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Hillary's modest proposal (to wreck the housing market)
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WoodlandsOwl Offline
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Hillary's modest proposal (to wreck the housing market)
The problems are two fold:
1. Wall Street bought garbage securities backed by garbage mortgages.
2. Companies like DiTech, Greenlight, Countrywide engaged in predatory lending practices putting people in mortgages that they couldn't afford without adequate disclosure.

The Department of Justice should open up an investigation of the Mortgage lenders while the Congress is bailing the borrowers out.


By Jon Birger, senior writer

(Fortune) -- Hillary Clinton is no dummy. Even her detractors know that. And yet in last night's Democratic presidential debate in Nevada, Clinton floated what is perhaps the dumbest solution to the current mortgage mess I've heard from a top presidential contender.

"I have a plan - a moratorium on foreclosures for 90 days [and] freezing interest rates for five years, which I think we should do immediately," Clinton announced at what was the last Democratic debate before the Nevada Caucus on Jan. 19. A 90-day moratorium on foreclosures would throw a lifeline to some deserving homeowners, though I suspect it would only delay the inevitable for most. That's not my beef.

Where Clinton goes awry is her proposal to freeze mortgage rates for five years, which is essentially a much broader version of a deal President Bush recently hammered out with lenders to assist some subprime borrowers. If Clinton's only goal were to bail out homeowners facing steep rate resets on adjustable mortgages, her plan would work just fine.

For everyone else though, such a freeze would be disastrous. Interest rates on new mortgages would skyrocket - perhaps past 8 percent, as the mutual funds, pension funds and other investors who typically provide capital to the mortgage market shift their money into other investments where the government isn't impairing returns. With higher mortgage rates eroding buying power, the downward pressure on home prices would only increase. Lower home prices would lead to even more defaults, as more folks who'd lost the equity in their homes choose to walk away from their mortgages.

"It certainly would not speed the recovery of the housing market," says Doug Duncan, chief economist of the Mortgage Bankers Association. "The problem now is that investors are already worried about what the risks are, and (a rate freeze) would only widen risk premiums more."

Then there's the long-term impact such a bailout would have on behavior. While Clinton's plan would no doubt save some legitimate victims who were duped into taking out bad loans, she'd also be saving the flippers and speculators who knew the risks of low teaser rate mortgages but figured (wrongly) that they could always sell their house for a profit if the reset mortgage rate proved unaffordable. Bailing out these folks now would only encourage them to take even bigger risks down the line.

To be fair, John Edwards, has endorsed an even broader rate freeze - one lasting seven years - and he also wants to give homeowners the right to halt foreclosures if lenders haven't made a "good faith" effort (whatever that means) to rework the loan. Edwards, however, seems a longshot to win the White House.

Barack Obama, meanwhile, wants to require better disclosure by lenders (of low teaser rates, for example) and, like Clinton and Edwards, proposes a government fund to help borrowers transition from unaffordable adjustable mortgages to lower-rate fixed ones.

When it comes to a rate freeze, Duncan and the Mortgage Bankers Association aren't exactly disinterested parties, of course. A freeze would directly impact the bottom line of MBA members. However, when I discussed Clinton's plan with a more sympathetic economist - one who'd worked for Bill Clinton - his reaction was much like mine and Duncan's. "[b]This is an ugly correction, but it's a necessary one,
" says Jared Bernstein, senior economist with the liberal-leaning Economic Policy Institute. "This kind of an idea is a little bit of untying your shoes with a buzz-saw."

http://money.cnn.com/2008/01/16/commenta...2008011617[/b]
01-18-2008 12:42 PM
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Machiavelli Offline
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Post: #2
RE: Hillary's modest proposal (to wreck the housing market)
Somebody needs to explain to me why we need to bail anyone out. I know Greenspan told people in 2003 that they should be taking out adjustable rates, but who put a gun to their head? I could of picked the 4.5% adjustable but instead went for the 5.375 fixed. I don't get it. This 1600 dollar give away still pisses me off. I don't mean to high jack your thread, but give me a break. We need a third party. I'm more convinced of that day by day.
01-18-2008 03:09 PM
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blah Offline
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Post: #3
RE: Hillary's modest proposal (to wreck the housing market)
Machiavelli Wrote:Somebody needs to explain to me why we need to bail anyone out. I know Greenspan told people in 2003 that they should be taking out adjustable rates, but who put a gun to their head? I could of picked the 4.5% adjustable but instead went for the 5.375 fixed. I don't get it. This 1600 dollar give away still pisses me off. I don't mean to high jack your thread, but give me a break. We need a third party. I'm more convinced of that day by day.

Wow, we agree on something. Let the dumbasses that got themselves into this, get themselves out. No one forced them to get that adjustable rate mortgage and no one forced them to buy that house they can't afford. Maybe they will learn their lesson when they lose their house.
01-18-2008 04:42 PM
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WoodlandsOwl Offline
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Post: #4
RE: Hillary's modest proposal (to wreck the housing market)
blah Wrote:
Machiavelli Wrote:Somebody needs to explain to me why we need to bail anyone out. I know Greenspan told people in 2003 that they should be taking out adjustable rates, but who put a gun to their head? I could of picked the 4.5% adjustable but instead went for the 5.375 fixed. I don't get it. This 1600 dollar give away still pisses me off. I don't mean to high jack your thread, but give me a break. We need a third party. I'm more convinced of that day by day.

Wow, we agree on something. Let the dumbasses that got themselves into this, get themselves out. No one forced them to get that adjustable rate mortgage and no one forced them to buy that house they can't afford. Maybe they will learn their lesson when they lose their house.

We agree on one thing...someone OUGHT to pay...

It could be the Wall Street Securities "Pusher" that marketed the subprime garbage to be the equivalent of "Fannie Maes"....

or it could be Mortgage Broker or Lender that failed to adequately disclose, costs, adjustments, etc. to the consumer.

The problem is the debt has been resold through packages to instutional investors..

Already the Federal Trade Commission has "Truth in Lending Act" investigations out on Bank of America, GMAC, Countrywide (Home of the 'Combo Loan' where you put your car note, credit cards 2nd Mortgage, etc.. all in "one easy payment"... which is all BULL%^*&#-- by the way, why would you invest in debt and depreciating assets???).....Greenlight, Wells Fargo, Citigroup....

Just like Enron, Tyco, Heath South, Adelphia Communications, and back in the RTC days of the 1980's....

A BUNCH OF PEOPLE NEED TO GO TO JAIL
01-18-2008 06:55 PM
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Machiavelli Offline
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Post: #5
RE: Hillary's modest proposal (to wreck the housing market)
Quote:The problem is the debt has been resold through packages to instutional investors..


EGGG SACTLLYYYY!!!! If you wanted a sure investment, invest in T-Bonds. Investment at it's core is a risk. I daytrade every day. You win .. you lose.

Well I'm going to give this deposition to a watershed moment in my life. Here it goes. Our bedroom T.V. broke down, well actually the the sattelite remote, so to keep peace in the house my wife and I have been sharing the T.V. So during her hour we watch Oprah. (I'm sure somewhere in the manly manual there's soomething about not watching Oprah) Well they had this story about giving a homeless man 100,000 dollars. Well guess what, in a matter of years the guy was right back to where he came from. They tried to help the guy out, gave him counseling, the whole nine yards. People will attain their level. In my mind it's kind of like a garden. After you plant your vegetables the job is not done before the harvest. You better go out every week with the spade and get the weeds before they overtake your plants. Kids and People are like the plants. You better have a parent or loved one taking care of the weeds before they are a problem. You can't just throw money at a problem and think it will be solved. I don't want to type this. I'm questioning myself as I type it, but in my heart I know it's true. You can't just throw money at schools either and think your going to get results. Kids through their parents have to value an education. I teach in a very wealthy district, but 40% of our kid's come from families who qualify for the free and reduced lunches. I don't want to give the specifics on how that works, but you'll have to trust me. By far and large the kid's who have parents that value education succeed. Those that don't struggle. They don't take advantage of their opportunities and believe me the opportunities at my school are almost endless. People who get rich in one generation are few and far between IMHO. It's the values that our parents give to us, and that's the biggest problem the Democrats have going for them. You don't replace a family with a welfare check. Democrats better start preaching more self reliance. Ask not what your country can do for you stuff. I hate to say this, but in a nutshell, if you can't afford to provide for your child, you would do society a favor by not having kids.


Boy, what a rambling wreck I just typed. I'm here at the I-X center in Cleveland Oh at a boat show. My wife's here til 10 O'Clock. I hope somebody's on here to type with. I hope this generates discussion. I just reread it for typo's, I'm pretty harsh there at the end, but the govt. isn't going to solve your problems. The govt. should be there for regulating our environment. Keep the playing field as level as it can. Protect us as much as they can, but if you are waiting for it to solve problems for you and your family. You'll be waiting a very long time.
01-19-2008 11:28 AM
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blah Offline
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Post: #6
RE: Hillary's modest proposal (to wreck the housing market)
Are you sure you are a democrat? It doesn't sound like it.

You aren't going to get any argument from me. I agree with you.
01-19-2008 01:08 PM
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Machiavelli Offline
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RE: Hillary's modest proposal (to wreck the housing market)
Honestly, I'm my dad's and grandpa's Democrat.
01-19-2008 01:28 PM
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Krocker Krapp Offline
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Post: #8
RE: Hillary's modest proposal (to wreck the housing market)
That is the thing that most of the brainwashed masses simply do not get. Neither today's Democrats nor today's Republicans are yesterday's Democrats or yesterday's Republicans. Both parties have degenerated into equally corrupt and practically useless extensions of the Military Industrial Complex. The global ambitions of big business control the show nowadays and the only thing politicians represent are figurehead personalities for the little people to choose between. None of the mortgage plans presented above will ultimately provide much help to anyone. The vast majority of those people will still lose their homes at some point.
01-20-2008 01:35 PM
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Machiavelli Offline
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Post: #9
RE: Hillary's modest proposal (to wreck the housing market)
I agree. I'm not an isolationist but the Democrats seem bent on securing votes in upcoming elections vs. securing our sovereignity. The establishment Republicans would do anything to lower the cost production of our labor force. Meanwhile, the average Joe just suffers. I may not always be right but one thing I am is honest. I would bet the majority of the people who voted for Bush know his administration's policies sold them down the river. You'll get guys like GTS who see the writing on the wall but most just stick to their dogma even though in many cases they are being hypocrits. You can't SURVIVE by cutting taxes and spending up the wazzoo. There will be a day of reckoning, and every day that goes by we just exacerberate the situation.
01-20-2008 02:11 PM
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Fo Shizzle Offline
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Post: #10
RE: Hillary's modest proposal (to wreck the housing market)
Krocker Krapp Wrote:That is the thing that most of the brainwashed masses simply do not get. Neither today's Democrats nor today's Republicans are yesterday's Democrats or yesterday's Republicans. Both parties have degenerated into equally corrupt and practically useless extensions of the Military Industrial Complex. The global ambitions of big business control the show nowadays and the only thing politicians represent are figurehead personalities for the little people to choose between. None of the mortgage plans presented above will ultimately provide much help to anyone. The vast majority of those people will still lose their homes at some point.

Thank you for being a voice of liberty...None of these thugs will do anything but continue to steal your wages and make you a ward of the state...Government is FORCE....FORCE is evil...therefore...Government is EVIL.
01-20-2008 09:25 PM
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NIU007 Offline
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Post: #11
RE: Hillary's modest proposal (to wreck the housing market)
Fo Shizzle Wrote:
Krocker Krapp Wrote:That is the thing that most of the brainwashed masses simply do not get. Neither today's Democrats nor today's Republicans are yesterday's Democrats or yesterday's Republicans. Both parties have degenerated into equally corrupt and practically useless extensions of the Military Industrial Complex. The global ambitions of big business control the show nowadays and the only thing politicians represent are figurehead personalities for the little people to choose between. None of the mortgage plans presented above will ultimately provide much help to anyone. The vast majority of those people will still lose their homes at some point.

Thank you for being a voice of liberty...None of these thugs will do anything but continue to steal your wages and make you a ward of the state...Government is FORCE....FORCE is evil...therefore...Government is EVIL.

Well, without ANY government we would have anarchy and life would be, well, nasty, brutish, and short.

But basically, I agree. I didn't buy as big of a house as I could have. And I went with the 30-yr fixed instead of an ARM so I didn't have to worry about whether I could afford my house a few years later. So I sure hope I won't have to bail out those that bought too much house or went with an ARM and now can't afford it. I wonder how many of those people bought the house intending to flip it for a quick profit?

I think the correction needs to take place and people need to learn a lesson. I don't like politicians talking about bailing people out in order to get votes. And Hillary must not have anybody versed in economics as an advisor if she really wants to freeze interest rates.
01-20-2008 11:51 PM
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Fo Shizzle Offline
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Post: #12
RE: Hillary's modest proposal (to wreck the housing market)
NIU007 Wrote:
Fo Shizzle Wrote:
Krocker Krapp Wrote:That is the thing that most of the brainwashed masses simply do not get. Neither today's Democrats nor today's Republicans are yesterday's Democrats or yesterday's Republicans. Both parties have degenerated into equally corrupt and practically useless extensions of the Military Industrial Complex. The global ambitions of big business control the show nowadays and the only thing politicians represent are figurehead personalities for the little people to choose between. None of the mortgage plans presented above will ultimately provide much help to anyone. The vast majority of those people will still lose their homes at some point.

Thank you for being a voice of liberty...None of these thugs will do anything but continue to steal your wages and make you a ward of the state...Government is FORCE....FORCE is evil...therefore...Government is EVIL.

Well, without ANY government we would have anarchy and life would be, well, nasty, brutish, and short.

But basically, I agree. I didn't buy as big of a house as I could have. And I went with the 30-yr fixed instead of an ARM so I didn't have to worry about whether I could afford my house a few years later. So I sure hope I won't have to bail out those that bought too much house or went with an ARM and now can't afford it. I wonder how many of those people bought the house intending to flip it for a quick profit?

I think the correction needs to take place and people need to learn a lesson. I don't like politicians talking about bailing people out in order to get votes. And Hillary must not have anybody versed in economics as an advisor if she really wants to freeze interest rates.

Government in its current form is evil and immoral....Take it down to about 90% of its current size....protect our borders....have an strong national defense..(instant deadly retaliatation capabablity) and possibly keep the roads up...everything else...can be handled with freemarket solutions and policies of nonagression and multilateral trade and diplomacy.

Nasty...Brutish...short...Sounds like the life that most of us have now under the this government the we love so much...Ill take my chances without it and its dictation of force against its citizens.
01-21-2008 10:06 PM
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GGniner Offline
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Post: #13
RE: Hillary's modest proposal (to wreck the housing market)
NIU007 Wrote:Well, without ANY government we would have anarchy and life would be, well, nasty, brutish, and short.


Anarchy is one of those things that is strictly a theory and doesn't meet real world realities. There is always Order in Disorder, if not a Civil, elected government, it would just take the form of "alternative Govt.", otherwise known as the Mafia, La Cosa Nostra, etc.

the more disorder, the more order there will be, in some form or another. the world is, has been headed, down a path of more disorder as globalization, modern technology and a declining culture come together.
01-22-2008 10:51 AM
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NIU007 Offline
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Post: #14
RE: Hillary's modest proposal (to wreck the housing market)
GGniner Wrote:
NIU007 Wrote:Well, without ANY government we would have anarchy and life would be, well, nasty, brutish, and short.


Anarchy is one of those things that is strictly a theory and doesn't meet real world realities. There is always Order in Disorder, if not a Civil, elected government, it would just take the form of "alternative Govt.", otherwise known as the Mafia, La Cosa Nostra, etc.

the more disorder, the more order there will be, in some form or another. the world is, has been headed, down a path of more disorder as globalization, modern technology and a declining culture come together.

Well, yeah, somebody will eventually move in to fill the power vacuum. The strong will rule the weak. Kind of like the warlords in Afghanistan or Somalia. Hardly an improvement over what we have now (unless you are part of the more numerous or better-equipped group), that is what I was getting at.
01-22-2008 02:42 PM
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