It appears a number of economists and financial experts see it as a failure. Not only a failure but an impediment to recovery.
The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.
The harm it has done is precisely the same harm that many of the larger programs have done, and something we warned about here at QandO at the time. Instead of letting the market take the hit it deserved for the bad risk it undertook and giving it an opportunity to digest that and then begin recovering, both the Bush and Obama administration’s chose to try and manage the crash and avoid the pain. Consider this particular program a microcosm of what many experts believe we’ll see happen in the larger economy. And, as usual, while it was something done with best of intentions it has run afoul of the Law of Unintended consequences and as critics are saying, has seemingly done more harm than good.
Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Homes Affordable, has raised false hopes among people who simply cannot afford their homes.
As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.
On the other side of the program are the lending institutions who some experts claim are using the program to delay an honest accounting of the toxic loans they have outstanding.
Only after banks are forced to acknowledge losses and the real estate market absorbs a now pent-up surge of foreclosed properties will housing prices drop to levels at which enough Americans can afford to buy, he argues.
Instead, we’ve chosen to string this all out:
Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.
In other words, government intrusion – with the best of intentions – has impeded the market’s ability to properly reconcile the losses and begin recovering and learn from the experience. Instead, both homeowners and financial institutions have been given false hope that they can avoid this pain and somehow benefit from the program without having to do what is really necessary. And this false hope, upon which reality will eventually intrude, is simply delaying the financial reckoning and further delaying a real recovery. Once that is done:
“Then the carpenters can go back to work,” Mr. Katari said. “The roofers can go back to work, and we start building housing again. If this drips out over the next few years, that whole sector of the economy isn’t going to recover.”
The article goes on to discuss proposed fixes, tweaks and alternatives. But the bottom line is the existing program doesn’t help, but instead hurt the chances for recovery within the housing market. And that’s the lesson here. There is pain in life, but pain’s usefulness is its warning not to do what one did to incur it and to modify behavior in the future to avoid it. The problem with removing the pain quotient is the lessons necessary to modify future behavior and avoid repeating the painful activity are lost. Additionally, by attempting to avoid the pain, the present problem isn’t quickly fixed, but instead drags out as false hope does its damage before reality finally takes its course.
No one wants to see people lose their homes, but the fact remains many took on homes they couldn’t afford and many lending institutions backed their acquisition. This program isn’t going to make their homes more affordable to them nor is it going to make their loans good ones. Time for the players, not the taxpayers, to pay the piper. Government needs to back away. Until they do and the financial reckoning necessary takes place, the recovery in the housing market will continue to be delayed.
You remember the promise by the administration that “Sheriff Joe” Biden would be monitoring the stimulus fund use and calling out those who engage in waste, fraud and abuse?
If that were true, he should be almost living in New Mexico. However, my guess is New Mexico is just the visible tip of a fraud, waste and abuse iceberg associated with the 787 billion dollar “stimulus”. First we had money going to nonexistent congressional districts. And Joe was silent. Now we have money traced to nonexistent zip codes as well:
Closer examination of the latest recovery.gov report for New Mexico shows hundreds of thousands of dollars sent to and credited with creating jobs in zip codes that do not exist in New Mexico or anywhere else. Moreover, funds reported as being spent in New Mexico were given zip codes corresponding to areas in Washington and Oregon.
The recovery.gov site reports that $373,874 was spent in zip code 97052. Unfortunately, this expenditure created zip jobs. But $36,218 was credited with creating 5 jobs in zip code 87258. A cool hundred grand went into zip code 86705, but didn’t result in even one person finding work.
None of these zip codes exist in New Mexico, or anywhere else, for that matter.
Phantom jobs, phantom spending and nary a Sherriff in sight. Maybe he’s busy setting up the mechanism for corralling the 60 billion of waste, fraud and abuse in Medicare each year. You do recall that’s how they plan on “paying” for this new health care monstrosity, right? And they’re doing such a bang up job with the policing of the stimulus funds that we all ought to rest pretty easy, wouldn’t you say? I mean it’s obvious that Sherriff Joe has it all under control, isn’t it?
One of the favorite things the warmists like to do is point to isolated temperature events that bolster their cause and claim them to be a result of man-made global warming. I have to wonder what they have to say about an entire winter such as this:
They predicted no let up in the freezing snap until at least mid-January, with snow, ice and severe frosts dominating.
And the likelihood is that the second half of the month will be even colder.
Weather patterns were more like those in the late 1970s, experts said, while Met Office figures released on Monday are expected to show that the country is experiencing the coldest winter for up to 25 years.
The cold weather comes despite the Met Office’s long range forecast, published, in October, of a mild winter. That followed it’s earlier inaccurate prediction of a “barbecue summer”, which then saw heavy rainfall and the wettest July for almost 100 years.
Paul Michaelwaite, forecaster for NetWeather.tv, said: “It is looking like this winter could be in the top 20 cold winters in the last 100 years.
I look forward to the creative spin warmists will try to use to explain away what could be one of the coldest winters in 100 years right smack in the middle of this unstoppable warming they’ve been touting. Oh, wait, we’ve been cooling for 10 years haven’t we? So that trend would support such a winter occurring wouldn’t it?
Your turn warmists – why are we seeing this horribly cold weather while in the midst of a “warming trend”?
You tell me – an entitlement mentality, an over inflated ego, or just a pathetic moron?
“You’re going to be up against people who have an opinion, a modem, and a bathrobe. All of my life, developing credentials to cover my field of work, and now I’m up against a guy named Vinny in an efficiency apartment in the Bronx who hasn’t left the efficiency apartment in two years” — Brian Williams, anchor of the “NBC Nightly News,” speaking before New York University journalism students on the challenges traditional journalism faces from online media.
Apparently in William’s world, Vinny isn’t entitled to an opinion because he didn’t go to J School and hasn’t spent his life “developing his credentials to cover [his] field of work”, even though old Vinny has more readers than Williams has viewers and more credibility as well.
Words from a dinosaur that hasn’t yet picked up on the heavy impact meteor crash which has occurred in his world and spells eventual extinction for his kind. And, frankly, the sooner the better.
Does anybody want a puppy? I mean a registered, purebred puppy. If so, drop me a line. My Cane Corso female is about to drop a litter in two weeks or so. If you’re in the San Diego/Southern California area, and might be interested in a new baby Corso, drop me a line at “puppies -at- dalefranks.com”
Corsos are large dogs, with females running from 80-100lbs, and males running from 100-130 lbs. They are active dogs, with a working breed background, so they need to be regularly exercised.
They are extremely loyal and protective of their family and homes. They love children, and make very protective watchdogs for them.
Here’s a video we did of her:
In this podcast, Bruce, Michael and Dale discuss the top stories of the past week. And, with a shiny new Studio PC , I’m back in the podcast recording business!
The direct link to the podcast can be found here.
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The Crotch Bomber – “The system worked!” The trials and tribulations of government run airport security . Why weren’t some pretty obvious dots connected?
Do they just not get it? – Are Democrats misreading the anger among Americans as nothing more than the normal partisan nonsense from the out of power party? Are Republicans?
Obama’s foreign policy – Does our president really have any real interest in foreign policy? Or is his focus mostly on the domestic side of things?
A few days ago, David Brooks wrote an op-ed in the New York Times entitled “The God That Failed” which is still bubbling in various blogs. Here’s how Brooks began his piece:
During the middle third of the 20th century, Americans had impressive faith in their own institutions. It was not because these institutions always worked well. The Congress and the Federal Reserve exacerbated the Great Depression. The military made horrific mistakes during World War II, which led to American planes bombing American troops and American torpedoes sinking ships with American prisoners of war.
But there was a realistic sense that human institutions are necessarily flawed. History is not knowable or controllable. People should be grateful for whatever assistance that government can provide and had better do what they can to be responsible for their own fates.
That mature attitude seems to have largely vanished. Now we seem to expect perfection from government and then throw temper tantrums when it is not achieved. We seem to be in the position of young adolescents — who believe mommy and daddy can take care of everything, and then grow angry and cynical when it becomes clear they can’t.
Glenn Greenwald and a host of other lefty blogs are now assuring us that this “hysteria” over the crotch bomber is a result of our immaturity as a nation because of our concerns about terrorism:
This is what inevitably happens to a citizenry that is fed a steady diet of fear and terror for years. It regresses into pure childhood. The 5-year-old laying awake in bed, frightened by monsters in the closet, who then crawls into his parents’ bed to feel Protected and Safe, is the same as a citizenry planted in front of the television, petrified by endless imagery of scary Muslim monsters, who then collectively crawl to Government and demand that they take more power and control in order to keep them Protected and Safe. A citizenry drowning in fear and fixated on Safety to the exclusion of other competing values can only be degraded and depraved.
Nonsense. This outrage isn’t just about terrorism and our fear of it. In fact, this isn’t a regression. It is a reaction to the continuing failures of a government which has repeatedly claimed it is the answer to all problems and repeatedly fails to live up to its claim. It is also an indication of the growing citizen anger at its continued unchecked expansion.
In a mature nation, President Obama could go on TV and say, “Listen, we’re doing the best we can, but some terrorists are bound to get through.” But this is apparently a country that must be spoken to in childish ways. The original line out of the White House was that the system worked. Don’t worry, little Johnny.
Really? Well let’s think about that for a second, shall we? Prior to the complete takeover of airline security by the federal government, any president might certainly have been able to stand up and said that. And most of us would have likely agreed. Airlines, which were responsible for their own security screening at that time, would certainly have reacted appropriately and taken new measures designed to heighten safety. And naturally, airlines which didn’t would most likely see passengers vote with their feet since a heightened chance of having your planes routinely blown out of the sky, when compared with the competition, isn’t good for business, is it?
Instead –and it happened under a Republican administration- the Fed decided that only it can properly provide the security necessary to ensure airline safety. A huge and costly system with its attendant bureaucracy was put into place based on that premise. And the implicit promise of the premise was that while under the airlines, “some terrorists are bound to get through”, under government, it would be safer than that. That was the purpose of the takeover. And it is that which both Greenwald and Brooks miss.
In the case of this particular incident, you couple that with a little stupidity (Napolitano: “the system worked”), a dollop of denial (Obama: “an isolated extremist”) and typical non-responsive overreaction (TSA: stay in your seat the last hour with your hands in your lap) and you begin to understand why the president couldn’t go on TV and say something like Brooks claims he could say in a “mature nation”. This has nothing to do with the maturity or lack thereof of the nation. It has to do with an inept government unable to fulfill it’s promise and the righteous anger that causes.
This incident is just one of many which are awakening the public to the falsity of the pernicious myth that government is “the answer”. It was the financial crisis that began the process. As it developed, people were suddenly confronted with the realization that those who had assured us they were in control and knew what they were doing really didn’t have a clue. Add that with the rapid takeover of the financial sector and GM, TARP and the “stimulus”, extended trillion dollar deficits, health care “reform” and cap-and-trade legislation and now this airline security failure and you begin to understand both the rising alarm and the rising anger.
I’m sure there are those out there who still think the Tea Parties were about health care and/or Obama and the Democrats. In fact, they were an early outward manifestation of the phenomenon – the rapidly growing realization that a) government can’t fulfill its promises but b) despite that, it continues to attempt to accrue more power and c) really doesn’t care if the public wants it or not.
They also are beginning to realize the mammoth cost of the leviathan in place is bad enough (and it is only going to get worse). And they are terrified of the cost of what is being promised as the government takes over more and more of our lives.
You can begin to understand why the growing anger is directed at this administration and government in general is the result. The attempted bombing incident and the resultant anger is no more just another indicator of that general anger and dissatisfaction.
What Brooks and Greenwald don’t seem to understand – and I’d think it is a safe bet to make the same claim about Republicans – is this isn’t anger just directed at this administration or Democrats alone. They’ve simply managed to bring it to a head with their over-reaching. It is anger, in general, at the depth, breadth, cost, intrusion and control government has and seeks to broaden. In a larger sense, what Greenwald and Brooks would like to write off as an immature tantrum about a security failure is just another manifestation of the growing anger and discontent directed at government in general and as result of the swiftness and scope of the recent expansion.
The culture of dependency that politicians have carefully engineered over the last 80 years is finally seeing a backlash. Ironically it is the financial crisis and the Democratic ascendancy, along with their attempts to broaden that dependency, which has suddenly alarmed and angered the public. As dependency was incrementally increased over the decades, the public’s alarm at government’s increased powers was muted. With the sudden power and control grabbed by the government, precipitated by the financial crisis, the alarm –and anger- is no longer muted.
That, by any measure, is a good thing. What it isn’t, however, is an immature reaction. It is, if anything, not strident enough.
For the self-named “reality based community” I sometimes wonder if the left lives in a bubble, or have a selective memory, or just flat don’t remember anything before January 20th, 2009.
In fact, take the word “Republicans” out of this quote and it could have been said of any number of people on the left during the previous 8 years:
The climate right now is that Republicans use everything they can to undermine and delegitimize this president. And it’s actually un-American. It’s traitorous, in my opinion. Do you want to give aid and comfort to our enemies? Continue to treat this president like he wasn’t elected and he doesn’t know what he’s doing! He knows what he did. He knows what he’s doing. I’m proud of him. I believe that he has the stalwart, resolute nature to get this done…
That was Joan Walsh of Salon.com on Hardball. You can watch it here. Obviously she didn’t get Hillary Clinton’s memo about questioning people’s patriotism and she obviously doesn’t know that dissent is, in fact, the highest form of patriotism (a sentiment, btw, with which I agree) according to the left.
Given she apparently believes that this is something new, she’s obviously oblivious to the irony of her own words. Either that or she found the left’s behavior acceptable during the Bush years.
In reality, what she and the rest of the left are going through is the transition from the opposition to the establishment.
Ed Driscoll provides some prime Victor David Hanson quotes to remind the left of how well it acted during its chance to show support for an opposition party president, and how miserably they failed. In fact, it isn’t a stretch at all to say they did “everything they [could] to undermine and delegitimize [that] president”.
Do you remember the uproar this year when someone admitted they hoped Obama would fail? Why that was simply outrageous. But any observer of the left during the last administration knew it was nothing new. Via Driscoll (and another part of the irony of this quote) here is Gary Kamiya writing at – wait for it – Salon.com about President Bush:
I have a confession: I have at times, as the war has unfolded, secretly wished for things to go wrong. Wished for the Iraqis to be more nationalistic, to resist longer. Wished for the Arab world to rise up in rage. Wished for all the things we feared would happen. I’m not alone: A number of serious, intelligent, morally sensitive people who oppose the war have told me they have had identical feelings.Some of this is merely the result of pettiness–ignoble resentment, partisan hackdom, the desire to be proved right and to prove the likes of Rumsfeld wrong, irritation with the sanitizing, myth-making American media. That part of it I feel guilty about, and disavow. But some of it is something trickier: It’s a kind of moral bet-hedging, based on a pessimism not easy to discount, in which one’s head and one’s heart are at odds.
Many antiwar commentators have argued that once the war started, even those who oppose it must now wish for the quickest, least-bloody victory followed by the maximum possible liberation of the Iraqi people. But there is one argument against this: What if you are convinced that an easy victory will ultimately result in a larger moral negative–four more years of Bush, for example, with attendant disastrous policies, or the betrayal of the Palestinians to eternal occupation, or more imperialist meddling in the Middle East or elsewhere?
Wishing for things to go wrong is the logical corollary of the postulate that the better things go for Bush, the worse they will go for America and the rest of the world.
Quite a confession, wouldn’t you say? Apparently in Mr. Kamiya and Ms. Walsh’s world, the “logical corollary of the postulate” is only valid for the ideological left.
So Ms. Walsh, it’s your turn – take a look at what your colleague wrote at your site back before you apparently began paying attention to things like that and, given how you’ve branded the right’s dissent and opposition as “traitorous” and “un-American”, tell us why Mr. Kamiya’s sincere wish for Bush to fail in Iraq isn’t fruit from the very same tree?
I’m sorry, I just can’t help myself – sometimes nature provides us with the best situational irony and this case is just hilarious:
A downtown protest of the climate change talks in Copenhagen became a victim of Wednesday’s snowstorm.
“Not many people showed up because of the blizzard conditions,” said organizer Clea Major, an international studies student at the University of Utah.
It didn’t take long for the six friends to pack up a bullhorn and posters they’d planned to use for their “scream-in,” an outlet for their frustration about the failure of the Copenhagen climate talks earlier this month to curb the pollution blamed for climate change.
Damn global warming.