one) overextended himself and goes into foreclosure, your home value goes down.

Yeah, but we should let the banks decide who wins and loses. After all it was the banks that lent the money. The government represents all of us. It is not the government's place to impose itself in the private contracts of the people.

Daniel said...

ChuckR:
Everyone should buy homes for use value rather than exchange value. That's a separate point -- if you lose your job (along with 500,000 Americans a month) and this crisis is what it looks like it is, you're going to be in trouble with payments (nest egg aside), and if you can't cover your mortgage by selling, then you're really in deep. And we are really, really not talking about BMWs for most of these people.

Rocketeer67: yes, it's about limiting the damage to you (another one of the responsible ones). My entire point is that letting your neighbor get screwed screws you too.

Mark: please don't oversimplify, first of all (liberals this, natural laws of economics that). It's lazy. Second, foreclosures add all kinds of costs to the system and over-deflate housing values, which will speed the vicious cycle we're in. Preventing foreclosures is an important part of rescuing the banking system (or maybe that should just be allowed to fail? -- go find an economist who says that.) Most of the commenters here pretend that you can let your neighbor go into foreclosure and be fine yourself. It's nonsense. And yes, house prices need to drop. But a foreclosed house drops too much. How hard is that to see? Prices need to drop slowly, or everyone is screwed.

Curtiss said...

Cute? I don't much like being called cute.

Anyway, foreclosure is not the end of the world. It's unpleasant for sure, but survivable, and it's inevitable for too many people at this point.

Obama's plan only postpones the inevitable and creates an inequitable system of citizen classification. One where poor decisions are rewarded over prudence and one that won't accomplish its intended result.

It's the unintended consequences of Obama's hasty but politically correct plans that will be his undoing.

Daniel said...

cardeblu:
We may be in for it no matter what we do. This mortgage plan is hardly a panacea. I'm just frustrated by all the atomism on display here.

Sloanasaurus:
1. The banks are losing. They need this as much as the homeowners.
2. With the packaging and securitizing of mortgages, banks don’t really own them anymore. The government needs to be involved.

Shanna said...

Found this on yahoo finance about the mortgage plan:

Anyone with high combined mortgage debt compared to income or who is underwater may be eligible for a loan modification.

If you qualify, your servicer or lender will reduce your monthly mortgage payments to 31% of your gross income.

Borrowers would also receive incentive bonuses of up to $1,000 a year for five years for making payments on time.


That sounds like a great plan! Especially incentives for paying your mortage. You know what used to be an incentive? Not getting kicked out of your house!

Bob From Ohio said...

"Every serious economist knows that spending hundreds of billions building roads, bridges, and hospitals is only for Iraq!"

Its not even close to "hundreds of billions" on "roads, bridges, and hospitals" in Iraq.

From the New York Times in August, 2008:

"The unspent windfall, which covers surpluses from oil sales since 2005, appears likely to reinforce growing debate about the approximately $48 billion in American taxpayer money devoted to rebuilding Iraq since the American-led invasion."

The "hundreds of billions" is the cost of the war but most of that was spent on extra military payroll and supplies/equipment, mostly bought in the US.

Now, $48 billion is quite a bit of money but also over 6 years.

Have not we spent $48 billion in the US for roads and other infrastructure in the last 6 years? I bet we have.

Justify the current domestic expenditures on their merits, not by comparison to imaginary spending in Iraq.

LarsPorsena said...

"And yes, house prices need to drop. But a foreclosed house drops too much." Oh really!!! "too much". How much is too much?

TitusFreezeFrame said...

Drudge is a homosexual...and not a pretty one. We don't like to claim those mos as one of our own.

Henry said...

Michael Hasenstab wrote: "Tighten your life jackets. The second economic tsunami - infation - is heading for our beach."

For responsible folks, this is at least a good time to refinance. Lock in that 5% and 30 years and wait for the inflation. If I could take a 100 year mortgage right now I would.

Politico has an article on the mortgage plan (h/t instapundit) that points out that Obamanomics goes way beyond composting money. The law of contract is up for grabs as well:

"Obama also reiterated support for what congressional Democrats and consumer advocates believe will be a powerful stick: allowing bankruptcy judges to modify mortgages, a change that would require congressional action....Consumer and housing advocates...argue the change will not only open another avenue for troubled homeowners to avoid foreclosure, at no cost to taxpayers, but also spur servicers and lenders to more aggressively modify loans rather than wait for a judge to do it for them.

I especially like that line "at no cost to taxpayers."

Really? Banks don't pay taxes? What about the people they can no longer afford to employ?

Amy said...

Two weeks ago I was on a shuttle bus between a hotel and a convention center with people in my industry from all over the country. The stimulus package came up in discussion and the immediate furious outcry that spread through this group of strangers (who ordinarily wouldn't be expected to speak so openly) was quite similar to the video clip. I listened in amazement, wondering if I was witnessing the beginnings of a groundswell of outrage among 'regular people.' This clip makes me wonder again.
People who have been basically responsible resent carrying those who have not. That is an emotional reaction. Whether it makes economic sense is a business decision, but that isn't going to negate the emotional response. It makes one sick to reflect on this too much.

Randy said...

Shanna: The fine print (which we now know most borrowers don't read) tells us that the reduction is not permanent but is reset in 5 years. To market rates. Most of those people will once again be facing foreclosure. In the meantime, a few million who aren't paying much attention now will find out their payments are going sky-high when their ARM's reset in 2010 and 2011. This has all the hallmarks of becoming a permanent program.

Daniel's case for this boondoggle is weaker and will grow weaker over time.

rocketeer67 said...

[Y]es, it's about limiting the damage to you (another one of the responsible ones). My entire point is that letting your neighbor get screwed screws you too.

And my point is that your solution let's my neighbor screw me twice - now, when this publicly-sanctioned theft takes money out of my - and more importantly my children's - pocket, and the second time when he loses his house down the road in spite of it. Foreclose and get it over with. Don't prolong my agony and rob me to boot.

1jpb said...

Pogo,

We still have room for funny (name calling or otherwise), don't we?

P.S.

There's a lot of uninformed viseral chit chat that I'm avoiding because we don't really know what's planned. I think I heard the gov would do a dollar match w/ the lenders up to $1000/year for five years, or something like that.

And, no investor, flipper, second home folks would be allowed. And, full documentation would be require w/ a housing expense of 31%, I'm not sure what the allowable total debt would be. These sort of restrictions would weed out folks who really never had a chance of paying their mortgages if they were full doc. It targets the folks who would have been pushed over the edge by a professional setback, i.e. part time or lower paying work.

And, this would target folks in ARMs that can pay the initial pre-adjustment mortgage, but they can't pay the time bomb when the rate changes. In fact, the other part of the BHO plan will really help these sort of folks w/ zero payment assistance. They can now refi into the really low 30y products. But, before, they couldn't because they're homes were underwater, so nobody would refi them before the rate reset--the new plan will allow 105% LTV. This means that they're principle stays the same--no giveaway--and they can move out of the ARMs.

Does anybody know for sure how much the gov dollar match to the lenders' subsidy is? If it is around $1000/ year it seems like that would be a very cheap way for the gov, commmunities, and not in trouble folks to prevent an over correction on the downside that would cost a lot more than $1000/year for five years. Foreclosures are not w/o real costs to gov, communities, and not in trouble folks; there must be a point where a little prevention does pay for itself in the long run. I need more real data, unlike the uninformed, emotionally charged folks commenting here. So, I poke fun.

And, one more thing, folks who are not having mortgage troubles should see if (post BHO plan) they can refi to the current super low rates (that the Fed is forcing by buying paper.) This will help you and the economy because you'll have more money to spend. And, even if you are underwater, w/ the BHO plan you can refi to 105% LTV. Of course this in not cashout, so you can't add debt. Your principle will stay the same, but the problem of a lower value will no long prevent you from taking advantage of the extremely low 30y rates that are now available to folks with 80% or lower LTVs. Of course, no luck w/ jumbo loans, this program runs through fannie and freddie, so it's conforming loans only.

Daniel said...

Lars: Foreclosure results in homes being put on the market below market value. That's "too much."

1jpb said...

their or they're, whatever

rdkraus said...

Daniel

Market value = what a willing buyer will pay a willing seller.

It is not too low or too high. It is what it is.

Daniel said...

Randy -- in five years people will hopefully be in better shape to pay their mortgages. You can't and shouldn't fix stuff forever. The point is not to reinflate the housing bubble, but to turn the pop into a slower deflation.

Rocketeer -- we come to my favorite argument: let's allow the current crisis to spin out of control and destroy us all to avoid the hypothetical crisis down the road.

Daniel said...

rdkraus -- foreclosure /= willing seller.

AJ Lynch said...

Shanna said:

"That sounds like a great plan! Especially incentives for paying your mortage. You know what used to be an incentive? Not getting kicked out of your house!"

LOL.

rocketeer67 said...

Foreclosure results in homes being put on the market below market value. That's "too much."

Daniel, really, this is just silly. Foreclosed homes have always been on the market, and they've always been included in appraisals establishing surrounding properties' values. Foreclosed homes are just like any "other" home - they sell, to the penny, for exactly what they are worth. They do not sell for "below market value." The fact that banks are "losing" money on them doesn't prove otherwise.

rdkraus said...

Daniel

Foreclosure has nothing to do with market value. It only has to do with people not paying their loans. That's it.

You said foreclosure results in homes being put on the market below market value. This is wrong. The value is what it is.

rocketeer67 said...

[L]et's allow the current crisis to spin out of control and destroy us all to avoid the hypothetical crisis down the road.

First of all, it will not destroy me, Daniel. And it is not hypothetical - it is apparent to anyone even passingly familiar with the organisms called "the economy" or more specifically "the housing market."

Daniel said...

Yes, this is silly. By your logic, housing prices were never too high either. And high numbers of foreclosed houses on the market, particularly spatially clustered, cause massive problems with literally everything. How could you possibly disagree with that?

Randy said...

in five years people will hopefully be in better shape to pay their mortgages.

There is absolutely NO reason to believe that will be true. Given the payment reset fixed in the plan, there is every reason to believe that the opposite will prove true.

You can't and shouldn't fix stuff forever.

True, but whether you admit it or not, you're advocating it.

The point is not to reinflate the housing bubble, but to turn the pop into a slower deflation.

Too late for that, despite your claim to the contrary. Unfortunately for you, the Law of Unintended Consequences is universal.

Big Mike said...

Nobody else sees that the Great Barack is actually covering for the banks and not the schnooks who overextended themselves.

Pull up a chair and pay attention. The banks eagerly lent monety to people whose monthly income didn't cover PITI, much less the other minor things like food, transportation, other debts.

Banks knew that the sucker, oops, investor would make some payments, then fall behind, and the bank would own an appreciating asset (the house) plus have collected settlement fees, plus some number of months of payments. Okay, some homeowners might retaliate on the way out the door by, for instance, flushing a bag of cement down the toilets, but the banks counter by not permitting home inspectors into the house so risk is assumed entirely by the buyers. And of course the little banks sold the mortgages to big banks, so they collected fees, some payments, and a chunk of money for selling (actually off-loading) the problem to a big bank.

It was all modeled out mathematically and guaranteed not to fail.

Except the "assets" are depreciating, and at a rate that is accelerating, the "assets" can't be unloaded because it's a total buyers market, and the banks are stuck paying property taxes so the losses aren't just paper losses.

Not to worry! The Great Barack will forestall foreclosures (at least until after the next election) and maybe even buy up some of these toxic assets (cement-clogged sewer lines and all).

The big bankers knew what they were doing when they contributed to Obama's campaign.

Smilin' Jack said...

Foreclosure results in homes being put on the market below market value.

Oxymoron alert. Or maybe just moron alert.

Also, paying your dumbass neighbor's mortgage for him doesn't make his house worth any more when he finally does sell it. It just means you have a dumbass neighbor to keep you company for a few more years. And of course, improves his self-esteem, because he can say "At least there's someone on this block even dumber than me!"

Daniel said...

No, of course not, Rocket, it won't destroy you. You are strong, proud, independent -- every man is an island, right? Dude, like it or not, you live in a society, and you, yes you, depend on the banking system and the social and economic health of others. I don't care if you're George Soros or a homeless guy on the street -- it will bring you down with it.

Whatever, I'm tired of this. We've come to the disagreement point -- some of you think you're a bunch of individuals insulated from everything else, despite the fact that the last three months have shown that to be completely, utterly, entirely, absolutely totally wrong. I'm going back to work.

Pogo said...

Incentives to repay your mortgage on time? Great.

How about incentive payments to feed your kids, mow your lawn, and take out the garbage?

And high numbers of foreclosed houses on the market, particularly spatially clustered, cause massive problems with literally everything.
Your problem, Daniel, is that you actually seem to believe that this boondoggle spending actually fixes something instead of recognizing that we are quite simply printing money and pretending it has real value.

Hyperinflation will be the result you twit.
Goddamnit, the absolute confidence Democrats have in this Ponzi shit just pisses me off.

Pogo said...

some of you think you're a bunch of individuals insulated from everything else,

Wrong diagnosis, and wrong prescription, Daniel.

ricpic said...

Steeped in resentment, hellbent on revenge,
Obama set forth to burn to the ground
The house of the decent hardworking breed,
And raise in its place a tent fit for clowns.

Lem said...

Lem, asked 1jpb

What do you think about the NRO mutiny?

The NRO is waiting for the messiah in the form of another Reagan to come and save us.
It's too late for another messiah.

At this point I look at Palin as Moses... We are going to be starving in the dessert very soon and we are going to need somebody to lead us out.

rocketeer67 said...

And high numbers of foreclosed houses on the market, particularly spatially clustered, cause massive problems with literally everything. How could you possibly disagree with that?

God, man, I never said I did disagree. But how would that even remotely lead me to the conclusion that I've got any responsibility, or even interest, in fixing it this way?

Randy said...

Yes. you're tired of it, Daniel because it's all hypothetical to you. Those of us actually living with it, with abandoned houses to the left and right of us, know that reality is quite different than your ivory tower model. You don't have to live with the consequences, Daniel. We do.

1jpb said...

It's too late for another messiah.

That's true, we (on the other side) already have that market cornered. And, Kool Aid too.

rocketeer67 said...

No, of course not, Rocket, it won't destroy you. You are strong, proud, independent -- every man is an island, right?

Uh, Daniel? You may want to recalibrate your mind-reading machine, or at least turn down the assumption inputs.

Bissage said...

The Yanomamo would settle the contentiousness of this thread with a series of chest-pounding duels.

And accomplish more.

Maybe the internet needs a disintegration booth.

Man, that sure would put some skin in the game!

Henry said...

Daniel, I think there is an argument for a mortgage bailout plan for individual investors, but I also think it's unwise to ignore future consequences. We risk turning housing into a kind of rent control or farm policy disaster -- a multigenerational distortion of the market that quickly disserves the people it's intended to help.

Look at 1jpb's substantive PS, above. Safeguards designed to prevent the money from being used poorly will create a hostile bureaucracy that will mostly serve educated speculators.

Furthermore, by tying people to houses they can't afford, these programs will hurt the recovery supposedly to be triggered by the trillion dollar stimulus. People won't be able to move to work.

Then there is the point that I quoted from the Politico article. Invariably, this program will be accompanied by other programs that counter its purposes. Even as the government pretends to help lenders by giving money to borrowers to pay their loans, it hurts lenders by undermining mortgage contracts.

The friend of debtors has always been inflation. Eventually, that's where we're headed.

Patm said...

I don't mind the "value of my house being driven down" by foreclosures. Frankly, my little house should never have been worth almost half a million dollars. And because I actually PAY my mortgage, it has gone down enough that I will always have some equity, but the house is first our home.

Duscany said...

I've heard a lot of people say we have to prop up people with high mortgages if we don't the banks will foreclose and our entire neighborhood will drop in value.

Well, so what? I'm not going anywhere. My house is paid off. I'm not depending on it for income. Why should someone down the street who bought a house with nothing down, lied about his income and then pulled out all the equity he could with a second mortgage, be bailed out by me?

Some of these clowns never put a penny into their houses. In fact many made money pulling out all their equity with a second mortgage. If they lose their houses, so what? They never really owned the house in the first place, in the sense that they actually invested anything in it. If they get foreclosed they haven't lost a thing.

In fact a foreclosure on the street might be a good thing. Someone on the block who needs another house for his married children could get a good deal, assuming that the former owners didn't trash the place, which might be very likely considering the kind of people who buy houses with nothing down, lie on their applications and then take out second mortgages.

ricpic said...

Bissage is calling on Admiral Yammamoto to save us? Have you no shame, Bissage. And no historical memory to boot? We beat his ass at Leyte Gulf, man! Update, Bissage, update.

MadisonMan said...

My home is where I live. It's not an ATM.

This is the crux of the problem.

My house is worth about 3x what I owe on it. Apparently, I should be using this place where I live as an ATM to fund ski vacations to Aspen, shopping trips to Minneapolis and the like. Alas, politicians of all stripes have encouraged this thinking, because it keeps (kept) the economy humming and the voters happy and the politicians re-elected.

LarsPorsena said...

"The Yanomamo would settle the contentiousness of this thread with a series of chest-pounding duels."

The Yanomamo would solve these contentions with a spear through the thorax.
When it's a real problem murder is the first and last court of appeal.
About a third of all male Yanomamo are victims of homicide.

Buford Gooch said...

My house is paid for in full. They going to give me a rebate?

madawaskan said...

Well-no one really knows what the specifics of the mortgage bailout plan is-in fact the Obama administration says that they are still arguing out the details-according to the WSJ.

That seems to be a trend with the Obama Administration.

Right now he's in Canada taking back just about everything he said during the campaign about NAFTA.

Then the stimulus package is passed rapidly without even Schumer knowing the specifics.

Geithner goes out to talk about the banking bailout plan and the markets tank-why?

One of the explanations yet again is that it lacked specifics-was too vague and inspired uncertainty in the markets.

It's a s if the Obama administration does not trust the voter-and maybe they have a point-the voters did blindly put their faith in Obama.

The Obama administration doesn't seem to trust the American public with the specifics and that is going to get reciprocated. It's as simple as that.

What the Obama administration seems to be forgetting is the American public can still "vote" in the markets with their dollars.

They are voting "no confidence".

chuckR said...

I prefer the AOSHQ's flaming skull to Drudge's flashing siren. It's best when it has a bouncing Blagojevich hairpiece superimposed.
You?

1jpb said...

Henry,

But, this $1000/y for five years with a dollar for dollar match from the lender (I think that's part of it, but not sure.) is small potatoes.

We just had the Rs tell us that $16 a month is useless as a motivator for folks. But, this plan is not spending much more than the amount from the BHO payroll refund, and now we're told that market principles will be completely turned up side down?

Seems like this amount of a subsidy is purposefully small so that it helps folks on the knife's edge, e.g. folks who were forced into downgraded employment. But, it's not so great that it would inspire folks to change their lifestyles--the Rs were not totally wrong when they mocked motivating influence of $16 a month, their point still holds.

And, it's not so great that it can make the difference for folks who are way over their heads. Those folks are still going down, they're not close calls.

And, someone should look at this cost of $1000/y for five years, matched dollar for dollar by the lenders(?) from the perspective of what it costs communities, govs, and not in trouble folks when homes owned by folks who can almost (perhaps even could fully, before the job market started collapsing) afford their mortgages get foreclosed. There must be an impact of many thousands of dollars on folks not in mortgage trouble by way of fewer folks paying property taxes, lost net worth that may have been important for their retirement or may be a real out of pocket hit if folks were forced to sell and relocate to follow their work, run down neighborhoods including vacancies that could attract criminality, and cuts in basic community services.

IMHO, this is a well considered and elegant set of policy changes to address the very difficult problem of over-correcting on the down side and/or avoiding a non-fundamentally justified spill over destruction of unrelated aspects of our economy.

P.S. Does anyone know if there is a required dollar for dollar match from the lenders? Is this voluntary from the lenders? In other words, if they don't want to do their part of the subsidy, then there will be no subsidy at all. I'm too lazy to look for this.

Bart DePalma said...

What was telling is that, rather than looking bemused or bored with yet another reporter's antics, the traders on the floor of the Chicago exchange gave CNBC's Rick Santelli a standing ovation and shouted a number of like minded comments.

Meanwhile, the markets' post Porkulus slide and vote of no confidence continues as the Dow is sliding downward past 7500. The Obama market is now down well over 2000 points.

This is not a vote of hope in Obama's change.

AJ Lynch said...

Bad behavior? In some cases sure.

In a normal year, before this latest crisis, about 1 million homes are foreclsoed.

The latest estimate I saw calculated there would be double that in the next four years. So we should be concerned with the number of foreclosures in excess of the average but far less troubled with the rest. IMO.

bearbee said...

Fight Foreclosure: Produce the Note How-To

video

Fight the foreclosure by forcing the institution to produce the orginial note. If the institution sold the property more than likely the original note is no longer available and is conducting an illegal foreclosure.

hdhouse said...

just another case of "i've got mine so you go scratch"

I didn't hear Mr. Santelli screaming about $350billion to the financal institutions...and we have zero idea where a lot of that went....and talk about "bad behavior" banks...and then they write bonuses on top of it...

and you morons scream about helping someone stay in a house with a roof instead of where? in the street?

This is an ounce of prevention rather than dumping a few million more in homeless shelters at, by the f..g way, at a greater cost per person and all of it locally...as if the cities and states don't have enough trouble.

conservatives make me barf.

Paul Zrimsek said...

and you morons scream about helping someone stay in a house with a roof instead of where? in the street?

In a fucking rental. Idiot.

Randy said...
This comment has been removed by the author.
rocketeer67 said...

[A]nd you morons scream about helping someone stay in a house with a roof instead of where? in the street?

This is an ounce of prevention rather than dumping a few million more in homeless shelters...


So, in your world, the only choices are undeserved, unsustainable homeownership and a homeless shelter?

Must be that much-talked-about liberal "nuance" I've heard so much about.

LarsPorsena said...

"and you morons scream about helping someone stay in a house with a roof instead of where? in the street? "

I'm sure Ms AA would gladly post hd's address so that any of the dispossessed can bunk with him??

k*thy said...
This comment has been removed by the author.
Pogo said...

an ounce of prevention

A trillion dollar ounce?
She-hit, hdhouse, you Dems do go for the expensive drugs, don'cha?

Seriously, dude: think renting, multifamily housing, living with mom and pop and grandma and sis and the kids. That used to be normal, in America anyway.

k*thy said...

No, I wouldn't. My point is that honest, responsible people have every right to be seriously pissed off right about now.
JAA - I really didn’t think so. I get that you’re pissed, but I don’t understand why anyone would say that when they took the responsible route. You didn’t cut corners, you played by the rules, you’ve got your self-respect, you did things the right way, if you’ve got kids you’ve shown them how to do it the right way. Sounds like a win to me.

Henry said...

1jpb - if there was (a) an easy way to determine who was on that knife's edge and (b) assurance that the program had an envelope, I really wouldn't mind the bailout.

But I don't think either of those conditions will be met. (a) is simply impossible. I just went through the head-pounding excercise of filling out a financial aid form for a school we can't afford, and I decided, about halfway through, that the process must be toxic to the people who most need help. Compiling layers of complex financial information from multiple parties is a huge barrier to entry for people with screwed up finances (let alone screwed up lives).

(b) is disproved by history. Rent control in New York City was a temporary WWII measure. It's still with us. Farm policy has been a farce since its inception (you don't need to trust the libertarians on this one -- just read Wendell Berry). Once you decide that moral progress can be bought with money you never stop paying.

The very details you specify make the program destined for disaster. It is not simple enough to be temporary or effective.

k*thy said...

You don't have to live with the consequences, Daniel. We do.

With 8M foreclosures projected by the end of 2012, we all will be.

Doesn't anyone else find it a little oxymoronic that Santelli and the stock and community traders are complaining of government's bailing out bad behavior?

MM - maybe not for ski vacations, but it's come in handy for us the kid's college tuition. The rates are lower than financial aid.

Shanna said...

JAA - I really didn’t think so. I get that you’re pissed, but I don’t understand why anyone would say that when they took the responsible route.

Because the responsible are going to have to PAY for everyone who doesn’t go the responsible route. They are taking money out of people’s pockets to pay for folks who have bought homes they couldn’t afford, overspent on crap and cars and whatever else. If there is some way to only help people who were laid off for economic reasons (not fired for incompetence or laziness), then I could go for that. But that is not who is going to be helped, by and large.

TosaGuy said...

According to some on here...If we don't bail out deadbeats then the value of my house will drop.

Works for me....because the other scenario means that in addition to paying my mortgage, I will have to float the boat of these deadbeats with higher taxes. I will take a short (or even medium) loss in home equity. It's cheaper in the long run because equity will recover....my money wasted on supporting deadbeats is gone forever.

BTW: What has a person paid when he has an interest-only mortgage with no downpayment? Answer: Tax-deductible rent. What is he out when he he is foreclosed upon? Nothing...because he would have paid rent anyway.

Revenant said...

If the American people didn't want the government to promote bad behavior, they shouldn't have elected Democrats to run it.

If you pay attention in school, and graduate, and get a job, and work hard, and save, and pay your taxes, and live responsibly -- the Democratic Party's not for you. You're the cash cow. The people whose votes they are buying are the people who don't do those things.

1jpb said...

Henry,

If a grand (approximately the BHO payroll rebate for a family that Rs mocked as inconsequential) a year (added to the lender's grand(?)) get's makes things work for you w/ a full doc loan w/ 31% housing expense, and I don't know what total debt to income ratio: then you fall on the good side of the knife. If it doesn't get you by: then you (and I would guess there will be a lot in this camp) fall on the bad side of the knife.

That is very simple, if about a score of gov dollars a week keeps you in your house, then that temporary gov investment averts the collective costs of your foreclosure, some of which I laid out above.

And, mortgage subsidies come and go a lot. Cities and rural areas have a lot of different special programs that get changed and replaced.

A bigger picture example that shows how these things are easily changed is the conforming loan limit. Recently, that thing was temporarily jumped up try and help the economy. Then, I think, it was allowed to go back down--much to my extreme shock, in fact I still don't believe it, even though I just checked at the Fannie website. It surprises me that in this environment we would pull the plug on folks w/ loans greater than $400M and change.

But, completely separate from the jumbo limit (which I still can't believe they dropped down again), there is a long history of targeted incentives coming and going into existence. I don't know why this is different than rent control or your other examples, but it is.

And, this sort of program is especially easy to change. I'm sure a program this big will use electronic underwriting. So, this proposal will provide particular variable guidelines that will be plugged into underwriting black boxes.

And, simple (and very common in the industry, never opposed) black box tweaks will easily wipe this program out. These black boxes have always been used to easily and instantly completely alter who gets approved.

Maybe it is precisely the secrecy of a "black box" that takes in data and spits out approvals and denials that makes these changes palatable to people--ignorance is bliss, sort-of.

joewxman said...

"I didn't hear Mr. Santelli screaming about $350billion to the financal institutions...and we have zero idea where a lot of that went....and talk about "bad behavior" banks...and then they write bonuses on top of it..."

i watch CNBC daily as a trader and have also listened to Mr Santelli all through this. For the record he was against the government bailout of the banks from day 1.

Bushman of the Kohlrabi said...

Goddamnit, the absolute confidence Democrats have in this Ponzi shit just pisses me off.

Well said Pogo. In the span of a month the Dems have gone from being budget hawks to drunken sailors on a unbelievable spending rampage. All these attempts to avoid the inevitable will fail. We are all in deep, deep shit and Barry, Nancy and Harry keep digging the latrine deeper.

AJ Lynch said...

And what does Althouse have to say about this video? Althouse is not a pitchfork waving / protest kind of chick.

Bissage said...
This comment has been removed by the author.
Bissage said...

Admiral Yammamoto, ricpic?

I’m a sweetheart of a guy.

Honest!

Ask anyone.

So . . .

DO NOT CLICK THIS LINK!

REPEAT.

DO NOT CLICK THIS LINK!!!

LINK.

My sense of humor is not that cruel.

HUUUUMMMMMMAAAARRRRRRR!!!!!!111!!!!!!!!!

Bissage said...

Well, I can't get that "#t=45s" thing to work so . . . I SUCK!!!

Bissage said...

NOTED!!!1!!1!!!

AllenS said...

I've said it before, and I'll say it again. When Obama is done, the US of A will look a lot like the south side of Chicago.

Bissage said...

I'm really sorry about that link.

Here's a palate cleanser.

LINK.

Lousy quality on the video but dig that crazy 1970s pron music intro!

And yes, it's true.

I really like that song.

And please be sure to enjoy the extra bonus pleasure that comes from the inexplicable confluence of Billy Jean King and Joe Namath!

P.S. Nice pants!!!

Shanna said...

In the span of a month the Dems have gone from being budget hawks to drunken sailors on a unbelievable spending rampage.

I don't think they ever really were budget hawks, but they did a damn good job convincing people that they were and hitting the republicans over the head with their crappy spending habits lately.

Which is why now that they are doing more shit than the republicans did the only argument they had is "look at what they did in the past". A trillion here, a trillion there and this argument no longer works.

blake said...

Of course, the kicker not mentioned by the pro-bailout types, the "oh noes, we must stop foreclosures!" is that the taxes this policy will result in will, of course, make more people unable to actually pay their mortgages.

My mortgage is about 20% of my income--way less than the various taxes levied upon me at every turn, which by some calculations is well over 50%.

If the government were interested in stimulating the economy, they could take less money out of it. That's pretty well understood. It would be cheap (to implement), immediate and revitalizing.

If the government were interested in helping folks out with their mortgages--they could take less money from them. Also cheap, immediate and revitalizing, and helps those who have fallen on temporary hard times versus those looking for a free lunch.

But then they'd be ceding power, and the government never cedes power easily.

blake said...

My mortgage is about 20% of my income--way less than the various taxes levied upon me at every turn, which by some calculations is well over 50%.

I didn't follow through on this with, "Even so, I could still lose my house with a few bad breaks." And meanwhile, the state of California wants to keep my overpaid tax dollars which might better enable my survival.

Bushman of the Kohlrabi said...

Shanna, I really didn't believe the act either. Their motive wasn't fiscal responsibility, it was about gaining power and fooling the electorate. Too bad for all of us.

Palladian said...

"just another case of "i've got mine so you go scratch"

LOL. I love when liberals pretend to care about other people :)

Ignorance is Bliss said...

What I keep coming back to is that the collapse of the housing bubble is not the problem. Foreclosures are not the problem. Recession / depression is not the problem. Unemployment is not the problem. They are all just symptoms.

The problem is people behaving irresponsibly, both individually and through our government. Anything that tries to fix the symptoms, while making the underlying problem worse, will only hurt us in the long run.

Yes, no man is an island. We are all part of a society. That is why, for the good of society, and everyone in it, we must not promote more irresponsible behavior.

Lem said...

Its disappointing to see how few of you are willing spend some time with Althouse.. in the flesh and in living color.. purple too ;)

Where is the Althousian spirit that has managed to propel our imperious leader to bloggsphere glory?

Common.. show her some love and pin yourself to the map.

1jpb said...

The problem is people behaving irresponsibly

Greenspan had a similar revelation:

Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief

Let's not come up w/ solutions that depend on folks demonstrating non-mandated self restraint when they are given a legal green light, fiduciary responsibility to keep up w/ competitors, and the promise of extreme self enrichment to push legal boundaries to the limit in the pursuit of profit. We have and enforce speed limits on the highway for a reason, likewise we better not count on the honor system when it comes to corporate governance, or anything else of critical importance.

Cedarford said...

Gahrie said...
I am a sucker. I bought a house I could afford, didn't refinance when its value tripled on paper, put money into a retirement account, and a rainy day savings account. I pay all of my taxes on time.

I'm so pissed.

President Jefferson was right.

And the next time we put explicit rather than implicit language in the Constitution to hamstring the Left.


What comes to mind is the People needing to refresh the Tree of Liberty occasionally with the Blood of the Oppressors. That Jefferson believed that the Constitution was a useful scrap of paper, but one that should not bind future generations to the mistakes of past generations or consent to rule by an Elite Sanhedrin of Loy-Yahs.

****************
ricpic said...
How do you like the taste of Obama's excrement sandwich, America?!


Obama just provided the brown, shit-smellin mayo on top.

The shit sandwich itself is truly Dagwoodian in portion size, 30 years in the making, going back to Reagan and the Free Traders, plutocrat Freedom Lovers who laid out the toilet paper breat and began tossing the 1st turds in it.

1. America no longer has to make anything. It can get rich on what other nations make, what new technology may enable others to make, on the homes to fill with goods others sell us all with magic IOU money.
No, the path to riches is by SPECULATING on foreign products, creating a technology bubble, a housing bubble, and a finance bubble...and being so connected that when the bubble bursts you keep you money while lesser Americans lose.

2. Destroying America's best jobs for the poor and middle class's upward mobility was OK, because all that money concentrating in the wealthiest people would eventually "Trickledown".
Mantras were trotted out and repeated endlessly by the Corporatists. "A rising Tide lifts all boats, eventually. Be not concerned your dinghys and small boats are taking on water while the yachts float majestically higher and higher." "Remember, Government is the Problem". "If you are anti-Free Trade you are anti-American. Remember Smoot-Hawley!! "Each job lost creates two new exciting high tech jobs! Honest!"

3. That America works best when you trust the money-men who pay off the Ruling Elites in both Parties and live alongside them...to self-regulate, because such great Captains of Law, Banking, and Hedge Funds are inherently honest and will do what is best for America without anyone trammeling on their merry Freedom-Loving Ways.

4. Corporatists needed to create the Religious Right to distract the populace on the Left and Right to dumb cultural issues like abortion and flag-burning while the economic looting happened. Sharp Zionists seeing what had been done, creation of ignorant, but useful tools - went into the same pack of Southern Fundies to create Christian Zionism.

That was all in place 30 years ago. Then on top of Reagan, Bush I, Clinton (Mr NAFTA, MR let China have MFNS as Republican Corporatists urged and the Dems own Wall Street and Progressive Jew Tycoons urged.) also added their fine piles of turds to the shit sandwich...which piled higher, but still stood proud. Even became close friends, did Bush I and Clinton. With Bill being sort of the smart older son Bush I wished he had had.

Then the whole shit sandwich destabilized under the uncontrolled turd and darrhea fest of Dubya, and came toppling apart just as the inexperienced Messiah came along to contemplate his predecessors incredible creation.

Dust Bunny Queen said...

The piss poor life decisions include the government that we the people elected and then allowed to do this.

Speak for yourself. I've never elected a Democrat. However, I agree that some Republicans need to be bitch slapped too.

Seriouly. Why should I struggle to make my mortgage payment when with a little sloth, I too can have my home refinanced over a longer term, the interest rate maybe lowered or possibly even have the principle reduced. I would be a fool to pay my mortgage.

The collapse of the housing market is a natural function of inflated prices, too easy money and unqualified borrowers. As housing prices come down because the original borrowers are selling or reliquinshing their homes...responsible people who didn't jump on the "flip this house" bandwagon will soon be able to afford a home at a reasonable price.

It's like the Darwinism of real estate.

Michael Hasenstab said...

Cedarford - I gotta hand it to you, you really had me going with that post above. She-ite, you didn't mention Zionists or Jews until the third from last paragraph. Pretty fricken stealthy.

You do know by the way, that the internet is actually owned by the Joos, and they are tracking your every post.

1jpb said...

DBQ,

That's is brilliant. Yes!!! Do stop paying your mortgage. Stop immediately. Life will be wonderful.

Promise you won't pay your mortgage. Please, please, please.

Michael Hasenstab said...

DBQ said: Seriouly. Why should I struggle to make my mortgage payment when with a little sloth, I too can have my home refinanced over a longer term, the interest rate maybe lowered or possibly even have the principle reduced. I would be a fool to pay my mortgage.

I had the same thought earlier today. The problem is that I was too responsible. I borrowed well below my debt capacity and am paying down the mortgage as fast as possible. The mortgage is well below even the distressed market value of my home.

If I defaulted on the mortgage, the bank would look at the low mortgage amount versus what my house would sell for as a foreclosed property. The bank would make out.

My fear is that the bank would be all to happy to take my house and sell it for more than the mortgage balance, including accumulated interest and taxes.

Once again, being responsible results in a penalty.

Dust Bunny Queen said...

Do stop paying your mortgage. Stop immediately. Life will be wonderful.

I'm seriously considering it. The Banks are all wetting their pants trying to accomodate the bail out provisions so they won't be closely scrutinized with the rest of the money they are receiving.

Why not take advantage of the new programs our great leader is foisting upon us. Why should I let principles stand in the way of the pig trough? It doesn't seem to bother many Democrats.

Dust Bunny Queen said...

I had the same thought earlier today. The problem is that I was too responsible. I borrowed well below my debt capacity and am paying down the mortgage as fast as possible. The mortgage is well below even the distressed market value of my home.

Actually, that is my real position too. The loan to value is low even with the modest down turn in r/e values in my area. We are holding up pretty well because this is a resort area and still desireable.

/sigh. I guess I'll just have to be more creative in my tax deductions, write offs.... and the underground economy is looking pretty healthy. My husband just got reimbursed for a "favor" he did for a client in a 1.75 ltr bottle of 10 year Glenmorangie. :-D Next....do a "favor" for the rancher down the way who raises Black Angus cattle. mmmmm steak and scotch.

Ignorance is Bliss said...

Why should I let principles stand in the way of the pig trough?

Because you are a decent person.
If you let the bank foreclose, you'll regret it. Maybe not today. Maybe not tomorrow, but soon and for the rest of your life.

1jpb said...

Michael,

The bank's would big time take you to the cleaners. Of course it's hard for me to see why you think that a subsidy of less than $20 a week is worth upending your life. Different strokes for different folks, I guess.

You know everybody can refi to take advantage of the current low rates, you may not get the extra $20, because that's not the difference between you being foreclosed on or not begin foreclosed on. But, it may still be prudent for you to lock in approximately 5% for thirty years.

DBQ,

Next time angle for some Highland Park. I love the 15yo and the 25yo.

Revenant said...

I like how some of the bailout's defenders are simultaneously arguing that it is (a) of trivial use to the people receiving it and (b) necessary.

Michael Hasenstab said...

@1jpb - I was describing some thoughts I had earlier today, not a plan to default on my mortgage.

I would never default on a loan (or any other promise including wedding vows). I was raised with an 'always keep your promises' set of values, which have been nurtured throughout my adult life, and have been passed along to my children.

I would, if necessary, shovel pig shit if that's what it took to earn money to pay my mortgage and other obligations.

Turn my responsibilities over to the federal government? Never fucking ever.

Palladian said...

"I like how some of the bailout's defenders are simultaneously arguing that it is (a) of trivial use to the people receiving it and (b) necessary."

That's that famous nuance that only liberals can understand.

ron st.amant said...

I guess all the whiny little babies in the comments who are so wise about their investments are writing the government to renounce their Social Security right? Bueller...Bueller??

Nope, their just like those traders cheering Santelli..the same ones who when the banks brokerage houses when belly up were crying and begging at Capitol Hill for money...it's okay for them but not for anyone else.

When it hits your backyard you'll be begging to suck on the teat too.

Remember its only poor ignorant people who can't make ends meet, poor people like Leahman Brothers or the 20 banks that failed last year...hmm...meanwhile, here in Canada not a single bank failed.

Palladian said...

Arbeit Macht Frei, eh Herr Cedarford?

blake said...

I guess all the whiny little babies in the comments who are so wise about their investments are writing the government to renounce their Social Security right? Bueller...Bueller??

Wait, so, I'm supposed to keep paying in but never take anything out? Is that what you require for whatever you think constitutes integrity?

Yes, I'll renounce my Social Security if it means that I don't have to pay any more in. In a heartbeat. That goes for all the payroll taxes.

Yes, please.

If you're trying to say, "No, you have to keep paying and keep paying but if you ever say a word against how that money is used, you can't use any of it yourself or you're a hypocrite", well, the logical fallacy garden is to the left, and try not to trip over the strawmen on your way out.

Palladian said...

"Remember its only poor ignorant people who can't make ends meet, poor people like Leahman Brothers or the 20 banks that failed last year...hmm...meanwhile, here in Canada not a single bank failed."

That's because you're a pretend country operating with play money. The only good thing about this economic collapse is that it's going to toss you smug maple-sucking subjects of the Queen squarely on your poutine-fattened asses. You've been parasites on our heads for far too long. It will be wonderful to watch your paradise (such as it is) unravel.

Are you sure you're allowed to comment here in such an inflammatory manner? You have speech laws to consider. If you hurt my feelings again I may have to report you to the Ministry of Love.

1jpb said...

Revenant,

I don't think that a less than $20 a week gov subsidy would be of "trivial use" to someone (and their surrounding community in general) who was able to avoid a foreclosure because of a government subsidy of less than $20/week.

Now, to someone who isn't on the knife's edge of foreclosure; sure, $20 is totally trivial. Either they don't need it because they're solid. Or, they're too far in the hole for this to make a difference.

You, see the triviality depends on whether it can keep someone out of foreclosure or not. My guess is that you don't really have any problem figuring out this distinction.

And, it seems that this subsidy needs to be matched dollar for dollar by the lending institution, who is totally free to choose to not provide any subsidy. So, if the banks think it's in their interest to not offer any subsidy, they can go ahead and foreclose on someone on the knife's edge anyway. I think some of the right wing hyperventilating got ahead of the facts here.

Randy said...

1jpb - You are talking twaddle. If all this is about a tiny $20/week subsidy, how do you begin to explain the $275 billion cost?

What do you think happens to those people's loans after five years?

Revenant said...

I guess all the whiny little babies in the comments who are so wise about their investments are writing the government to renounce their Social Security right?

Americans don't have the option of renouncing Social Security, little brain. The taxes are mandatory. If they weren't, I and millions of other Americans would happily opt out of the system.

the same ones who when the banks brokerage houses when belly up were crying and begging at Capitol Hill for money

Apparently you don't know the difference between a trader and a broker.

Remember its only poor ignorant people who can't make ends meet, poor people like Leahman Brothers or the 20 banks that failed last year

Due to lending money to the poor and ignorant, although of course it was the lenders' fault that they chose to do so.

meanwhile, here in Canada not a single bank failed.

Yet, at least. But since the Canadian economy is entirely dependent on the US economy, you're pretty much screwed anyway. Heck, there are US *states* that are less dependent on the US economy than Canada is. :)

1jpb said...

Randy,

$200 billion is for Fannie and Freddie to allow non troubled folks to refi at today's rates. They are not increasing their loan size, so in normal times it would be simple for them to refi. But, because their houses' values have declined they can't refi. Their loans may have started at 80% (or lower) loan to value, but now w/ a lower value they're at over 100% LTV, which would have prohibited them from a refi. These are perfectly solid credit risks, who have done and are doing everything right but they're being screwed becuase of LTV rules that in normal markets are meant to keep folks from borrowing to much. But, guess what? These folks have already got this debt from when their homes were worth more. Now, they just want a chance to refi at today's historically low rates, so up to 105% is allowed. But, this $200 billion is to facilitate loans to the cream of the crop borrowers. The risk of losses for this part of the BHO plan is quite low.

The other $75 billion is the $1000/y matched by the lenders subsidy. But, as I've noted above, who knows if the lenders will use this? And, who knows if there are enough folks on the knife's edge for this to matter? Seems like this could spend out less than the full $75--it totally depends on the choices made by the banks.

Randy said...

No Canadian banks failed during the Great Depression either, Ron, yet the gross national product dropped 40% between 1929 and 1939 and unemployment reached a high of 27%.
The comparable numbers for the US during that number were 37% and 25%.

Back to the present, it seems that the Canadian dollar has depreciated by about 25% in the last year. I wonder why that is.

Randy said...

I'm pretty sure that those aren't fixed rates, 1jpb. They're adjustable to market at the end of the five years.

Revenant said...

I don't think that a less than $20 a week gov subsidy would be of "trivial use" to someone (and their surrounding community in general) who was able to avoid a foreclosure because of a government subsidy of less than $20/week.

The surrounding communities should have no problem chipping in $20 a week with no help from the federal government. It is, as you noted, a trivial amount of money. I pay more than that just for my homeowner's association, and they don't do anything but send out the occasional newsletter. But of course the notion that $1000 a year will make the difference in avoiding foreclosure for more than a trivial fraction of homeowners is complete nonsense. If the problem was that trivial it wouldn't be a problem at all.

1jpb said...

Randy,

I don't know if the $200 billion is only for 5 year balloons w/ a reset or for a straight 30y fixed. It be good to know. But, it doesn't really matter, if it doesn't make financial sense for a person to do this refi, they don't have to. It's voluntary.

And, the $75 billion 1000/y matched by the banks, is for five years. I don't know if after five years the subsidy goes away and the underlying rate resets, or if the underlying rate stays the same and the subsidy goes away. Either way, kicking the can down the road for five years seems like a good idea.

Hopefully, by then the folks will have an extra $20/40 a week in income, which seems quite plausible. And, this is a good argument for having this subsidy be fairly small $20/40 a week, i.e. folks can eventually manage the small extra cost sans subsidy.

Revenant,

You make an excellent argument for why conservatives shouldn't be freaking out. It's hard to see how BHO's plan is bailing out a bunch of loser degenerates--it's hard to see how his plan is bailing out pretty much anybody. And, it's voluntary for the banks to use it, in which case they must match the gov subsidy dollar for dollar.

P.S.
The states are broke. And, we don't need national lenders dealing w/ fifty (or more, if every community in the country instigates their own subsidy plan) different ways of providing this sort of subsidy.

Deana said...

JohnAnnArbor, Gahrie, Sloanasaurus, Duscan:

I totally agree.

Several years ago, I was living in the D.C. area. I was looking at buying a home and was told that it would be fine if I went ahead and bought a condo that was 6 times my gross salary. Home prices were going up and eventually, it would be a great invest.

Six times my gross salary.

I did NOT buy a home. I knew it was madness.

Now I’m kicking myself. I could have bought a lovely condo and then, when the inevitable happened, I could have demanded that tax payers save me from my stupidity and pay my mortgage.

Daniel:

By your argument I STILL should go out and buy a home that is 6 times my gross salary.

Because if I did and had trouble paying my mortgage, you would argue that society needs to take care of me.

When does the irresponsibility and stupidity stop? When do we get to say “enough!”

Deana

P.S. - Daniel, I noticed that you commented that you had to go back to work. I am glad to hear you are working. Presumably that means you are paying taxes. Good. I’ll call you when I find out how much my mortgage will be. Perhaps we can just cut out the government middleman and you can hand over your paycheck to me. Deal?

1jpb said...

Revenant,

And, re home owners association dues: I've know a fair number of developers of very high end condo buildings in cities, and it's so funny how they always joked about how folks super rich customers buying condos in their buildings would non-stop complain about these dues at the same time they were dropping millions on the condos.

Just a funny anecdote, still makes me laugh.

Randy said...

1jpb: I don't know if the $200 billion is only for 5 year balloons w/ a reset or for a straight 30y fixed. It be good to know.

I do know. It's not as simple as the your two alternatives.

Chris Wren said...

"some of you think you're a bunch of individuals insulated from everything else"

A bunch of individuals. Haw!

madawaskan said...
This comment has been removed by the author.
Cedarford said...

Michael Hasenstab said...
Cedarford - I gotta hand it to you, you really had me going with that post above. She-ite, you didn't mention Zionists or Jews until the third from last paragraph. Pretty fricken stealthy.


When 30% to 35% of the big bad major players in the economic castastrophe are Jewish, its kind of hard to avoid mention of the Greenspans, Fulds, Madoffs, Franks, billionaire members of the Democrat Jewish Progressives that helped set up "the system".

Kind of like it is hard to avoid mention that people who fly planes into buildings and blow themselves up "tend to be" Muslims outside all proportion to their actual numbers.

Jews continually demand an amulet from all criticism as "it is bigoted", just as many radical Muslims demand no linkage of them to terrorism "as it is Islamophobic".

Lots of luck in the future on maintaing both variants of immunity amulets..

Palladian - Isn't your personal slogan "Arbeit und Salami Smokerspetzerin Macht Frei?"

1jpb said...

Randy,

a) Is it a secret, or can you share what happens after five years?

b) It's a voluntary chance to refi for good borrowers w/o foreclosure issues. If it doesn't make financial sense for them to do this, they won't. What's the big deal?

Michael said...

"When 30% to 35% of the big bad major players in the economic castastrophe are Jewish, its kind of hard to avoid mention of the Greenspans, Fulds, Madoffs, Franks, billionaire members of the Democrat Jewish Progressives that helped set up "the system"."

Care to provide a link or report that substantiates this?

Penny said...

Just sitting here IMAGINING all the clerical assistance we need to hire to get all the eventual paperwork "straightened out".

Between govt, banking and healthcare jobs alone, this could get a bit dicey. I envision a shortage of... GREAT CLERKS!

America...You gotta love her.

Michael Hasenstab said...

Cedarford said: When 30% to 35% of the big bad major players in the economic castastrophe are Jewish, its kind of hard to avoid mention of the Greenspans, Fulds, Madoffs, Franks, billionaire members of the Democrat Jewish Progressives that helped set up "the system".

You seem to hold no animus toward the other 65% to 70% who, by your reasoning, are not Jewish. Why is that, Moshe? Do the non-Jews get a free pass?

Your anti-semitism is disgusting.

«Oldest ‹Older   1 – 200 of 299   Newer› Newest»