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Calling Neil Irwin and Zachary A. Goldfarb at the WaPo

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November 26, 2008 – Comments (1)

Come on, guys... This is "reporting?"

...estimated that the Fed's facility could lower mortgage rates to between 5.5 percent and 5.75 percent for 30-year, fixed home loans. Recently rates have been hovering over 6 percent and have been nearly as high as 6.75. Other analysts expected a steeper drop, to roughly 5 percent.

Either scenario would help the economy. It would allow some people to refinance their mortgages, saving money on their monthly payment that they could then use for other things. And it might prompt others to enter the housing market as buyers, helping make the decline in housing less severe.

If we're charitable, we'd have to say your simply drinking Paulson's Kool-Ade. The notion that lowered mortgage rates are automatically good is completely false -- as shown by the current mess we're in, which was predicated entirely on very low mortgage rates.

The current "slowdown" in consumer spending is only a slowdown in comparison to prior levels of consumer spending, levels which were unsustainably high because? Right, because those "good for the economy" low mortgage rates allowed people not only to pay too much for houses, but to go out and spend too much money on other crap they couldn't afford.

If we're less charitable, we might say you have been duped by your lack of understanding and your reliance on sources whose motives you don't understand, or don't bother to lay out for your readers.

Neil and Zachary, you guys ought to be pretty embarassed about this piece. It begs the question (that is, uses circular reasoning), and tries to pass off as an uninterested expert source an analyst from FTN Financial. He's the one who convinced them that lower mortgage rates are good for the economy, it appears from the article.

What's FTN Financial, you ask? Good question. I bet Neil Irwin and Zachary Goldfarb didn't bother to ask it. FTN financial, in its own words:

Capital Markets/Securities Corp
FTN Financial is an industry leader in fixed income sales, trading and strategies for institutional clients in the U.S. and abroad.  We also specialize in mortgage and consumer-loan trading and risk analysis through our Capital Assets Corporation.

In other words, we've got a guy whose firm's lunch money depends precisely on getting more mortgage and consumer-loan backed notes trading. What else is he going to say about this new Paulson mortgage and consumer-loan bailout other than "it's good for the economy." It's good for his pocketbook, I'm sure, but for the rest of us?

It's another mugging to hand out our tax dollars to the greedy, the irresponsible, and the ignorant.

Let's remember who is (or isn't) on the hook to pay the tab for this push to borrow our way out of a popped debt bubble. Taxpayers, or their children, or their children's children. Nothing's free -- unless you make so little money that you don't pay taxes. If we don't eventually raise taxes to pay off this debt, our dollars will become worth a lot less and we'll pay via inflation. Either way, we're all on the hook for the greed of the few, especially the well-placed, loudmouthed few, the friends of Paulson, or the FTN financials, whose PR firms get them onto gullible reporters' speed dials.

There's a slimy irony here, which is that the U.S. is borrowing without any regard to the effect on future financial stability in order to encourage its citizens to once again begin borrowing without any regard to its effect on their future financial stability. I, for one, don't believe the "lending is dead" stories that Paulson whips up every time he throws another couple hundred billion at the nations poor, struggling bankers.

I would love to see evidence of this consumer-lending crisis. I see zero-percent financing offers on cars (and know people who have taken them up on it...). I get at least half a dozen credit card offers per month. As far as I can see personally, people who can afford credit have access to as much as they need, or want -- probably too much.

If those who can't afford credit, or have proven themselves unwilling to pay their bills in the past, cannot, then we don't have a crisis, but a return to normalcy. Six percent mortgage rates are a burden? Look at historical costs of mortgage borrowing and wipe your tears. Many of our parents paid double digits.

This is one of the worst articles I've seen from the Post. You can email Neil and Zach here, if you want.

1 Comments – Post Your Own

#1) On November 26, 2008 at 8:02 AM, TMFBent (99.80) wrote:

To judge from the comments, Neil Irwin and Zachary Goldfarb didn't slide this pile of regurgitated Treasury talking points past every reader.

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