$75 Billion? Obama Distorts American Dream

Update: Michelle has all the gory details here.

This is the latest on Obama's housing initiative, suddenly grown to 75 billion up from 50. The "American Dream" he invokes is not the Dream of America as we know it. No one has ever been promised everything simply because they were born in America. The American Dream is having the freedom to pursue your goals without undue influence from government. And said pursuit has always carried risks. Not in Obama-land, apparently.

"In the end, all of us are paying a price for this home mortgage crisis,'' he will say. "And all of us will pay an even steeper price if we allow this crisis to deepen - a crisis which is unraveling homeownership, the middle class, and the American Dream itself. But if we act boldly and swiftly to arrest this downward spiral, every American will benefit. ''

As pointed out here, many of these people bought homes they never could have afforded to pay for in the first place. Some just gambled and lost. Removing responsibility for one's actions isn't some American Dream, it's an American nightmare. And especially so for the vast majority of the population who managed their affairs appropriately.

Now all they see is a government dictating to them that they must pony up to support those who did not. That has absolutely nothing to do with what made this nation great. And it has everything to do with nations and systems we have shed blood to defend ourselves against.

The America people better wake up before they find themselves sleep walking through the slow groan of a life without the need or incentive for enterprise, because no matter what happens, government is going to level the playing field. This is nuts!

Comments

[jimzinsocal]

If I did the math correctly? We are going to pony up to the tune of about
8,333 for each of the advertised 9 million homeowners that will be "helped"
via this legislation/decree.

Merry Christmas and you are welcome.

Signed: Responsible citizen

[mark l.]

look these people have nowhere to go...
obama's relatives have filled up all the section 8 houses.

This plan is the equivalent of turning any house that is 'arbitrated' into a section 8 property, so aunt zutti can move on up, whiel awaiting her deportation.

[Andrew_M_Garland]

Obama thinks that every opportunity to borrow and spend will create wealth, so why not? Obama and the Democrats have announced that their policies are based on a 1.5 "economic multiplier" that will improve the economy. Does it matter that these leaders base their policies on a discredited, obviously false, 70 year old Keynesian theory?

The Keynesian multiplier makes counterfeiting a productive activity

It seems like a funny idea, but it follows directly from the Obama and the Keynesian theory, so it isn't funny, it is an absurd consequence of the beliefs of Obama's economics team.

I think it is more than strange to believe that when the government buys 2 TV sets, the government gets 2 TV's and someone else gets one for free. A great deal. But, it is entirely due to miscounting transactions as being wealth.

If Obama (via Keynes) is correct, that there is a 1.5 wealth multiplier on spending, then $100 in spending produces $150 in wealth, and we should all benefit from counterfeiting.

Let's Counterfeit Our Way to Wealth
http://easyopinions.blogspot.com/2009/02/lets-counterfeit-our-way-to-wealth.html

-------------
Excerpt:
This counterfeit money should have the same 1.5 multiplier associated with government spending. The money won't be saved, it won't go to the taxpayers (who have their own money), and it will get into circulation immediately where it can stimulate the economy and even create more tax collections.

Even better, there is no need to borrow money or raise taxes to get back the money, because this would create it at very low cost. The investment and job creation plans of the taxpayers would not be interrupted.
-------------

Where have I gone wrong? By believing Obama and Keynes. Maybe they don't care if they are wrong, as long as they get to spend the money.

The housing bubble was a direct stimulus, loaning money to people. The new plan is a "trickle-down" stimulus. The government wants to give money to businesses in the hope that this will raise employment and create permanent jobs. Money to businesses run by the politically connected.

What happened to the truth "Receive a fish and eat for a day. Learn how to fish and eat forever." Only the private sector has the incentive and knowledge to guide production and employment. The government can only take taxes from productive people and give the money to favored interests.

A Tested Stimulus Plan
http://easyopinions.blogspot.com/2009/02/tested-stimulus-plan.html
We just tried a stimulus through housing policy.

Andrew_M_Garland
EasyOpinions

[mark l.]

has a bottom rate of renegotiating the loan predetermined?

here's some quick numbers for reference...

a guy is making 20k a year, at 0% interest, he can pay under the guideline of 31% of income, 186k over 30 years.
he pays 516/month.

at 1%, 697/month.
at 2%, 941/month.
at 3%, 1270/month.
at 4%, 1751/month.
at 5%, 2315/month.

IF the govt is going to intervene, it absolutely cannot do so at a rate less than the responsible consumers who are making payments, otherwise they are providing a long term source of welfare.

consider the 20k salary that can afford a 186k home-he pays 186k over a lifetime.
a responsible home owner looking to get the same property at 5.5%, will pay a total of 968k over a lifetime.

You want backdoor reparations?
how about coupon for 782k, the difference between no interest and normal rates...

The absolute criteria that must be figured in is the cap for the interest rates that can be offered.

[mark l.]

bottom line on any govt assistance?

they need to expand the criteria of 31% of income to also provide the parameter of 5% interest payment, bare minimum.

the rates cannot be transferable,-even among family.

any home equity loan nullifies the agreement, and the owner has to shop their new rates.

120k house at 5%?
1490 a month. 31% of income...means the individual needs to be making 57k a year. Bye, bye obama's corp supporters.

We are a few votes away from our govt buying houses and giving them away at almost no interest. Those who are paying for their houses? You'll also be on the line for the govt purchases that are made, so that people who could not afford houses are bailed out and given hundreds of thousands of dollars.

[Jumbo]

So we should let the many thousands of homeowners lose their homes and net worth? I thought the right side was all tighty whitey about homeownership for Americans. You said it would strengthen the fabric of our communities. You said better cities, states, and nations are based upon home ownership. Why is it different now? Oh, I forgot. The benefits are going to someone other THAN YOU. Since the benefits are going to others, you now cry foul? Maybe it is a simple calculation that you folks are all renters, so you don't have an emotional connection to losing ones home. To most loyal Americans, seeing your neighbors prospering is a good thing. Not so much with this crowd. Your badge of honor simply says: "Hey, where's mine?". George W Bush already made your beds. Now you must go sleep in them. But, boy did he look good in that flight suit, huh? The grown ups are here to fix things. Please stay out of the way.

[mark l.]

step one: nationalize the banks, under the premise of this being a temporary measure.
step two: give low income borrowers the fed rate, .25-.5.
step three: ignore the temporary part of step one.

Sounds good, right?
9 million loans at 100k a piece provides a govt lending, via the banks, 900 billion.
at .5% interest, the govt/banks should still make 145 billion over 30 years, so it is a net gain.
The problem is that if the fed was just getting 2.5% on the loans, the govt would make over a trillion profit.

an essential qualifier if there is going to be any push to nationalize the banks:

the bank cannot offer a rate that is below normal rates for everyone else.

Without this, a senator's son could find the ability to access the fed rate for any business venture he chooses...
why not just borrow money at 2% and lend it at 5%? his income would be determined only by how much he could loan.

The dems are going to torch this country, and most of them don't even understand how.

[Kat]

Jumbo- I feel teh stupid coming off your keyboard. You pay your bills, I will pay mine. If your neighbor doesn't pay his, that is HIS responsibility. Charity is freely giving to neighbors but Government taxation is theft when TAKEN from me to give to your neighbor.
Comprende?
Why do liberals believe they are so morally superior when they are dumb as a rock? <

[mark l.]

jumbo-

can I borrow a thousand dollars from you?

nevermind, the govt is going to take it from you and give it to me. Glad I don't have to deal with your stingy ass.

[Jumbo]

Let me be very clear: Compared to the folks still supporting the GOP, any progressive (anyone) would be smarter and more capable than any of you. Hands down. Not even a question about it. Having said that, this crisis is an American crisis. Not mine or yours, but OURS! Because it is OUR crisis, we all need to realize sacrifices and adjustments need to be made. Those sacrifices might mean one of your neighbors - who lost his job or had health problems, resulting in a foreclosure - may need your assistance. Its how communities operate. Well, it was how communities operated before your imperial stoopid george w bush created the permanent GOP minority status. You folks are hurting too. Why not support an effort to help you own country. Well, wait now. You all sniff the butt of limbaugh and he wants the country to fail. You all watch oreilly like he was a god, but he also wants the country to fail. I guess you all want that too? Your leaders have given you your talking points and sadly, none of you can do your own research to figure out if you are being played for fools (you are). You follow along behind wealthy people, thinking they care about you or your family - they don't. They care that you support their lifestyle, they don't care about you.

Well enough truth and honesty for this crowd. You all wouldn't know a loyal, patriotic American if one jumped on your chest. You are putting your pathetic party over the good of the country - just like limbaugh told you. Mission accomplished! You Betcha!

Also Mark. I wouldn't give you the sweat off my backside. And if you need more sweat off someones backside, step closer to limbaugh. He'll enjoy you.

[mark l.]

"Because it is OUR crisis, we all need to realize sacrifices and adjustments need to be made."

Every single american with a 401k lost 40% of their retirement account.

Are you going to bail them out?

Currently, they can only deduct up to 3000 dollars of loss, and must roll it over to next year.

The same people who had lost the most in their 401k's are now going to bailout the younger first time homeowners?

[mark l.]

"Under the voucher program, individuals or families with a voucher find and lease a unit (either within a specified complex or in the private sector) and pay a portion of the rent (based on income, but generally no more than 30% of the family's income)."

http://en.wikipedia.org/wiki/Section_8_(housing)

Obama is going to turn the houses that the govt will be buying into section 8 housing. Instead of providing 30% on their income, he bumped it up to 31%.

The houses, jumbo, that you are advocating bailouts for...

no qualms about the govt simply buying them and treating them as section 8?
you don't see any ramifications?

[John]

Actually roll in the 200 million subsidy for Fannie/Freddie and it's nearer 275 billion. It's going to be broadly ameliorative and therefore fairly effective. The mistake all the real estate "experts" here make is to assume the real estate market is homogenous. It's not. And forget all the moral hazard bs, that argument went out the window when Bush and Paulson threw 150 billion at AIG. We have to slow the foreclosure rate which will not only assist domestic finances but also bolster the balance sheets of banks holding these loans. Sorry failure crowd this is going to help. Bad news for Republicans perhaps but good news for America.

[John]

Posted by: Andrew_M_Garland | Wednesday, February 18, 2009 at 01:12 PM

You're forgetting the Bush admin has been counterfeiting since 2001!! Deficit spending over the last eight years is one of the three principal causes of this whole mess. The other two; cheap money from easy al, and hands off regulation that let all those bankers enjoy 30/1 leverage and invent doomsday machines.

[Rich K]

It will be interesting to see where housing values go after the courts decide what they are worth in readusting all those dead loans. And with that the drop in tax revenue for local communities already broke. Aaaaand for what those neighborhoods will become when they all turn into Sec.8 ghettos like so many before have. We need more popcorn Dan!

[Lala]

I was reading a section 8 message board one day and was much amused (and horrified). One woman said she was living with her mother and wanted her own place. Because she had 2 kids she wanted a 3 bedroom apartment, preferably with two bathrooms, and a washer and dryer, along with air-conditioning. All this for 30 percent of the going rate.

[brian]

NO REWARD...NO Principal REDUCTION!

INSTEAD...Interest-only loans for 30-, 40-, 60- etc years.

That way, they aren't rewarded w/a principal reduction!

How 'bout dat?