Wednesday, November 9, 2011
The Easiest Mortgage Loan Bailout Program Would Let Taxpayers Do It Themselves
According to the Federal Reserve's latest Statistical Release in September, here, the current value of all residential mortgages outstanding is $9.935 trillion.
That's down 5.8 percent from the 2007 peak of $10.542 trillion.
It is estimated that half of all residential mortgages are effectively underwater, meaning homeowners, if they could sell under current conditions, would not make enough from the sale to have 10 percent down for the purchase of a new home. This situation traps people in their homes, keeping them from moving to take employment or retirement elsewhere.
The easiest solution to this problem is to allow holders of 401K, IRA and similar retirement accounts to withdraw funds without penalty, and perhaps even without taxation, if expressly used for the purchase of a new home, or for retirement of an outstanding mortgage or home equity loan. If not a complete tax forgiveness, government could settle for a flat tax at a low rate on such withdrawals in order to stimulate activity and help solve problems associated with indebtedness.
Holders of IRAs already know only too well that there are few exceptions to withdrawals without penalty. Perhaps the most useful of these few exceptions at present has been withdrawals permitted in certain circumstances for health insurance premium expenditures. Some people who have lost their jobs and their insurance have found this provision particularly helpful during this most severe period of unemployment since the 1930s. It has enabled them to purchase their own health insurance for themselves and their families with the funds.
The provisions permitting such withdrawals should be expanded to permit use of these funds to buy homes elsewhere, or pay off existing mortgages, which would do more than anything government has tried to do to date to stimulate velocity in the housing market.
People have saved plenty of dough to do it, too: $18 trillion.
Here's recent testimony about this from the Investment Company Institute:
Americans currently have more than $18 trillion saved for retirement, with more than half of that amount in defined contribution (DC) plans and individual retirement accounts (IRAs). About half of DC plan and IRA assets are invested in mutual funds, which makes the mutual fund community especially attuned to the needs of retirement savers.
Of course, not all of this money may presently be in the direct control of the individual taxpayers themselves to do with what they please, but a significant portion in IRAs and defined contribution plans, over $9 trillion, might very well be, according to ICI's latest data:
The risk to the retirements of people going forward if they are allowed to liquidate some of these monies is very real, but so is the prospect of a stagnant market of underwater mortgages devolving into bankruptcy, or even precipitating severe economic depression.
People should at least be given the choice under the current circumstances, perhaps with a sunset provision expiring in five years in order to spread out the effect.
A tip of the hat to John Crudele of The New York Post, who continues to argue for this solution in his columns.
Fortune Editor Geoff Colvin Thinks Flat Tax is Good Idea Which Need Not Be Partisan
As reported here:
[D]on't call it a flat tax. Call it a top-to-bottom overhaul that will put people to work, close loopholes that serve only certain corporations and the rich, make America more competitive globally, and improve life for people who work hard and save money. A flat tax, done right, can achieve all those benefits and more. Nor is it just theory. Several Eastern European countries have successfully used flat-tax systems for years.
Emphasize that it's a big change, bigger than most people first realize. Asking whether your taxes would go up or down under a flat tax is too small a question. Such a system would change your income, your taxes, interest rates, the value of assets, and prices of things you buy. All those changes combined would determine whether you'd be better or worse off. If it's done right, most people would be better off.
A flat tax can be a good idea. Let's hope it can escape the campaign war zone and get the serious attention it deserves.
Tony Blankley Just Had A Bloody Mary on the Acela
He was on live with Don Wade and Roma on WLS 890 AM this morning, a Wednesday, at about 0915. A lousy Wednesday.
Out here in fly over country we at least wait until 1700 hours.
Cain's Accuser Bialek Was Accused by Father of Her Son of Mental Problems
As reported here:
The father of Bialek’s now-13-year-old son sued in an ugly paternity fight to win sole custody of the child, accusing her of “significant mental and emotional problems,” court papers from 2000 show.
Cain Accuser Kraushaar Can't Remember Complaint Filed at Subsequent Job
As reported here:
Kraushaar said Tuesday she did not remember details about the complaint and did not remember asking for a payment, a promotion or a Harvard fellowship.
Underwater Mortgages: Effectively Half of All, or 25.5 Million, Says Mark Hanson
Because it's not just a matter of selling for a price which pays off the current note. It's a matter of also paying the realtor 6 percent and having enough left over for 10 percent down on the next purchase.
Half of all mortgage holders are in the situation where they would not have enough left over for 10 percent down on the next home. This is the key problem according to Mark Hanson:
"Because repeat buyers have always carried the market as the foundation, this is why demand has not come back. It's as if half the potential buyers in America died over a two-year period of time."
Read the full story about negative equity from Diana Olick here.
Technically 14.6 million are in negative equity on the note alone, but that's only 28.6 percent of homes with mortgages. 50 percent is more like 25.5 million homes with mortgages which cannot be sold without bringing money to the table for the next purchase. People are quite literally stuck.
To paraphrase Jonathan Swift:
Mortgages, the lifeblood of the nation,
Corrupt and stagnate in the veins,
Unless a proper circulation
Their motion and their heat maintain.
To paraphrase Jonathan Swift:
Mortgages, the lifeblood of the nation,
Corrupt and stagnate in the veins,
Unless a proper circulation
Their motion and their heat maintain.
Tuesday, November 8, 2011
Bill Bennett Should Just Shut Up About Herman Cain
What does he want Herman Cain to do? Some kind of magic dance to make the accusations stop?
"Four women are not an insignificant number. One or two anonymous charges, perhaps. Three anonymous charges (where, as I understand the story, Cain knows of at least two of the women) plus one woman who went very public and opened herself up to all manner of investigation are a lot. It is no longer insignificant. Neither is it insignificant that the Cain campaign discounted the charges in the initial stories, saying they were based on anonymous sources, only to make a mockery by blaming other campaigns with less substantiation than the original stories."
It's all here, but I look in vain for a defense of the rules of evidence, fair play and the like, all of which one would expect one's allies to marshall at a time like this in defense of one of their own.
But Bill Bennett is not a reliable ally.
Democrats on the one hand know Herman is the real threat to Obama, not Romney. Moderate Republicans, on the other, know Herman is the real threat to Romney.
Their joint mission is to destroy the source of Herman's success, which is his likeability. Relentless below the belt stuff will be tried until something sticks. Herman isn't even that important. It's the Tea Party he represents. Dispirit that and you automatically depress the turnout. Meanwhile Democrats can count on the individualist vein in Republicanism to cause Republicans to hang Herman out to dry as a matter of principle, the last refuge of the scoundrel.
"A man big enough to run for president should be big enough to have a full and candid press conference on all of this."
One important difference between Republicans and Democrats is that when a Democrat gets attacked, Democrats circle the wagons around their wounded, but when a Republican takes a hit, Republicans either run and hide like sissies, or join in the attack.
The electorate respects party unity, not because it's often right but because it's logical and predictable. Republicans aren't unified and haven't been since Reagan, which is why no one trusts them. They're insane, and occasionally fly off the handle and hurt somebody in the process.
And right now it's Herman Cain Republicans want to hurt.
Red State's Erick Erickson Says Romney Will Be The Republican Nominee
Because Perry blew it on immigration and Newt and Cain blew it with women.
There are many money lines in the post, here.
Oh, and Romney will lose to Obama, and conservatism dies.
And that means now we should rethink . . . John Huntsman (!).
Doesn't that mean conservatism is already dead?
The real conservative in the race is Cain, who likes $400 wine and a national sales tax. Therefore the argument is social, that is, with the women, who gave us their opposites: Prohibition and The Income Tax. Real conservatives like Phyliss Schlafly support Cain's ideas to unleash American business.
What we need is more women like Phyliss Schlafly, and fewer like Ann Coulter.
There are many money lines in the post, here.
Oh, and Romney will lose to Obama, and conservatism dies.
And that means now we should rethink . . . John Huntsman (!).
Doesn't that mean conservatism is already dead?
The real conservative in the race is Cain, who likes $400 wine and a national sales tax. Therefore the argument is social, that is, with the women, who gave us their opposites: Prohibition and The Income Tax. Real conservatives like Phyliss Schlafly support Cain's ideas to unleash American business.
What we need is more women like Phyliss Schlafly, and fewer like Ann Coulter.
Gloria Allred, Representing Cain Accuser, Made Light of Sexual Touching by TSA
SEAN HANNITY, HOST: "Did they touch your body parts?"
GLORIA ALLRED: "Yeah, they did and it was a first time anybody touched them in a long time and frankly, I liked it."
Video here from November 2010.
I Got Your Sexual Harassment Right Here, Pal
According to The Chicago Sun Times, here, Herman Cain's latest accuser was awfully chummy with the so-called scoundrel only a month ago:
"[Cain and Bialek had an] encounter a month ago while backstage at the AM 560 WIND sponsored TeaCon meeting in Schaumburg Sept. 30-Oct. 1 at the Renaissance Hotel and Convention Center."
The very attractive one time reporter for NBC's WMAQ in Chicago, Amy Jacobson, is the source for the story. She is now on AM Radio Station WIND in Chicago.
Peter Morici Says Herman Cain's 999 Plan 'Makes Great Economic Sense'
Here, but doesn't explain why in the same breath he criticizes Cain for being short on explanations (!):
Mr. Cain’s 9-9-9 tax proposal makes great economic sense but when pressed, he cannot explain why it does or how it would work. For example, when asked about how the nine percent sales tax would treat imports, he doesn’t know—this despite the fact that European countries have extensive experience with this issue, economist and lawyers have studied those issues ad nauseum, and the treaties the United States and EU have signed permit applying sales taxes to imports and refunding the same on exports to maintain neutrality in competition between foreign and domestic products.
I think Herman is being coy about treatment of imports because he intends to apply tariffs wherever necessary to level the playing field to make American exports more competitive.
Herman can't be entirely candid about that sort of thing at this stage because Republicans have been hooked on free trade since at least the 1960s. In the general campaign against Obama, however, Cain could conceivably make a bid for the Democrat union vote with such a tariff threat as part of an overall strategy to form a broader coalition not unlike Reagan put together in the 1980s.
Chinese Communist Calls Europe a 'Worn Out Welfare Society'
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| China's slave labor camps |
"If you look at the troubles which happened in European countries, this is purely because of the accumulated troubles of the worn out welfare society. I think the labour laws are outdated. The labour laws induce sloth, indolence, rather than hardworking. The incentive system, is totally out of whack. ... [A] welfare society should not induce people not to work hard."
Monday, November 7, 2011
Sarkozy and Obama Caught Dissing Bibi Netanyahu on Open Microphone
"I cannot stand him. He is a liar." According to the report, Obama replied: "You're fed up with him, but I have to deal with him every day!"
Story here.
Barry Ritholtz Can't Take It That Fellow Liberal Bloomberg Blames Congress For '08 Meltdown
In The Washington Post, here.
In the end, I think this is because of two things. One, a bias toward liberalism, the finger prints of which are all over the current crisis, so Barry can't stand it when one of his own departs from his version of the accepted narrative and puts the blame on liberalism's institutional face. And two, a widespread intellectual failure affecting liberals, conservatives and independents alike, which conflates the free market and the banking sector:
The previous Big Lie — the discredited belief that free markets require no adult supervision — is the reason people have created a new false narrative.
The banks are beholden to a fiat currency mediated by a fiat central bank fed by a government printing press. They are by no means a private sector player, and haven't been since 1913. Banking isn't a free market, it does require adult supervision, and the taxpayers should be outraged by the on-going failure of it every goddamn Friday night. Congress willingly acceded to this failure in the 1990's under Clinton and the Republicans when they gave banks free reign over money creation. The Federal Reserve became beside the point. It only took a decade to implode.
To paraphrase Russell Kirk: Free markets aren't a failure, they just haven't been tried recently.
Remove the taxpayer guarantee and put bankers personally on the hook, and that will change things for the better in a hurry.
In the end, I think this is because of two things. One, a bias toward liberalism, the finger prints of which are all over the current crisis, so Barry can't stand it when one of his own departs from his version of the accepted narrative and puts the blame on liberalism's institutional face. And two, a widespread intellectual failure affecting liberals, conservatives and independents alike, which conflates the free market and the banking sector:
The previous Big Lie — the discredited belief that free markets require no adult supervision — is the reason people have created a new false narrative.
The banks are beholden to a fiat currency mediated by a fiat central bank fed by a government printing press. They are by no means a private sector player, and haven't been since 1913. Banking isn't a free market, it does require adult supervision, and the taxpayers should be outraged by the on-going failure of it every goddamn Friday night. Congress willingly acceded to this failure in the 1990's under Clinton and the Republicans when they gave banks free reign over money creation. The Federal Reserve became beside the point. It only took a decade to implode.
To paraphrase Russell Kirk: Free markets aren't a failure, they just haven't been tried recently.
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| Off the Hook |
Remove the taxpayer guarantee and put bankers personally on the hook, and that will change things for the better in a hurry.
The Anti Heritage Foundation Line of the Day
"Heritage’s economic policies are reasonably free-market, at least when Democrats are in power."
-- Ryan Young, here
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