Idea for Obama to support housing prices

Horrible idea. It will bankrupt the government. I think the government is better off buying up all the foreclosures. THis way, at the end of the day, the govt. has something to show for the money they spent.

Do nothing, look at California, its working perfectly. Foreclosures are allowing clearing prices to be realized.

Yes, Califironia is working perfectly. A state that is in the worst fiscal condition of any state in the country. And a state with an unemployment rate of 9.3%.

It's California's own fault. They need to grow up and repeal proposition 13. Their financial situation wouldn't be so dire if they taxed their citizens appropriately (or at least consistent with their spending).

Cali lead us in, will lead us out. Funny how the most liberal States in the Union caused the problem, California with housing and NY by financing it. All the while lead by an idiot (Bush) and an even bigger idiot (Pelosi), and we expect Pelosi to lead us out, God help us!

Arizona and Florida also contributed greatly to the problem. And they are not such liberal states. If you look up "Housing Crash" in the dictionary, you will see a picture of a Miami condo.

Blaming the municipal financial messes on the economy is just wrong.

These things were in horrible shape BEFORE any mortgage crisis, they just made it all fairly obvious. California and NYC doubled per capita spending all on their own, they didn't need any help.

We're now seeing the cuts we should have seen YEARS ago. Horrible, wasteful spending was covered up by short term revenue peaks. This change had to happen no matter what.

Alpine: Sorry, didn't answer your point

"Yes, Califironia is working perfectly. A state that is in the worst fiscal condition of any state in the country. And a state with an unemployment rate of 9.3%"

You know what I meant, the process of market clearing is working, instead of being delayed. prolonged and made worse by Govt intervention.

Letting the process "work" at the expense of completely destorying the economy and state budget is a BAD idea. Now I know that as a buyer, you want lower prices. But do you want those lower prices if it comes at the expense of your child having to be in a classroom full of 35 students, or streets that are too dangerous to walk on at night? THe LACK of government intervention will make the matter worse. IF you look at the past, govt. intervention typically works pretty well.

I truly think we need to somehow ignite hope and take away uncertaintly. Yes, in the process we fix this problem of people spending too too much, and not producing. Did anyone read the article in the economist "Nearly nothing to fear but fear itself?" Alpine I tend to agree with your points. Uncertainty is the biggest single danger in the economy. We absolutely need to revamp this before it is too late.

What about the Republican's idea of 4% 30 year fixed mortgages for everyone. If they include commercial property, we could stabilize the system for a fraction of the cost of the wall street bailout.

Free market. Let the chips fall where they may.

Fruck the free market. Let's give Socialism a try. After all, we've got nothing to lose.

alpine: you have to come to grips with the fact that there is nothing the govt can do to prop up the price of property. the phony debt keeping it together has come apart and they cant tape it back together.

Prices will go where they are destined to go with or without government intervention...

Luis5acc: that proposal won't keep property from decreasing either...just another waste of money.

Personally I think it is morally reprehensible for people to saddle their children and grandchildren with a substantially decreased standard of living just so they won't take a loss on their property.

alpine292 wrote: "Fruck the free market. Let's give Socialism a try."

A joke on the streets of Moscow these days: "Everything the Communists told us about communism was a complete and utter lie. Unfortunately, everything the Communists told us about capitalism turned out to be true."

Russia is Socialist, even today. Their elections are a sham. The oil compnaies are owned by the Kremlin. And Putin uses their revenues as his personal piggy bank, making him the richest person in Europe. And if I was in Rissia right now and I dare wrote this, the KGB would throw me into a prison in Siberia.

cowards... all of you (alpine and others) who would turn to socializing the mistakes of yourselves and others ... this is/was a nation built by risktakers who have/had the opportunity to both succeed AND fail. I want to live in a country with equal opportunity (still a long way to go there) NOT equal outcomes. time for you and our nation to man up, and take your/our lumps. to all those crying about their unrealized losses, recapitalizing by saving money wont killa ya... may I suggest eating your cereal with water and putting the change in the piggy bank

Screw socialism -- Let the chips fall where they may. I cannot stand all of these people looking for handouts. It is an embarassment.

the growth of an economy is a process. just because we are capitalist now, doesn't mean this is the best system for all. think about it - we are already in a way socialist? welfare? government intervention? we cannot let anyone fail - unfortunately we learned the hard way. i have learned all throughout my life and career to believe in the free markets. i think this theory must be modified. look what happened to lehman. think about it.. why won't we let countries fail? why do we have the imf? we have been doing this for a very long time, this is the first time it is affecting us directly. who knows. all i can say is bring back the certainty and we can worry about fixing the problems the right way over time. uncertainty will destroy everything.

one addendum :-) i think socialism and capitalism run their flaws - that sounds crazy i know, but think about it. socialism, in theory, SEEMS ok. so does capitalism.. but then you have to consider the human factor - emotion, struggle to survive, greed, pressure to make certain decisions to keep your job - these factors are unquantifiable but unfortuantely can create and destroy all the same. lets be careful in attacking anything, and be careful to judge unless you have been there yourself. the economy is very complicated, and very intertwined today. lets work together to make this work - one day at a time.

Countries fail all the time nyc10028. Take a trip to Iceland and Zimbabwae.

And Somalia. And Pakistan.

Semantics here, but Socialism would not countenance private individual ownership of one's residence, and therefore there would be home prices to prop up.

typo - there would be NO home prices to prop up

name a more developed economy?

nyc10028: it is our intervention that is destroying everything...you are confused but it isn't completely your fault

Financial markets take insane risks becuse they know the government will always bail them out...this crisis is a direct consequence on federal reserve bailouts that began with the S&L and long term capital managment and continued with the asian bailout, emerging market contagion and the mexican peso incident. each time there is an incident there is the govt to bailout so the risk taking gets bigger and bigger

the ultimte was with Greenspan and his incessant tinkering...people don't realize that it was only when greenspan became chairman that the fed began raising and lowering interest rates to keep us out of recessions...people were so used to it theygave it a name "the Greenspan put"...as recently as a year ago I had colleagues telling clients that as "soon as Bernake lowers rates the stock market will be fine"

if that clown Greenspan hadn't lowered interest rates tosuch ridiculous levels andlet the 2000 stock market bubble blow up run its course we would not be in this situation

do you ever wonder why college tuition is so high? its because of all the available student loans...college officials figure they can jack up the tuition cause students and parents will just take out loans to pay for it...we have college students graduating owing 30,000 plua in loans it is horrible

it is all due to government intervention....now they willspend a ton of money and this near depression will last a long time anyway...all they will create is a 3 - 4 trillion dollar debt that our kids and grandkids will have to pay back.

Then they'll tell us it would have been worse if they had not done something and you will believe them nyc10028

People own their houses in SOcialist countries. People own RE in Sweeden. People even own RE in China and that is Communist.

my point is only that the us collapsing does not put the rest of the world in a particularly pretty situation, and therefore makes it in the best interest of everyone to not let that happen.. especially in todays world.

i am an economist i am aware of all these points :-) have any of you read the article in the most recent economist? the one i refernced above? called nearly nothing to fear but fear itself

ok economist = studied it in school, i am not employed as one at the moment, but anyway, this entire situation is very complicated, i just cannot muster up thoughts as to what the most appropriate course of action is at the moment to stimulate the economy.

fl: interesting point on college tuition!! yes, greenspan fiddling with interest rates is entirely insane, i do hold that opinion. but the problem is... how can we reverse all this without destroying everything? how long would it take? also, why should we suffer instead of keep pushing it back (extending the duration of mortgages... or having the govt buy back the bad debt and have banks stop posting lossess which will increase confidence and credit flow?). thoughts?

INteresting article from the Socialist Party (and yes, there is a SOcialist Party):

Socialists Confront The Economic Crisis

http://socialistparty-usa.org/statements/financialcrisis012509.html

nyc10028: the economy will come back on its own...cash, money markets and the like have been backstopped, we will just go through a very difficult recession...but even that is a good thing...it will lead to a very robust bull market...I don't understand people's unwillingness to deal with this issue now

the US is still the least sucky of what is global suckitude so no need to worry about that...you need to worry about all the printing that is going on.

Follow the Cali model

"The trouble with socialism is that you eventually run out of other people's money"

"If your only opportunity is to be equal then it is not opportunity."

"When you hold back the successful, you penalize those who need help."

-former British Prime Minister Margaret Thatcher

what about the idea of buying back the assets, coupled with extending longer mortgages - while imposing stronger regulation. if you think about it, every single check and balance has failed - auditors (what do they do anyway?), credit rating agencies, recklessness in banking (not monitoring and assessing risk as best as they could), the government. if this "new" regulation is actually enforced (basically people who were supposed to do their job are actually doing it) the system should work itself out. the damage i am afraid is done and irreversable, and can only be worked out over time - we must mitigate a complete collapse?

alpine - wow, scary orgs running around out there...

nyc10028: I think the problem is that human nature compels some people to do something...you also have the problem with the politicians...they cannot even allow a small recession to happen on their watch...people don't realize that recessions are good...they lead to bull markets, it is the natural order of things

when they kept stopping each recession they just made the final bubble so big that even their interventions couldn't stop it...they nearly blew up the world.

but regulations can potentially keep steady growth (ie no bull and bears). yes certainly, everyone is selfish - you, me, your neighbor. when it comes from push to shove, people want to survive. that is human nature and i am afraid we cannot change that, so we need to regulate and keep these checks and balances. recessions are good, definitely, but this is severe and requires severe measures.

10028: extending mortgages are just going to make people debt slaves....you or I won't buy their home, we can get a cheaper one. but they wont reduce it because they have this ridiculously high principal balance they have to pay off

they will just walk away...which is the fiancially smart thing to do...this process needs to happen...cut the principal balnces to fair market value...rip off the bandaid...the sooner we take our punshment the quicker we get to the recovery

the bad bank won't work unless the govt is going to buy up all bad mortgages, credit card bonds, student loan bonds and car loan bonds...even we don't have that kind of money

wait a minute - are you suggesting the govt pressure the banks to cut the principal balances to fair mkt value?

"nyc10028: I think the problem is that human nature compels some people to do something...you also have the problem with the politicians...they cannot even allow a small recession to happen on their watch...people don't realize that recessions are good...they lead to bull markets, it is the natural order of things"

"when they kept stopping each recession they just made the final bubble so big that even their interventions couldn't stop it...they nearly blew up the world."

10028 must be an economist, not a politician, this is what the informed 1/10,0000 of the population has been saying for 20 years. Economies are cyclical, they must be allowed to have their cycles. Clinton didn't, Bush didn't, now we pay. our sorry ass politicians have dscreamed bloody murder when growth slowed to 1% and we continued to artificially inflate. Nightmare. That is why it is even more important to let the shit hit the fan now, Cali style. Just secure the ATM system, let the pain come, we will be better in the long run.

10028: regulations never work for some reason...if people want to commit fraud they will do it

its sort of like the secret service...have you ever seen one of these guys get in the way of a bullet...if someone wants to shoot thepresident doesn't he always get shot or someone close to him (Brady) never a secret service guy though

i dont think it will be a catastrophe just s&p 650 (only 20% away) and unemploymnet at 9-10%, we will survive and so will you

buck up little buckaroo

haha i am bucking. but in your previous comment were you suggesting the banks eat the losses ie carve out the mark to market loss from the principal?

yes I believe if we are going to bail out banks the only moral thing to do is bail out the american consumer.

most of the people who have purchased since 2003 are underwater a significant amount...these ARMS were marketed as affordability loans or temporary loans...just do this loan and in 2 years we can refinance one your house goes up 25% or just take this loan and we'll refinance when your creit is better

you know you have to buy now or you'll be priced out...its a good starter home you'll move out in a year and buy something bigger

so they listened and they are now screwed...they need a bailout more than the banks...we can either give it to them or they will do it themselves by choosing to walk away from the homes

i think that is EXACTLY where this money needs to go now. is there a way they are actually going to do this? top down works to an extent (gives confidence, i think, from a macro perspective but this is not working because banks are not lending) BUT we absolutely have to do this bottom up. this way it is absolutely 100% definite that the money the govt is putting in is going directly to the right people. every single mortage needs to be re-done - ie we need to start from scratch. thats the bottom line. oh boy, we shall see.

it will happen nyc10028...they can do it the quick way(cut principal balances now an take our punishment) or we can take the Japan route

People own in houses in countries some people refer to as Socialist - which of them is Socialist and to what degrees? China, a Communist country has home ownership, and has many other changes which people consider signs they are embracing capitalism. Sweden is a "capitalist" country as well as a "socialist" country, depending on who you're talking to and what about Sweden you're referring to.

Having the government prop up home values somehow, which sounds like fantasy to me, would be a manifestation of capitalism as much as a sign of "Socialism" or "socialism." Neither label, "capitalism" or "socialism," addresses the idea's merits or lack thereof.

Forget propping up home values, but buying up the "toxic paper" as it's been referred to, might ease things for banks, and might even pay for itself, but merely labeling any ideas for fixes as "Socialism" does not advance things.