Wednesday, February 18, 2009

Add Another $275 Billion To The Tab! What Do You Think Of The Mortgage Bailout?

$275 Billion + $800 Billion (CRAPulus) + $700 Billion (TARP) + Interest Equals:

$2,125,000,000,000... $2 TRILLION!

Bloomberg reports:

Feb. 18 (Bloomberg) -- U.S. President Barack Obama pledged $275 billion to cut mortgage payments for as many as 9 million struggling homeowners and enable Fannie Mae and Freddie Mac to keep loan rates down.

The plan includes $75 billion to reduce monthly payments for borrowers, helps homeowners with loans owned or backed by Fannie Mae and Freddie Mac to refinance at lower rates and promises incentives to industry. Obama will double by $200 billion funding available for Fannie and Freddie to buy loans.

Um, that amounts to over $30,500 per "struggling" homeowner.

As for me, I won't see a dime of this money; I'll just be paying for it. Call me callous, call heartless, but I don't want to give my money to other people unless I so choose!

Red State explains it this way:

It’s still too early to give you an actual analysis of the plan, but I did notice one very interesting thing. Obama’s warmup act was FDIC head Sheila Bair, who was been screaming about preventing foreclosures for a long time now. In her remarks, she said that voluntary mortgage relief hasn’t worked, and now it’s time to try something else. What that “something else” turns out to be, is of a course a matter of intense interest.

What did Mr. Market have to say about this? Prices for high-coupon mortgage-backed securities immediately tumbled. That makes sense if you assume that a lot of people who couldn’t refinance at lower rates before, will be able to now.

Yes, this raises interest rates. Yes, it makes the banking crisis worse by cutting the value of “toxic assets” still farther. Unintended consequences don’t always take so little time to appear.

We want to know what you think of this plan? Please comment below!

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1 comment:

  1. I think it stinks like bacon. If it looks like a pig, smells like a pig and rolls around in crap like a pig.