Dooming For Votes
The candidates for President, and President Bush are starting to offer their plans to "fix" the economy.
Never mind that the economy might not need so much fixing.
From the Dan Kennedy Letter:
- For all of '07 retail and wholesale revenues of U.S businesses were up vs 2006.
- Black Friday shoppers turned out in bigger numbers and spend more than any prior year.
- American households have more discretionary income than-ever!
- November was the 51st consecutive month of job growth.
- Net wages grew by more than inflation.
- Unemployment remains at historic levels.
But what good is a Presidential campaign when everyone is bored with Iraq? You gotta scare the crap out of everyone somehow.
Just in time for the '08 race President Bush has offered freezes on the Adjusting Loans, while Hillary said I will raise your lame freeze and extend it like forever! Bush then said affectively, "Hillary, I will better you and give everyone in America $800"! I gotta believe Lenin is smiling in his grave.
Of course you will recall that Bush gave a mandated break for risky loans that were going to adjust upwards. Free market purists have a problem with this. Now Hillary's plan is also hauntingly Socialist in its design. From CNN:
"I have a plan - a moratorium on foreclosures for 90 days [and] freezing interest rates for five years, which I think we should do immediately," Clinton announced at what was the last Democratic debate before the Nevada Caucus on Jan. 19. A 90-day moratorium on foreclosures would throw a lifeline to some deserving homeowners, though I suspect it would only delay the inevitable for most. That's not my beef.
Where Clinton goes awry is her proposal to freeze mortgage rates for five years, which is essentially a much broader version of a deal President Bush recently hammered out with lenders to assist some subprime borrowers. If Clinton's only goal were to bail out homeowners facing steep rate resets on adjustable mortgages, her plan would work just fine.
For everyone else though, such a freeze would be disastrous. Interest rates on new mortgages would skyrocket - perhaps past 8 percent, as the mutual funds, pension funds and other investors who typically provide capital to the mortgage market shift their money into other investments where the government isn't impairing returns. With higher mortgage rates eroding buying power, the downward pressure on home prices would only increase. Lower home prices would lead to even more defaults, as more folks who'd lost the equity in their homes choose to walk away from their mortgages....Bailing out these folks now would only encourage them to take even bigger risks down the line. "
An economist spoke at Inman NY just recently and I have listened to the talk twice and I think his ideas scare me more than the any of the politicians.
To make matters even more disturbing, it was reported in the recent John Mauldin's Weekly E-Letter that Senator Chris Dodd is seriously hampering the ability of the Fed to respond to the current crisis and threatening the independence of the Fed in the process, all for a little partisan gain.
Basically, there are two vacant seats on the Fed. President Bush has nominated two very qualified people with distinguished records and backgrounds who have hands-on experience in real-world banking, as opposed to being academicians. These are not political appointments, but serious economists.
Dodd refuses to allow these nominations, or any others, to move forward. Plus, Dodd has let it be known that he will not hold a confirmation vote on current Fed governor Randy Krozner, whose expertise is mortgage markets, when his term ends January 3.
I know it is very hard to pay attention to these things. And politics can be so distasteful for most. But they affect us all. You as a Realtor pay huge dollars to NAR. Demand that your represenatives and your industry affiliations (like Inman as an example) represent real solutions. To push those on Congress , the President, and local leaders.
I've been hearing more about Clinton's plans to fix the economy and the nation and they're unanimously relying on more government. Nevermind the fact that government intervention was a major cause of the weakness in the market to begin with.
Ron Paul is calling for an end to the Fed, Jim Cramer has called for investigations into the central bank, and Chris Dodd is preventing Bush's nominees? What's going on with the attitude toward the Federal Reserve in this country?
Posted by: foreclosurefish | January 23, 2008 at 05:46 PM