Bush Plans Loan Relief on Housing

[adios]

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.... Are the Bush and Democrats main concern really about helping a small percentage of struggling home borrowers?

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They're worried about a contagin i.e. a downward spiral in home prices. I think it's also a recognition that the market for lending was not regulated sufficiently (that probably will get some responses). As to the morality of a bail out, the government bails out people all the time. As to the politics, if the Republicans are opposed they look bad IMO. The MBS markets have seen securities take a huge hit and it's not just junk that's taking it. I find it interesting that the government made Fannie Mae and Freddie Mac cut back on the leverage they use and we see this devastation in the MBS markets after that happens (not immediately though). Agency paper has held up fairly well for an obvious reason, the implied backing of the government. This, if enacted and depending on what's enacted, will probably help non agency paper alot.

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Does the govt., by bailing them out through the use of federal funds (which is borrowed money since we run a deficit) allowing us to maintain to healthy economy at the expense of our children, while allowing the greedy to take heavier risks?

Would things be better, if capitalism was void of government involvement?

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I'll take these one at a time:

Does the govt., by bailing them out through the use of federal funds (which is borrowed money since we run a deficit) allowing us to maintain to healthy economy at the expense of our children, while allowing the greedy to take heavier risks?



Haha how does inflation hurt a borrower anyway? For those that the borrower owes money to the borrower says ....

S U C K E R

(and the borrower gets to print the money that the lender gets paid with too).


Would things be better, if capitalism was void of government involvement?

We've been debating this for years on this forum, go back and read the archives for various, well thought out views across the spectrum.