They Are Not Your Friends
In addition to things going on in Real Life® I’ve been looking for information on the Super Atomic, Better Than Sliced Bread, Going To Solve All Our Problems Plan. Pretty slim pickings when it comes to details.
Atrios is wondering why the “line in the sand” about no new bailouts resulted in 0 To $1 Trillion In 4 days Flat. What is it that changed? What facts emerged that convinced Bernacki and Paulson that they needed spend upwards of $ 1,000,000,000,000? Duncan is also concerned that they haven’t figured out that this is not a liquidity problem, but is more involved than that.
Nouriel Roubini, a person who has been saying this was going to happen since 2004 and a specialist in collapsing economies, says that we need to bring back the very effective program created under FDR, the Home Owners’ Loan Corporation. He says if they don’t deal directly with the mortgages, anything they do will have only short-term effects.
Over at CNN-Money their article on the big bailout notes:
Will it help homeowners: It’s unclear at this point. If the government buys an entire securitized loan, it could opt to help struggling homeowners by modifying the terms. This could include reducing a loan’s interest rate or principal balance.
But it could prove difficult to snap up all the securities sold on a mortgage, experts said. And as long as investors still hold a piece, they could block any changes to the loan.
If the plan doesn’t stem the tide of foreclosures, home prices will not stabilize and the economy will not recover, experts said.
From what they are saying on the ‘Net, and the talking heads on cable at my Mother’s seem to agree, the proposal would appear to be targeted at buying up the bonds that were derived from the mortgages, rather than the mortgages themselves. This will help banks, insurers, and big investors, but it doesn’t deal with the underlying problems. I would call what they are trying a “trickle down bailout”: they bail out the big guys who will then help “the little people”. Yeah, Right.
