Housing gambler bailout ping
Nationalization Alert!
Let’s invent words and put them in Bernanke’s mouth.
From Bernake today:
“Lenders tell us that they are reluctant to write down principal. They say that if they were to write down the principal and house prices were to fall further, they could feel pressured to write down principal again. Moreover, were house prices instead to rise subsequently, the lender would not share in the gains. In an environment of falling house prices, however, whether a reduction in the interest rate is preferable to a principal writedown is not immediately clear. Both types of modification involve a concession of payments, are susceptible to additional pressures to write down again, and result in the same payments to the lender if the mortgage pays to maturity. The fact that most mortgages terminate before maturity either by prepayment or default may favor an interest rate reduction. However, as I have noted, when the mortgage is “under water,” a reduction in principal may increase the expected payoff by reducing the risk of default and foreclosure.”
http://globaleconomicanalysis.blogspot.com/
Mish’s site.
I’m going to borrow to the hilt, blow the cash, spend my money, ignore moral hazard and come into the 21st C.
Why oh why oh why did I think being frugal and careful and honest was a good policy!!!
I just shake my head as I recall the flaming hoops I had to jump through to get a CP loan from Countrywide in 1998.
BS, let them sue their real estate brokers and appraisers if they were lied to. Otherwise suck it up.
Sure prices are higher than they were four years ago and before.
The problem is all of the mortgages signed at higher prices.
Oh wait ... it kinda sorta already is nationalized.
But then so are Fannie Mae and Freddie Mac.
Why are so-called sophisticated investors so easily conned?
These were the same idiots who believed that the deregulation of the energy business was a true deregulation rather than just a scam for letting middlemen gouge the consumer.
Great, why not just declare homeownership a constitutionally protected right and give everyone a house? After all, what he's suggesting here is legislatively protecting stupidity and risk-taking.
Did I mention that the crisis is contained? Good.
Maybe the writer is a little younger; there's not even a hint of "nationalization" in the air. Maybe if unemployment hits 30% it might talked about.
Hope I'm right.
So why is this a crisis that I, Joe Taxpayer, should pay for, just because some people bought homes where a measly 10% increase in their house payment sends them over the cliff?!!!