We haven't seen the bottom yet. A huge wave of sub-prime mortgages will have their interest rates re-set between now and the middle of 2008.
I see a recession very soon.
"In another move, Mr. Paulson and HUD Secretary Alphonso Jackson have instructed their staffs to begin working with mortgage lenders and others to identify borrowers who are in danger of defaulting. They also are trying to work with private lenders and mortgage giants Fannie Mae and Freddie Mac to develop loans for borrowers who will likely face default if they can't get more flexible terms."
-Translation: Those with a "R" by their names will be helped; those with a "D" will be fucked: "No loan for you."
from what I am hearign from friends in the finacials things are goign to get much worse over the next two years before they start to get any better....2010 things may start to pick up...
This may the only thing he learned from his father- "It's the economy, stupid."
Bad War + Bad Economy = No GOP
It's certainly reassuring to hear that Alphonso Jackson is leading the effort.
From a 2006 WaPo article:
An inspector general's report charges that top U.S. housing official Alphonso Jackson urged staff members to favor friends of President Bush when awarding Department of Housing and Urban Development contracts. But investigators so far have found no direct proof that Jackson's staff obeyed.
Two points:
1. A bailout is inevitable. Mark Zandi , chief economist for Moody's, estimated a month ago that losses in the securitized mortgage market would total around $110 billion between now and the end of 2008. This ignores the massive amount of leverage built on top of these losses. After seeing what has happened already to Countrywide, various French and German banks, Australia's second-largest hedge fund, I doubt either major party will just allow the market to correct itself while the CP market and at least one major bank tanks.
2. If you're going to do a bailout, a CBA tells you to bail out the home owners, since they are at the bottom of the inverted pyramid created by layers of leverage and securitization. Basically, there's no real difference between Bush's position and those of Sens. Dodd, Clinton, and Schumer.
Any mention of whether preference will be given to owner-occupied homes?
That would be nice - the WSJ has a front page article today on the high rates of defaults by speculators - up to 32% in the worst-hit states.
And that's just so far ...
"It's not the government's job to bail out speculators or those who made the decision to buy a home they knew they could never afford," Bush said in the Rose Garden. "Yet there are many American homeowners who could get through this difficult time with a little flexibility from their lenders or a little help from their government."
I'm confused. I heard part of the News Hour report while I was making dinner. It sounded like subprime borrowers weren't going to be helped at all. Could someone clarify?
Guys; what's going to be fun is watching bush, as the results of his "Fuck you, Jack; I've got mine!" policies, and the fall-out of the disaster in Iraq, turn him into some kind of bastard clone of FDR and LBJ, as he has to start pouring government money into all manner of programs, to stave off the 1929 "marketplace" effect. :o)
I'm confused. I heard part of the News Hour report while I was making dinner. It sounded like subprime borrowers weren't going to be helped at all. Could someone clarify?
What I heard on NPR said that, under the proposal, subprime borrowers with good credit could get some new loan relief. But isn't "subprime borrowers with good credit" an oxymoron?
the problem isn't the subprime borrowers...it's the people w/good credit who overextended themselves. and a whole lot of people are extremely tapped out. real income has NOT kept pace with cost of living even in high income cities/suburbs. hey you driving a lexus SUV in my 'hood -- you're a fucking liar, you don't have the money.
Actually, people could have good credit and still be sub-prime borrowers because they lacked info on their mortgage options or, at worst, were victims of redlining.
I am sure his help will some how include
a private contracted firm to make things worse for everyone.
Tom Tancredo says it's time to end the Katrina taxpayer gravy train in NOLA.
No word yet on when the gravy train for Haley Barbour relatives will end.
Rosali, how about the $2.5 bil a week gravy-RAILSYSTEM going on in Iraq?
:o)
I guess that gravy for GOP-connected firms is a great thing.
Assistance for poor NOLA residents who lost everything? Not so good.
Rosali:
Due date...Nov. of 2008.
Pay, you bastards, PAY! :o)
(Unless we're stupid enough to nominate Hillary...)
Bush aid.
I'd run away, if I had a house - you know the program will screw you and aid major donors, with a pretty, bogus name on top...sigh..
Whiskey: Basically, there's no real difference between Bush's position and those of Sens. Dodd, Clinton, and Schumer.
really? you want to support those allegations?
Recession by November.
Gay Veteran:
really? you want to support those allegations?
All of the proposals include using either a government agency or a GSE to provide the liquidity needed to refinance subprime borrowers facing a large increase in their mortgage payments. The Dems seem to favor Fannie and Freddie, while Bush favors going through the FHA.
Additionally, all of the proposals have the government providing some form of bailout for borrowers. For Hillary Clinton and Chuck Schumer, this is a government slush fund, whereas Bush wants the bailout in the form of tax cuts. The differences are ideological and minor, and I expect both tax cuts and slush funds will be used in the end.
me:
the problem isn't the subprime borrowers
I hate to disagree with you, but subprime mortgage bonds are the reason there's a liquidity crisis and the reason the German banking industry is in shambles. If the foreclosure rates in subprime weren't so big that major banks were in danger of failing, no one would care. It's no coincidence that the politicians in front of this issue, Dodd, Clinton, and Schumer, have the strongest ties to the financial industry.
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