McCain on Mortgages: Good, bad & the ugly

[politicaltipster]

A few days old but good anyway....

Good

* No bailouts for homeowners or for speculators
* Accounting reform
* Focus on structural problems of US Economy

Bad

* Bailouts if there is a risk of systematic collapse with Bear Stearns bailout (just about) justified


Ugly

* Calling lenders to 'work together'

http://thepoliticaltipster.wordpress.com/2008/03/30/the-good-the-bad-and-the-ugly-john-mccains-mortgage-plan/

[Ban my account ffs!]

A few days old but good anyway....

Good

* No bailouts for homeowners or for speculators
* Accounting reform
* Focus on structural problems of US Economy

Bad

* Bailouts if there is a risk of systematic collapse with Bear Stearns bailout (just about) justified


Ugly

* Calling lenders to 'work together'

http://thepoliticaltipster.wordpress.com/2008/03/30/the-good-the-bad-and-the-ugly-john-mccains-mortgage-plan/

Basically:

Let the government bail out the corporations but leave the individual sh**t out of luck.

Not the type of leadership we need in 2008.  McCain is out of touch.

[Gustaf]

A few days old but good anyway....

Good

* No bailouts for homeowners or for speculators
* Accounting reform
* Focus on structural problems of US Economy

Bad

* Bailouts if there is a risk of systematic collapse with Bear Stearns bailout (just about) justified


Ugly

* Calling lenders to 'work together'

http://thepoliticaltipster.wordpress.com/2008/03/30/the-good-the-bad-and-the-ugly-john-mccains-mortgage-plan/

Basically:

Let the government bail out the corporations but leave the individual sh**t out of luck.

Not the type of leadership we need in 2008.  McCain is out of touch.

Lol. Did you read a thing of the actual link? Or do you even understand what the point of the bail-out would be?

[Ban my account ffs!]

A few days old but good anyway....

Good

* No bailouts for homeowners or for speculators
* Accounting reform
* Focus on structural problems of US Economy

Bad

* Bailouts if there is a risk of systematic collapse with Bear Stearns bailout (just about) justified


Ugly

* Calling lenders to 'work together'

http://thepoliticaltipster.wordpress.com/2008/03/30/the-good-the-bad-and-the-ugly-john-mccains-mortgage-plan/

Basically:

Let the government bail out the corporations but leave the individual sh**t out of luck.

Not the type of leadership we need in 2008.  McCain is out of touch.

Lol. Did you read a thing of the actual link? Or do you even understand what the point of the bail-out would be?

No.  But apparently you do, so why don't you humor me with your overflowing cup of knowledge and excellent analysis. [/sarcasm]

[Person Man]

So, basically he is just like Bush on the economy.

Socially, he's less activist, but in terms of FP, he's much more hawkish.

[Gustaf]

A few days old but good anyway....

Good

* No bailouts for homeowners or for speculators
* Accounting reform
* Focus on structural problems of US Economy

Bad

* Bailouts if there is a risk of systematic collapse with Bear Stearns bailout (just about) justified


Ugly

* Calling lenders to 'work together'

http://thepoliticaltipster.wordpress.com/2008/03/30/the-good-the-bad-and-the-ugly-john-mccains-mortgage-plan/

Basically:

Let the government bail out the corporations but leave the individual sh**t out of luck.

Not the type of leadership we need in 2008.  McCain is out of touch.

Lol. Did you read a thing of the actual link? Or do you even understand what the point of the bail-out would be?

No.  But apparently you do, so why don't you humor me with your overflowing cup of knowledge and excellent analysis. [/sarcasm]

Since you are being sarcastic I suppose this means that you do understand but you ain't gonna tell? Good move. I don't exactly have an overflowing cup of knowledge, but I am studying economics and I read the entire article. But since you didn't actually say anything relevant I'll just give you the basic idea here.

The problem with bail-outs is that people stand around with money and try to make it grow. Some people make good decisions and invest in things that go well and some make bad decisions and invest in things that go badly. If the government constantly steps in and saves those that have trouble it is a) morally dubious to punish those who did well and reward those who messed up and b) creates bad incentives for the economy. So, McCain says, bail-outs are bad. He adds though that in cases of people NOT losing houses through speculation but losing their own homes there is a place for government intervention. So, contrary to what you said, it's about going after corporations and speculators and helping low-income people who's lost everything. However, he adds that if there is a case where the economy might be severely damaged the government should step in. During the Great Depression for instance, the banks went bankrupt to a large extent. As a result those who had their money in the banks went bankrupt too. And then other banks who had lent money to those people would go bankrupt and...you get the idea. Therefore, if we're talking about a corporation who's collapse would have severely negative effects on the economy as a whole, it can be bailed-out. The purpose of this would primarily be to shield the little guy at the end from the fall-out.

So, the way to attack this is really if you either think that government should protect companies or if you think government should completely stay out of these things and adopt a libertarian position.

[Ban my account ffs!]

A few days old but good anyway....

Good

* No bailouts for homeowners or for speculators
* Accounting reform
* Focus on structural problems of US Economy

Bad

* Bailouts if there is a risk of systematic collapse with Bear Stearns bailout (just about) justified


Ugly

* Calling lenders to 'work together'

http://thepoliticaltipster.wordpress.com/2008/03/30/the-good-the-bad-and-the-ugly-john-mccains-mortgage-plan/

Basically:

Let the government bail out the corporations but leave the individual sh**t out of luck.

Not the type of leadership we need in 2008.  McCain is out of touch.

Lol. Did you read a thing of the actual link? Or do you even understand what the point of the bail-out would be?

No.  But apparently you do, so why don't you humor me with your overflowing cup of knowledge and excellent analysis. [/sarcasm]

Since you are being sarcastic I suppose this means that you do understand but you ain't gonna tell? Good move. I don't exactly have an overflowing cup of knowledge, but I am studying economics and I read the entire article. But since you didn't actually say anything relevant I'll just give you the basic idea here.

The problem with bail-outs is that people stand around with money and try to make it grow. Some people make good decisions and invest in things that go well and some make bad decisions and invest in things that go badly. If the government constantly steps in and saves those that have trouble it is a) morally dubious to punish those who did well and reward those who messed up and b) creates bad incentives for the economy. So, McCain says, bail-outs are bad. He adds though that in cases of people NOT losing houses through speculation but losing their own homes there is a place for government intervention. So, contrary to what you said, it's about going after corporations and speculators and helping low-income people who's lost everything. However, he adds that if there is a case where the economy might be severely damaged the government should step in. During the Great Depression for instance, the banks went bankrupt to a large extent. As a result those who had their money in the banks went bankrupt too. And then other banks who had lent money to those people would go bankrupt and...you get the idea. Therefore, if we're talking about a corporation who's collapse would have severely negative effects on the economy as a whole, it can be bailed-out. The purpose of this would primarily be to shield the little guy at the end from the fall-out.

So, the way to attack this is really if you either think that government should protect companies or if you think government should completely stay out of these things and adopt a libertarian position.

The problem seems to be that McCain is standing around with a box of bandaids reserving them only for those who cry the loudest.

I would like to see a more proactive approach to ensure that these types of bubbles don't happen again. 

I agree that those that lost their shirts because they were misled or just had bad luck deserve some help and that those that were speculating and trying to make a quick buck have lost their shirts for a good reason:  Speculation is almost never a sound way to make money.. in the same way that gambling is a bad habit.

But this subprime mortgage crisis was not brought on by speculators alone, but years of poor financial policy by the government, which McCain doesn't seem to address.

We need financial policy that seeks to smooth out ups and downs, not creating bubbles because you "think" that the amazing economic growth is being caused by technology or money falling from the sky.

At this point, I think the best way to get ourselves out of this hole would be to raise taxes on the rich and use that money to invest in our infrastructure.  Why?  Because infrastructure is a good way to provide jobs and it's an investment that has a very good return in terms of allowing economic growth and it lasts for a long time if it's done right.

The whole point of raising taxes right now is to put money into the economy.  Taxes are historically low right now in the U.S., so cutting taxes further will not help the economy as much as raising them and using that money to build a good base for our economy to grow on would.

In the early '80s, taxes were high and the economy was in the tank.  By lowering taxes you put more money into peoples' hands to invest and make the economy work.  This sort of worked, except we kept spending and our deficit went through the roof, and we're paying for that now.

I know it's very keynesian of me, but what turned this country around in the '30s and '40s was a mass redistribution of income from the rich to projects that built much of our modern day infrastructure that is now aged and beginning to crumble. 

I don't advocate taking from the rich and giving to the poor just to spend because they're poor.  I advocate taking from the rich and putting the poor to work with it so that when it's over we can all reap the benefits.

But that really has nothing to do with the housing market.  I think the only criteria you need to meet to get some assistance if you lost your home is to prove that you actually lived in the house and that it was your primary residence. 

[Person Man]

A few days old but good anyway....

Good

* No bailouts for homeowners or for speculators
* Accounting reform
* Focus on structural problems of US Economy

Bad

* Bailouts if there is a risk of systematic collapse with Bear Stearns bailout (just about) justified


Ugly

* Calling lenders to 'work together'

http://thepoliticaltipster.wordpress.com/2008/03/30/the-good-the-bad-and-the-ugly-john-mccains-mortgage-plan/

Basically:

Let the government bail out the corporations but leave the individual sh**t out of luck.

Not the type of leadership we need in 2008.  McCain is out of touch.

Lol. Did you read a thing of the actual link? Or do you even understand what the point of the bail-out would be?

No.  But apparently you do, so why don't you humor me with your overflowing cup of knowledge and excellent analysis. [/sarcasm]

Since you are being sarcastic I suppose this means that you do understand but you ain't gonna tell? Good move. I don't exactly have an overflowing cup of knowledge, but I am studying economics and I read the entire article. But since you didn't actually say anything relevant I'll just give you the basic idea here.

The problem with bail-outs is that people stand around with money and try to make it grow. Some people make good decisions and invest in things that go well and some make bad decisions and invest in things that go badly. If the government constantly steps in and saves those that have trouble it is a) morally dubious to punish those who did well and reward those who messed up and b) creates bad incentives for the economy. So, McCain says, bail-outs are bad. He adds though that in cases of people NOT losing houses through speculation but losing their own homes there is a place for government intervention. So, contrary to what you said, it's about going after corporations and speculators and helping low-income people who's lost everything. However, he adds that if there is a case where the economy might be severely damaged the government should step in. During the Great Depression for instance, the banks went bankrupt to a large extent. As a result those who had their money in the banks went bankrupt too. And then other banks who had lent money to those people would go bankrupt and...you get the idea. Therefore, if we're talking about a corporation who's collapse would have severely negative effects on the economy as a whole, it can be bailed-out. The purpose of this would primarily be to shield the little guy at the end from the fall-out.

So, the way to attack this is really if you either think that government should protect companies or if you think government should completely stay out of these things and adopt a libertarian position.

The problem seems to be that McCain is standing around with a box of bandaids reserving them only for those who cry the loudest.

I would like to see a more proactive approach to ensure that these types of bubbles don't happen again. 

I agree that those that lost their shirts because they were misled or just had bad luck deserve some help and that those that were speculating and trying to make a quick buck have lost their shirts for a good reason:  Speculation is almost never a sound way to make money.. in the same way that gambling is a bad habit.

But this subprime mortgage crisis was not brought on by speculators alone, but years of poor financial policy by the government, which McCain doesn't seem to address.

We need financial policy that seeks to smooth out ups and downs, not creating bubbles because you "think" that the amazing economic growth is being caused by technology or money falling from the sky.

At this point, I think the best way to get ourselves out of this hole would be to raise taxes on the rich and use that money to invest in our infrastructure.  Why?  Because infrastructure is a good way to provide jobs and it's an investment that has a very good return in terms of allowing economic growth and it lasts for a long time if it's done right.

The whole point of raising taxes right now is to put money into the economy.  Taxes are historically low right now in the U.S., so cutting taxes further will not help the economy as much as raising them and using that money to build a good base for our economy to grow on would.

In the early '80s, taxes were high and the economy was in the tank.  By lowering taxes you put more money into peoples' hands to invest and make the economy work.  This sort of worked, except we kept spending and our deficit went through the roof, and we're paying for that now.

I know it's very keynesian of me, but what turned this country around in the '30s and '40s was a mass redistribution of income from the rich to projects that built much of our modern day infrastructure that is now aged and beginning to crumble. 

I don't advocate taking from the rich and giving to the poor just to spend because they're poor.  I advocate taking from the rich and putting the poor to work with it so that when it's over we can all reap the benefits.

But that really has nothing to do with the housing market.  I think the only criteria you need to meet to get some assistance if you lost your home is to prove that you actually lived in the house and that it was your primary residence. 

This is about right. Also, with money being centralized to a few people, I highly doubt that money is ALL being used to hire people and build infrastructure.

[Gustaf]

I don't see that you're saying anything other than that additional things should also be done, beyond what McCain wants to do.

As for speculation being bad, I disagree. Speculation is a completely unavoidable consequence of a free economy and is rather fundamental for its workings. What speculation is about is basically that you invest your money in a way you expect to yield returns. This puts money where it is needed. For instance, if you're running a business and you have potential to expand, the fact that people speculate in your future success and are willing to invest in your business provides you with the financial means to maybe hire more people, etc. A prosperous economy demands that people can invest money where they see fit. And I don't really think you can blame people for trying to make money on their investments.

Now, I'm not entirely sure how "financial policy" is to save the day. The purpose of economic policy, at least macro policy, is precisely to "smooth" things and avoid bubbles. It's not an easy job though. If you have concrete ideas here, feel free to present them, but I can't say it's immediately obvious to me what should be done here. Analyzing the economy is a tough job, and sometimes people mess up. I'm not sure it can be easily avoided.

Finally, your keynesian ideas, as you say, are not much related to the housing market directly. The question is, what exactly do you want to achieve here? Is it better infrastructure, redistribution of wealth, increased demand? The track record of Keynesian policies is not really super-great from a purely economic point of view. I would argue that one of the problems is that what Bush pursued to an extent was demand-side economics, cutting taxes and running up huge deficits to keep up demand. I'm not convinced that was the right way to go, neither then nor now.

[MODU]

^^^^ with most of what Gustaf said.  I'll just add...

If the government was going to stand around with a checkbook ready to write checks to people who made bad investment deals when buying a house, where is the cutoff on who gets aid, and what are the incentives for people who are doing the right thing by making ends meet to pay their bills on time?  If the government says "Ok, we'll bail out those who couldn't make the last three months payments on their home," you can expect that there will be plenty of those who are able to make their payments suddenly stop to collect aid.  They didn't need it, but they aren't going to turn down a handout like that. 

So, the government being so smart says "this only applies to those who couldn't make the last three payments as of March 30th.  That way, those that would otherwise scam the system lose the incentive to do so.  But what about the people that couldn't make the last two payments and will miss the third in April?  Since the government stated a cutoff date so people wouldn't abuse the handout, those that would actually need it now cannot obtain it, so how does that help them?

This is why I go back to what I said a month or so ago.  The $150B that is being issued as stimulus checks should have been placed into a refinancing program to get those struggling out of the abusive ARM loans they are currently in.  This would stabilize the housing and financial markets without costing us even more in bailouts down the road.  Plus, unlike some of the recommended bailouts, this has a better return on investment for the gov't, making it a smart transaction.

[opebo]

What on earth does the housing administration have to do with a 'market'?

For 60 years the US government has engaged in a program to house middle class white people in suburbs by giving them cheap, subsidized loans.  All off this is clearly a government operation, and to suggest that the poor saps who have no choice to participate or live in an apartment their whole lives are somehow 'to blame' for the foreclosure of 'their' home is ridiculous.

[agcatter]

Yeah, how dare you blame the person who doesn't pay his mortgage.  Why, that's ridiculous.

LMAO

[opebo]

Yeah, how dare you blame the person who doesn't pay his mortgage.  Why, that's ridiculous.

LMAO

It is largely out of his control, agcer.

[agcatter]

You have absolute control as to whether you take out a mortgage you can or cannot afford.  It's called personal responsibility - something liberals don't believe in.

Just like the lenders that hand out risky loans to people who can't afford to pay them back.  As a taxpayer, I'm no more obligated to bail the mortgage lender out than I am to pay the borrower's mortgage.

[??????????]

You have absolute control as to whether you take out a mortgage you can or cannot afford.  It's called personal responsibility - something liberals don't believe in.

Just like the lenders that hand out risky loans to people who can't afford to pay them back.  As a taxpayer, I'm no more obligated to bail the mortgage lender out than I am to pay the borrower's mortgage.

Preach it brother!

[jesmo]

One of the few economic issues I agree with the "Rethuglicans" on.

Americans brought this crisis on to themselves. I love my country, but I can not stand the freaking idoits who manage spending. Americans are worse then Arabs when it comes to money!!!!

[??????????]

Arabs are pretty cheap. Believe me, half my family is arab.

Anyhow, rethuglican, lol.

[War on Want]

You have absolute control as to whether you take out a mortgage you can or cannot afford.  It's called personal responsibility - something liberals don't believe in.

Just like the lenders that hand out risky loans to people who can't afford to pay them back.  As a taxpayer, I'm no more obligated to bail the mortgage lender out than I am to pay the borrower's mortgage.

Total Personal Responsibility=Social Darwinism/Anarchy

[classical liberal]

You have absolute control as to whether you take out a mortgage you can or cannot afford.  It's called personal responsibility - something liberals don't believe in.

Just like the lenders that hand out risky loans to people who can't afford to pay them back.  As a taxpayer, I'm no more obligated to bail the mortgage lender out than I am to pay the borrower's mortgage.

Total Personal Responsibility=Social Darwinism/Anarchy

You anti-Darwinists need to die (through survival of the fittest).

[??????????]

You have absolute control as to whether you take out a mortgage you can or cannot afford.  It's called personal responsibility - something liberals don't believe in.

Just like the lenders that hand out risky loans to people who can't afford to pay them back.  As a taxpayer, I'm no more obligated to bail the mortgage lender out than I am to pay the borrower's mortgage.

Total Personal Responsibility=Social Darwinism/Anarchy

No, not really. Personal Responsibility = Personal Responsibility.

[jesmo]

In general, I am an economic lefty commie, but this is one issue where I have to agree with StatesRights on.l