Thursday, February 26, 2009

"Down Payment" on Universal Health Care

Pres. Obama proposes $634 billion for health care reform. No details in this particular article.

This is gonna be tough to oppose. He's ramming it all together as a single budget. If Republicans balk at the whole bill, they'll be accused of obstructionism and undercutting the economy. If they try to excise the most offensive spending (in particular the so-called health care reform), they risk having two or more Senators peeled off as they were for the stimulus.

Nailed It

Joel Stein gets it...
A lot of optimistic people bought houses near the historic height of the market, say November 2005, for absurdly high prices, say $1.12 million, in places like the eastern Hollywood Hills section of Los Angeles. These people are very, very sad. Trust me on this. But the sudden drop in housing prices hasn't made it any harder for these people to pay their loans. That's because your home's value is utterly irrelevant until you want to sell it — the same as your baseball cards, Hummel figurines or casual encounters. (See pictures of Americans in their homes.)

The only people affected by plummeting real estate prices are the ones who bought a house that cost more than they could afford, hoping for a spike in value so they could sell at a profit or take out a new loan based on an increased value. Their home wasn't just a place to live; it was an investment they thought they could liquefy at will. If we're saving these poor souls from the 26.7% drop in their investment, we should give twice as much aid to everyone who has lost approximately 50% in the stock market since its peak.

Edit: His little asides are amusing (I wonder who bought that East Hollywood mansion?), but they undercut the message.

Friday, February 20, 2009

Sub-Prime Loans Redux

From the Wall Street Journal...
Existing borrowers who may not qualify for Fan/Fred refinancing can still receive loan modifications that move their mortgage payments down to 31% of monthly income. In either case, no effort will be made to verify that recipients of aid were truthful on their original mortgage applications. Given that mortgage fraud skyrocketed during the housing boom, and that the Obama Administration intends to assist up to nine million troubled borrowers, we can say with certainty that the unscrupulous will be among those rescued.
In fact, the program encourages mortgage servicers to keep the payments low only for five years, after which rates will rise. During the housing bubble, these were called "teaser" rates. Modifications also may extend the term of, say, a 30-year mortgage to 40 years, but still leave the borrower underwater. Research at Credit Suisse suggests that borrowers without equity are not a good bet to stay current. What research cannot answer is how many people will seek assistance when they are told that a new federal program is available to cut their mortgage bill.

No doc loans? Check. Teaser/adjustable rates? Check. 40-year loans? Check.

This plan perpetuates the sub-prime loans that triggered the crisis!

Is there any way to keep these borrowers in their homes without a sub-prime? If not, why are we trying to keep them in their homes? That's just kicking the problem down the street!

Thursday, February 19, 2009

Housing Plan Newspaper Coverage

Both the Times and the Post have stories on President Obama's housing bailout plan, but neither of them fronts it on their home pages. Instead they're fronting stories on, among others, Pres. Obama's upcoming Canada trip, stem cell funding, and Senator Burris. All important stories, but are they really as important as the housing bailout?

Monday, February 9, 2009


Google needs to blacklist Scribd. The site is unusable, and yet it consistently shows up high in Google search results.

When I search Google, I'm searching for web sites, not PDF's.


From the New York Times, this para caught my attention...
This “tug and pull,” as Mr. Axelrod called it, has presented a challenge because the president is intent on getting his arms around the enormous problems facing the nation. The political instincts that served Mr. Obama well in his campaign faced new tests after he conceded last week that he had made a mistake by pushing the nomination of Tom Daschle to champion health care.

So Pres. Obama wants to understand the nation's problems, but doesn't have time because he has to go stump for the so-called "stimulus". One might say (simplistically) that he's selling solutions rather than solving problems.

This is what has always scared me about Pres. Obama: that in any real crisis, he would rely primarily on his personal charisma rather than any fundamental problem-solving ability. Granted charisma is a fine asset, and can be used to foster cooperation and unity. But that's not what's needed now. Pres. Obama allowed Speaker Pelosi and Senator Reid to drive the stimulus bill, and their incompetence ruined it. Now the President is stuck selling a lemon. Can he do it?

I hope not.