Mortgage Rescue Plan
Sadly amusing . . .
via Slate
Monday, July 28, 2008 | 05:00 PM | Permalink
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Gee, I think I see Paulson somewhere smashed on the ground! lol
Posted by: JustinTheSkeptic | Jul 28, 2008 5:10:30 PM
Barry, you know that old Chinese proverb: "It is better to light a candle than to curse the dark." The mortgage assistance and foreclosure parts of the Housing bill are only going to have a marginal effect on the housing market I agree, but if they keep a few hundred thousand folks in their homes that might have lost them, it's a net gain in my book. You and I are comfortably off living on the shore of Long Island sound, but some of these poor buggers are hanging by their finger tips perhaps trying to bring up single parent families, etc etc. It's easy to sneer at this effort as it was at the $1200 checks but there's a place for it. Sorry, Barry you are usually on the money but this is a bit of a cheap shot really.
Posted by: John | Jul 28, 2008 5:13:52 PM
Justinthesceptic:
Paulson has emerged from this with enormously enhanced stature actually. He's effectively setting the domestic agenda in the dying days of this admin unless you'd noticed.
Posted by: John | Jul 28, 2008 5:19:37 PM
"I agree, but if they keep a few hundred thousand folks in their homes that might have lost them, it's a net gain in my book"
Johh,
I sort of agree with you, but as with all things structured by the government, it will probably cost three times as much as intended and help 1/3 the number of people it is supposed to and some clever folks somewhere will find a way to manipulate the system to insure that 10 times as many people who DO NOT DESERVE help get it-including the usual fraudsters.
And...of course the "cure" is late (about a year) and the "prevention" is well....never was. Funny how you could read about this festering problem every day in 2005 and 2006 on blogs like Barry's but government officials 98% were completely "shocked" by it.
So, we create a whole new federal bureaucracy and maybe someone somewhere gets to keep a house.
Government at its best!
Yipee!
Posted by: Rich Shinnick | Jul 28, 2008 5:28:31 PM
John,
The point is how much it costs to keep these "poor buggers" in a place that they could not afford to start with.
The second point is why should anybody else bear that cost while living in a rental place because s/he was not stupid to buy an overpriced house.
Call me heartless but the numbers are too large to care about individual tragedies. Specially when each tragedy was caused by the parties in each contract, unlike say a flood which is an external event.
Posted by: mhm | Jul 28, 2008 5:31:20 PM
John,
excuse the acronym, though, FBM..
“In addition, this legislation will work to stabilize the housing markets and reform and strengthen our housing sector,” he (Dodd)added.
Obviously, this bill is an expensive one and it has to be “paid for.” That’s where small business comes in. (Or, where Congress thinks it can get more money from.)
The bill includes a provision that would mandate information reporting to the Internal Revenue Service (IRS) on merchant payment card payments. “Payment settlement entities, including merchant acquiring banks and third party settlement organizations, or third party payment facilitators acting on their behalf, will be required to report the annual gross amount of reportable transactions to the IRS and to the participating payee,” according to a Senate Finance Committee document outlining the measures to “pay for” the bill’s tax provisions. (The government estimates this "tax gap" reporting mandate would raise $9.802 billion over 10 years.)
Essentially, the bill establishes a mammoth system for collecting almost all credit card, debit card and electronic payment transactions made in the United States – and these will be reported to the IRS. Many in Congress claim the mandate won’t cost small businesses anything – in real dollars or compliance costs – but who are they kidding. Credit card companies, banks and the electronic payment industry are not going to do this for free – the costs will be passed down to small businesses.
The small business merchant also gets a copy of the total transactions sent to the IRS.
And what if there are mistakes in reporting transactions (can you imagine reconciling hundreds, and even thousands of transactions)? I don’t have to go any further there…...
http://sbecouncil.blogspot.com/2008/07/does-housing-bill-create-new-burdens.html
Posted by: Mark E Hoffer | Jul 28, 2008 5:33:08 PM
Ah, I see that the high-prices-relative-to-income trampoline has been positioned to rebound homeowners onto a new trajectory of hope!
Posted by: KnotRP | Jul 28, 2008 5:36:05 PM
Is Bernanke up in the building pushing them or using a pitchfork?
Posted by: Rob Dawg | Jul 28, 2008 5:51:22 PM
None of you people think big enough. This whole debacle was engineered by some government think-tank, knowing that China et. el., will clean our collective economic clocks if we don't tear-down our system and re-build it aknew. And the only way to bring this about is to totally distroy the system through bad policy decisions via the FED, Congress, Excutive, etc...
We are headed for terrible economic times, but down the road our Pheonix will rise again.
Posted by: JustinTheSkeptic | Jul 28, 2008 5:52:09 PM
mhm/rich;
you're making all kind of assumptions based on zero data. Since refinancing these mortgages is going to require the lenders taking a haircut it seems likely they are only going to do it for those that can keep making payments. The govt's involvement is relatively marginal. Is it perfect, no, but then no solution is going to be perfect. At the end of the day I think it's good public policy to try and keep some of these folks in their homes both in the interest of shoring up the housing market and for humanitarian reasons. I just don't like these simplistic, one shoe fits all, generalisations that are so popular. As with most things the devil will be in the details.
Posted by: John | Jul 28, 2008 6:01:45 PM
Mark:
"the acronym, though, FBM.."
What's this got to do with housing? It sounds like one of those other provisions that's been slipped in the bill like hiking huts in Wisconsin, shooting lessons for the disabled, and so forth. Since a majority of Republican senators voted for it and a Republican president is signing it I assume they can live with it. Who knows maybe it was slipped in by the Republicans. Don't ask me to defend the entire lawmaking process.
Posted by: John | Jul 28, 2008 6:16:04 PM
Folks mentioning the cost of what it takes to keep "those buggers" in their homes should consider the unconscionable massive misappropriation of taxpayer money in Iraq.
The U.S. Government has been so mismanaged over the past 8 years; to the extent that not much but a complete overhaul of the system will correct any of these failures.
Given that backdrop, you can't fix the incredible massive screw ups all at once, so you must address that one at a time.
And I'm a registered Republican ...
God help us all.
Posted by: ToddinFL | Jul 28, 2008 6:26:13 PM
Everybody thought hey were "well off" at one point in the recent past. Some think they are immune. Reminds me of John Donne:
No man is an island,
Entire of itself.
Each is a piece of the continent,
A part of the main.
If a clod be washed away by the sea,
Europe is the less.
As well as if a promontory were.
As well as if a manner of thine own
Or of thine friend's were.
Each man's death diminishes me,
For I am involved in mankind.
Therefore, send not to know
For whom the bell tolls,
It tolls for thee.
What'cha gonna do when your dollars are worth pennies?
Posted by: Marcus Aurelius | Jul 28, 2008 6:30:08 PM
http://www.businessspectator.com.au/bs.nsf/Article/NAB-will-shock-Wall-Street-GV4M7?OpenDocument&src=sph
A view from down under
Posted by: Mark | Jul 28, 2008 6:54:44 PM
John writes:
> Since refinancing these mortgages is
> going to require the lenders taking a
> haircut it seems likely they are only
> going to do it for those that can keep
> making payments.
The problem I have with this is that when the (%10-%15) haircut is applied to a house that's %20-%50 overpriced, and the reduced loan still carries a payment higher than historic income-price ratios, it only looks like a problem has been solved, temporarily, at great expense to people who pay taxes and save. And it doesn't really help the resident of the house either; what they need is a payment they can afford, which is predicated on a house price that works with people's incomes.
In my opinion, this 'solution' actually will enslave more people to more debt, and put a false floor under house prices that hurts anyone not in the money business.
If you project pre-00's house prices to the present, by whatever means you choose - rents, income, history - it looks like housing still needs to take a big price cut to fall back in to normal ranges. This bill slows that process. Argue that it's good for systemic risk, but please don't argue that it's good for individuals.
Posted by: pmorrisonfl | Jul 28, 2008 7:04:48 PM
I know Larry Kudlow loves this blog...and tonight his opening theme is eerily similar to my comment from a few days ago...
The housing bailout will have unintended consequences...if actually used by the banks (and I don't think they are forced to do so), by letting borrowers off the hook for higher rates, banks are ensuring they will never get all the cashflows they projected when they made the loans...thus all the derivatives off those loans will not be worth what they thought(we already knew that anyway). But now there will be no way to avoid taking the marks...unless accounting obfuscation bill is passed.
Posted by: Steve Barry | Jul 24, 2008 9:57:09 AM
I think Larry deserves some credit for getting off his Goldilocks schtick for a minute. Vince Farrell on the other hand, is a lost cause.
Posted by: Steve Barry | Jul 28, 2008 7:15:59 PM
Oh John, you make me insane.
Not you really, but what you've written. It's all about "protecting the innocent". I'm one of those schlubs who paid down on my mortgage in the past five years. I saw what was coming, knew it would explode the economy, know a number of folks who didn't buy a home knowing damn well the prudent move would be to wait until prices returned to pre-bubble status. Guess what, we all work for a living IN A MACHINE SHOP.
We're not financial geniuses, nor are we wealthy. We play be the rules. And now I get to help subsidize every last S.O.B. who bought in. I want F & F to die. I want every sub-prime loan to fail. I am sick and tired of paying the cost to prop up everyone else. You know why? My wealth is vastly diminished by not being an a-hole.
Cripe, who didn't see this coming? AAAGH! I'm seeing my small holdings turned to garbage now and down the road by every damn opportunist I get to help recover. Gosh, I guess it's for the best though.
Screw that.
Posted by: SeamusAndrewMurphy | Jul 28, 2008 7:18:49 PM
Rob Dawg wrote at 5:51 pm
Is Bernanke up in the building pushing them or using a pitchfork?
----
actually i think i heard big ben on the sidewalk below yelling , jump, jump, jump, jump
(note snark meter at 10)
Posted by: mock turtle | Jul 28, 2008 7:28:07 PM
May 5th, 2008 (74 days ago):
SINGAPORE (Reuters) - Merrill Lynch & Co Inc sees no need for more capital as the subprime crisis nears an end, but expects U.S. banks with large exposure to consumers to be the next problem area, its chief executive told a Singapore newspaper.
John Thain told the Business Times he does not foresee the need to raise more capital, after the biggest U.S. brokerage raised billions of dollars, including from Singapore investment firm Temasek, after suffering massive subprime-related losses.
"Right now, our equity capital is $44 billion, which is just a little under its record high," the paper quoted Thain as saying in a report published on Tuesday.
The Straits Times, which said Thain was in Singapore to meet the local banking regulator and clients, quoted him as saying Temasek no longer has any paper losses on its Merrill investment.
- - - - - - -
Well, it's good to see that the subprime crisis is near it's end and that Merrill is well capitalized and does not need to raise any more equity. Oh, wait, what's this coming across the news wire....$8.5 bones; ok I guess he changed his mind after all. Well, I'm sure on his next trip to Singapore Thain can reiterate how strong Merrill's balance sheet is. Obviously having to raise $8.5B knowing full well that usurious repricing provisions will kick in (30% haircut) does not indicate poor financial health. Great to see Temasek is willing to plow in another $3.4B, I wonder where they are getting the money to do that...
Posted by: Short Man | Jul 28, 2008 7:28:45 PM
I was way too nice to Larry...he just asked Meg Whitman if an Obama election would cause a depression. I take it back...his trip to rationality was short-lived.
Posted by: Steve Barry | Jul 28, 2008 7:30:28 PM
" The govt's involvement is relatively marginal. "
" generalisations that are so popular. As with most things the devil will be in the details. "
" Who knows maybe it was slipped in by the Republicans. Don't ask me to defend the entire lawmaking process. "
John,
you're right, it doesn't have anything to do with housing..everything to do with false premises.
http://www.thefreedictionary.com/premises
Posted by: Mark E Hoffer | Jul 28, 2008 7:32:32 PM
Hey Larry:
Your hero and mine Volcker is on Obama's team of advisers...interview him instead of Meg Whitman.
Posted by: Steve Barry | Jul 28, 2008 7:45:51 PM
LOL. That net is way too big. It should be a bucket of water. LOL
Posted by: johnnyvee | Jul 28, 2008 7:48:44 PM
John,
Enjoy your comments...lots of thinking going on...However, if this bill will have a "marginal effect"...what is the point? Really?
I am afraid it will indeed have only a marginal effect...and this may mean that Uncle Sam is becoming increasingly marginalized...
I am not a fan of Kudlow...I think I would rather listen to long fingernails on a chalkboard..but I did listen to the first 15 minutes of his show today, and the points that were bandied about about why the markets went down and why the financials got killed (again) on the day the latest bailout bill was enacted were pretty eye opening...
Comment?
Bruce in Tennessee
Posted by: Bruce | Jul 28, 2008 7:50:27 PM
After tonight's news, Larry will have to change his mantra from Drill! Drill! Drill!, to Dilute! Dilute! Dilute! I appalaud MER for coming clean, however it puts pressure on the rest.......
Posted by: equtz | Jul 28, 2008 7:59:05 PM
