My dream ticket. Palin/Coulter 08

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–But don’t expect me to let up ’til the 5th.

I, personally, would be disappointed if you did. What *would* I do for entertainment??? LOL

~~~

Don’t feel bad, BillC. Frankly this is above everyone in the beltway’s pay grade too. None of us have a full grip, as we’re treading in unchartered waters here.

But try not to make it too complex and take the basics. Then you’re as good as any of us. But the first thing you need to get out of your head is that the feds are not to be a banking institution, dealing in individual mortgages. Think “wholesale” not “retail”.

Right now, because of the losses, the credit/banking (mortgage and credit cards) industry has slammed the door shut on money. Without the money flowing, the economy grinds to a halt. So far good?

What the feds propose is to give a shot in the arm of cash to the banking industry by buyout out the bad debt for a better than average price, so they can start the money flowing again. And they want to do this by buying off the debt at above a “fire sale” price… perhaps 65% of the supposed valued price, and holding it (in the name of us, the taxpayers) before selling.

They are trying to accomplish two things here. Give the money infusion into the economy to get credit started again, and also maintain the property values.

The money infusion part I have no problem with… save the fact that money is coming from the government in a buyout. I could see a loan with interest, but it’s not the governments role to be our real estate investor.

Holding to maintain the property values I have a big problem with. They came up too fast, too high between 1997 and 2000 after Clinton revamped the compliance for the CRA. Then, after 911 when the loan rates went low to accommodate, the housing prices went thru the roof.

Trouble is, the household income didn’t. If the prices stay this high, no one can afford a house unless the rates are rock bottom. If you can’t fluctuate loan rates, you can’t control inflation.

See if the below graph works to show you how the home prices rose out of control…. and ask yourself… did your income move in that same curve? Pay attention to the red line which is the housing prices, adjusted for inflation.

NOTE: The graph’s too big for the column here. Go see the whole thing in my “perfect storm” post. There’s more there about the housing price inflation.

Now, since the basics are:

1: get money into the system to free up credit money
2: get the housing values lower, but not “tanked”

the burning question is… why does the taxpayer have to buy these notes out? If they are such a money making deal, why can’t the majority of it be sold to massive amounts of private investors… both individual corporation and pools of buyers? And since the govt doesn’t want a “fire sale” to protect property values, but the property is genuinely over valued, that “fire sale” objection… IMHO… becomes a moot point. We need a recession and decline in values to bring everything back into reasonable line. It’d be a tough 3-9 months. But we’ve done it before.

Remember, the notes are for real estate, which will be resold to home owners. So it doesn’t need to be only American enterprise purchasing these notes. All of it will end up back in American residents hands after a profit is turned. But of course, this doesn’t include groups that are profiting to support terrorists… :0)

The economists don’t think this is a cure at all… And for now, we should all be content that Congress is acting hastily, and without considering all the repercussions of what they do. As the economists point out, a recession is generally short term. What these bozos do? It will be with us for long term. And, if it works as they want it to, it is even more expensive to the taxpayer.

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@MataHarley: Now we shall see the stuff McCain is made of. He needs to deliver the renegade GOP (which includes me, BTW…. thank heavens I have *some* voice in the beltway…), so we shall see if he can get the compromise, and what they compromise on.
Or, maybe McCain need to reinforce the lines and hold against the bailout if the Dem’s insist on porking it up.

Like most Americans, this really is above my paygrade. I’m not too keen on either of the two options I’ve been presented with thus far. I would really like to see a third way open up. My uneducated shoot from the hip reaction is that:
*The government temporarily go into the mortgage banking business and start offering refinance options to anyone who wants to take advantage. Only offer refinancing for adjustable rate and sub prime loans. Standard conforming loans not eligible (the free market will probably be willing to help them as the market heals.
*Offer a really good rate, like prime or prime +.5.
*Make the loans such that if you take a new gov offered loan, and then default, you will suffer tax liability for the any loss. In other words, the debt is inescapable. That ought to make people sober up before signing the notes.
*Then those refinanced notes could be resold as fully Gov insured notes, because they would be.
*Give everyone 1 year to take advantage, and zero any back tax liabilities one time for owner occupied homes only.

The people would self bailout the majority of bad or at risk loans. Shoot my loan is pretty solid and I would take a look at it. The benefit to the market is that the remaining loans in their portfolios would be the loans where people feel rock solid that they don’t need or don’t want help. Those instruments would be worth more as they would have the higher rates, and so they would recover their values.

It would not be a wall street bailout as wall street would loose the opportunity to make money on the high risk loans like they intended.

I know, I’m no economist, but this just seems more fair and more targeted to the problem.

Why am I wrong?

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I like Newt Gingrich’s idea that instead of a $700 billion buyout of bad loans we loan the banks $700 billion and let them take care of their of their own assets rather than dump them on the federal government.

And since Sec. Paulson also dumped in student loans and car loans just how does he propose we are going to collect on those?

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thanks, MH.

May the road rise to meet you. May the wind always be at your back.

–But don’t expect me to let up ’til the 5th.

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Oh, BTW.. did I mention this really pisses me off coming from a Bush WH? I like a lot of things about that man… but this is definitely NOT one of them.

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Now we shall see the stuff McCain is made of. He needs to deliver the renegade GOP (which includes me, BTW…. thank heavens I have *some* voice in the beltway…), so we shall see if he can get the compromise, and what they compromise on.

Pelosi? Pelosi who? Like what has she and Reid got to do with this? They’ve passed all negotiating power to Schumer and Frank. They are “also rans” in the negotiation power arena… just media mouthpieces since their credibility for the DNC is as deplorable as Bush’s is for the GOP.

Obama? He’s a sheeple in lockstep with his bosses to suck up all the cash in order to throw it in the hands of a Secy of the Treasury (feeling confident they’ll be appointing the next one, of course). *If* it reaps any returns, the DNC WH/Congress plans to take it for Congressional welfare/energy spending. All he needs to do is sit back and see if McCain can upset his and Pelosi/Reid’s apple cart.

However it appears this isn’t such a popular suggestion amongst the American taxpayer. The “not with my tax dollar” protest is growing steadily…. thus the “not such a done deal” status.

If McCain orchestrates something that the GOP and DNC can agree upon, and it passes the muster of the American electorate? Game over for Obama. Test given. Test passed, and Obama called in “disinterested”.

That’s okay, Doug… we’ll still luv ya here anyway… :0) With the exception of your usual dusty crystal ball, and an occasional stubborn macaw-squawking attack, you’re a credit to the liberal/progressive movement for presentation.

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I’m a fan of Ann Coulter since she said: “If Democrats had any brains, they’d be Republicans.
LOL!

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…are you kidding, Mike. Paulson needs to ‘rise from the dead’ to get what he needs. …and even then, it ain’t gonna happen.

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From Politico:

Democrats left after the meeting to caucus in the Roosevelt Room, [Treasury Sec.] Paulson pursued them, begging that they not “blow up” the legislation. The former Goldman Sachs CEO even went down on one knee as if genuflecting, to which Speaker Nancy Pelosi (D-Cal.) is said to have joked, “I didn’t know you were Catholic.”

Begging that witch? That makes me less a fan of Paulson than before.

Still no word on whether the debate will take place Friday.

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