By Monty Pelerin, on February 2nd, 2010
Image via Wikipedia
Image via Wikipedia
Obama announced his new budget, which exceeded most people’s expectations regarding spending. The deficit is likely to be worse than projected because of rosy revenue assumptions.
Today WaPo announces that serious problems are developing in the FHA:
The share of borrowers who are falling seriously behind on loans backed by the Federal Housing Administration jumped by more than a third in the past year, foreshadowing a crush of foreclosures that could further buffet an agency vital to the housing market’s recovery.
About 9.1 percent of FHA borrowers had missed at least three payments as of December, up from 6.5 percent a year ago, the agency’s figures show.
This deterioration should be a surprise to no one. FHA was selected to replace Fannie and Freddie. At this point, it seems to be the perfect substitute. They are allowing the same irresponsible lending practices that produced the disaster that is Fannie and Freddy. This time will be no different. The ending will be the same.
The FHA will be the next bailout, but not the last. Hold on to your wallets, taxpayers!
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By Monty Pelerin, on January 3rd, 2010 Corruption, Ineptness and Duplicity — The Description of Washington, DC
For anyone still under the delusion that the government is actually a neutral referee or that we will get out of this crisis in any reasonable time or manner, the following is an absolute must-read.
The financial sector has been the scapegoat for much of our economic problems. They are hardly innocent and probably are a key part of the oligarchy that run the country. It would be nice if we saw criminal investigations into their activities which would result in many going to jail. That will not happen because it would implicate too many politicians and/or cut off their cash supply.
Now we have indications that the role of the financial sector may have been smaller than first assumed. Not that they are innocent by any means, but that the crisis could not have attained anywhere near the size it did without direct complicity by government agencies, specifically the GSEs. An investigation here is not likely either because it would be even more dangerous to the politicians involved.
Based on the allegations of Edward Pinto as reported in the Wall Street Journal, Zerohedge concludes: “… it seems almost beyond question that the policies (or policy malfeasance) of Fannie and Freddie, and not the actions of large banks or firms like AIG are the proximate cause of not just the credit crisis, but also the continuing multi-act, multi-bailout farce that continues to be passed off to the public as necessary ’stimulus’.”
Below is
Continue reading Fannie and Freddie, Not Financial Sector to Blame
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By Monty Pelerin, on January 2nd, 2010 Just another example of how good intentions mean nothing! When people speak of “good intentions” they are talking about a failed program. Almost every government program, upon evaluation, includes the phrase “good intentions” or its equivalent.
A reasonable rule of thumb regarding government programs is to identify the objective and then predict just the opposite to result. The law of “unintended consequences” was invented to rationalize government failure. The following article is from American Thinker.
Big Surprise: Mortgage bailout program hurting rather than helping say experts
Rick Moran
Before Obama is out of office, the four most overused words in the English language are going to be…
“I told ya so:”
The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.
Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to
Continue reading More Good Intentions Gone Awry
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By Monty Pelerin, on December 28th, 2009 Kicking the Can Down the Road
If you believe that the housing market is improving, it might be understandable given the “pumping” provided by main-stream media, CNBC, government officials and Federal Reserve statements. However, you might want to look at government actions rather than propaganda.
On Christmas eve, after the close of markets, Bloomberg reported regarding Fannie and Freddie: “The two companies, the largest sources of mortgage financing in the U.S., are currently under government conservatorship and have caps of $200 billion each on backstop capital from the Treasury. Under a new agreement announced yesterday, these limits can rise as needed to cover net worth losses through 2012.”
This action is not consistent with an improving housing market. It represents the kind of panic reaction that might be taken in a market that is imploding. In the words of Julian Mann, vice president of First Pacific Advisors LLC: “They don’t want the foreclosures now, so they’re saying, we’ll pay whatever it takes to continue to kick the can down the road.”
Karl Denninger in an excellent post entitled Fannie / Freddie – What Does Treasury Know? provides the following:
What’s the bond market going to think about a literal $5 trillion guarantee (for three years anyway) on MBS? Might some people have known about this in advance, with that being the reason for the bleed in the long end of the bond curve this last week or so? One wonders – of course nobody would ever trade
Continue reading Housing Market is Awful
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By Monty Pelerin, on December 6th, 2009 FDIC Fire Sale! 11 Homes For Under $10,000 (PHOTOS)
From the Huffington Post: “But for our readers with a slightly tighter budget, we’ve compiled a list of some of the cheapest homes — all $10,000 or less — across the country. One Chicago house, sold for $280,000 two years ago, is now listed by the FDIC at the deeply-discounted price of $10,000. And one Detroit home is going for just $500 — less than the property’s estimated annual taxes.”
According to the website: “In 2007, this 3,012 square-foot Chicago home was sold for $280,000, according to trulia.com. The four-bedroom, three-bathroom home is estimated to have been built in 1889. THe FDIC currently lists the property for $10,000.:
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Friedrich von Hayek
Friedrich von Hayek founded the Mont Pelerin Society.
“Monty Pelerin” is a pseudonym chosen by this blogger to convey general agreement with the philosophy, goals and spirit of the Mont Pelerin Society. No other connection exists between the blogger and the Society.
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