Gary M Posted July 31, 2012 Share Posted July 31, 2012 http://www.nytimes.com/2012/08/01/business/us-agency-bars-fannie-and-freddie-from-reducing-principal.html?exprod=myyahoo Link to comment Share on other sites More sharing options...
JuanGuzman Posted July 31, 2012 Share Posted July 31, 2012 (edited) This part strikes me as idiotic: "Mr. DeMarco also said that the agency did not consider whether lower levels of debt might bolster economic growth. Economists have long argued that this is a primary reason for the government to support debt reduction." That is the primary reason to advocate a debt reduction program, to reduce broader macro-economic consequences related to foreclosures and in fact boost economic growth by avoiding them. Its one thing to consider the question and find that the arguments saying preventing foreclosures through debt reductions will improve economic growth is invalid --- it's a complete idiotic mess though when you don't even address the question your analysis. The football equivalent of this would be to remove all running plays from playbook because Fitzpatrick yards per pass attempted were greater than Fred Jackson yards per rush attempt, without actually considering whether eliminating all running plays would help the bills win more games... Edited July 31, 2012 by JuanGuzman Link to comment Share on other sites More sharing options...
WorldTraveller Posted July 31, 2012 Share Posted July 31, 2012 DeMarco said his decision was based on “extensive analysis” of HAMP-PRA, and that he had concluded the program would not improve the rate of foreclosures in the country while at the same time reducing cost to taxpayers. DeMarco has long been a thorn in the side of liberals and his announcement on Tuesday heightened those tensions. Liberal economist Paul Krugman, in a New York Times blog post titled, “Fire Ed DeMarco,” wrote, “Deciding whether debt relief is a good policy for the nation as a whole is not DeMarco’s job. His job — as long as he keeps it, which I hope is a very short period of time — is to run his agency.” Read more: http://www.politico.com/news/stories/0712/79211.html#ixzz22F0jEw2X Link to comment Share on other sites More sharing options...
dayman Posted July 31, 2012 Share Posted July 31, 2012 (edited) DeMarco sees his mission as preserving the assets of Fannie and Freddy not restoring the housing market despite the $140B they got b/c they went nuts w/ subprime dog ****. Even if not writing down mortgages or refinancing them at lower rates saves F&F today until the real problem is addressed in the long run the value of housing stock will continue to suffer and more mortgages will be valued higher than homes. Something needs to be done no matter what party you associate with the entire economy is sucking and the single biggest source of family wealth is in crisis. The mortgage problem continues to freeze us in place and here we have F&F at the middle of it all again b/c DeMarco is a douche. Edited July 31, 2012 by TheNewBills Link to comment Share on other sites More sharing options...
DC Tom Posted July 31, 2012 Share Posted July 31, 2012 DeMarco sees his mission as preserving the assets of Fannie and Freddy not restoring the housing market despite the $140B they got b/c they went nuts w/ subprime dog ****. Even if writing down mortgages or refinancing them at lower rates saves F&F today until the real problem is addressed in the long run the value of housing stock will continue to suffer and more mortgages will be valued higher than homes. Something needs to be done no matter what party you associate with the entire economy is sucking and the single biggest source of family wealth is in crisis. The mortgage problem continues to freeze us in place and here we have F&F at the middle of it all saying no. There is almost no cost benefit to Freddie or Fannie to modifying people's loans under the terms of HAMP (in no small part because the qualifications for HAMP are seriously Wednesdayish). Ultimately, Fannie or Freddie modifying loans under HAMP translates into taking a bath on the same borrowers twice (since the general trend of people who don't pay their bills, for whatever reason, is to continue to not pay their bills; and since the typical result of a modification doesn't modify the principle, merely the terms of the mortgage - the caveat to that last being "at least with the commercial lenders".) There's no magic wand that's going to fix the housing market. At best, you might cushion the short-term blow (which HAMP manifestly won't do), but the only real solution is to stop poking at it and let it sort itself out. Link to comment Share on other sites More sharing options...
dayman Posted July 31, 2012 Share Posted July 31, 2012 There is almost no cost benefit to Freddie or Fannie to modifying people's loans under the terms of HAMP (in no small part because the qualifications for HAMP are seriously Wednesdayish). Ultimately, Fannie or Freddie modifying loans under HAMP translates into taking a bath on the same borrowers twice (since the general trend of people who don't pay their bills, for whatever reason, is to continue to not pay their bills; and since the typical result of a modification doesn't modify the principle, merely the terms of the mortgage - the caveat to that last being "at least with the commercial lenders".) There's no magic wand that's going to fix the housing market. At best, you might cushion the short-term blow (which HAMP manifestly won't do), but the only real solution is to stop poking at it and let it sort itself out. By stop poking at you mean continue to allow them to dump thousands of foreclosed houses into the market further depressing the market? Link to comment Share on other sites More sharing options...
DC Tom Posted July 31, 2012 Share Posted July 31, 2012 By stop poking at you mean continue to allow them to dump thousands of foreclosed houses into the market further depressing the market? Yes. Because the vast majority of those houses are going to end up on the market anyway; it's a choice between a quick and strong recovery in prices, or long drawn-out stagnation of the market (which would be well on its way to recovering by now, if it had been allowed to adjust without interference). Link to comment Share on other sites More sharing options...
dayman Posted July 31, 2012 Share Posted July 31, 2012 Yes. Because the vast majority of those houses are going to end up on the market anyway; it's a choice between a quick and strong recovery in prices, or long drawn-out stagnation of the market (which would be well on its way to recovering by now, if it had been allowed to adjust without interference). Continued foreclosures while we're trying to mount an economic recovery, which hasn't taken off yet btw, is the choice for a quick and strong recovery in prices? The vast majority of these houses will end up on the market anyway? Who is buying? This thing is holding itself back. We need to put a floor on this and keep people in homes and provide some debt relief. More foreclosures dumped isn't going to bounce the housing market back any stronger or quicker with the economy frozen by... foreclosure dumps depressing the housing market...and the thing will continue to feed itself as the housing crisis holds the economy back and the economy sucking prevents the housing dumps from doing anything is it? Link to comment Share on other sites More sharing options...
WorldTraveller Posted August 1, 2012 Share Posted August 1, 2012 Continued foreclosures while we're trying to mount an economic recovery, which hasn't taken off yet btw, is the choice for a quick and strong recovery in prices? The vast majority of these houses will end up on the market anyway? Who is buying? This thing is holding itself back. We need to put a floor on this and keep people in homes and provide some debt relief. More foreclosures dumped isn't going to bounce the housing market back any stronger or quicker with the economy frozen by... foreclosure dumps depressing the housing market...and the thing will continue to feed itself as the housing crisis holds the economy back and the economy sucking prevents the housing dumps from doing anything is it? Yes, the sad reality is that the sooner the market can find its natural bottom, the sooner we can begin a true housing recovery. Gee, what a foreign horrible concept, allowing the free markets to do their thing. You can't intervene and place a bottom in the market, all you are gonna do is delay it, the housing market is way to massive for this to happen. Every housing program this administration has attempted has failed miserably and the one thing they all had in common was that they all had interventionist crafted elements to it. The best thing the government can do is begin to restore the faith from the American public, a good start would be to stop intervening in every aspect of the economy that is weak and be effective stewards of our tax payer money. Link to comment Share on other sites More sharing options...
dayman Posted August 1, 2012 Share Posted August 1, 2012 Yes, the sad reality is that the sooner the market can find its natural bottom, the sooner we can begin a true housing recovery. Gee, what a foreign horrible concept, allowing the free markets to do their thing. You can't intervene and place a bottom in the market, all you are gonna do is delay it, the housing market is way to massive for this to happen. Every housing program this administration has attempted has failed miserably and the one thing they all had in common was that they all had interventionist crafted elements to it. The best thing the government can do is begin to restore the faith from the American public, a good start would be to stop intervening in every aspect of the economy that is weak and be effective stewards of our tax payer money. I don't agree that this is the way to go here. But I do accept the basic logic that in your opinion we have to let the cyclical feeding of this disaster just continue. However, I had better not see you complaining about jobs numbers in some other thread in the near future And btw just for the record guy on Eliot Spitzer talking about local government taking the debt by eminent domain. Paying fair value for the public purpose of plugging the drain and writing it down to keep people in their houses. I'm simply reporting here I don't know about this one just hearing it as I type. Link to comment Share on other sites More sharing options...
WorldTraveller Posted August 1, 2012 Share Posted August 1, 2012 I don't agree that this is the way to go here. But I do accept the basic logic that in your opinion we have to let the cyclical feeding of this disaster just continue. However, I had better not see you complaining about jobs numbers in some other thread in the near future And btw just for the record guy on Eliot Spitzer talking about local government taking the debt by eminent domain. Paying fair value for the public purpose of plugging the drain and writing it down to keep people in their houses. I'm simply reporting here I don't know about this one just hearing it as I type. Why? Sure I complain, I complain because I deeply disagree with the policies enacted from this administration. I don't say this to be bombastic, but I believe that this president is the most ideologically driven, economically incompetent man that has resided at the white house in my life time. He believes that an ideal economy is one crafted from the school of robin hood, where you take money from the rich and productive and redistribute it to the less fortunate, to even out the playing field, and he does this all in the guise of "fairness". Never have I been part of a successful company where you add incentives for those who do less and disparage and penalize those who do more. I can't stand it, I believe it goes against everything that made this country great and I guarantee that his policies will never produce good results. Link to comment Share on other sites More sharing options...
dayman Posted August 1, 2012 Share Posted August 1, 2012 (edited) Why? Sure I complain, I complain because I deeply disagree with the policies enacted from this administration. I don't say this to be bombastic, but I believe that this president is the most ideologically driven, economically incompetent man that has resided at the white house in my life time. He believes that an ideal economy is one crafted from the school of robin hood, where you take money from the rich and productive and redistribute it to the less fortunate, to even out the playing field, and he does this all in the guise of "fairness". Never have I been part of a successful company where you add incentives for those who do less and disparage and penalize those who do more. I can't stand it, I believe it goes against everything that made this country great and I guarantee that his policies will never produce good results. People disagree and I get that. If we don't start some principle write-downs, IMO we're not going to recover any time soon and that seems fairly obvious to me. So all I"m saying is don't complain about recovery. Complain away about Obama I would never take that from you, but even assuming I'm wrong and you are right...your policy on the mortgage issue admits the recover simply won't get going until the market finds it's natural bottom which is something the President has nothing to do with b/c he should be hands off. Edited August 1, 2012 by TheNewBills Link to comment Share on other sites More sharing options...
DC Tom Posted August 1, 2012 Share Posted August 1, 2012 People disagree and I get that. If we don't start some principle write-downs, IMO we're not going to recover any time soon and that seems fairly obvious to me. So all I"m saying is don't complain about recovery. Complain away about Obama I would never take that from you, but even assuming I'm wrong and you are right...your policy on the mortgage issue admits the recover simply won't get going until the market finds it's natural bottom which is something the President has nothing to do with b/c he should be hands off. Actually, the original point that I made and he agreed with was that the policies are delaying the natural bottom... Link to comment Share on other sites More sharing options...
dayman Posted August 1, 2012 Share Posted August 1, 2012 Actually, the original point that I made and he agreed with was that the policies are delaying the natural bottom... The policies DeMarco ignores and can't be compelled to accept? Link to comment Share on other sites More sharing options...
WorldTraveller Posted August 1, 2012 Share Posted August 1, 2012 The Japanese are the OG's of QE, and where are they 20 years later? So what does Ben bernanke do to "fix" our economy, that parallels to that of the Japanese liquidity trap? More QE Where has this gotten us so far? The point is that interventionist policies usually produce mild short-term gains but more drawn out long-term stagnation. The best thing we can do is not always look for the politically expedient solutions, but give us a cold hard dose of reality, and let the markets determine value. It works, sure there are hiccups, but over the long-term free markets work. Just let us keep more of our money, stop placing such onerous regulations that stifle growth, open up territories for more oil drilling so that we can become completely energy independent, offer more job retraining programs and give us more access to foreign markets. Link to comment Share on other sites More sharing options...
dayman Posted August 1, 2012 Share Posted August 1, 2012 (edited) The Japanese are the OG's of QE, and where are they 20 years later? So what does Ben bernanke do to "fix" our economy, that parallels to that of the Japanese liquidity trap? More QE Where has this gotten us so far? The point is that interventionist policies usually produce mild short-term gains but more drawn out long-term stagnation. The best thing we can do is not always look for the politically expedient solutions, but give us a cold hard dose of reality, and let the markets determine value. It works, sure there are hiccups, but over the long-term free markets work. Just let us keep more of our money, stop placing such onerous regulations that stifle growth, open up territories for more oil drilling so that we can become completely energy independent, offer more job retraining programs and give us more access to foreign markets. What would could we accomplish with these demon interventionist policies if done in a rapid coordinated comprehensive way? Bank balance sheets cleaned up freeing up lending money, massive reduction of economic stress on millions of people allowing them to participate as normal members of the economy once again, turn the rotting foreclosed death omens sitting in neighborhoods and condo units into properly maintained rental properties so they are no longer toxic to the surrounding home values, and yes even some (I'm not saying a huge fix to unemployment here just saying "some") direct jobs in preparing these foreclosed properties and as a general result of some house cleaning in the housing market. The guys holding these mortgages don't want to them down b/c they basically have lottery tickets waiting for the recovery. But as long as they hold their ticket, it isn't coming. The bottom is nowhere and the recovery is dependent on something happening here. We need to write down and/or refinance the people who can pay, those who can't there are a lot of idea we can convert the deed to leases w/ options to purchase at the end, I read some idea instead of the lease/option to convert a portion of the bank mortgage to an equity investment (not entirely sure of all the details on that idea), etc...and yes even after all this some will need to be foreclosed on anyway and we need to expedite those foreclosures. The idea that this is going to just find it's bottom isn't insane...but that isn't going to be acceptable to most people when they understand what that means in terms of time. I know government intervention is a sin to you and there are others who feel that way so I'm not saying you are crazy. But this ongoing mortgage-recovery cycle is crippling us and both sides complain about the job numbers and slow recovery...the implication is we need to fix it. If that's true this is how. Now if the implication you would have people draw from your ideology is that we don't need to fix it but simply eat it and let it go...that's fine...but what you are saying is deal with it. You can't say deal with it and then complain about the recovery...that's all I'm saying. Edited August 1, 2012 by TheNewBills Link to comment Share on other sites More sharing options...
WorldTraveller Posted August 1, 2012 Share Posted August 1, 2012 What would could we accomplish with these demon interventionist policies if done in a rapid coordinated comprehensive way? Bank balance sheets cleaned up freeing up lending money, massive reduction of economic stress on millions of people allowing them to participate as normal members of the economy once again, turn the rotting foreclosed death omens sitting in neighborhoods and condo units into properly maintained rental properties so they are no longer toxic to the surrounding home values, and yes even some (I'm not saying a huge fix to unemployment here just saying "some") direct jobs in preparing these foreclosed properties and as a general result of some house cleaning in the housing market. The guys holding these mortgages don't want to them down b/c they basically have lottery tickets waiting for the recovery. But as long as they hold their ticket, it isn't coming. The bottom is nowhere and the recovery is dependent on something happening here. We need to write down and/or refinance the people who can pay, those who can't there are a lot of idea we can convert the deed to leases w/ options to purchase at the end, I read some idea instead of the lease/option to convert a portion of the bank mortgage to an equity investment (not entirely sure of all the details on that idea), etc...and yes even after all this some will need to be foreclosed on anyway and we need to expedite those foreclosures. The idea that this is going to just find it's bottom isn't insane...but that isn't going to be acceptable to most people when they understand what that means in terms of time. I know government intervention is a sin to you and there are others who feel that way so I'm not saying you are crazy. But this ongoing mortgage-recovery cycle is crippling us and both sides complain about the job numbers and slow recovery...the implication is we need to fix it. If that's true this is how. Now if the implication you would have people draw from your ideology is that we don't need to fix it but simply eat it and let it go...that's fine...but what are saying is deal with it. You can't say deal with it and then complain about the recovery...that's all I'm saying. again, sure I can complain, it goes against everything I believe to be sound fiscal and economic policy. I will always feel this way until proven wrong, Link to comment Share on other sites More sharing options...
dayman Posted August 1, 2012 Share Posted August 1, 2012 (edited) again, sure I can complain, it goes against everything I believe to be sound fiscal and economic policy. I will always feel this way until proven wrong, OK allow me to clarify, you can't complain while we sit here not doing that (which you say we should do) and letting your idea go. B/c the housing market IS still freezing the recovery and our housing market policy as of now is basically your policy. So we're waiting. So you should tell people to wait patiently. Edited August 1, 2012 by TheNewBills Link to comment Share on other sites More sharing options...
WorldTraveller Posted August 1, 2012 Share Posted August 1, 2012 (edited) OK allow me to clarify, you can't complain while we sit here not doing that (which you say we should do) and letting your idea go. B/c the housing market IS still freezing the recovery and our housing market policy as of now is basically your policy. So we're waiting. So you should tell people to wait patiently. No, it's not "my policy", there has been unprecedented levels of intervention from both fiscal and monetary policy perspectives that it's nearly impossible to undo all the harm that has been done. We're knee deep in it, and a removal of all these easing policies would be akin to a doctor removing life support from his patient. Best way to do it would be to ease off so the economy doesn't go into remission. There are no short-term solutions to the housing market. Edited August 1, 2012 by WorldTraveller Link to comment Share on other sites More sharing options...
Gary M Posted August 1, 2012 Author Share Posted August 1, 2012 I know government intervention is a sin to you and there are others who feel that way so I'm not saying you are crazy. Government intervention caused most of this, what are the odds they can fix it? Link to comment Share on other sites More sharing options...
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