NEW YORK - A sure sign of a dysfunctional market economy is the persistence of unemployment. In the United States today, one out of six workers who would like a full-time job can't find one. It is an economy with huge unmet needs and yet vast idle resources.
The housing market is another U.S. anomaly: there are hundreds of thousands of homeless people (more than 1.5 million Americans spent at least one night in a shelter in 2009), while hundreds of thousands of houses sit vacant.
Indeed, the foreclosure rate is increasing. Two million Americans lost their homes in 2008, and 2.8 million more in 2009, but the numbers are expected to be even higher in 2010. Our financial markets performed dismally -- well-performing, "rational" markets do not lend to people who cannot or will not repay -- and yet those running these markets were rewarded as if they were financial geniuses.
None of this is news. What is news is the Obama administration's reluctant and belated recognition that its efforts to get the housing and mortgage markets working again have largely failed. Curiously, there is a growing consensus on both the left and the right that the government will have to continue propping up the housing market for the foreseeable future. This stance is perplexing and possibly dangerous.
Continue reading at Project Syndicate.
While this bill doesn't address the losses of home purchasers who lost major down payments, at least they wouldn't be homeless, neighborhoods would not be ravaged by empty homes, and maybe there would be less bankruptcies.
The downside of this bill for home purchasers is that they give up their "ownership" - but with Negative Equity/Underwater Mortgages, it seems pointless in the short term to believe that we'll gain any Equity over the next 5 years anyway.
This should not burden tax payers. The homes would remain occupied with funds still going to the banks.
http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.5028:
http://grijalva.house.gov/index.cfm?sectionid=13&itemid=582
http://activerain.com/blogsview/1629674/the-right-to-rent-act-of-2010-allowing-homeowners-to-remain-in-their-house-as-renters
www.55places.com
We are ALL in this together and we need good leadership without the pitting of all Americans against each other and casting blame.
Everyone has their own responsibility in this mess.
It would be foolish for big bangs NOT to engage in predatory lending when the federal government basically says it will make the banks whole for the foreclosures.
What if 2,000 banks out of 8,000 fail? 1.700 Savings and Loans were eliminated by the Resolution Trust and within a year we were into the longest boom stretch in history.
Well, I guess he did solve the problem that bankers might lose some bonus money, but he didn't solve anything else.
Just like what got us into this mess!
The heart of the matter is that big business is doing just fine and ialmost entirely unmotivated to curb profits for the good of America's economy. Politicians largely depend on corporate interests to stay afloat themselves, and the culture war that is continually being stoked in the American middle class prevents them from collectively instituting change.
No, it will be disastrous for many. One fourth of banks could close.
And who gets hurt if they do - the stockholders. That's EXACTLY the people who need to be hurt.
http://seekingalpha.com/article/56765-the-ten-largest-holding-of-calpers-the-biggest-u-s-investor
See what they did there?
The boyz are way ahead of you, bro.
I want Stainless Steel Appliances and Granite
! want a shower with 8 shower heads
I want a Hummer in the driveway
I want, I want I,want. Well you got it. Now its its now worth nothing, so what do you want now, A bail-out?
Having gorged itself on the borrowed earnings of others for over five decades, it is little wonder that an overstretched, underfunded economic system should begin collapsing beneath the burden of its own obligations.
MANY of these primary residences are NOT lived in by greedy people who have newer cars, took vacations, or spent above their means. Many people have lost jobs which is attributing to their inability to pay their mortgages - which is increasing the number of foreclosures and lowering property values further.
Since you probably don't have an underwater mortgage, what you probably don't realize is that NEGATIVE EQUITY is NOT shared by the banks or investors - it is the burden of the homeowner (unless the bank decides to lower the principal balance, which is extremely rare). You may not realize that Negative Equity is one of the major issues with the stagnation and decline of the housing market.
This may not be important to you because you may live in an area not devastated by foreclosures, but this is what is happening in many places, and it effects the ENTIRE ECONOMY.
Every tax payer (including homeowners in dire straights) paid for, and will continue to pay for the bailouts of the "Too Big to Fail" and with taxes and the devaluation of our dollar.
The American middle class did NOT crash the GLOBAL ECONOMY.
I would recommend watching this video -
http://www.youtube.com/watch?v=n0NYBTkE1yQ
Reason home-buying is flat is because people cannot afford high mortgages on high priced home. Reason home-building industry embarked on high-priced home is same as US auto industry; which embarked on making larger cars; leaving the small / low-priced car segment to foreign manufacturers. Ratonal - Higher unit-profit with big-ticket items (greater profit for less work).
If government encouraged building medium priced homes ($75,000 - $150,000) one would create construction and allied jobs; and help middle class. Building medium-priced homes is encouraged by capping home mortgage deductions on taxes.
This would also bring real-estate prices down. High land-prices is mainly driven by speculation and the enormous cost; including campaign contributions to re-zone and provide various licences for land use.
America was built on a low-profit-margin and large volume model (economy of scale). Somewhere we (the auto, home-building and other industries) forgot the very successful Henry Ford business model for autos.
Instead of smaller, cheaper and mass production, we want boutique personalized products and services, at our convenience... and govt pay for it as in healthcare and education. Or we sue!
End high unemployment, the foreclosure blight and jump start the economy –
WITHOUT SPENDING TAXPAYER MONEY!
Want to put Americans to work, help Main Street and stop the Financial Crisis without borrowing from China? Want to accomplish this within three to six months?
Give all citizens (with incomes up to $250,000) the option to withdraw some/all of their retirement savings TAX FREE IF THEY PAY ALL CASH FOR A PRIMARY OR SECOND HOME OR RENT TO SOMEONE WHO LOST THEIR HOME!
Retirees and those near retirement have suffered significant losses to their savings thanks to Wall Street greed. Tax free withdrawals for home purchases would make up for some of these losses, put a bottom on home prices, reduce foreclosures, increase consumer confidence and spending, provide state and local governments with much needed real estate taxes, and provide construction, consumer product and other employment without costing the taxpayer a dime.
Putting America back to work NOW would more than make up for FUTURE taxes on retirement funds.
Here is some out-of-the-box thinking, which at first glance may seem counter-productive. It does not involve federal spending and may even add to federal revenues. With courage to implement it, this proposal may solve many problems.
Legalizing the undocumented immigrants (who are already IN the American system), would permit these individuals to come out of the shadows. This will allow them, about twelve million, to BUY homes, cars, furniture, washing machines and dryers, refrigerators, seek healthcare and education, etc etc. and thus help and stimulate the over-all economy. The expanding economy will HELP ALL Americans.
Not to mention, the undocumented can start utilizing their full capacity and even start small businesses. And just like past and present legal immigrants, maximize their contribution to America.
Undoucmented workers have alredy proven their niche skills are needed. Now they need is the paper-work to spend the money they earn.
We complain that there is no consumer demand. Then, we don't want to bring the 12 million CONSUMERS / undocumented workers out of the shadow. Another example of wanting to "have our cake and eat it too." See the link below about immigrants and wealth.
http://www.huffingtonpost.com/rabah-ghezali/there-is-no-wealth-but-fr_b_703085.html#comments
American Monetary Institute-
http://www.monetary.org/