patrick.net

Congressional leaders yesterday gathered support for aggressive changes to bankruptcy laws that would help troubled homeowners, even as the Bush administration threatened to veto the plan and emphasized its opposition to any program that would risk tax dollars.

Democrats are calling for the government to do more than what the administration has done to date. They propose a range of initiatives that include the purchase of troubled mortgage securities by a federal agency and the empowering of bankruptcy judges to change the terms of high-interest loans held by homeowners facing foreclosure.

But the administration said that changing mortgage terms retroactively for a select group of troubled borrowers would only add to lenders' woes and lead to higher mortgage rates for everyone.

The clash highlighted the sharp differences between Democrats and the Bush administration over how to solve the nation's worst mortgage crisis since the Great Depression.

"Homeowners at risk of foreclosure are floating 50 feet from shore, and the Bush administration has thrown them a 30-foot rope," said Sen. Richard J. Durbin (D-Ill.), the author of a proposal that would allow bankruptcy judges to change the interest rates on subprime, adjustable and other nontraditional loans for homeowners facing foreclosure.

Malcolm Says:
Two candidates apply for the same job, one with one without, the employer may choose the one without [a MBA] if they can do the job for less.

Doesn't this just imply that the MBA degree was not necessary to do the job?

The government-sponsored company was forced to set aside billions to account for bad loans. Its results clearly showed the ravages of the mortgage-market turmoil that began last spring and rattled the economy.

Because Fannie customarily buys more solid mortgages as opposed to the high-risk subprime loans that have mushroomed into default, the latest losses show how pervasive the mortgage crisis has become.

BankRate.com is reporting the national average 30 year fixed conforming loan rate is now up to 6.10%.

Nobel Prize winning economist Joseph Stiglitz, the former World Bank Vice President and chief economist who is now a member of the Columbia University faculty, has been one of the more reliable sources for "Greenspan mess" sightings in recent months. Once again he comes through in this Bloomberg interview.

Host: Alan Greenspan in the last 24 hours said the recession is going to be deeper than the last two contractions. Let's not debate that. Let's debate Greenspan because you say that he basically left the U.S. in this mess.

Stiglitz: Exactly. I mean, perfectly right about the fact that this downturn is going to be the worst downturn in a quarter century. But he's largely to blame. And why is he to blame? Not just because he looked the other way - he was asleep at the wheel - in some ways, he was an active promoter.

When people asked the question, "Aren't you worried about a housing bubble?", he said, "Oh no, it's just a little froth in the market." He actually encouraged it. Congress gave him the authority to impose regulation to dampen the bubble in the housing market and he decided not to use that authority. Bernanke finally did it, but it was like closing the barn door after the horse got out.

Host: And you say that misguided monetary policy and poor regulation got us into this, but the flip side of that doesn't really get us out of this mess, does it?

Stiglitz: Exactly. Once you start tightening the regulation, it helps deepen the downturn. You don't have much choice at that point, but it means that it makes it more difficult to continue the bad practices. You don't want to continue the bad practices, but that means that consumption is going to be contrained and that is going to help push the economy down.

"Congress gave him the authority to impose regulation to dampen the housing bubble"

And what would THAT have been? What "regulation" is Stiglitz referring to? Did I miss something? Oh and there were plenty of pom-poms in Congress too!

Malcom,

Thanks. The "sprawl mentality" is a big part of it. "Me first-at-all-cost"? You bet. These are things I understand. What I don't get is... why all the alienation? Other groups and women don't typically engage in this type of behavior. Perhaps to a degree but not nearly as obvious as older white males.

It's just weird to me b/c you can really bend over backwards to help them (even for years) and you still get this "me against the world" attitude! It becomes self-fulfilling b/c after awhile (as a CPA/CFP/Whatever) you think to yourself (here we go again) and besides everyone else is so open with me! Do I really need this? And so on it goes....

@FAB

Socio economic status, opportunity, and environment are the relevant causes of any higher crime rates within ethnic groups. Implying that certain peoples are more inclined to violence or crime based on skin color is completely ignorant and racist.

Justme Malcolm Paul DinOR others

I've recently become active in job market myself.

Linked In seems to be a tool working well for some folks, if anyone is interested in hooking up there please email me address catchspam00 at yahoo dot com offlist, note identity here and I'll send you an invite. Thinking we all might benefit from some networking here, no? I might also serve as a bit of a clearinghouse to get all of us hooked up, I'll figure someway to manage that privately and appropriately.

@FAB

Apologies on coming across so combative in post of 8:51, I didn't mean to be disrespectful. I'd pull that post back if I could, my intent was not to call you directly racist or ignorant. I understand your thoughts on the matter, its a defendable viewpoint in some ways. I clearly disagree, but you are correct about cultural issues being a factor also. I do not necessarily think you ignorant or racist.

Anyway, just wanted to be clear. Again, please no offense man.

if you need a gig nowadays, you must be a "PC pansyass", even if it means overlooking the white elephant in the room.

@Headset

No, I have not lived in any of those countries but know them well enough to draw an informed opinion. I've probably spent 7-8 months total between them all, and dated women from each which is where much of my real knowledge probably derives. And my family is Swedish.

I'd argue that quality of life is significantly better if one measures by physical and mental health, spiritual fulfillment, quality and perspective of education, and social and artistic life. Materially, their TV's might be only 27 inches and the sq footage of their residences may not be 10,000 sq ft, but life is about much more than money in a bank account or what kind of car one owns. Longer lifespans, lower infant mortality, significantly more leisure time, higher appreciation and enjoyment of the arts, more family time.

“Homeowners at risk of foreclosure are floating 50 feet from shore, and the Bush administration has thrown them a 30-foot rope,” said Sen. Richard J. Durbin (D-Ill.), the author of a proposal that would allow bankruptcy judges to change the interest rates on subprime, adjustable and other nontraditional loans for homeowners facing foreclosure.

Nice subtle Katrina allusion there. All with the aim of rewarding the reckless, propping up house prices and prolonging the long-overdue correction. Durbin is an ass.

@eburbed,

Prop. 1313 -- :lol: !

Newsflash

OFHEO Just lifted investment caps from both GSE's, fannie and freddie.

In his original treatise (not sure if it is still there) Patrick used this point in a very convincing argument as to why prices will fall. The disparity between fast rising home prices does end up putting downward pressure on houses, that’s part of why bloggers hating P13 seems counterintuitive to me.

Here's my main beef with Prop. 13:

a) It's not really about "saving grandma from eviction", the way it was sold to the public 30 years ago. It's all about providing a perpetual tax shelter for big business and for a select group of fortunate-born wealthy Boomers and their lazy, greedy Trustafarian spawn, who disproportionately benefit from it.

b) It's a form of discriminatory taxation that --despite what the Supreme Court said-- clearly violates the "equal protection" clause of the Constitution. Age discrimination is no better than race or gender discrimination. If you're going to lower taxes for one group of people, why not lower it for everyone?

I would be in favor of the following:

--Eliminating property taxes altogether (better no tax than one that taxes me to death, so my scumbag Boomer/Trustafarian neighbors and CEOs can continue to fund their lavish lifestyles).

--Expanding Prop 13's 1978 tax-basis to EVERYONE who buys a home --not just the Birth Lottery winners.

You'll notice that *neither* of these proposals would RAISE taxes one cent for anyone now benefitting from Prop. 13, and the former would actually LOWER taxes for them. But you'll never get a Boomer or Trustafarian to go along with either one, becuase it's never really been about "lower taxes". It's really all about "I got mine, so F**k you!" It's really about keeping privileged tax benefits for the lucky few, not about helping out the rest of us Hoi Polloi.

Fannie Mae, Freddie Mac Portfolio Caps Will Be Lifted (Update2)

Phase 2 of the Real Bailout(tm) is now in place.
Phase 1 was raising the GSE CLL to $729,000.
Next up, Phase 3: Eliminating all qualifying "standards" on the type of mortagages the GSEs can buy (no-docs, neg-ams, I/Os, hybrids and NINJAs = ok).
Phase 4 will be taxpayers assuming/liquidating the portfolios of the soon-to-be bankrupt GSEs.

Can't happen, you say? Never say "never".

justme Says:
February 27th, 2008 at 8:14 am
"I have always attributed the airport conveyor crowding mentality to pure sheeple stupidity, ot a lack of understanding of what is the globally optimal behavior, if you will. Are you saying that this is instead an expression of an individual me-first-at-all-cost attitude?"

It could be, but I never seem to have these incidents with Gen X or Ys. I'm open to your interpretation as well, but the more of these types of incidents I have a clear pattern is emerging. Here's another one:
So last week I go to the bank. There was a long line. The bank thoughfully puts a little pen stand in the line asiles which are cordened off by the line tapes. While in line I turn to the side and sign the back of my check. The most grotesque 400 lb white trash boomer squeezes around me (like I'm not going to notice) as the line starts to move, and I then turn back having finished my endorsement. I say "Excuse me, I was ahead of you in line."
Her response, "you were at the table." angrily.
Me "Yes which is right here." I reached my hand out and touched.
I smiled and then move to my place and she groans out the word "Prick!"
I smiled again proud to have angered a miserable beast like that who was obviously very embarrassed that I didn't just let it go as most people would. I almost said "wow it must suck to be you" but stopped myself because I thought that would have been excessive.

SP Says:
February 27th, 2008 at 8:25 am
Malcolm Says:
Two candidates apply for the same job, one with one without, the employer may choose the one without [a MBA] if they can do the job for less.

"Doesn’t this just imply that the MBA degree was not necessary to do the job?"

Yes, of course it can, but for a particular job I was applying for they pay for the MBA was a certain amount and they chose to not offer it to me to save $2 per hour to give to someone else. That's what I mean, they made do without the MBA because they didn't perceive the value. That's what Paul means by the MBA hurts you so you should just not talk about it.

prop 13 makes slaves of the recent buyers

when they take money from you forcibly, that is labor, forced labor=slavery

it used to be physical slavery forced upon minorites, but now the tax/financial system is complex enough to allow financial slavery. Sure you dont have to lkve in CA or buy....you are free to starve to death too.

as they say: democracy is the tryranny of the majority.

if anyone can think up a better system than p13 THAT WILL PASS that would be awsome and its possible.

How about this..... We pass the SAME VERSION of p13 AGAIN. So....if you bought your house before 2009 then your taxes are reset to the 1978 level. Anyone buying after 2009 is screwed! haha. think about it....it will pass. The only hope is to enslave the future generations and 'get yours now'.

Yeah, I think it may be too late to short google. It is always risky to short these high-flying stocks anyway.

I agree.

Although he is on the other end of the spectrum, I have a lot of respect for Joseph Stiglitz. I recommend all of his books.

On the other hand, you just need to read The Alchemy of Finance from George Soros.

DinOR Says:
February 27th, 2008 at 8:46 am
Malcom,
"It’s just weird to me b/c you can really bend over backwards to help them (even for years) and you still get this “me against the world” attitude! It becomes self-fulfilling b/c after awhile (as a CPA/CFP/Whatever) you think to yourself (here we go again) and besides everyone else is so open with me! Do I really need this? And so on it goes…."

I'm lucky in that I have an unusually genuine group of white friends all gen X who share my views of society. I have to say that I know exactly what you are talking about. You are touching on two points.

One the white boomer generation has that atitude specifically; when they go to the timeshare and automatically start bossing the brown people around they are demonstrating the hypocracy of their, everyone is equal 60s drivel and what they really believe.

Part of that has trickled down unfortunately. In more than one case at jobs and socially I have found myself become somewhat isolated by befriending Mexicans. Just going and having lunch with them gets a double glance from white people like, "Whys he talking to him?"

"(here we go again)" I picked up on that on our first conversation. Somehow you've figure out I'm a little different but I had to demonstrate that I don't share the mindset with 'those' people.

why's

@ Harm

Well done on phases of bailout, agreed that this is phase II. Phase IV, the taxpayer assumption of bankrupt GSE's is a foregone conclusion.

I'm not sure about your phase III though. I don't see these guys being able to buy the really "innovative" paper as there may be some legal ramifications relative to their own shareholders. I mean, how exactly is that story going to read at this point?

I'd suggest an alternative phase III which is the creation of the 3rd GSE, a new government sponsored depression era "garbage resolution trust corporation". By creating a 3rd beasty, they can essentiallly offbook like a SIV conduit. Maybe Fannie and Freddie will take some special interest in this new corp, acting as expert consultants and stewards. Lipstick for the pig and they might milk some billable cash flow out of it.

New thread: Phase 2 of the Real Bailoutâ„¢ is here

Harm, I recognize your points about the birth lottery. I'm still not sure I'm sold on dismantling the whole thing but I would support raising the annual limit on P13 to a more realistic 5%. Without having thought it through fully, I am also intrigued by the notion of allowing property taxes to accrue on a home after a certain age and then making them payable during probate. I'm almost afraid to capitulate at all because giving liberals any slack means all of a sudden no one tightens the schools' belts. Do you know how sick and tired I am of the fix all bond measures that say they will fix everything in the schools and then they actually pass only to encourage more the following year?

Harm, I recognize your points about the birth lottery.

I doubt child birth is random. I hold the belief that past-lives follow a path of evolution.

Peter, you can't transfer your cost basis to your reincarnated self later down the road.

LOL!

NVR,

I'll drop you an email from one of my less official accounts, with subject "it is justme".

DinOR,

>> “me against the world” attitude! I

I don't know, it may be from bad experiences that accumulate with age, or it maybe from competing with too many other boomers all their life. Or maybe listening too much to Frank SInatra and taking some of the lyrics a bit too literally (no offense to Frank, although I'm not that much of a fan)

>> Durbin is an ass.

Democrats are an ass ....

The original question is unanswered: The "grannies", or whomever, were being "taxed out of their homes."
Where is the study that supports this?
PR bullshit is not research.

Property 13 seems to be in opposition to an efficient and single tax on land. Will it ever be reduced?

I like this idea a lot actually.

Idea just needs to regulate flipping and mass buying, so that person when selling will have to owe taxes on it. Set it so that no taxes only starts after an owner lived there for 10 years, and only applies to their owner occupied residency. And last but not least, owner occupancy has to be verified, otherwise you'll have abuses.

Peter P says

Okay, let me put on my evil hat again…
Why is it the government’s responsibility to keep granny in her family home?
We should eliminate capital gains tax though. This way, granny will be able to retire somewhere nice with lots of cash.

problem with eliminating capital gains tax is that you will redirect all the money from labor to wall street gambling. Which is why so much money is there, and so little here. That's what government does, they direct money through tax policy.

I'd be completely opposed to cutting capital gains tax. It's very lax now, just a give away to the rich. In fact these should be raised to match labor tax. It isn't a just system where if you trade labor for money you are taxed heavily, but if you are taxed on wall street you barely pay a dime.

The fact that Warren Buffet came out and said that he can pay 0% taxes for the rest of his life if he wishes, tells me that our tax policy has way too many loopholes for the rich, and not enough for the rest.

Prop 13 is a Ponzi scheme.

Get in early and you are all good. Everyone else pays taxes for public services while you sit around high on your prop 13 welfare. It even drives up property values for a while as other people want to get in on the action. Eventually, the suckers (new buyers) can't foot the bill anymore & the prop 13 bubble pops.

If granny can't afford taxes, let her reverse mortgage or move out. It's sad when someone doesn't save enough for retirement, but it does happen. California can't afford much of anything right now. It definitely can't afford to subsidize a bunch of oldsters living in beach houses.

FrmerAptBrker is right on.

Cant compare countries - it is intellectual fraud due to mix of ethnicity being so different.

The 'test scores' in schools is a fraud the unions pull out to extort money. They claim US falls way below all these northern european countries and japan. AHhhhh but I read if you only compare test scores by RACE then students in the US are equal or HIGHER than those in germany/ sweden, etc.

See the fraud? They compare illegal aliens dominated SoCal test scores to sweden!!! haha.