Things are going great!

[ppilot]

Aw, silly Barfo. Ask yourself which party opposed GSE reform Bush proposed? Thanks for playing.

That's more of a commentary of the failing of our current political structure than an indictment of any one party. Shocking that a party would put political interests ahead of more pressing issues. With that said, blaming Obama for the state of the economy is pretty narrow minded. I would say that the second stimulus did little to help the basic problems of the recession, but the economic issues facing the country are much deeper than any one piece of legislation and a president who hasn't even been in office half his term.

 

[jlprk]

The stimulus wasn't meant to address the basic problems of the economy. It was meant as a band-aid to prevent a revolutionary situation in which millions of people lose their houses.

 

[Denny Crane]

That's more of a commentary of the failing of our current political structure than an indictment of any one party. Shocking that a party would put political interests ahead of more pressing issues. With that said, blaming Obama for the state of the economy is pretty narrow minded. I would say that the second stimulus did little to help the basic problems of the recession, but the economic issues facing the country are much deeper than any one piece of legislation and a president who hasn't even been in office half his term.

From what I've seen, Obama's policies have extended and deepened the recession.

At what point does it become Obama's economy, if not day 1 of his presidency?

 

[Denny Crane]

The stimulus wasn't meant to address the basic problems of the economy. It was meant as a band-aid to prevent a revolutionary situation in which millions of people lose their houses.

If it was meant to prevent millions of people from losing their houses, it's a massive FAIL.

 

[barfo]

Aw, silly Barfo. Ask yourself which party opposed GSE reform Bush proposed? Thanks for playing.

There is certainly plenty of blame to go around, and the Democrats do deserve a healthy heaping of it. But you've failed to support your initial implication that somehow the change of control of congress in 2006 had something to do with it.

As for plenty of blame to go around. Yes, many democrats opposed the reforms that Bush rather tepidly advocated. But Bush had 4 years of republican control of congress and the administration, and failed to accomplish anything on this matter. That suggests to me that it wasn't a very high priority for him or the Republicans. Bush gets about as much credit for this as Obama gets for immigration reform (so far). Failing to do something isn't really very impressive.

But while he was talking and not taking action on reform, his administration did also manage to make the problem significantly worse.

So, plenty of blame to go around.

barfo

 

[TradeNurkicNow]

AGREE TO DISAGREE

 

[julius]

From what I've seen, Obama's policies have extended and deepened the recession.

At what point does it become Obama's economy, if not day 1 of his presidency?

When did it become Bush's economy, and not Clintons? When did it become Clintons recovery/boom and not Bush 41's?

 

[Denny Crane]

When did it become Bush's economy, and not Clintons? When did it become Clintons recovery/boom and not Bush 41's?

I would say it was Bush's economy from day 1. Especially since he got his tax cuts passed, and then more tax cuts, etc.

 

[Denny Crane]

Speaking of saving millions of people from losing their homes...

http://www.cnbc.com/id/38110678

New Loan Delinquencies on the Rise Again

Just when you thought things might be turning around, the mortgage crisis takes yet another little dip to the downside.

Lender Processing Services just put out its May "Mortgage Monitor," and some promising trends aren't so promising anymore, specifically new delinquencies and cure rates.

While the total delinquency rate rose 2.3 percent, which is not surprising given how much is in the pipeline, the 30-day delinquent bucket jumped 10 percent. That is surprising because the that number had been coming down of late. The LPS data report says that's because the "seasonal improvement period has expired," but I'm not sure normal seasonal patterns really apply to this market anymore.

More likely is that home prices are not rebounding at the expected/hoped for pace, prompting more borrowers who are underwater on their loans to choose not to pay. And while the job market isn't bleeding so much anymore, it's not adding jobs back at the rate we need, nor is it re-instituting those full time jobs that were slashed to part-time, leaving many borrowers still "underemployed." So the delinquency rate nationwide now stands at 9.2 percent from this particular data set, and with the rise in new delinquencies, it won't be coming down any time soon.

How do I know this?

Because the report also finds that the "cure rate," which is the rate at which bad loans actually get better, i.e. the borrowers start to pay again, is getting worse.

After a two-month decline, deterioration ratios increased, with 2.5 loans rolling to a "worse" status for every one that has improved. The number of delinquent loans that "cured" to a current status declined for every stage of delinquency, except in the "greater than six months delinquent" category. This improvement was likely the result of trial modifications made through the Home Affordable Modification Program (HAMP) that transitioned into permanent status.

Oh good, so the HAMP program is helping "cure" those 6 month+ delinquencies. No, they're just delaying them yet again, since we know that the re-default rate on HAMP is only rising. Forget cure and think remission.

Good news?

Well, the report shows that both delinquency and foreclosure rates have stabilized.

The trouble is that they've flat lined at "historically high levels."

And what does that mean for the rest of the world? Continued pressure on home prices. Yes, we will see a bunch of new reports this month, looking backward two months, that show slight improvements in home prices thanks to the run-up to the end of the home buyer tax credit; that's not reality, that's subsidy.

 

[MARIS61]

I'm better off than I was 18 months ago, thanks for asking.

barfo

Me also. Real estate has taken off nicely down here and I've got so many buyers I may have to start turning some away.

If the pace continues I plan on buying the Blazers next summer and moving them to Beautiful Central Oregon.

 

[jlprk]

If it was meant to prevent millions of people from losing their houses, it's a massive FAIL.

Yes, but a lot more millions would have lost them than the small millions who did. The process stayed orderly this way, and the economic system was preserved. Instead of criticizing the band-aids, would you like to describe the streets as they would now be if the President had done it your way? The streets would be impassable with the homeless, middle class until months ago, throwing rocks through your windshield. To your side are stores without customers, boarded up. More jobless. It's a ripple effect. And of course, the construction industry is dead, with many millions of empty houses. Not to mention the banks having no money, since their investements are mainly local mortgages. So I hope you're not driving to your bank, because it's boarded up too. I hope you bought gold before the President did it your way.

 

[Denny Crane]

Yes, but a lot more millions would have lost them than the small millions who did. The process stayed orderly this way, and the economic system was preserved. Instead of criticizing the band-aids, would you like to describe the streets as they would now be if the President had done it your way? The streets would be impassable with the homeless, middle class until months ago, throwing rocks through your windshield. To your side are stores without customers, boarded up. More jobless. It's a ripple effect. And of course, the construction industry is dead, with many millions of empty houses. Not to mention the banks having no money, since their investements are mainly local mortgages. So I hope you're not driving to your bank, because it's boarded up too. I hope you bought gold before the President did it your way.

If the president would have done it my way, the TARP bailout money would have been used to pay down peoples' mortgages. A $100k mortgage paid down to $50K so the people wouldn't be upside down in them and could better afford the payments. And guess what? The banks still get that $50K to keep them afloat.

Additionally, what is $800B / $25M? 32,000. $25M is prime VC type investment in an early startup company like a Google was back when. That "stimulus" spending was enough to fund 32,000 NEW companies, each with 100 to 200 employees and guarantee that most will survive at least 5 years without $.01 in sales. Do the math. What's 100-200 employees x 32,000 companies?

So how about you describing the streets if the president did it my way. 3.2M to 6.4M more people employed at good paying jobs with mortgages they can afford and homes that can be sold without putting the seller into bankruptcy.

The way it is now, there are a lot of storefronts up and down the main drag in town here that are for rent or boarded up.

Hopey changy thing is really working out.

 

[jlprk]

The Republican Party wouldn't have gone for it. I don't know what they're saying, but I know how they would vote. This is all for show. They wouldn't allow that to get to the floor. They want to protect big companies even more than Democrats do. Since when have Republicans gone for a little guy-plan like yours? What they say they want is often not what they would really vote for. They find ways to make it not come up for a vote, like immigration, abortion, etc.

 

[maxiep]

The Government is trying to stop the market from reaching its natural bottom. The Government is big, but is dwarfed by the size of the market. Attempts to falsely prop up the market will only delay the inevitable and increase the pain experienced by the population as a whole.

Money is standing on the sidelines because of uncertaintly. Uncertainty in real estate values, uncertainty in tax policy, uncertainty in this Administration's targeting of industries to remake the heirarchy of corporate ownership. Remove the uncertainty, and you'll see this economy start to click.

 

[barfo]

The Government is trying to stop the market from reaching its natural bottom. The Government is big, but is dwarfed by the size of the market. Attempts to falsely prop up the market will only delay the inevitable and increase the pain experienced by the population as a whole.

Money is standing on the sidelines because of uncertaintly. Uncertainty in real estate values, uncertainty in tax policy, uncertainty in this Administration's targeting of industries to remake the heirarchy of corporate ownership. Remove the uncertainty, and you'll see this economy start to click.

So, if the government had done nothing (no TARP, no stimulus, no bailouts, etc), where would the bottom have been, and how would we know when we'd gotten there?

barfo

 

[maxiep]

So, if the government had done nothing (no TARP, no stimulus, no bailouts, etc), where would the bottom have been, and how would we know when we'd gotten there?

barfo

I was actually in favor of much of TARP, because it was a failure of regulation and government policies that put us in that position. GM should have been allowed to enter Chapter 11. The stimulus was a waste of money that has put us in worse condition.

And yes, markets understand bottoms. It's not one decision, it's hundreds of millions or billions of individual decisions that characterize it. They don't think they've seen it yet, which is why money is on the sideline.

 

[barfo]

And yes, markets understand bottoms. It's not one decision, it's hundreds of millions or billions of individual decisions that characterize it. They don't think they've seen it yet, which is why money is on the sideline.

I wasn't asking the market where the bottom would have been. I was asking you.
And markets understand bottoms amounts to saying markets go up, and markets go down. And the lowest point is the bottom. Deep.

barfo

 

[maxiep]

I wasn't asking the market where the bottom would have been. I was asking you.
And markets understand bottoms amounts to saying markets go up, and markets go down. And the lowest point is the bottom. Deep.

barfo

Even I'm not arrogant enough to believe I know the answer for where the bottom is; the market decides it. Sadly, members of the Obama Administration don't have even that limitation.

As for whether or not the concept of markets is deep or not, something doesn't have to be deep to be correct.

 

[barfo]

Even I'm not arrogant enough to believe I know the answer for where the bottom is; the market decides it. Sadly, members of the Obama Administration don't have even that limitation.

As for whether or not the concept of markets is deep or not, something doesn't have to be deep to be correct.

Sure, we all agree that the lowest point is the bottom. It's correct, but it's hardly worth posting.

So if you don't know where the bottom would have been, how can you say the administration was wrong to try to prevent it from falling all the way to the bottom? What if the bottom was a long, long, long way down?

barfo

 

[Denny Crane]

The Republican Party wouldn't have gone for it. I don't know what they're saying, but I know how they would vote. This is all for show. They wouldn't allow that to get to the floor. They want to protect big companies even more than Democrats do. Since when have Republicans gone for a little guy-plan like yours? What they say they want is often not what they would really vote for. They find ways to make it not come up for a vote, like immigration, abortion, etc.

Democrats had a filibuster proof senate and easy control of the house. The republicans weren't relevant.

 

[maxiep]

Sure, we all agree that the lowest point is the bottom. It's correct, but it's hardly worth posting.

So if you don't know where the bottom would have been, how can you say the administration was wrong to try to prevent it from falling all the way to the bottom? What if the bottom was a long, long, long way down?

barfo

My point is the government can't stop the market from finding bottom, no matter where it is. And prolonging that decline only increases the eventual pain. What part about letting markets clear don't you understand?

 

[barfo]

My point is the government can't stop the market from finding bottom, no matter where it is. And prolonging that decline only increases the eventual pain. What part about letting markets clear don't you understand?

So, government actions can have no influence on where the bottom is, just the timing of when the bottom is hit? I find that difficult to understand, and I eagerly await an explanation of the economic principles behind that surprising assertion.

barfo

 

[boatsandstars]

So, government actions can have no influence on where the bottom is, just the timing of when the bottom is hit? I find that difficult to understand, and I eagerly await an explanation of the economic principles behind that surprising assertion.

barfo

OH YOU ARE GONNA GIT AN XSPLANATION! STRAIGHT U of C BBB FORUM STYLE! YEAH! SNAP INTO A SLIM JIM!


That said, Maxi is the greatest economist I've ever heard of, I know this because he is constantly posting on message boards about his knowledge, which is what I would expect a really successful and knowledgable (and employed) person to do. He wins!

 

[blazerboy30]

I'm better off than I was 18 months ago, thanks for asking.

barfo

Silly Barfo. You don't care how you as an individual are doing. It's about about everybody having the same. Silly Barfo.

 

[maxiep]

So, government actions can have no influence on where the bottom is, just the timing of when the bottom is hit? I find that difficult to understand, and I eagerly await an explanation of the economic principles behind that surprising assertion.

barfo

I didn't say "no influence". Timing is an influence. The slope of decline is an influence. I said the government couldn't prop up a market indefinitely, like they're trying to do with the real estate market (which is the subject here), and it's delaying and increasing the pain. There are markets the government can distort, but the residential real estate market is just too massive.

I'm sorry you find it difficult to understand, but markets are like plumbing. For them to operate effectively, they have to be able to clear. The government is trying to manage the flow, but it's not going to be able to hold back the forces of decline forever. It's not complicated. One doesn't need to have much education to understand this simple fact: Size of government < Size of the housing market.

 

[maxiep]

OH YOU ARE GONNA GIT AN XSPLANATION! STRAIGHT U of C BBB FORUM STYLE! YEAH! SNAP INTO A SLIM JIM!


That said, Maxi is the greatest economist I've ever heard of, I know this because he is constantly posting on message boards about his knowledge, which is what I would expect a really successful and knowledgable (and employed) person to do. He wins!

Tough day, honey? Need a backrub?

 

[barfo]

I didn't say "no influence". Timing is an influence. The slope of decline is an influence.

Ok. But are you saying that the depth of the well is not something government can influence?

I'm sorry you find it difficult to understand, but markets are like plumbing. For them to operate effectively, they have to be able to clear.

Yes, that makes sense, assuming that you use your definition of "operating effectively", i.e. completely freely. Some might argue that wild market swings aren't a feature of "operating effectively", because the effects of those wild swings, while they might be perfectly healthy from the market's point of view, aren't so great from the point of view of humans. But I know that we will agree to disagree about that.

barfo

 

[maxiep]

Ok. But are you saying that the depth of the well is not something government can influence?

They can have a minimal influence, as we've seen with the $8,000 tax credit for first-time homebuyers, but most of it is shifting demand (like cash for clunkers) rather than creating it. It's invariably more expensive to do so and when you factor in the money spent, it actually makes the bottom deeper.

Yes, that makes sense, assuming that you use your definition of "operating effectively", i.e. completely freely. Some might argue that wild market swings aren't a feature of "operating effectively", because the effects of those wild swings, while they might be perfectly healthy from the market's point of view, aren't so great from the point of view of humans. But I know that we will agree to disagree about that.

barfo

Residential real estate experienced these wild swings when banks were strongarmed into making subprime loans. Before that period, real estate grew a bit more than inflation. Government policy helped to create the bubble, and a bubble is mostly hot air.

If the lending fundamentals would have stayed constant--a significant down payment, a fully amortized loan, varified income with a specified debt coverage ratio, etc.--we would likely have seen a straight-line moderate increase rather than a bubble and a crash.

 

[barfo]

They can have a minimal influence, as we've seen with the $8,000 tax credit for first-time homebuyers, but most of it is shifting demand (like cash for clunkers) rather than creating it. It's invariably more expensive to do so and when you factor in the money spent, it actually makes the bottom deeper.

We are probably talking about two different things, then. By bottom I meant the bottom of the recession, e.g. on a graph of GDP growth (or lack thereof). Spending money doesn't make that bottom deeper, it makes it shallower. I certainly agree with you that there are longer term consequences, but I don't see how it makes the bottom of the recession deeper.

Residential real estate experienced these wild swings when banks were strongarmed into making subprime loans. Before that period, real estate grew a bit more than inflation. Government policy helped to create the bubble, and a bubble is mostly hot air.

If the lending fundamentals would have stayed constant--a significant down payment, a fully amortized loan, varified income with a specified debt coverage ratio, etc.--we would likely have seen a straight-line moderate increase rather than a bubble and a crash.

That could well be hypothetically right, we have no way to know. But are you suggesting that all prior wild swings in markets are caused by governmental interference? Or just this one?

barfo

 

[maxiep]

We are probably talking about two different things, then. By bottom I meant the bottom of the recession, e.g. on a graph of GDP growth (or lack thereof). Spending money doesn't make that bottom deeper, it makes it shallower. I certainly agree with you that there are longer term consequences, but I don't see how it makes the bottom of the recession deeper.



That could well be hypothetically right, we have no way to know. But are you suggesting that all prior wild swings in markets are caused by governmental interference? Or just this one?

barfo

We were specifically discussing the residential housing market.