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.

[kidpokeher]

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I'm worried there won't be a downward spiral in home prices.

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Do you think I should have to pay to protect your housing investment?

(By the way, I'm a homeowner, too, and well, that's the breaks, I guess.)

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Read again, plz.

[Moseley]

yea. My math sucked there. The reason Bush/Congress is addressing the issue is because the crisis is being felt around the world.
Funds and banks around the world have taken hits because they purchased bonds, or risk related to bond, back by bad home loan, often bundled into financial instruments called collateralized debt obligations, or C.D.O.'s.

There are even combinations, that were further removed from the original asset, called CDO's-Squared and CDOs-cubed.

A lot of the top 1% richest, are losing a lot of money, having bet the wrong way. Take Merrill Lynch who bought First Franklin, a leading subrpime mortgage originator, for 1.3 billion in the fall of 2006, when the subprime business was at its peak. Oops!

The rich kids are gonna take a big hit, and the media (owned by 5 corporations) is spinning it off as helping those less fortunate people who were duped into these home loans.

You see, corporations are like doctors, they protect each other.

[maxtower]

Don't worry about falling home prices. As long as the fundamentals (rent/price) are out of line, prices will come down. The government would have to do some more substantial bailing out to change the fundamentals.

[Kaj]

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I'm worried there won't be a downward spiral in home prices.

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Do you think I should have to pay to protect your housing investment?

(By the way, I'm a homeowner, too, and well, that's the breaks, I guess.)

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Read again, plz.

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Gotcha, sorry. Nonetheless, many do feel that the govt must protect the housing market.

[morphball]

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Nonetheless, many do feel that the govt must protect the housing market.


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The housing market is in trouble because the government inflated it in the first place. Keeping it inflated will not solve the problem.

Read between the lines, they are pumping money in like crazy because they do not believe there will be a "soft landing." Will these new efforts make one?

I know that if they don't work, there will be a lot of short term suffering, but the country will be better off facing the music now instead of later, so I kind of hope they don't. We need a good old fashion recession to clean the house.