February 20, 2009

Obama's muddled mortgage politics

Obama went to Arizona to announce the plan because of the giant number of foreclosures there, but the worst case scenario in his plan is a family that bought in 2006 and is $25k underwater and paying 42% of their income on their mortgage. In reality, most people in trouble in Arizona are over $100k underwater and looking at 50% of their income going to the mortgage. And let’s not even talk about California.

Geithner and Summers probably understand that there’s not enough money in the world to bail out the Bubble in the four Sand States — Arizona, Nevada, Florida, and California. But, by choosing Arizona for his big announcement, Obama signals that he doesn’t likely understand that a plan limited to people 25k underwater will mostly help people in Red States in the middle of the country (think Affordable Family Formation). Obama seems to think his plan will convert the heavily Hispanic Purple States Arizona, Nevada, and Florida to Blue forever.

Obama going to Arizona to announce a bailout plan that's not big enough to bail out Arizonans just shows that Obama doesn't grasp the situation.

If he really comprehended that Geithner and Summers wouldn't let him propose a big bailout, then he should have made a political virtue of it: go to, say, Pittsburgh and butter up the locals for slowly rebuilding their economy while other states were living high on the Housing Bubble hog, then say your plan is aimed not at the greedy but at helping out responsible folks like the Kowalskis here, who were paying off their $87,000 mortgage until the factory shut down due to the recession that was caused by the Bush Bubble.

Instead, Obama just seems lost amidst all the big numbers. I'm reminded of Randolph Churchill's tenure as Chancellor of the Exchequer in Britain (where they use dots instead of commas in big numbers), of which he later said: "I never could make out what those damn dots meant."

33 comments:

Anonymous said...

Do you really want to give Obama's people intel?

I am sure they have people watching your blog.

Anonymous said...

All this leaves aside the question of why, if you indeed had all the money in the world, you would actually want to bail out the bubble in the sand states. It is going to unwind, one way or another, so why throw good money after bad?

Anonymous said...

I don't get the point of this plan.

It isn't big enough to save the biggest housing bubble states nor big enough to help the banks much.

So which Obama constituency benefits? Bankers or NAMs; or somebody else?

What am I missing?

Argent Paladin said...

Anonymous 3:
It's all about being seen as "doing something". Yes, it would be better and faster for them to do nothing, but then we would realize that politicians aren't really that necessary. So, they need to go through the motions.
It's just PR.

testing99 said...

Nobody really benefits. Because Obama does not nor does his team know how to run things. They are good at shaking down the Feds, in good times, with diversity scams.

Now they are in charge and have not a clue how to proceed.

This is likely to waste a lot of money, help not even their backers, create no patronage, and show how inept the diversity crowd is in running anything but their mouths.

Actually running something, even being Richard Daley, is hard, requiring a whole bunch of different skill sets that Obama and his followers do not have:

1. The ability to figure out how much money can be dispensed to backers without hurting too many other people or creating a huge spoils fight.

2. Ability to create and maintain a spoils patronage network broad enough to encompass any potential trouble makers.

3. Ability to deliver on key public demands, like keeping streets plowed during snow storms, to prevent critical mass for recalls/defeat/removal.

4. Ability to hedge against scandal by keeping one removed from direct spoils/patronage arrangements.

Obama has mastered only #4, not the other three.

J said...

testing 99

They are learning fast ...

The second packet will be better managed...

Baracktopus said...

Please stop calling Florida a sand state. I guess there is sand on the beaches, but.... come on.

rightsaidfred said...

testing99, comment gold.

Steve Sailer said...

Yes, that was an excellent comment by Testing 99.

AMcGuinn said...

We don't use dots. I think the French and Germans do.

I would guess he was referring to decimal points?

Anonymous said...

Interesting that you mention that notorious syphilitic (and father of Winston), Randolph Churchill (or 'Cheeky Randy' as he was affectionately known to an adoring british public).
Cheeky Randy was a very popular Tory politico during Britain's high-noon of grand imperialism and was well known as a fanatical opponent of Irish home rule.His hot-headed bomabastic/comic rants across the floor of the House of Commons were much admired for their showmanship and bluster - until they got a little too extreme in the end - Cheeky Randy started screaming obscenities at loyal opposition members, barking like a dog for no apparent reason and at one society high table dinner he greatly amused guests by suddenly jumping upon the dinner table, sitting on all four haunches and scratching behind his ear with his booted foot in the manner of a dog.Bemused guests were unsure whether to laugh or cry at this impromptu unexpected display but the consensus was to eventually burst out laughing and applaud the 'public school/Indian army jolly jape' in the best manner of English eccentricity and cherished sense of humor.
Later it was realised that Cheeky Randy was not joking at all - he suddnly collapsed and died a few weeks later.You see tertiary syphilis (kept strictly confidential) had rotted his brain*

* See 'In the Blood' by the geneticist (not the Sex Pistol) Prof. Steve Jones, for the source of this anecdote.

Anonymous said...

Robert Gibbs, POTUS press secretary, on who will and won't get bailout money:

"Here's what this plan won't do. It won't help somebody trying to flip a house. It won't bail out an investor looking to make a quick buck. It won't help speculators that were betting on a risky market. And it is not going to help a lender who knowingly made a bad loan...there will be people that made bad decisions that in some ways will get help."

In other words, white people who flipped: no money. Minorities who flopped: money.

Anonymous said...

Whatever Obama does about housing is about securing Dem neighbourhoods. Nothing else. He is using public money to fund his 2012 campaign. Americans need to realise that African politics is a radical game. There exists not even a whiff of any moral.

Anonymous said...

t99 said:
"Now they are in charge and have not a clue how to proceed."

I'd say t99 called this one right. Its a pattern all over Africa. The "freedom fighters" beguiled colonists and whites, but once at the helm were clueless. The only thing that kept them afloat for a while was looting the coffers left behind by whites, and development aid from Europe/US. When that dried up the civil wars and abject poverty set in. The MSM keeps telling us that non-whites are somehow more intelligent and vibrant and wiser than whites, when in fact reality keeps pointing in the opposite direction.

Big Bill said...

Regarding testing99's comment, Barry O should have gotten his start running a smaller, more manageable scam: plundering Antigua, for example.

The Lester Bird family has been doing that for fifty years, and (at least until the Stanford crisis caught up with them a few days ago) had not managed to kill the host organism.

Lucius Vorenus said...

Steve Sailer: I'm reminded of Randolph Churchill's tenure as Chancellor of the Exchequer in Britain (where they use dots instead of commas in big numbers), of which he later said: "I never could make out what those damn dots meant."

A little off-topic, but has anyone ever made a serious scholarly study [and then published a readable book about it] investigating Issac Newton's tenure as "Master of the Mint"?

He held the position for like the last 28 years of his life, and it's hard to imagine that a mind like his, working on empire-wide questions of currency & pricing & taxation policy, would not have anticipated at least something of modern economics [assuming, of course, that there's anything in modern economics worth anticipating].

Anonymous said...

richie daley 87:

testing 99 - how can you argue that obama "doesn't have the skillset to run a spoils system"?

the democrats just passed the largest gov't spending plan in history with just 3 republican votes from the entire congress.

virtually all of the benefits are targeted towards people with low or no income, where he won by a significant margin. he was in a dead heat for voters over 50-75k in income.

http://www.cnn.com/ELECTION/2008/results/polls/#USP00p1

so, how accurate do you need to be if that's the barometer? the language of low income voters was all over the stimulus

http://finance.senate.gov/sitepages/leg/LEG%202009/021209%20American%20Recovery%20and%20Reinvestment%20Act.pdf

whether or not the mortgage hits blue states or red states, is a second fiddle issue, and could still change.

they've already authorized 3 times that amount for their 'base'...

Mark said...

How can it not benefit someone when they're blowing $275 billion on the plan? (And that number will grow). Somebody's getting paid off, whether it's NAMs, banks, or whoever. Someone's getting that money.

ben tillman said...

Yes, that was an excellent comment by Testing 99.

Yes, it was.

Anonymous said...

AMcGuinn,
Officially Germans are losers. Never mind that their economy is larger than the UK, produces infinitely more high-tech goods, and other interesting facts, just remember they are losers. Then you're in sync with official history.

as said...

Off topic, but:

"In China, Clinton Focuses on Climate"

Doesn't the headline say it all?

http://www.nytimes.com/2009/02/22/world/asia/22diplo.html?_r=1&hp

Anonymous said...

AMcGuinn is right. Like Americans, Brits use commas for very large numbers and 'dots' for decimal points, and I highly doubt things were different in the late 19th Century. Churchill was referring to decimal points.

Acilius said...

Yes, right on the mark, testing99. Too bad it's confined to a comment thread- you should start a blog and post it there.

While I agree that Mr O's plan won't likely help Arizona, I don't agree that his decision to go there to promote it betrays a lack of understanding on his part. Rather the contrary, I should think.

As a politician, Mr O has two resources to win support, policy and publicity. At the moment, he's stuck with a set of policies that are sure to disappoint Arizona, a state that is key both to his reelection chances and the long-term prospects of the Democratic Party. So, he'll have to use publicity to convince Arizonans that he is on their side.

Since the plan is in fact a stinker for Arizona, he must site some of the highest profile events in his campaign to promote it there. That way, over the next few years Arizonans will remember his visit and some will think that because he promoted his ideas in their state, it must have been good for them. Those Arizonans will then look elsewhere for an economic scapegoat.

airtommy said...

Testing99 is way off base. "Obama's team" is big money Wall Street billionaire insiders. That's who Summers, Geithner, etc represent and that's who they're trying to protect. Basically, starting in the Clinton years the Dems stole the Repugnicans Party's foundation (but not their voter base) - the rich. All the Repugs are left with is whining about social issues, but to their credit that whining has become the most potent political force in America.

Jun said...

Wait, what?:

The Bailout Is Robbing the Banks

"Many Americans are angry at banks for taking bailout money while still cutting back on lending. But the government is also to blame. For reasons that remain unclear, the Troubled Asset Relief Program has channeled aid to bank holding companies rather than banks...."

Big Bill said...

For your musical pleasure, here is a recent song by Tom Paxton. Yes, Virginia, he is still alive. I have (ahem) changed two lines.

http://www.tompaxton.com/audio/fannie_mae.mp3

Everybody and his uncle is in debt
And Barack Hussein Obama is upset
Goldman Saches Merrill Lynches saw themselves as lead pipe cinches
Now they've landed in the biggest screw-up yet

Barack Hussein Obama and his kind
Have turned out to be the blind leading the blind
They are clearly the nitwittest in survival of the fittest
Let me modestly say what I have in mind

I am changing my name to Fannie Mae
I am changing it to AIG
On this bailout I am betting just a piece of what they're getting
would be perfectly acceptable to me.

I am changing my name to Freddie Mac
I am leaving for that great receiving line
I'll be waiting when they hand out seven hundred million grand out
That's when I'll get mine

Since the first amphibian crawled out of the slime
we've been struggling in an unrelenting clime
we were hardly up and walking before money started talking
and it said that failure was the only crime

if you really screwed things up then you were through
now -- surprise -- there is a different point of view
all that crazy rooty-tootin' and that golden parachutin'
means that someone's making millions ... just not you.

I am changing my name to Fannie Mae
I am changing it to AIG
On this bailout I am betting just a piece of what they're getting
would be perfectly acceptable to me.

I am changing my name to Freddie Mac
I am leaving for that great receiving line
I'll be waiting when they hand out seven hundred million grand out
That's when I'll get mine

I'll be waiting when they hand out seven hundred million grand out
That's when I'll get mine

Ronduck said...

Testing99, you haven't realized that the purpose of the stimulus bill may be to destroy the US economy.

As for here in Arizona, houses are already being listed on the MLS system for $11k. If you want to see for yourself go here and enter a maximum price of say $20k, and a house type of "single family - detached". About 150 homes across AZ will pop up with most will be in Phoenix.

Anonymous said...

It's not just the sand states. Last week I had a client who had taken a buyout, which amounted to early retirement, from his company, sold his house in Manassas VA, and moved down here to SW VA near his daughter.

Manassas and Prince William County VA were particularly badly hit by the housing crisis, as well as the illegal alien invasion, which goes hand in hand.

By the time he got his buyout/early retirement, the housing bubble had started to deflate so housing prices were on a downward slope and houses were not moving too rapidly. To make matters worse, there were 2 more houses like his in the neighborhood which were on the market. The 3 houses sort of decreased in price in unison.

Then my client told his RE agent to lower the price $20,000 NOW and if that didn't do the trick, he'd take it off market and just stay put. The agent wasn't happy but did as directed. The house - luckily - sold in a short while before the other 2 caught up (or down) in price.

My client bought a much better house in SW VA than he could have ever afforded in NoVA and paid cash.

The other 2 houses in his neighborhood are still on the market a bit over a year later at $100,000 below the price of my client's house.

Ellis said...

Jun, I think "bank holding cmpanies" includes such entities as "John Deere Credit" which finances tractors, combines and construction equipment. Lending for ag equipment may be one of the smartest things we can do. South Africa has become a net importer of food, Zimbawe is living off charity, and Zambie, after ejecting its white folks, is trying to claw its way back from the brink, and China is experiencing a massive drought in its norther wheat farming regions. Food--US food--is going to be in high demand.

Lucius Vorenus said...

A couple of days ago, I made kinduva medium-long reply to this thread.

Did it get eaten by a glitch in the software package?

Or was it censored?

Or is it possible that "blogger.com" has inserted some sort of a software filter which is diverting posts - maybe to a "spam" folder, or maybe deleting them altogether?

This is getting to be really weird, and more than a little frustrating.

Truth said...

"Now they are in charge and have not a clue how to proceed."

Testing99, congratulations; it seems as though, judging from feedback, you have finally become 'made'.

But hey, just for kicks, tell me exactly which president knew how to proceed? Was it Regan or Bush (who grew the government faster than any president's in history) Carter, Nixon, Clinton, who?

And which president would have been able to turn around this crumbling mess had he inherited it from Boy George?

Ronduck said...

Ellis said...

South Africa has become a net importer of food...

The United States has also become a net importer of food.

Anonymous said...

"produces infinitely more high-tech goods" Oh really?? http://www.conferenceboard.ca/HCP/Details/Innovation/export-market-share-electronics.aspx