patrick.net

yeah, me too.

How far we've fallen from 2006. More to come.

Count me in as being "preliminarily fucking pissed". We'll see if they actually go through with it.

Have you guys not realized by now that govt. policy has always favored homeowners over renters? Is this a new concept to everyone? But what do I know? Now go and deduct your rent from your income taxes. Oh wait...

Nomograph says

klarek says

Count me in as being “preliminarily fucking pissed”.

It seems you’re pretty much “fucking pissed” all the time anyway.
Let other pens dwell on guilt and misery — Jane Austen

Sorry, should I be celebrating bailouts? Rather than attack people for being critical of this, why don't you offer a formidable defense of such reckless "help" for homeowners?

This is a pure case of shutting the barn doors after the horse is out. No way will this help jobs jobs jobs. If people feel good about their job people will spend money. The sad part is this is a new way of life for America cheap overseas labor, high tax's in this country paying for unions and the list goes on and on. This is going to get worse until we change our ways..

PAT632 says

This is a pure case of shutting the barn doors after the horse is out. No way will this help jobs jobs jobs. If people feel good about their job people will spend money. The sad part is this is a new way of life for America cheap overseas labor, high tax’s in this country paying for unions and the list goes on and on. This is going to get worse until we change our ways..

Dems as usual are trying to keep the housing bubble afloat, while businesses keep on sending more jobs overseas.

PAT632 says

The sad part is this is a new way of life for America cheap overseas labor, high tax’s in this country paying for unions and the list goes on and on. This is going to get worse until we change our ways..

You realize we are actually in a period of historically LOW taxes, right?

Taxes are actually at a 60 year low.

ChrisLA says

Dems as usual are trying to keep the housing bubble afloat

you damn better believe it.

There's still $10T of household mortgage debt on everyone's books. Another 10-20% price contraction will simply wipe out the economy as we've known it.

Troy says

There’s still $10T of household mortgage debt on everyone’s books. Another 10-20% price contraction will simply wipe out the economy as we’ve known it.

lol no it won't. it will just wipe out the bubble profits which were created out of thin air to begin with. voila, the economy will be fine and home prices will be fundamentally supported.

I am watching INSIDE JOB on my laptop and I am huffing and puffing fire at the WS scumbags and at the elite academicians :|

"it will just wipe out the bubble profits which were created out of thin air to begin with. voila, the economy will be fine and home prices will be fundamentally supported."

You could not be more wrong. A 20% drop in housing prices will make the banks insolvent, thereby destroying the entire economy (unless we bail them out again, of course).

klarek says

it will just wipe out the bubble profits which were created out of thin air to begin with

Most people really don't understand that when a bank loans money out, it is lending its depositor's money. It can borrow from the Fed overnight and stuff to cover shortfalls, but the reason banks offer CDs etc. is to match loan sources with loan funding maturities.

The Great Depression slaughtered everyone who had put their money in banks, looking for a little yield on the lending game.

Troy says

Most people really don’t understand that when a bank loans money out, it is lending its depositor’s money. It can borrow from the Fed overnight and stuff to cover shortfalls, but the reason banks offer CDs etc. is to match loan sources with loan funding maturities.

The Great Depression slaughtered everyone who had put their money in banks, looking for a little yield on the lending game.

You're right. Let's pretend that there's no such thing as the FDIC and spend trillions of dollars to subsidize the future profits of bubble-flippers.

"Let’s pretend that there’s no such thing as the FDIC..."

You do know that the FDIC does not have anywhere near enough money to cover all of the deposits in America, right? The FDIC only has about $10 billion. The nations' 6 largest banks have roughyl $8 trillion in deposits. Let's see: $10 billion vs. $8 trillion.

HousingWatcher says

You do know that the FDIC does not have anywhere near enough money to cover all of the deposits in America, right? The FDIC only has about $10 billion.

You don't need to cover *all* deposits in America. I believe the reserves were briefly negative, which is fine because the FDIC has a credit line (which it pays back through bank insurance fees). The FDIC also asked banksters for 3 years of prepayments last year, pulling in $46B. It also raised insurance fees for this year. If it needed to do so, it could raise insurance fees again.

When the FDIC takes over a bank, it absorbs a portion of losses, and then essentially sells the assets to another bankster. Usually the losses are only a small portion of the total deposits of the bank.

I still don't understand what this has to do with bailing out deadbeats, however.

HousingWatcher says

You do know that the FDIC does not have anywhere near enough money to cover all of the deposits in America, right? The FDIC only has about $10 billion. The nations’ 6 largest banks have roughyl $8 trillion in deposits. Let’s see: $10 billion vs. $8 trillion.

OMG you're right! Quick, let's invent a time machine and go back to 2007 and fix it before it's too late!

It would make so much more sense to pay trillions to reduce idiots' principal balances while reducing the risk to banks' customers and the FDIC by a fraction of that amount.

It would not cost trillions to reduce principals klarek. And yes, reducing principals is far better than having a run on the banks. The last time we had one, it did not end to well if I recall....

corntrollio says

You don’t need to cover *all* deposits in America. I believe the reserves were briefly negative, which is fine because the FDIC has a credit line (which it pays back through bank insurance fees). The FDIC also asked banksters for 3 years of prepayments last year, pulling in $46B. It also raised insurance fees for this year. If it needed to do so, it could raise insurance fees again.

When the FDIC takes over a bank, it absorbs a portion of losses, and then essentially sells the assets to another bankster. Usually the losses are only a small portion of the total deposits of the bank.

I still don’t understand what this has to do with bailing out deadbeats, however.

Correct on all counts. It doesn't have to do with bailing out deadbeats. It's just the typical, pathetic, dishonest projection of an apocalypse if we don't direct our entire GDP into the pockets of the minority of retards that helped bring about this mess. He can't make an economic or moral argument, so he delves into science fiction.

HousingWatcher says

It would not cost trillions to reduce principals klarek.

Do you know what the aggregate dollar amount of people underwater is?

HousingWatcher says

And yes, reducing principals is far better than having a run on the banks.

There's no run on the banks. The FDIC has been shaky for years, but unless you believe the market is going to crash into the ground (as in houses will be worth zero, in which case nothing can be done), they've already seen the worst they're going to see. Yes, more losses are coming. They're expecting it. TARP was a long time ago. Get with the times.

klarek says

It’s just the typical, pathetic, dishonest projection of an apocalypse if we don’t direct our entire GDP into the pockets of the minority of retards that helped bring about this mess.

Right, someone has to pay for deleveraging. The question is whether it's banksters (and their shareholders and bondholders) or the federal government. It disturbs me greatly that it's been almost exclusively the feds so far.

This is a bailout to deadbeats and holders of non-performing bonds. I'm not sure why we should bail out either of the irresponsible parties. We're not going to come crashing down because a bunch of assets that should have been marked to market are now being treated as if that market price is accurate.

How does the market return to some semblance of normalcy? Does it behoove any of us in society to let people walk from their homes, or drain their assets to pay the inflated home prices?

It seems to me that ultimately countless people will be shifting from one house they used to pay for to another that used to be occupied by another family who was booted out of that one, and so on. And that really does destabilize the neighborhood.

Seems like writing down principle will still keep cash flowing for the secondary market, stop the hemorrhaging and get us to a real market "value" faster. Maybe split the profit with the Government if it magically appreciates?

People aren't as mobile if they're tethered to a house they can't sell, too. And doesn't that stop them from taking better jobs, starting new businesses and whatnot?

And doesn't paying so much "extra" to the bank each month stifle jobs and the economy by soaking up the money that, at the very least, would be spent on improvements and maintenance? And that money would have a substantial ripple effect throughout the economy, especially in the construction sector?

Alternatively, we do what? Wait for the vulture cash-only deals to come in and scoop up foreclosures? After those foreclosures have been stripped of their copper, appliances and became crack-dens?

How do you see this whole thing playing out in a laissez-faire way? More importantly, which way is the quickest, least painful and least expensive?

CL says

How does the market return to some semblance of normalcy? Does it behoove any of us in society to let people walk from their homes, or drain their assets to pay the inflated home prices?

Aren't you the one who is opting for the deadbeat path? Wouldn't you have "drained" your assets had your gamble paid off?

CL says

Seems like writing down principle will still keep cash flowing for the secondary market, stop the hemorrhaging and get us to a real market “value” faster. Maybe split the profit with the Government if it magically appreciates?

How magnanimous of you: "Pay off half my debt and we'll call it even."

CL says

Seems like writing down principle will still keep cash flowing for the secondary market, stop the hemorrhaging and get us to a real market “value” faster.

You can write down a purchased asset, happens everyday. However, your obligations to another party are fixed since they are a promise to pay and therefore would be a breach of contract if your unable to full fill your side of the agreement.

I get it. Instead of prosecuting the fckin wall street fraudsters, the government is trying once again to forgo its obligations and instead cut another sleazy deal with them? Fck Obama, fck all of them.

So the govt. will now protect you from bad financial decisions and spread the losses to the taxpayers. The bankers get their $$$. The unfortunate "victims" of the economy get bailed out and the financially responsible people get stuck with the bill.

How can we ever evolve and progress if the govt. keeps rewarding stupid decisions?

HousingWatcher says

You could not be more wrong. A 20% drop in housing prices will make the banks insolvent, thereby destroying the entire economy (unless we bail them out again, of course).

in real world, when bank becomes insolvent it gets sold to another bank for pennies on the dollar. Aka (wamu bought by Chase) and absolutely nothing changes to an average American other than the branch they go to will have new logo and colors.

The whole BS argument by the government that we need to bail out banks is just smoke and mirrors. Just bad banks were going to get gobbled up by banks that were financially well off and life would continue just the same way as it was a day before.

But they had to be bailed out because Washington has a clubby nature where they bail out their friends and let others fail. They didn't bail Wamu or Bear, but they went crazy bailing out some other institutions. It really pays to have friends up there.

CL says

It seems to me that ultimately countless people will be shifting from one house they used to pay for to another that used to be occupied by another family who was booted out of that one, and so on. And that really does destabilize the neighborhood.

No, it doesn't. When a house sells, another person buys it. Even in your scenario, at most one house is vacant. :) That's why this "people losing their homes" thing is so bogus. If you believe that homeownership is a worthwhile goal, as our policymakers seem to think, dropping prices are good because it means more people can afford homes. Trying to prop up housing and make it expensive is exactly why we have vacants.

You guys crack me up. Nobody wants to reward the banksters. Or the deadbeats. The goal is to keep the US economy from collapsing. If you'd rather our politicians drive us to a Mad Max state to prove a point about moral hazard or get some revenge on the banksters, vote Republican. I'm not sure our children will really get the message though--they'll be too busy planting potatoes....