Monday, October 24, 2011

The Short List - October 24, 2011

International
Domestic

3 comments:

Colin said...

Hasn't spent enough or gone big enough? Why should Obama be spending *any* taxpayer money on this? It is bizarre to read Obama's quote that the administration tried "to start lifting home values up."

Why is raising home prices -- i.e. making housing less affordable -- a public policy goal? Why is that something to be embraced? Should the administration also push for higher prices of other necessities such as food, clothing or transportation? One could be forgiven for thinking the chief aim of this program is simply to buy votes.

Further, why should those of us who were prudent with our money during the housing bubble have to subsidize those who bought more home than they can afford? Granted, the government played a big role here by stupidly encouraging the housing bubble through the mortgage interest deduction, Freddie, Fannie, the FHA, etc. but that shouldn't let people off the hook.

This is not a problem for government to solve, but rather an issue for the homeowners and bankers to figure out.

The fact that Wall Street remains a mess, meanwhile, despite the heavy regulation of the sector (since 1980, Congress has passed four new sets of regulations for every one deregulatory act) is a good argument for repealing Dodd-Frank and removing other nonsensical government interventions in the sector.

Jason said...

One might also think the chief aim of the program might be to keep people in their homes, though clearly you'd prefer homeowners & bankers "figure out" what to do, even if that means millions more people foreclosed on and potentially homeless, right? That's pure market forces at work.

Lest we forget that banks were soaking up mortgage-backed securities like a Sham-wow, and then they found themselves over leveraged when the bottom came out, but that's the government's fault too, right?

Colin said...

One might also think the chief aim of the program might be to keep people in their homes, though clearly you'd prefer homeowners & bankers "figure out" what to do, even if that means millions more people foreclosed on and potentially homeless, right? That's pure market forces at work.

Right, because the alternative to living in a home you can't afford is homelessness? Render unto me a break.

And why should people be able to stay in homes that they could never afford? If I buy a Mcmansion I can't afford I should still be able to stay in it? Why should their greed be rewarded? What about the costs to others through reduced housing affordability (which actually can lead to homelessness). Further, is rewarded stupidity and greed (through government transfers) while punishing prudence and delayed gratification (taking money from those who didnt buy homes they couldnt afford) wise public policy?

If we went by pure market forces we wouldn't have had this ridiculous bubble in the first place. But it is instructive that neither the government's role in inflating the bubble nor its ineffective response (as detailed by the WashPost article) is deterring you from advocating further government involvement.

Lest we forget that banks were soaking up mortgage-backed securities like a Sham-wow, and then they found themselves over leveraged when the bottom came out, but that's the government's fault too, right?

You are aware, correct, that Freddie and Fannie have been issuing MBSs since the early 1980s, and that these are widely understood to have the backing of the US govt? And further than Freddie and Fannie were responsible for more than half of the MBSs issued from 1998-2008? You are also aware that the SEC, as part of the Basel Accords, allowed securities given a high rating from Nationally Recognized Statistical Rating Organizations (basically a government regulated oligopoly) can be used to satisfy capital reserve requirements, thus encouraging their purchase?

Yeah, I would say the government bears a big part of the blame.