The folks at Fortune magazine — people who actually understand economics — don’t think much of Hillary’s mortgage bailout plan:
(Fortune) — Hillary Clinton is no dummy. Even her detractors know that. And yet in last night’s Democratic presidential debate in Nevada, Clinton floated what is perhaps the dumbest solution to the current mortgage mess I’ve heard from a top presidential contender.
[Snip]
For everyone else though, such a freeze would be disastrous. Interest rates on new mortgages would skyrocket - perhaps past 8 percent, as the mutual funds, pension funds and other investors who typically provide capital to the mortgage market shift their money into other investments where the government isn’t impairing returns. With higher mortgage rates eroding buying power, the downward pressure on home prices would only increase. Lower home prices would lead to even more defaults, as more folks who’d lost the equity in their homes choose to walk away from their mortgages.
The government should not be bailing out homeowners who made poor decisions when they signed their mortgages on homes they really couldn’t afford.
I can’t stress how strongly I feel about this.
Go read this post by Michelle Malkin about the proposed bailouts — I completely agree with every word of it. The government needs to get out of the way and let the market fix itself.
_______
Heh — Hillary isn’t the only Democrat confused about economics. Congresswoman Marcy Kaptur (D-Ohio)…you are an idiot. You should lose your next bid for re-election based on this alone.
Of course many of these people are victims of their own greed and they should suffer the repurcussions of that. Many others however are victims of fraud- I don’t see how this is any more permissible than fraud in any other arena.
It’s certainly one of the problems with a national goal of a ‘homeowner society’. The financial instruments available- while beneficial to some- can be far too complicated for many to understand.
Of course, the proper time for the government intervention was before the crisis yet “laissez faire” economists as personified by Alan Greenspan repeated that we were to allow the market to run it’s course. And we have jackasses like Jim Cramer calling for a bailout and chanting the Wall Street cheer: Privatize the Profits; Socialize the Risk.
Left by Preston on January 18th, 2008 at 5:27 pm