Stop Me Before I Vote Again

Been pondering last week's Washpost report that both Fannie Mae and Freddie Mac are setting in motion buy-up programs to back the wave of low credit refinancings:

http://www.washingtonpost.com/wp-dyn/content/article/2007/04/18/AR2007041802499.html?referrer=email

Maybe some sub-primers will get the relief we called for here, though so far it looks to have the usual big bold talk and small penis one associates with these two waddling behemoths. Their function, after all, is to turn lending to us homemakers into a barrel shoot for "the private lending interests".

If it's for real, and gets really rolling, this bailout, by my seat of the pants guess, for the whole subprime quagmire, could end up needing about 20 times as much as the two Uncle-spawned and -backed outfits are dummying up here (ie 500 billion maybe 750 billion in Uncle guarantees.)

Most importantly, imo, there's a back story here, of course, provided for us by the wishywashy express, and it sure does seem to be aswim with the usual beltway smelly factoids.

My favorite: the fiercely snarling false teeth of our ever heroic tribunes, the donk house boyz, as they pressure "both companies [Fannie Mae and Freddie Mac] ... to demonstrate that they perform a public service." Demonstrate to who? Rep. Barney Frank, that's who, the man from Newton Lower Falls himself, who according to this article is making large motions about requiring uncle's two spoiled brats "...to contribute to an affordable housing fund," 'cause battlin' Barney feels "the public has not received enough value in return for the commercial advantages Fannie Mae and Freddie Mac get from their government ties."

"The public?" Hmmmmmm. Poke around in this soup a bit, and I bet there's a private label under the cover of all this "the public" business.

Note well: we often hear this stuff called a cheap Wall Street bailout, when its some sub-saharan state that's on the dunking stool.

Recall, fellow citizens: if Uncle saves an 'umble 'omeownin' defaulter, He saves the stiff's generous soft hearted creditor's arse too, don't he now?

I know I'm trespassing on Owen's turf here, but since I've been waiting for a real-estate crash for, oh, thirty years or so now, I had a lot of fun this morning reading patrick.net:

US Housing Crash Continues
It's A Terrible Time To Buy
Why?

1. Prices still disconnected from fundamentals. House prices are still far beyond any historically known relationship to rents or salaries. Rents are less than half of mortgage payments. Salaries cannot cover mortgages except in the very short term, by using adjustable interest-only loans. Anyone who buys now will suffer losses immediately, and for the next several years at least.

And so on. Man, do I love a really convinced and energetic doomsayer -- and damn, I hope he's right.

http://www.iht.com/articles/2008/01/02/business/abandon.php

MURRELLS INLET, South Carolina: Ettore and Larisa Costanzo are showing off their new house, which they love madly.

"Notice how we upgraded so there's tile on all the floors," Ettore Costanzo, a retiree from Brooklyn, said.

Now if only they could get the keys and go inside...

Their builder is Levitt & Sons, which ran out of cash in October and declared bankruptcy in November.

So the mighty Levitt & Sons corporation is broke and busted. I can't tell you how happy this makes me. Does anybody else remember that it was the original Levitt, William Levitt, builder of Levittown, who said, "No homeowner can be a Communist. He has too much to do."?

Here's a bit of thumbsucking from the Washington Post:

Everyone knows the direct causes of the present housing collapse: low interest rates, lax mortgage lending, rampant speculation. But the larger force lies in Americans' devotion to homeownership. It explains why government officials, politicians and journalists (including this one) overlooked abuses in "subprime" lending. The homeownership rate was approaching 70 percent in 2005, up from 64 percent in 1990. Great. A good cause shielded bad practices. The same complacency lulled ordinary Americans into paying ever-rising home prices. Something so embedded in the national psyche must be okay.

A "good cause"? What's good about it, other than enriching "developers" like Levitt and operating, as he astutely observed, as a first-class instrument of social control? As for our "devotion" to homeownership -- apparently a psychological given as far as the WaPo sage is concerned -- that is plainly an outcome of policy, or rather a whole congeries of policies, ranging from the mortgage-interest tax deduction to the socialization of "developers'" infrastructure costs.

I never cease to be amazed at how much Left discourse accepts the idea that house ownership is a good thing, and I'm dismayed by all the Left handwringing about the bursting of the speculative bubble. I hope it bursts so far and so fast it puts people off buying real estate for a generation.

Gallant ex-secretery Reich is all a-spin over at his blogging camp --

http://robertreich.blogspot.com/

'Twould appear the great American home lot collapse has Bobby in its spell, 'cause now he figures without the borrow-on-tomorrow two-step provided by ballooning property assets, there's just not enough effective demand out there to go around -- at least not enough to keep our consumer market bells ringing lustily away. Hence RECESSION -- maybe worse....

And what of this Congro-confected interim stimulus package? Well, sez Bobby, if you looked at it from the point of view of every underwater householder, it's got serving sizes maybe two sizes two small. And then there's the deficit we'll need to cover the shortfalls -- where's the funding for that to come from, in a country that's not saving even the spared dime?

[cue ominous sub-Wagnerian monster music] -- "overseas"! The horror!

Bobby, keep your shirt on. Warm up some milk. Read Lerner and Vickrey.

I'm a great believer in the basic intelligence of the public, though like all articles of faith, it's sometimes a challenge to maintain one's credence. So news like the following is especially welcome:

http://latimesblogs.latimes.com/laland/2008/01/a-tipping-point.html

A tipping point? "Foreclose me ... I'll save money"

A homeowner who can't sell his house tells the L.A.Times, "Foreclose me. ... I'll live in the house for free for 12 months, and I'll save my money and I'll move on."

Banks and lenders fear this kind of thinking -- that walking away from a house could be the smart economic move -- appears to be on the rise....

Calculated Risk notes this is "one of the greatest fears for lenders ... that it will become socially acceptable for upside down middle class Americans to walk away from their homes."

A nation of deadbeats! That's us! And about time, too.