Thursday, July 24, 2008

Seven Cent Solicitation

I just don't have much to say lately and am on on a feel free to post RE related thoughts.

I would be especially keen to hear everyone's seven cents on the recent Housing Legislation passed by Congress. My hope for a veto was recently extinguished.

At least there are some provisions for first time buyers...but they look a bit complicated at first blush (and could anyone figure out the definition of a first time tends to vary by context?).

I will try and post some historical data on different Sacramento zips in the coming days to fill some space.

(Why not two cents? According to Webster's "two cents" tends to be unwelcome/unsolicited advise, so I figure I'm inviting comments, coupled with inflation, and a bit of tongue twister....and cents.)


Jacob said...

2 cents to 7 cents huh? Lots of inflation there. Maybe we are in an oppinion bubble lol.

It seems to me like this bill will spend a lot of money but wont really do anything. Maybe keep everything going until after the elections, which is its real goal, so it that sense it may very well succeed.

At least the treasury didnt get a blank check to bail out fanny and freddy like they wanted.

there is a tax "credit" for first time buyers but you have to pay it back so it is a tax "loan" in reality.

There is no way to end this painfully. That option would have been to stop this mess in the first place (i.e. with some form of regulations, maybe require banks to make sure a person can pay back a loan, crazy, I know).

But it might help some people keep their homes. Even tho that is not in their best interests in most cases, but it is what the banks want cause they cant deal with all the foreclosures.

A couple billion in there for counties to buy and fix up homes, why not. We spend more than that blowing up and rebuilding stuff in Irag. Might as well spend a small amount here.

Patient Renter said...

I would be especially keen to hear everyone's seven cents on the recent Housing Legislation passed by Congress. My hope for a veto was recently extinguished.

I have a lot more than seven cents to share. I'll sum up a few thoughts though.

First, some facts. This bill will end up being the costliest public bailout in the history of the world, orchestrated by the most indebted nation in the history of the world (that would be us). If you dare yourself to think about it, the ramifications for future generations are deplorable, yet this is looked at as a good thing? It's so disgusting, words cannot describe.

So let's look at the pros and cons briefly. Pros, who benefits?

-Politicians - obviously those who support the bill are looking to gain votes, donations, political capital, etc., etc.
-Wall Street - as part of this whole mess, the Treasury has made it clear that they intend to support the GSE stock prices at any cost, which greatly benefits the Boyz on the Street... because, you know, it's all about propping up the stock market.
-Investors - By security the GSEs debt, taxpayers are essentially bailing out investors (most of them foreign - China anyone?) who have been supporting the GSEs through the bubble.
-Big Banks - the housing bailout portion of this legislation, heavily lobbied for by the big banks and lenders, gives lenders direct control over choosing which loans they want to approve to receive benefits from this legislation. Regardless, any legislation aimed at subsidizing loan payments or rates ultimately goes to lenders - so they are a big winner.
- Corporate Execs - One of the most evil attributes of corporate bailouts is that they let the executives off the hook for running a company into the ground and essentially subsidize their massive pay and bonuses (20 million per year in this case) with taxpayer dollars.

So in summary, our tax dollars are being used to benefit Politicians, Wall Street, Big Banks, Investors and Corporate Executives. That's quite the list of people who are going to benefit from a situation that they helped create. So who on main street benefits? Well, some homeowners. As I mentioned above though, this legislation allows banks/lenders to ultimately control who receives benefits, and the congressional budget office estimates that nearly 1/3rd of benefit recipients will lose their homes to foreclosure anyways.

Paul said...

You mean "The 2008 Stick It To Your Children Act" legislation (because that is who is going to pay), or the much touted $300B cost which is, by my estimate, only about 10% of what the actual cost will be, or the tax credit that is really just an interest free loan?

For those who don't know, part of the legislation increased the national debt limit by either $800b or 900b, so obviously, that was a veiled attempt to cover the cost. But as we know, the gubmint has a dismal history of vastly underestimating costs (look at Medicare prescription drug benefits if you doubt me).

And as to the first time homebuyer tax credit, yes, it is a tax credit, but you must repay it over 15 years (?), albeit interest free, so it's really just an interest free, unsecured second loan on your new home!

(Although I do find it ironic that BT was hoping her nemesis in the White House would veto it! :-) ) said...

There are so many elements to this legislation, it really boggles the mind. If you have not ready through it, much of it has very little to do with "Foreclosure Prevention." I too am really turned off by the overall cost... if you read the Summary of HR 3221 on GovTrack, it says the estimated cost is "$4 per American over the 2008-2012 period." I find that estimate amusing.

I posted a link to HR 3221's overview on my blog. If any of you can't sleep tonight, reading this will definitely help you get your zzzz's.

JOATMON said...

This is horrendous. Another example of donors getting preferential treatment over the regular folks. IF the Govt wants to spend $1 toward this, why not fund a law enforcement agency to prosecute the lenders, realtors, purchasers, and appraisers for FRAUD? They might actually be able to reduce the deficit by a few pennies that way

sacramentia said...

I think that it is the right thing to do given the current situation.

PR - As a percentage of GDP, compared to the UK, we are in much less debt. The UK seems to be doing ok (no depression) so maybe we still have some rope to use?