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Obama Gets One Right

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September 03, 2008 – Comments (7)

Maybe.

"Long term, what we have to do is go ahead and make a decision," Mr. Obama said last week in Davenport, Iowa, in response to a question. "If these are public entities, then they have to get out of the profit-making business, and if they are private entities, then we don't bail them out." Sounds like former Federal Reserve Chairman Paul Volcker and former Treasury Secretary Larry Summers have been talking to the Illinois Senator.

Mr. Obama added a note of populism, saying he had "no sympathy" for Fannie and Freddie CEOs, and that "investors who had made a killing" shouldn't be bailed out. Maybe he can whisper that to current Treasury chief Hank Paulson, who keeps saying he wants to preserve the companies in their "current form," despite the manifest failures of that form.

Will he have the guts to stand up to panderers like Schumer, who will want to replace this broken Fannie/Freddie system with an even bigger, even more expensive and pointless, taxpayer-funded boondoggle that will operate at the whim of whichever party holds the looped end of the leash?

The government needs to snatch these and run them only long enough to chop them into bits and auction those bits off to the public markets. The Europeans don't need GSEs like these, do they?

Maybe what we really need in the U.S. is an end to the ridiculous fetishism of home ownership, something I've never understood when the vast majority of the homes here are nothing but sticks and drywall.

Sj

7 Comments – Post Your Own

#1) On September 03, 2008 at 10:26 PM, motleyanimal (97.54) wrote:

Hmmm...I never really thought of it that way, but individual home ownership is a very inefficient way to live. Not that I want to give mine up!

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#2) On September 04, 2008 at 12:45 AM, devoish (98.81) wrote:

Homeownership used to be part of a responsible retirement plan. You saved alot for your house, and then when any loan was paid off you could live there for your taxes, which for my mother in law is about half of what she could rent for. If she needed to it could also produce income renting it a room. When incomes were growing faster than they are today it worked out because your home cost was fixed except for the taxes. My parents gew up in a time before computers, investment information was not one or two clicks away. We were even told not to wear out the phone. When I rented my first room (shared the kitchen) for $50.00/week I had a friend whose parents mortgage was $300/month and he only knew that because they were burning it. Their taxes at the time were higher than their mortgage bill but their incomes had grown their entire lives, not stagnated for seven years.

At least Obama might understand what should to be done, whether or not he can do it. Biden from the great tax haven banking state of Deleware was a dissapointment for me. I think McCain will listen to expert advisors from the banking industry and figure out the GSE's just need to help the banks balance sheets a little more.

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#3) On September 04, 2008 at 9:02 AM, JoeandChuckP (47.20) wrote:

I find it highly unlikely that Obama would stand up to Schumer.  Obama has yet to vote away from his ticket.  Why would you suspect that to be different?

If you were investing in Obama the company, and you saw how he allocated his captial before (votes) why would you think he would miraculously begin to allocate his captial differently?

 CP

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#4) On September 04, 2008 at 9:02 AM, JoeandChuckP (47.20) wrote:

I find it highly unlikely that Obama would stand up to Schumer.  Obama has yet to vote away from his ticket.  Why would you suspect that to be different?

If you were investing in Obama the company, and you saw how he allocated his captial before (votes) why would you think he would miraculously begin to allocate his captial differently?

 CP

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#5) On September 04, 2008 at 9:23 AM, Gemini846 (88.73) wrote:

I've been decrying home ownership for a while now. No house has the after market returns of the stock market when you consider the costs that go into it. If you're willing to move from market to market just to make a few bucks on a house then bless you. Single family homes usually don't make near the money that apartment complexes do. Even a duplex or triplex is a much better investment.

We priced out a house 2 years ago figuring it was worth about $120k. The asking price was $180k and they told us they had been offered $150k to tear it down. I said go ahead. It needs $30k worth of repair work.

The taxes and insurance on said property were about $550/mo.  So look at it however you want. I could "invest" in the house at $800/mo and throw away the cost of the investment $6600/yr + interest or I could look at it as throwing away the $800/mo to keep a roof on my head and invest the $6600/yr in some other kind of equity. I opted for the latter and invested in about $12,000 of 19.99% credit card debt ;)

Obama has no problems stealing from any rich, especially corupt rich to make his point that all of us "rich" ($40,000+/yr) people are evil. He would never agree to shut down these entities but would rather run them at a loss as non profits.

Paulson needs to be hung. Literally. I don't see how what he is doing isn't criminal.

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#6) On September 04, 2008 at 4:39 PM, EnigmaDude (96.53) wrote:

"the ridiculous fetishism of home ownership" - huh. Interesting perspective from an American. That's like calling baseball ludicrous and boring, and like saying Apple Pie is fattening and leads to tooth decay. Or like calling my Dodge truck a gas hog!

OK buster - now you've really done it. I've had it up to here with your blasphemy!

Oh wait - I'm a renter. Never mind.

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#7) On September 14, 2008 at 9:04 PM, BradAllenton (31.68) wrote:

I agree, home ownership is overrated. Take into consideration that by the time you pay of a mortgage you payed 3x what the loan was. Then don't forget you really don't own it, you are just renting it from the local government. I always say to my friends "stop paying your property tax and you will find out in a hurry whos house it is"

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