Bush Plans Response to Subprime Crisis

[JES]

This is laughable. Let me get this straight, we are going to use my hard earned taxes to pay flippers and guys driving H2s in Temecula to hold on just a little longer. And now that their stucco boxes – homes that went from 200k to 700k in 6 years – have dropped a mere 10% in value, we have the President throwing money at them, Congress concerned and the Fed ready to act. Gimme a friggin break! Does anyone in DC realize what is really going on out there? I really hope that prices continue to tank and that we fall into a recession now. There are people who need to learn a lesson the hard way.

[LA_Renter]

My take is we are heading straight into the political season of 2008. Millions of people going into foreclosure in an election year is jut too juicy for politicians not to grand stand on the issue. Bush threw this out there to give the GOP candidates cover. Hillary, Shumer and Dodd have been on the war path on this issue not so much out of the kindness of their hearts but they know a big club they can use when they see it. Fortunately most polls I have seen indicated that most Americans are against a large Government bailout……right now. That may change when people start losing their jobs as a result of this mess which is starting to happen right about now. We are going to have to face that the chance of a large Government bailout increase during an election year.

With that said I think we have to put into proper context that much of the rhetoric around the issue will equate to the “mouse that roared”. Much like the rhetoric around all of the other issues. All politicians want is to create the perception that they are “aware of your pain” and fighting for the cause. The same will hold true for the Fed Governors. You have a popping of a severe national bubble with the potential of severe consequences. Those in power are frantically mobilizing a “Manage the message” program. Who holds the power of this country are the stakes.

It is still my opinion that the FED and our fearless politicians cannot undo this mess. You have $5 to $10 Trillion of the CDO derivatives market that have been contaminated with toxic waste that no one knows how to find. These institutions can posture all they want but they cannot force banks to lend.

[one_muggle]

I feel like this puts the thumb on those who have worked hard, saved for a down, etc… It’s pretty much like we have to coddle and baby sit these idiot borrowers.

Yup. But it just might happen because it bails out the two most important political constituencies: The donors and the victims. Anyone else feel like you’re living in an Ayn Rand novel?

Reminds me of the Educational Equality initiative that was proposed on Long Island twenty years ago. I forget the exact numbers but the gist was that since the middle/upper-middle class neighborhood schools had more money than did the working class neighborhoods, it was proposed to pool the money and dole it out more fairly. Some friends of mine and I figured out that if we expanded the pool to include the most affluent neighborhood schools as well, then the middle-class schools would stay roughly even. The response was basically “Nice try kids, but don’t you know people PAY more money to live in those neighborhoods?”
Strange, and I thought the middle-class people paid more to be in those neighborhoods, as compared to the working class areas.
I guess the moral is that we should all pay for the victims, whomever they may be, but we can’t expect the ultra rich to take a hit, because they deserve their money.

-one muggle

[one_muggle]

LA_Renter, I agree that they likely cannot help. BUT, the certainly can do significant damage trying.

Unintended consequences are a bitch.

-one muggle

[bubba99]

“FHA will begin charging “risk-based” premiums, a move that will enable the agency to help riskier borrowers since they can charge those individuals higher insurance rates. Right now, FHA premiums are a flat 1.5% of the loan, and the change would give the FHA flexibility to charge some borrowers as much as 2.2%.”

I get it, those who cannot pay the market rate 7% will be able to pay 7% with 2.2% insurance on top for a rate of 9.2%

The new quarantees will only bail out those holding the now government guaranteed delinquent mortgages.

And I always thought that cops had the best drugs

Bubba

[LA_Renter]

I am watching the Bush speech and he’s talking about changing the tax code so people are not penalized when……..what??………their home price FALLS!! LOL

Bush jut told the United States their home prices are falling!!

You have to look at the bright side of things every once in a while. I guess that debate is over.

[Alex_angel]

I wonder how long it took for them to explain to bush what subprime was. He probably just sat there with that confused look on his face wondering what the duck was going to do next.

[bsrsharma]

I watched his speech and he was just perfect. (I am not his admirer). He mouthed a few platitudes and sympathies, and offered trivial amount of useful help through FHA expansion.
The sensible real policy change is going to be the possible elimination of tax obligation on forgiven loans. An interesting consequence may be borrowers may interpret it as a suggestion to walk away from loans that don’t make sense in the new home value regime. That may multiply REO a lot more.

[Anonymous]

lendingbubbleco is probably right though. Bush getting involved will not have the intended effect; it will only make things worse. So we might as well all rejoice now in anticipation of house prices falling and extra 10% from what they would have fallen to before he said he’d get involved…

[drunkle]

next thing you know, bush will decree farms use gatorade to water their crops…

if you voted for bush twice, you autta have your voting priviledges revoked. fool me once, shame on… me. fool me twice… you’re not gonna vote for me twice, are you?!?

[seattle-relo]

What’s sad is that the people that are in some trouble are now going to believe that the government in going to rescue them rather then be proactive and trying to fix the mess that they got themselves into.

[PadreBrian]

“He is also expected to support legislation that would provide tax breaks to homeowners whose mortgage debt is forgiven, in whole or in part, by lenders. The federal government currently collects taxes on the amount of a loan that is forgiven.”

Basically, Dubya has just given the green light to everyone underwater right now to walk away from their sh*tty loan/overpaid house.

I see this as a good thing. Prices will crash next early next year! lol, I’m sure My Pet Goat had something to say about all this.

[waiting hawk]

Now that dubya is involved I know its crashing..

[stockstradr]

Fortunately, we all know that EVERY single thing the Bushes’ have set out to accomplish on behalf of “hard-working Americans” has delivered the complete opposite result. Or, put another way, it has all backfired.

Yes, those are words of wisdom.

I have one other comment which may or may not apply to you, but it certainly applies to most Americans who complain about Bush.

When Bush and his cronies were drumming up support for their oil war on Iraq, I realized they were evil and were taking advantage of an APATHETIC America. I saw I was apathetic also, too fat and complacent to protest Bush in any meaningful way.

I decided to get off my ass and protest in any way possible. I wrote my senators and representatives. I personally flew to Washington several times to join the moveon.org marches BEFORE the war on Iraq. I stood before the White House and gave that asshole the middle finger. I was interviewed by the Washington Post and my comment that he should be impeached was included in a front page article.

I’m a typical yuppie who isn’t very politically active, but this was an exception. George Bush himself IS the most dangerous terrorist in the world.

Now, my actions didn’t change policy, but they could have if enough of us had done the same thing. Nothing will change if we are all complacent and apathetic about our government walking all over us. If enough of us stand up and say, “F__K you. We’re not going to take it any more!” and say ten million of us go march on the White House, then things will change.

[PadreBrian]

I don’t mind Bush is recommending the forgiving of tax for people under water. Yes, that means less tax revenue, but it also means the next few months we are going to see the majority of people who bought in 2004 to 2006 foreclose. The market will be saturated with REO houses.

I’m saving up a nice 20% down payment, and lowball everything that I like. I’ll be busy in FEB/MAR.

(BTW, sorry i messed up the formatting)

[Author]

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