Well it was a heck of a Thanksgiving break and if you're like me, all you managed to accomplish was nothing. Amidst more homework than ever before and an extremely uncomfortable bed at my girlfriend's mom's house, its hard to feel like we got any gains out of the too-late break. However, there's only a couple weeks until finals so I guess we just have to get tough... To think we have two more years of this!
Anyway, down to brass tacks. While the economy continues to make gains throughout the country with stocks rising and companies posting profits, the one area where gains are not being seen is the one that's most important to you and I: employment and the housing industry.
A recent NY Times article highlighted the unfortunate shortcomings of the current administration's program, Making Home Affordable. The government incentives offered under the program clearly aren't pushing lenders any closer to permanent restructuring of loans and the rising unemployment continues to drag foreclosure numbers upward.
President Obama is feeling more pressure than ever to use the bully pulpit for good and Senators are looking at measures to restructure the Fed's current housing program to put more pressure on lenders for the good of delinquent borrowers. Anti-government tea baggers heads' are spinning.
The following brief explanation sums up the article well:
From its inception early this year, the Obama administration’s program, called Making Home Affordable, has been dogged by persistent questions about whether it could diminish a swelling wave of foreclosures. Some economists argued that the plan was built for last year’s problem — exotic mortgages whose payments increased — and not for the current menace of soaring joblessness. Lawyers who defend homeowners against foreclosure maintained that mortgage companies collect lucrative fees from long-term delinquency, undercutting their incentive to lower payments to affordable levels.
Now at the end of the day, I think it's time to stop the bleeding. The article suggests that one measure under consideration is mediated renegotiation of home loans by bankruptcy judges, putting pressure on lenders to cut their losses in lieu of financial stability. While this will ultimately hurt the financial industry a bit, I am staunchly of the opinion that they've received quite enough of our money and this would help us by making them shoulder the burden for their deeds.
In the same breath, tighter controls need to be put in place to prevent the wild borrowing that lead people to default on their mortgages. If we do not curtail both wild financial speculation by banks and unsafe borrowing practices by consumers, then we have learned absolutely nothing from this catastrophe.
The bottom line is this, flex muscle on lenders, relieve pressure on consumers, get money back into the economy, spur job growth. Seems like a simple chain but as I'm sure Alex K will demonstrate, it probably isn't.
You know what to do cats and chicks. Feel free to leave comments at the front desk.
2 comments:
It's worth noting that the banking industry spent millions of dollars to stave off mediated renegotiation in bankruptcy courts. Critics said it just wasn't necessary. They were wrong.
We're in agreement on tighter controls of dangerously speculative behavior. In fact if speculators feel sufficient risk it's doubtful that it'll even be necessary to put that much more regulation on borrowers.
All of this is important to creating an economy that's viable in the long term and therefore capable of creating jobs, but perhaps here the situation isn't everything it seems. Unemployment is, after all, a trailing indicator www.iconoclast-investor.com/2009/08/13/trailing-indicators-and-economic-recovery/ and it's actually considered normal for unemployment to remain low during the early phases of a recession and not peak until after recovery is underway.
This is where the media drives me crazy. You hear 100 times a day that labor is down and 0.1 times a day that labor is a lagging indicator. People ask me where they should do their research to properly scrutinize the news, however if it weren't for practices like that, we wouldn't need to!
It's an imperfect world but that doesn't mean I can't get pissed about it.
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