90% of mortgages in first half of the year backed by government

[Craig234]

http://www.businessinsider.com/15-s...se-2010-8#fannie-and-freddie-are-in-shreds-14

When the consumer and business sectors are crashed, the only sector left in the way of big problems is government spending.

This is why our debt is such a catastrophe, already being the largest it's been in history by far, reportedly.

On housing, after the government's stimulus ended, housing had the lowest sales since they were recorded in 1963.

What the 90% implies is that without the government, the mortgage industry would be in ruins, with only 10% coming privately.

'Small government' people should calm down long enough to ask what the economy would look like if they had their way and the government mortgages were eliminated.

That 'freed up money' would no more rescue the economy than the private sector spending is now. But the debt is a disaster.

Can anyone argue against the notion that irresponsible voters picking politicians who bribe them with debt-funded spending - or for those politicians who are using the money for their donors and the rich, well funded ad campaign - are making democracy look flawed to the point of alternatives becoming a threat, taking the power of the purse more out of the people's hands just as federal interest rates are taken out of politicians' hands?

Everyone likes the idea of spending cuts - because they assume the cuts will come where they want, rather than from their favorite areas.

But the 'public good' and average Americans seem the first in line to cut.

The link above has negative information about the way the housing market is looking.

 

[EagleKeeper]

People might also be able to find other non government options; but the government options were the most tempting.

 

[Craig234]

People might also be able to find other non government options; but the government options were the most tempting.

Yes, but it's hard to estimate how many would have.

 

[EagleKeeper]

agree

 

[Mursilis]

Can anyone argue against the notion that irresponsible voters picking politicians who bribe them with debt-funded spending - or for those politicians who are using the money for their donors and the rich, well funded ad campaign - are making democracy look flawed to the point of alternatives becoming a threat, taking the power of the purse more out of the people's hands just as federal interest rates are taken out of politicians' hands?

That sounds bad, until you remember that the average person isn't smart enough, in most cases, to manage their own budget, let alone the nation's. After all, you did call the voters irresponsible, and I agree with you on that. Unfortunately, there aren't any good alternatives to democracy at present. The best idea I've got in the meantime is to severely limit the ability of the gov't to engage in deficit spending. Maybe pass a Constitutional amendment to require a 2/3 majority to pass any appropriation which isn't funded by current receipts? It has to be harder for Congress to pass, year in and year out, budgets which are in deficit.

 

[PeshakJang]

That sounds bad, until you remember that the average person isn't smart enough, in most cases, to manage their own budget, let alone the nation's. After all, you did call the voters irresponsible, and I agree with you on that.

The problem being that our society chooses more and more to shift all responsibilities onto others, with the government being the poster child.

Why should you be educated about spending and budgeting? The government will take care of you when you go bankrupt.

Why should I eat healthy and exercise to stay in goo health? When I get sick, insurance will pay for me to see the doctor. If I can't afford the rates, the government will give me free care.

Why shouldn't I buy a big screen TV and a laptop? When I can't afford the payments, the government will make credit cards charge me less.


The government has become a tourniquet... it will stop the bleeding, but the tighter we turn it the more it kills the limb. Maybe we should focus on not getting shot to begin with.

 

[Slew Foot]

Why keep the loan for yourself when you can keep the origination fees and the taxpayer can carry the risk of default?

 

[piasabird]

If the government was not involved the market would force prices to fall.

 

[CycloWizard]

It's not a fair comparison to say that the government is saving everyone's bacon due to industry's failures when government caused those failures. Government is currently doing the same thing to health insurance that it did to the mortgage industry - setting it up for a monumental failure with ridiculous, nonsensical policies that will inevitably lead to their demise. Then, apparently, government is the phoenix which rises from the ashes of industry to save the day?

 

[Darwin333]

http://www.businessinsider.com/15-s...se-2010-8#fannie-and-freddie-are-in-shreds-14

When the consumer and business sectors are crashed, the only sector left in the way of big problems is government spending.

This is why our debt is such a catastrophe, already being the largest it's been in history by far, reportedly.

On housing, after the government's stimulus ended, housing had the lowest sales since they were recorded in 1963.

What the 90% implies is that without the government, the mortgage industry would be in ruins, with only 10% coming privately.

'Small government' people should calm down long enough to ask what the economy would look like if they had their way and the government mortgages were eliminated.

That 'freed up money' would no more rescue the economy than the private sector spending is now. But the debt is a disaster.

Can anyone argue against the notion that irresponsible voters picking politicians who bribe them with debt-funded spending - or for those politicians who are using the money for their donors and the rich, well funded ad campaign - are making democracy look flawed to the point of alternatives becoming a threat, taking the power of the purse more out of the people's hands just as federal interest rates are taken out of politicians' hands?

Everyone likes the idea of spending cuts - because they assume the cuts will come where they want, rather than from their favorite areas.

But the 'public good' and average Americans seem the first in line to cut.

The link above has negative information about the way the housing market is looking.

So you support the government artificially inflating housing prices? I seem to recall something just like that not working out to well recently.

Furthermore, the .gov is buying so the private sector is selling. Its that simple, why take the risk when the .gov is more than happy to do it for you?

Why do you support artificially inflated housing prices to the point that the average person can not afford the average house?

Why do you not want the lower middle class/poor to have a chance in hell of home ownership?

Why do you want to significantly reduce the ability of the middle class to move up due to their cost of housing being so much greater (psst, thats a huge reason why the middle class is worse off than 20 years ago... housing and HC, everything else inflation adjusted has remained relatively the same).

People can't save money, and therefore accumulate wealth, if they have to spend every last dime of their two income earnings to live in a decent house in a decent area.

Why do you want to keep the poor poor with much higher rental costs due to artificially inflated housing costs?

Why DON'T you want the market to correct itself? Are you a homeowner?

 

[xj0hnx]

The problem being that our society chooses more and more to shift all responsibilities onto others, with the government being the poster child.

Why should you be educated about spending and budgeting? The government will take care of you when you go bankrupt.

Why should I eat healthy and exercise to stay in goo health? When I get sick, insurance will pay for me to see the doctor. If I can't afford the rates, the government will give me free care.

Why shouldn't I buy a big screen TV and a laptop? When I can't afford the payments, the government will make credit cards charge me less.


The government has become a tourniquet... it will stop the bleeding, but the tighter we turn it the more it kills the limb. Maybe we should focus on not getting shot to begin with.

This.

 

[zephyrprime]

People might also be able to find other non government options; but the government options were the most tempting.

Even excluding fha insured loans, people cannot actively avoid government involvement. You can get a mortgage from a private bank and the bank will turn around and sell the mortgage to Fannie or Freddie which are government backed.

 

[Fern]

Craig,

If you're a bank you're are certainly going to take advantage of government programs that guarantees your loans. It would be stupid not to do so.

If there is no government guarantee-type program, then you find a way to do loans without the guarantee, such as higher down payments and stricter guidelines on the borrowers' financial situation/earning history etc.

The government doesn't guarantee auto loans, yet they're readily available. So no, without Fannie/Freddie the mortgage industry wouldn't be in ruins.
------------------

Otherwise I find it a bit amusing that you take an article predicting doom & gloom in the government's mortgage program ($5 trillion needed to rescue it?) and spin it in to something completely different.

Fern

 

[BoberFett]

I find it amusing that Craig is in favor of the government continuing Dubya's housing bubble.

 

[bfdd]

lol Craig is an idiot.

 

[Jhhnn]

Heh. There are a few obvious answers underlying the discussion.

First off, housing prices would crash entirely w/o govt involvement, and the banks as well. There's currently a huge over supply, even with govt backed loans. Banks and the FRB currently hold the worst of the worst mortgages and MBS, the stuff they couldn't sell even to suckers. They also own lots and lots of housing which isn't making them any money, and are still delaying foreclosure on more. Much of it is purposefully being held off the market, because if they sold it for what they could get, their balance sheets would go to hell in a handbasket. Right now, they can say it's worth whatever they need to say to look solvent.

The selling price of a house would be the cash price, just like it was in 1932. Which would lead to a huge number of strategic defaults and a deflationary spiral. Think about it- what's the point of a good credit rating when there's no money to borrow? And what's the point in paying on a huge mortgage when you can default, use cash to buy another place at a small fraction of the price in no-recourse states?

The patriarch of a clan distantly related to my own paid $3500 for an 8 bedroom, 3 bath, 5 year old brick 3 story home in 1932. It cost the former owner over $35K to build in 1927. Why? because he had cash when everybody else had zip, and because the owner was desperate to sell.

The other thing that's obvious, just as it was back then, is that the Investor Class isn't investing, because they don't need to, because deflation will benefit them at the expense of everybody else. Their money gains value invested in govt bonds and stuffed into their mattresses. They're holding out for the pound them in the ass bargains... Guess who "Them" is?

The final obvious truth is the same now as then- that taxes must necessarily be raised on the financial elite, both to finance the govt and to blunt their advantage- otherwise, we'll degenerate into a true rentier economic system, much like that of central and south america.

 

[BoberFett]

The other thing that's obvious, just as it was back then, is that the Investor Class isn't investing, because they don't need to, because deflation will benefit them at the expense of everybody else. Their money gains value invested in govt bonds and stuffed into their mattresses. They're holding out for the pound them in the ass bargains... Guess who "Them" is?

The final obvious truth is the same now as then- that taxes must necessarily be raised on the financial elite, both to finance the govt and to blunt their advantage- otherwise, we'll degenerate into a true rentier economic system, much like that of central and south america.

Do you think about what you say or just blurt out whatever talking point comes to mind?

I've bolded the important parts, and I'll even give you a hint: Taxes affect income, not wealth.

No wonder Democrats don't know how to fix the problem. They don't even understand the words they string together to form sentences.

 

[Craig234]

Craig,

If you're a bank you're are certainly going to take advantage of government programs that guarantees your loans. It would be stupid not to do so.

If there is no government guarantee-type program, then you find a way to do loans without the guarantee, such as higher down payments and stricter guidelines on the borrowers' financial situation/earning history etc.

The government doesn't guarantee auto loans, yet they're readily available. So no, without Fannie/Freddie the mortgage industry wouldn't be in ruins.
------------------

Otherwise I find it a bit amusing that you take an article predicting doom & gloom in the government's mortgage program ($5 trillion needed to rescue it?) and spin it in to something completely different.

Fern

That's a lot of nonsense. Unfortunately, as usual.

You're saying the mortgage industry would be just fine without the government involvement.

While I said earlier it's hard to estimate the precise impact,I'd say you're full of it. We're going to have to agree to disagree on this.

But I invite you to find experts who comment, and you'll see them agree with me IMO.

Auto loans with the smaller amounts and shorter repayment are a very difference animal than real estate loans. The ability to repay is very different.

I didn't spin anything different - in fact, it's the very article you say I spun that you are spinning. It says the mortgage industry would be in shambles without the government, the opposite of you.

If anything, I moderated the article's point closer to your position.

The article says the housing market is at risk to go a lot lower. I did not disagree or 'spin' that. You posted nonsense again.

 

[Jhhnn]

Do you think about what you say or just blurt out whatever talking point comes to mind?

I've bolded the important parts, and I'll even give you a hint: Taxes affect income, not wealth.

No wonder Democrats don't know how to fix the problem. They don't even understand the words they string together to form sentences.

That's supposed to be an argument?

Ultimately, taxes affect wealth, otherwise we wouldn't have seen the top filers share of wealth based income increase as dramatically as it has over the last 30 years in response to serial tax cuts. That income is not derived from work, at all, but rather from investment, which *is* wealth.

Those who have no wealth have no investments, and no investment income. Wealth based income, regardless of the amount, is currently taxed at extremely low rates, basically 15%, which is the same rate paid by singles who work and earn $125K taking a standard deduction.

 

[BoberFett]

That's supposed to be an argument?

Ultimately, taxes affect wealth, otherwise we wouldn't have seen the top filers share of wealth based income increase as dramatically as it has over the last 30 years in response to serial tax cuts. That income is not derived from work, at all, but rather from investment, which *is* wealth.

Those who have no wealth have no investments, and no investment income. Wealth based income, regardless of the amount, is currently taxed at extremely low rates, basically 15%, which is the same rate paid by singles who work and earn $125K taking a standard deduction.

Please point out to me which tax is applied to wealth.

Sigh. OK, since you clearly have a learning disability I guess I have to spoil the fun and tell you exactly what the problem with your logic is.

If people with wealth are not investing because they're trying to destroy America, or whatever liberal bullshit you're busily lapping up, then THEY HAVE NO INCOME. The investor class only earns when they INVEST. Notice how the word INVEST is the root word in the phrase INVESTOR CLASS. If they're not investing, then they won't pay any TAXES. You can tax the wealthy at 100% and it won't matter because THEY HAVE NO INCOME IF THEY DO NOT INVEST.

Your stupidity is painful.

 

[Acanthus]

Please point out to me which tax is applied to wealth.

Sigh. OK, since you clearly have a learning disability I guess I have to spoil the fun and tell you exactly what the problem with your logic is.

If people with wealth are not investing because they're trying to destroy America, or whatever liberal bullshit you're busily lapping up, then THEY HAVE NO INCOME. The investor class only earns when they INVEST. Notice how the word INVEST is the root word in the phrase INVESTOR CLASS. If they're not investing, then they won't pay any TAXES. You can tax the wealthy at 100% and it won't matter because THEY HAVE NO INCOME IF THEY DO NOT INVEST.

Your stupidity is painful.

They are still investing, just in T-bills, metals, etc rather than stocks, startups, etc

Sadly, the inflation monster needs to show up to push people back into real investment.

 

[Darwin333]

They are still investing, just in T-bills, metals, etc rather than stocks, startups, etc

Sadly, the inflation monster needs to show up to push people back into real investment.

Not gonna happen if they can do anything about it.
edit: "They" as in the government, plus they kinda want a high demand in the bond market right now.

1. The "inflation monster" would push up interest rates, including those that the government borrows at. The Federal budget would instantly get FUBARed since almost all of our debt is short term and must be rolled over (not to mention the insane amount of new debt we are adding)

2. The "inflation monster" would push up interest rates, including those that people pay to borrow money for houses. Most people buy a house based on "payments" not necessarily "price". At 4.5% people can afford a more expensive house than at 7.5%. Since the average person can't really afford the average house as it is, pushing up interest rates would kill housing sales even more. As an example, lets assume a family can afford to pay $1,000 a month for their house note, at 4.5% they can afford a $200,000 house (no pmi or taxes added in, just a straight 30year fixed). At 7.5% they can afford a $150,000 house. That is a 25% reduction in the amount of house that they can afford.

 

[Jhhnn]

Please point out to me which tax is applied to wealth.

Sigh. OK, since you clearly have a learning disability I guess I have to spoil the fun and tell you exactly what the problem with your logic is.

If people with wealth are not investing because they're trying to destroy America, or whatever liberal bullshit you're busily lapping up, then THEY HAVE NO INCOME. The investor class only earns when they INVEST. Notice how the word INVEST is the root word in the phrase INVESTOR CLASS. If they're not investing, then they won't pay any TAXES. You can tax the wealthy at 100% and it won't matter because THEY HAVE NO INCOME IF THEY DO NOT INVEST.

Your stupidity is painful.

Awww. Reduced to ad homs and typing in CAPITAL LETTERS. In person, I suspect you'd just resort to yelling.

Of course the wealthy are still invested, but just in things that don't promote the growth that's needed. Dollar carry trade. Utilities. Energy. Defense industry. Agriculture and food processing. Long held rent generating real estate holdings. And, don't forget, govt backed mortgage securities on an abundant over supply of existing housing. Even with depressed prices, they still demand those guarantees to invest in such instruments at all.

As the market peaked in 2006-2007, they engaged in profit taking, got a lot more liquid, and they're staying that way, because we're still headed downward overall. They obviously believe that to be true, and their actions reinforce the trend.

 

[PeshakJang]

Awww. Reduced to ad homs and typing in CAPITAL LETTERS. In person, I suspect you'd just resort to yelling.

Of course the wealthy are still invested, but just in things that don't promote the growth that's needed. Dollar carry trade. Utilities. Energy. Defense industry. Agriculture and food processing. Long held rent generating real estate holdings. And, don't forget, govt backed mortgage securities on an abundant over supply of existing housing. Even with depressed prices, they still demand those guarantees to invest in such instruments at all.

.

So your answer is to force them out of those investments as well?

You hang in there, kiddo ^_^

 

[bamacre]

Heh. There are a few obvious answers underlying the discussion.

First off, housing prices would crash entirely w/o govt involvement, and the banks as well.

GOOD. We'd be better off without some of these big banks. And look at Mr. Progressive Democrat helping the poor by using government to help banks make houses more expensive. Yup, that's what poor people need, higher prices for necessities. Progressives, keeping people in poverty and banks bathing in cash for decades.