Wonkette
Money-printing liquidity trapper Ben Bernanke has been a Local Loser in recent months after rapidly cutting the federal funds rate to negative 1,000% to no effect whatsoever, except national embarrassment. He’s had to print Master Paulson’s money, alone, every night, as punishment. He is not allowed to shave. But as Paulson and his flack Neel “Chump” Kashkari refuse to do anything right, Bernanke’s had enough and he’s just going to sing it from the rooftops of America! Today, in a big speech, he declared that the “government must step up efforts to prevent home foreclosures, with options including buying delinquent mortgages and providing bigger incentives for refinancing loans.” Meanwhile, back in their lair, Paulson and Kashkari are discussing what evil they must next bring to the global economy.
The government could buy “delinquent or at-risk mortgages in bulk,” then refinance them through the federal Hope for Homeowners program, Bernanke said in a speech at a Fed conference in Washington. Congress could also help reduce loan rates and lender insurance premiums, he said.
Each option would require “some commitment of public funds,” Bernanke said, underscoring his position that the central bank alone can’t revive the economy through its interest- rate cuts and emergency lending programs. Foreclosures may begin on 2.25 million homes this year, more than double the pace before the financial crisis, he said.
“More needs to be done,” Bernanke said in prepared remarks to the Fed research conference on housing and mortgage markets. “Policy initiatives to reduce the number of preventable foreclosures should be high on the agenda.”
Phew. Something along these lines, yes, please. Since avoiding moral hazard is no longer a concern in any way — we just guaranteed $300 billion in Citibank loans! Because! Citibank! — just push those idiots who are underwater on their mortgages and headed towards default into some sort of refinancing or managed bankruptcy. Stop foreclosures! Determine prices of illiquid assets! END THE CONSTANT DEATH OF MONEY.
Bernanke you must do this! Because your colleagues are determined to focus on nonsensical things, if they get their way:
Treasury Secretary Henry Paulson is considering a new plan to reduce borrowing rates involving the purchase of mortgage-backed securities issued by Fannie and Freddie, a government official said yesterday.
The Treasury, which already has a program to buy the securities, could step up those purchases to drive down interest rates on some loans to 4.5 percent, the official said on condition of anonymity. The plan is preliminary and could change.
Because what the economy needs now is more people, no matter their income or credit rating, buying houses. They’ll cook ‘em up a real nice deal, won’t pay a dime for five years!
Bernanke Says U.S. Must Step Up Foreclosure Efforts [Bloomberg]
Is it possible that no one in America read Friedman’s “Catastrophe Doctrine”, but maybe Chavez and Almond-Jeans and Saddam DID?
Do these nutjobs think the economy is one big ole Monoply game? OK then - they have all landed on “Go straight to jail”! Crooks!
Dude speaks MUCH too clearly for the Fed Hed. Must learn to obfuscate if he wants to be famous like Greenspan. I give him maybe 10 months unless he becomes fucking incomprehensible.
Notice how this whole thing is turning into a custom pork delivery for the homebuilders? Four-and-a-half percent on new mortgages? Everybody’s going to want a new house, yippee!
What? We’ve got millions of unsold new houses and nobody’s building any more? Tell it to someone who cares!
Nurple: Yup, we’re fucked…. plus a lot of these are spec, 2nd homes, and way more house than most of us should ever have thought of in the first place….my own theory: bring back the old cartoon bomb-throwing nihilists to blow up the nation’s mansions and move those executives back into 2 and 3,000 square foot houses, thus “downsizing” the entire market….oh, and fuck Citibank and the horse it rode in on….is it too early to start drinking? I usually wait until 2, but I seem to be getting cranky….
Just ’cause we’re facing a catastrophe doesn’t mean we should go off our rockers. Isn’t there some way to limit free money to people who are worth, say, a hundred million or more?
OK, I confess: I took a mortgage out in 2005 for $330K and only put 5% down, while drawing equity on it once. The recent downturn has crushed my business and my income will likely no longer support my mortgage obligation, but I do not WANT or DESERVE any kind of bailout.
the bank and I each took risks, that my home would appreciate (it did for awhile) and my income would remain stable (which it did for awhile), but OUR projections were wrong.
so what now? short sale with the hopes of making the bank whole at the end of the day and me getting out from underneath my mortgage.
they have a name for people like me: renters. if, and when, I am able to get out from underneath this, I will likely have $2000 per month extra in my pocket to spend on whatever i like. By keeping people in houses they cannot afford, by renegotiating into a mortgage they can just barely afford, you force too much of their income to be spent on an asset that is not appreciating.
the best thing for these people is what I am doing, forgetting the idea of home ownership for now, being satisfied with renting, and putting a substantial sum of money in my pocket every month.
It looks as though the bank is going to take a $30k haircut, but this is much preferable to them over renegotiating with questionable credit or foreclosure.
bailing everyone out makes things worse. foreclose on everyone, flood the real estate market with the supply and the market will gradually find its level.
All I can say is, at least its a housing recession, IE when this is all over we’ll have a roof over our heads. This is better than a Moon-landing-induced recession, or a battleship-induced recession. Of course, I guess you could say it’s an Iraq-war-induced recession, that’s a trillion dollars and thousands of American lives we’ll never get back.
ALL OF YOUR MONIES ARE BELONG TO ummm…. who the fuck even knows anymore?
This is the beginning of the best day of the rest of your lives, China-peoples.
They start with delinquent loans, then move on to juvenile delinquents and before you know it, the Feds buy out convicted criminals. Not a good policy.
Nationalizing private property in general and enacting a 100-percent inheritance tax, retroactive to about 1950, would seem the least they can do if they’re serious about the problem. Everyone would then get to live wherever they want, rent free.
kimbongil:
uhm, with all due respect we’re not really worried about you and your financial mistakes. the problem is that thousands of people and hundreds of lenders made the same mistakes, throwing the entire economy into a ravine and therefore fucking over people like me who did not make the mistake of signing a ridiculous mortgage without seriously considering the possible pitfalls.
the bailout is about saving people like me who did nothing wrong, paid their credit debts, worked their asses off and generally did nothing worse than maybe overbid on a pair of shoes on ebay because people like you fucked up the whole system for us.
sorry, just had to get it out of my system. it’s not about YOU. it’s about the rest of us.
I’ll take as many of those 30-year 4.5% mortgages as they got. If I can’t use them all, I’ll sell a few to coworkers.
Metro: yeahbut your job is likely dependent on the rest of us keeping ours. It’s called productivity. There may be a spiritual and moral dimension to capitalism, but it is a system which’s behavior can be predicted by rulez.
nurple:
yes i agree. the point i was trying to make was that the bailout is about saving the economy for everyone, that it’s not just some cheesy ploy to give money away to people and institutions that made mistakes. it’s about keeping the economy moving for everyone, including those who did not make mistakes.
and while i’m at it, first check zappos before getting carried away with the irrational exhuberance of finding that cheap pair of kenneth cole’s on ebay and bidding more than they’re worth. not that i ever made that mistake, i’m just sayin’.
I’m with the Metro. Everybody’s getting bailed out but us r’sponsible folks who kept our wads in our pockets (and have been living in our in-laws’ basements for the last coupla years.) We’d like suma that Bernake-love too.
They do realize the value of any of these “monies” and “housings” will be negative eleventeen bajillion, yes? They are aware. The Sec. of the Treasury knows this? Right?
Yes, please, use my tax money to bail out the strawberry picker making $17,000 a year who bought a $680,000 house. And make sure the guy who sold him the mortgage gets a bonus.
metropolitan: If you or someone else on this board could tell me how the bailout is saving the economy for everyone but dumb ass MBA types and robber barons, I mean god bless ‘em, but that would be great. There is no consumer protection for working slobs like me who haven’t made mistakes other than carry some credit card balances and oops all of the sudden the rates are 30% and I’m paying as much in credit card fees as I am on my effin mortgage.
kaithxbai
kimbongil: metropolitan: Yeah, it has little to do with you keeping a fancy home forever. It’s about putting a floor under these home values, so then the appreciation cycle will start up again… you’ll be stuck in it for a while and then you can sell it for a loss. But it’s in everyone’s interest for you not to default! DON’T DO IT MAN!
Metro, Snide - I was overdone. sorry. I do get pissed tho at the Joes The Plumber who got so much work for so many years building Fannie-Mae subsidized houses and now complain they have no work and blame other people.
metropolitan: Personal responsibility is a great thing, but I still think homeowners who got into a sloppy mess getting some bailout action is good for the smart consumers and the economy as well.
First of all, the problem wasn’t just J the P buying a crazy expensive house. The fact that these loans were even available, not to mention frequently misrepresented to the consumer, is due to a federally abetted relaxing of regulations. This was brought on, of course, by heavy lobbying from the finance industry (Morgan Stanley, Salomon Bros. et. al.) who found a way to sell mortgages as securities — which were also misrepresented to the consumers.
Loan regulations became lax basically just because everybody was making money. And the smartest minds on Wall Street pushed mortgage-backed securities, even for subprime loans, because they all hoped they could make money and get out before the bubble burst. Believe me, all these folks knew they were selling trash, but they didn’t give a rat’s patootie as long as they were getting their commission.
The easy loans, which allowed more people to buy houses drove the market prices up, which is why so many average Joes bought overpriced houses — there weren’t many choices. Yeah they took a gamble too, but government and industry pushed for and allowed that to happen, which it wouldn’t in a properly regulated market.
And while it’s nice that KimBongIl and other folks don’t want a bailout and are willing to take their lumps, the best way to alleviate this mess is to feed the bottom tier of the economy. Money trickles up through the economy a lot better than it trickles down, which is the approach Paulson and Co. are taking now, to obviously little effect.
kimbongil: I appreciate your ethical approach, but if a refinancing opportunity came along — funded by the government or not — you’d probably be better off taking it. Indirectly it would benefit everybody. It would ease the credit crunch, be better for business (because it would get bundled and sold, but this time as a more reliable security) and because of that would help with employment, state and federal revenue, and flow up through the economy.
I be so confused. Why can’t Bernanke and Paulson share the same Magic 8-Ball? Damn!
Look folks, everything in this fucking country is TOO big (homes, apts, etc) and everyone is paid too little. Therefore, everyone overextends themselves cuz they “need” a house. You don’t need a house. You ” need ” a roof. Period.
tiger - the Wonkette Kommentor kommunity are going too move into foreclosed houses en masse and create an entire gated community. The official language will be Swedish, and underwear will be changed three times a day, and worn on the outside to assist in verification of same.
Ugh. Finance is hard. I should have spent more time learning about the monies and less time doing whatever it was I did in college.
Still don’t get it…. most of these loans have NO EQUITY… and NEVER HAD…! The reason people are allowing foreclosure is because they don’t care…. They were renting with papers… They can walk away, but we’re supposed to care and help out the mortgage lenders and their ever-receding insurers of insurers which will somehow save the economy….and build more houses…Yeah, I’m drinking now…..it’s all good…
It is kinda silly to build more houses while they’re using mule teams to plow under mid-size city downtowns from Camden to Saginaw.
nurple: that’s koolaid i kan believe in
Actually, Detroit will be a wonderful place for the Wonketteer Commune, especially cheap once GM goes down. I think we can get it for about 83 cents per lakefront footage - and it’s got a great art museum…, which we will be able to use for decorating our newly acquired city…!
kimbongil: Here’s what you do:
1) Get your best refi/bailout you can, and KEEP the McMansion
2) Take in roomers, all single, attractive, around your age
3) Have keggers with live bands and stuff; it’ll be just like college again!
I’ve just made your life a million% better.
Your welcome!
Toomush Infermashun:
In the world I see - you are stalking elk through the damp canyon forests around the ruins of GM’s Renaissance Center. You’ll wear leather clothes that will last you the rest of your life. You’ll climb the wrist-thick kudzu vines that wrap the Cadillac Tower. And when you look down, you’ll see tiny figures pounding corn, laying strips of venison on the empty car pool lane of “the Lodge”…