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Only 9% of Homedebtors in Trouble

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June 06, 2008 – Comments (10)

This isn't happy news, but it only proves that any bailout attempt hatched by Bernanke, Paulson, McCain or O'Bamillery is doomed, because of this simple truth:

There's no way to replace the trillions in speculative money that powered this bubble.

About 1 in 11 American mortgages were past due or in foreclosure at the end of March, according to a report released on Thursday, a figure that is rising fast as home prices fall and the job market weakens.

Let the prices fall. Let the people who won't and can't make their rent payments to the bank leave the properties so that the prices can adjust and those with money and credit enough to buy them can do so.

It'll be ugly, but no uglier than the 0rgy of speculation and smug self-delusion that led to the bubble in the first place.

10 Comments – Post Your Own

#1) On June 06, 2008 at 12:20 PM, TDRH (99.68) wrote:

If I had a vote, I would push to just let the correction happen.  Rip the bandage off, suffer the pain and begin to heal.   Government interference through legislation and or direct bailouts is just going to prolong the pain and extend the duration of the decline.

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#2) On June 06, 2008 at 12:23 PM, thepull (99.46) wrote:

I agree 100%.

Bailing out people who really had no business buying the homes they did in the first place is not good policy. We are all going to have to suffer in some way, but dragging it out longer is only going to make it worse. Of course I'm one of those people who could actually afford to buy my first home if prices continue to fall for the next year so maybe I'm just really selfish. What with my saving of money and having good credit.

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#3) On June 06, 2008 at 12:53 PM, EScroogeJr (< 20) wrote:

Why do people always confuse morality with reality?  It's wrong to reinflate the housing bubble, no two ways to think about it. But that's what will happen anyway. The question is, what shall we do so that we don't find ourselves on the receiving end of that deal.

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#4) On June 06, 2008 at 1:24 PM, madcowmonkey (< 20) wrote:

Pick our nose while everybody else foots the bill. Oh wait, that is what the non-taxpayers are saying:)

Bent- So is Ed McMahon your buddy now or what. I have to feel for the guy. Broken neck, divorce(s), multimillionaire, old, and the list goes on.  I think being old works in his favor. I wonder how much he gets in Social Security? Oooops, who want to bring up that issue.

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#5) On June 06, 2008 at 1:41 PM, eldemonio (98.65) wrote:

THRH - Too bad we won't have a vote on what is done.  My vote would be to do nothing.  No interference from the FED, no interference from Congress, let the correction happen, not only with the housing bubble, but with the rest of the economy as well.

I am a firm proponent of  natural selection - capitalism is the economic arm of Darwin's theory.  Unfortunately, we are living in a time where, for some strange reason, we want to keep the weakest link around.  If we keep doing this, that compassion for the stupid will be the root of our demise.  Hold people and institutions accountable for their terrible fiscal decisions - let them fail.

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#6) On June 06, 2008 at 1:55 PM, GS751 (27.50) wrote:

What about the people like me..... Umm last time I checked I have no debt..  I Pay of my credit card off at the end of the month in full...... Great Obama Raise the Capital gains tax so people like me have to foot the people for speculators.. Are you gonna take care of the options bets that I lost money on.  Hey I've lost money speculating I'm not looking for a handout... I'm looking how to not make the same mistake twice.  Last time I checked the gov. gets more revenue when taxes are lowered...... Oh yeah the Us spends more on education as a % of GDP than they do on the war, by a full percentage point 1.6% versus 2.6%).  But yes Bent this is not good.

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#7) On June 06, 2008 at 2:13 PM, SemperGumby77 (64.29) wrote:

I've heard a couple of people chime in already that it is Obama's plan to raise the capital gains tax. When has he said this? And if so, by how much?

If you can forward me along a link to an interview or a video, I'd be more inclined to believe it.

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#8) On June 06, 2008 at 2:52 PM, saunafool (98.86) wrote:

From what I have seen in various sources, the Republicans are saying that Obama is going to raise the capital gains tax. The reason they say this is because Obama has repeatedly pointed out that it is unfair for executives to take the vast majority of their compensation in options, and therefore pay the capital gains tax rates on the millions they receive from this supposed "investment income" every year.

Therefore, the only thing Obama has specifically said is that he would like for executive compensation to be taxed at the same rate as the engineers, janitors, and middle managers working in their companies.

Other than that, to my knowledge, Obama has not said anything about capital gains taxes. Report this comment
#9) On June 06, 2008 at 3:31 PM, TMFBent (99.82) wrote:

Well, there's this and this:

I think that we can have a capital gains rate that is higher than 15 percent. If it—and if it, you know—when I talk to people like Warren Buffett or others and I ask them, you know, what's—how much of a difference is it going to be if it's 20 or 25 percent, they say, look, if it's within that range, then it's not going to distort, I think, economic decision making.

Or, you can just read it on his own website.

If he really believes that, then he's an idiot, a liar, or both.

This "it won't do anything" story is coming from a guy who is looking to distort economic decision making in the homedebtor arena via various (redundat) tax breaks and other giveaways. Barocky promises the homedebtors that he will:

Create a Universal Mortgage Credit: Obama will create a 10 percent universal mortgage credit to provide homeowners who do not itemize tax relief. This credit will provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 per year.

Create Fund to Help Homeowners Avoid Foreclosures: Obama will create a fund to help people refinance their mortgages and provide comprehensive supports to innocent homeowners. The fund will be partially paid for by Obama's increased penalties on lenders who act irresponsibly and commit fraud.

Sure it will, Barocky.

Bottom line, I think Obama's a typical Illinois politico. Play the populist, tell all those "bitter" hicks out there that's you're going to stick it to the rich guys. Meanwhile, take all the sweet deals you can get for yourself (Rezko, anyone?) and plead ignorance and piety -- until your favorite preacher get the entire country riled up with rubbish...

(Notes on Obama's pal Rezko, who was just convicted on a bunch of charges of fraud and money laundering in a wide-ranging investigation into his pattern of attempted influence-buying. Of course, Obama claims his relationship with the guy -- which includes a fishy land sale -- was on the up and up...)

http://www.suntimes.com/news/watchdogs/757340,CST-NWS-watchdog24.article

6. In 2003, Obama announced he was running for the U.S. Senate, and Rezko -- a member of his campaign finance committee -- held a lavish fund-raiser June 27, 2003, at his Wilmette mansion.

7. A few months after Obama became a U.S. senator, he and Rezko's wife, Rita, bought adjacent pieces of property from a doctor in Chicago's Kenwood neighborhood -- a deal that has dogged Obama the last two years. The doctor sold the mansion to Obama for $1.65 million -- $300,000 below the asking price. Rezko's wife paid full price -- $625,000 -- for the adjacent vacant lot. The deals closed in June 2005. Six months later, Obama paid Rezko's wife $104,500 for a strip of her land, so he could have a bigger yard. At the time, it had been widely reported that Tony Rezko was under federal investigation. Questioned later about the timing of the Rezko deal, Obama called it "boneheaded" because people might think the Rezkos had done him a favor.

8. Eight months later -- in October 2006 -- Rezko was indicted on charges he solicited kickbacks from companies seeking state pension business under his friend Gov. Blagojevich. Federal prosecutors maintain that $10,000 from the alleged kickback scheme was donated to Obama's run for the U.S. Senate. Obama has given the money to charity.

Tim Novak

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#10) On June 26, 2008 at 11:07 PM, jester112358 (28.83) wrote:

Do we really want to direct precious capital to a non-productive asset like housing?  Let prices adjust downward naturally to provide truly affordable housing.  And let those wishing to own a house do as I did some years back-put 10-20% down via saving and investing.  Otherwise, renting makes more sense.  Fortunately, Bush will veto any taxpayer giveaways to those who showed no financial discipline.

 Its nice to see capital flowing out of paper assets held by banks etc into real industrial companies which make real things.  This is the way capitalism is supposed to work.  No taxpayer intervention.

Bent:  I agree completely that an increased capital gains tax and tax on dividends as proposed by Obama will cause capital flight (that's what I'll do) to other countries.  Global markets cannot be controlled by laws in any one country.  It will devastate US companies by starving them of capital.  Funds will flow into commodities whose price can never be mandated by fiat (unlike currency). 

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