NYT: Administration may give up on housing.

[BigBagel]

http://www.nytimes.com/2010/09/06/bu...er=rss&emc=rss


The Obama Administration may elect to let the market do it's magic and stop trying to prop up the housing market. No mention in the article of the loses the government will experience via Fannie and Freddie. They do mention that the FHA's lending standards were not adequate in the past. They still require only 3.5% down which means their lending standards are still not adequate.

[Chomsky]

Re: NYT: Administration may give up on housing.

Reality bites.

[don]

Re: NYT: Administration may give up on housing.

Thanks for posting. It's a classic NYT's Hall of Mirrors front page Party Line.

The unexpectedly deep plunge in home sales this summer is likely to force the Obama administration to choose between future homeowners and current ones, a predicament officials had been eager to avoid.

Unexpected? Haven't we come to expect that all negative economic indicators will be "unexpected".....

Over the last 18 months, the administration has rolled out just about every program it could think of to prop up the ailing housing market, using tax credits, mortgage modification programs, low interest rates, government-backed loans and other assistance intended to keep values up and delinquent borrowers out of foreclosure. The goal was to stabilize the market until a resurgent economy created new households that demanded places to live.

Au contraire. It was to Extend & Pretend the toxic mortgage portfolios.

As the economy again sputters and potential buyers flee — July housing sales sank 26 percent from July 2009 — there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.

Translation: We're being prepped for another big ticket public assumption of bank debt.

When prices are lower, these experts argue, buyers will pour in, creating the elusive stability the government has spent billions upon billions trying to achieve.

Three penguins walk into a bar. The first penguin orders a scotch, neat. The second penguin....

“Housing needs to go back to reasonable levels,” said Anthony B. Sanders, a professor of real estate finance at George Mason University. “If we keep trying to stimulate the market, that’s the definition of insanity.”

Define "reasonable levels". Associated in any way with the lower 90%'s income? And when's the last time rationality was a factor in our political economy ?

The further the market descends, however, the more miserable one group — important both politically and economically — will be: the tens of millions of homeowners who have already seen their home values drop an average of 30 percent.

Feelings are important. And the consequences of being miserable?

The poorer these owners feel, the less likely they will indulge in the sort of consumer spending the economy needs to recover.

You is consumers so now go buy somethin'.

Last but not least, the neighborhood shiv is revealed.

If they see an identical house down the street going for half what they owe, the temptation to default might be irresistible. That could make the market’s current malaise seem minor.

Aka the Great Suburban Fear. Not a word on being hopelessly underwater, naturally.

And so it goes...bankster free...out to the syndicated local rag sheets and the MSM empty suits...

[Jay]

Re: NYT: Administration may give up on housing.

The Obama Administration may elect to let the market do it's magic and stop trying to prop up the housing market.

Wow, shadow banking into the ditch again! No viable collateral for the repo market. It will be very interesting if this comes to pass. I wonder how much of the shadow banking system is underpinned by real estate now?