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It's not a wave of foreclosures that must be stopped or else mankind is doomed. Rather it's the onslaught of price discovery and sane market forces. Foreclosures represent the market doing its best to regress to the mean. However it must fight a phalanx of bone-headed public policy initiatives that gum up the price discovery mechanism for a whole host of 'crony capitalism' reasons. The financial industry loves higher prices because it means more fees and interest charges. So there was an appreciation bias in the system.
Now they are throwing massive amounts debt at the debt market in order to resuscitate the only tool they have: debt. What a putrid circle. The message here in the US might be best be summed up as 'rent for life'.
From the linked article:
"Those new to this argument about the price of housing should consider that the government effort to artificially inflate prices includes radical intervention. Fannie Mae, Freddie Mac, and the FHA, all government banks, are the entire mortgage market today. Private investment in mortgages is gone. No sane banker is going to make a loan on an asset that has fallen 30% in value. The federal government is also literally giving money to buyers through a tax credit. And the federal government is buying a huge percentage of mortgages to artificially keep interest rates low (see above). And the federal government has issued an unlimited credit line to Fannie and Freddie so they can write as many mortgages as they want."
http://newobservations.net/2010/01/1...atriotic-duty/
Now they are throwing massive amounts debt at the debt market in order to resuscitate the only tool they have: debt. What a putrid circle. The message here in the US might be best be summed up as 'rent for life'.
From the linked article:
"Those new to this argument about the price of housing should consider that the government effort to artificially inflate prices includes radical intervention. Fannie Mae, Freddie Mac, and the FHA, all government banks, are the entire mortgage market today. Private investment in mortgages is gone. No sane banker is going to make a loan on an asset that has fallen 30% in value. The federal government is also literally giving money to buyers through a tax credit. And the federal government is buying a huge percentage of mortgages to artificially keep interest rates low (see above). And the federal government has issued an unlimited credit line to Fannie and Freddie so they can write as many mortgages as they want."
http://newobservations.net/2010/01/1...atriotic-duty/