idiotic financial editorial at the NYT
http://www.nytimes.com/2008/07/01/opinio…
By the time the Senate returns next Monday from its July 4 recess, some 55,000 more homes will have entered foreclosure. And that’s hardly the full picture of the growing calamity.
Why is this considered a calamity at all?
More than three million homeowners are currently at risk
“At risk” – the all purpose leftist phrase that lets you multiply any purported social ill by – it seems – a factor of 60.
Yet the Senate went ahead with its vacation last Friday without passing a foreclosure prevention measure.
Excellent!
The bill was expected to pass, but the vote was derailed by petty politics. Senator John Ensign, Republican of Nevada, for example, demanded that the Senate add a multibillion dollar package of tax breaks for renewable energy. Democrats balked %Gâ??%@ not out of opposition to the tax breaks, which rightly enjoy bipartisan support, but because Mr. Ensign wanted to tack them on to the foreclosure bill without paying for them. That would threaten passage of the bill in the House, which is more committed than the Senate to pay-as-you-go governing.
This sort of delay achieves political ends, like denying Democrats the chance to campaign on the accomplishment during the recess
Oh, boo hoo.
It’s apparently every Republican’s job to make it easier for Democrats to campaign.
Foreclosures are feeding the nation’s severe economic problems. Turmoil in the financial markets is rooted in the collapse of the housing bubble and will not abate until house prices stabilize and sales pick up.
And the way to stabilize house prices is the destroy price signal information ?
Even Americans fortunate enough to have a down payment
When, exactly, did we all agree that working and saving the down payment for a house is equivalent to “fortune” (meaning “chance”) ?
…and a willing lender are hesitating, understandably fearful of further price drops.
At some point the prices will bottom out.
How will we know when we’ve hit the bottom? When those folks with preapproved mortgages start itching, and don’t want to wait for further drops, and decide to wade in and snatch up the bargains.
Not before.
Rising foreclosures add daily to the glut of unsold homes, pushing prices down and foreclosures up in a vicious cycle.
Yep.
Why is this a problem?
Housing is getting more affordable.
Hurray!
That same financial turmoil, coupled with huge losses in home equity, has deprived many Americans of the means or the confidence to buy a new house
So house prices are dropping, and this is bad, because it makes it harder to afford a new house?
Huh?
In a recent Gallup poll, a majority of Americans said they were now worse off financially than they were a year ago.
Perhaps that’s because Republicans have spent money like drunken sailors, devaluing our currency, and Democrats have stopped any increase in the oil supply or nuclear power for 30 years?
Unfortunately, the pessimism is justified. The Bush-era expansion was based largely on a boom in bad lending and house-price inflation
Yeah, Moore’s law wasn’t operating for the last decade.
many Americans have spent the last several years taking on debt, rather than building their earning power or adding to savings. They are ill prepared to cope with a weakening economy and rising gas prices, and they know it.
And this is my problem…how?
This spring’s tax refunds and stimulus checks have been a boost
No they haven’t.
The foreclosure prevention bill is not a cure-all, by any means, but is a way to try to break the cycle.
Throwing away your medicine is a way to break the cycle of taking medicine every day … but that doesn’t mean that it’s a win.
If you’ve got a disease, sometimes you need to swallow a bitter pill.
It would allow many troubled borrowers to exchange their unaffordable loans for new mortgages guaranteed by the federal government
By “guaranteed by the federal government”, you really mean “guaranteed by those of us who work hard and pay a lot of taxes”, right?
Because there’s really no such thing as a federal government that can pay for things – there’s just taxpayers.
as long as the lender agreed to reduce the existing loan balance to 85 percent of the home’s current value.
Why, exactly, would a lender want to do this?
In what way is it fair that the irresponsible get massive 20-50% writeoffs on their mortgages, while the responsible folks still shoulder the full burden of what we contracted for?
Still, the bill’s passage, which should be the Senate’s priority next week, would be an overdue acknowledgment that the foreclosure mess requires government intervention. Lawmakers could build on the effort as needed, but it is unconscionable not to take the first step.
Bah.
July 2nd, 2008 at 11:00 am
I own my house (or co-own w/ the bank). Value goes up, value goes down. Who cares? It’s a home, not an investment. My payment stays the same and is no less affordable now than it was when I first bought the home.
To hell with ‘em. The ‘problems’ in the housing market were caused by people buying more home than they could afford (by using ARMs) and/or using their home as an ATM (pulling out equity).
Why are we even talking about bailing out people who made poor financial decisions in a greedy effort to live beyond their means?
July 2nd, 2008 at 12:30 pm
“Why are we even talking about bailing out people who made poor financial decisions in a greedy effort to live beyond their means?”
Because, when the people find out they can vote for bread and circuses, they will.
July 2nd, 2008 at 1:20 pm
Why are we even talking about bailing out people who made poor financial decisions in a greedy effort to live beyond their means?
It’s an election year.
What me, cynical? I prefer ‘realist’.
July 2nd, 2008 at 2:09 pm
Let’s also keep reminding one another that many of the people with loans they can’t afford got those loans by lying about their income and assets on their applications for higher-interest “stated income” loans. We used to call that “fraud”.
The word “fearful” in that sentence ought to read “hopeful”.
At first I read that as “85 percent of the original loan value”, but it’s actually “85 percent of the home’s current value”. Why – other than trying to mollify legislators to stave off even worse regulation – would a bank want to cut someone’s loan to 85% of what the house could be sold for after foreclosure?
July 3rd, 2008 at 5:38 pm
“Even Americans fortunate enough to have a down payment and a willing lender are hesitating, understandably fearful of further price drops.”
I always fear the dreaded “price drop” on a purchase.
WTF?