So now Paulson is announcing buying mortgage backed securities

[YellowLinesandArmadillos]

I am not sure what all this means, my inclination is that it doesn't put money in the hands of homeowners allowing them to use their salary for something other than paying off debt. I know the moral hazard arguments, but this has the same moral hazard issue problem for banks and security companies so either why do it or Why not start where the root of the problem is, the over-mortgaged homeowner???

 

http://www.washingtonpost.com/wp-dyn/conte...news&sub=AR

[GG]

Again, the root of the problem is uncertain value of the homes, not the homeowners. While it doesn't address the core issue of stabilizing home prices, the gov't buying up mortgages is to allow time for the process to work itself out. If you're going to require modifying mortages for some borrowers, you have to do it for every mortgage in the country. Of for the government to buy any mortgage that a bank wants to sell at $.35 - $.40.

[TPS]

Again, the root of the problem is uncertain value of the homes, not the homeowners. While it doesn't address the core issue of stabilizing home prices, the gov't buying up mortgages is to allow time for the process to work itself out. If you're going to require modifying mortages for some borrowers, you have to do it for every mortgage in the country. Of for the government to buy any mortgage that a bank wants to sell at $.35 - $.40.

It's now only "partially the root of the problem." The other side of the policy coin needs to kick-in in a big way now. Job creation and tax cuts for those making < $100K are necessary. Need to limit credit card defaults, student loan defaults, and business bankruptcies. In other words, there are a lot of other assets that could go bad in a bad economy.

 

While I think Paulson has !@#$ things up more often than not, the FED continues to do whatever is necessary. Fiscal policy kicks in early next year. I expect continued negative news and surprises (who will we bailout next?) until June.

[meazza]

It's now only "partially the root of the problem." The other side of the policy coin needs to kick-in in a big way now. Job creation and tax cuts for those making < $100K are necessary. Need to limit credit card defaults, student loan defaults, and business bankruptcies. In other words, there are a lot of other assets that could go bad in a bad economy.

 

While I think Paulson has !@#$ things up more often than not, the FED continues to do whatever is necessary. Fiscal policy kicks in early next year. I expect continued negative news and surprises (who will we bailout next?) until June.

 

Maybe BCE?

 

http://ca.news.finance.yahoo.com/s/2611200...cy-opinion.html

 

The FED has to save everyone

[YellowLinesandArmadillos]

It's now only "partially the root of the problem." The other side of the policy coin needs to kick-in in a big way now. Job creation and tax cuts for those making < $100K are necessary. Need to limit credit card defaults, student loan defaults, and business bankruptcies. In other words, there are a lot of other assets that could go bad in a bad economy.

 

While I think Paulson has !@#$ things up more often than not, the FED continues to do whatever is necessary. Fiscal policy kicks in early next year. I expect continued negative news and surprises (who will we bailout next?) until June.

Agreed is some respects, but your first paragraph gets at my point that folks making under 100k don't have any money and they are the ones that typically drive consumer spending. In fact Food Stamp recipients are reported to top 30 mil this month, eligibility is those making under 27k for a family of four, highest ever, even after post Katrina.

 

Do some debt forgiveness on mortgages directly to the spenders and you immediately help out the stressed middle class, who will still have to spend and won't be holding on to their money tighter than the banks are right now. I am just saying, I know the personal responsibility argument etc.... We are all going to have to pay for this in the long run through our taxes, but if you are going to bail out Wall Street, ING, City etc than what about average 'Mericans and let it trickle up?

Other than the moral hazard argument from those who like to get on their high horse, what from a macro or micro standpoint is the problem with this? Job creation is good, student loan forgiveness or partial forgiveness.... Things that are short-term and targeted?

[Boomer860]

Agreed is some respects, but your first paragraph gets at my point that folks making under 100k don't have any money and they are the ones that typically drive consumer spending. In fact Food Stamp recipients are reported to top 30 mil this month, eligibility is those making under 27k for a family of four, highest ever, even after post Katrina.

 

Do some debt forgiveness on mortgages directly to the spenders and you immediately help out the stressed middle class, who will still have to spend and won't be holding on to their money tighter than the banks are right now. I am just saying, I know the personal responsibility argument etc.... We are all going to have to pay for this in the long run through our taxes, but if you are going to bail out Wall Street, ING, City etc than what about average 'Mericans and let it trickle up?

Other than the moral hazard argument from those who like to get on their high horse, what from a macro or micro standpoint is the problem with this? Job creation is good, student loan forgiveness or partial forgiveness.... Things that are short-term and targeted?

Where is my free gas and TV?

[TPS]

Agreed is some respects, but your first paragraph gets at my point that folks making under 100k don't have any money and they are the ones that typically drive consumer spending. In fact Food Stamp recipients are reported to top 30 mil this month, eligibility is those making under 27k for a family of four, highest ever, even after post Katrina.

 

Do some debt forgiveness on mortgages directly to the spenders and you immediately help out the stressed middle class, who will still have to spend and won't be holding on to their money tighter than the banks are right now. I am just saying, I know the personal responsibility argument etc.... We are all going to have to pay for this in the long run through our taxes, but if you are going to bail out Wall Street, ING, City etc than what about average 'Mericans and let it trickle up?

Other than the moral hazard argument from those who like to get on their high horse, what from a macro or micro standpoint is the problem with this? Job creation is good, student loan forgiveness or partial forgiveness.... Things that are short-term and targeted?

Some of it is going, and probably more needs to be done. I mentioned a program in Philly (I believe) that gets lenders and borrowers together in bankrucptcy court to re-work the financing--both sides give a little. A fiscal stimulus will be targeted at the middle class, so that's no different than a "bailout" is it?

[YellowLinesandArmadillos]

Where is my free gas and TV?

Change is coming... nickles and dimes and quarters probably, but hey Wall Street already got theirs, so did big oil, so why not give something to the masses rather than the corporate scoundrels???? Nah, too socialistic for you!