Mortgages, Not Quite as Cheap As Cuervo!

Well, I was at a restaurant last night that offered three shots of Jose Cuervo for $7 - total! It is nice to know that if I get laid off at least I can still find a way to forget the problems of the economy.

After Treasury Secretary Geitner's non roll out of his plan earlier this week and the lack of definitive stimulus bill from Congress, we seem to be in a state of flux, with little bits and pieces being leaked out here and there. Governmental planning seems to be as strong as the S&P, which is down 4.4% for the week and 8.1% year to date.

The main issue is confidence and jobs. If we have those, we should be able to turn the ship around regardless of the ups and downs of the housing market. I just do not see how things like this article really help or are a good use of public funds:

http://www.washingtonpost.com/wp-dyn/content/article/2009/02/12/AR2009021203368.html?wprss=rss_politics

Sure, you keep someone in his/her house because of a lower payment, but the bank will still have to write down the mortgage if this person tries to move, and he or she will not all of a sudden make money on an underwater mortgage. In other words, the loss of wealth is still the same, it is just delayed.

In the meantime, the 50% split of the lower payment with the government is just another government pass through to the banks, who made the stupid loan in the first place. This program just puts off the inevitable and I don't think it spurs the economy. It is like the powers that be are just trying to re-inflate the bubble without thinking through to the next step. Frankly, the lack of willingness by most everyone to deal with this issue squarely is becoming tiresome, and I believe there is huge opportunity for some one to be honest with the public. (See Senator Gregg's decision not to accept Commerce Secretary based on his "individuality".)

At the same time plans like this are laid out there is no discussion of what we do to pay that money back. Government intervention into the housing market will only slow down markets running their course. It just seems nonsensical to me. We can say but otherwise the banking system is insolvent. Again, that just seems to say let's keep Citi and Bank of America around because they have been around. Let them go! Have the government make it a smooth transition, but let them go.

Is there an argument here that I am missing? It looks as though we are determined to mismanage it and continue this culture of tying people to homes. Who cares if your mortgage went from $1600 to $1100, when you cannot really aford more than $900. I read this morning in Fred Hickey's 'The High Tech Strategist' (its not just about tech and I highly recommend a subscription) that 25-35 year olds over the last few years spent 117% of their incomes. That and easy money is the issue, and it looks like the charade will continue. It seems like saving the money on housing and directing it toward the rest of the social initiatives coming our way is a better use of funds -at least a a few hundred billion less.

-2outof4