This can’t be good for the financial system.
NEW YORK (AP) — A stunning 48 percent of the nation’s homeowners who have a subprime, adjustable-rate mortgage are behind on their payments or in foreclosure, and the rate for homeowners with all mortgage types hit a new record, new data Thursday showed.
But that’s not the worst of it.
The reckless lending practices in states like Florida, California and Nevada that were the epicenter of the housing crisis are no longer driving up the nation’s delinquency rate. Instead, the foreclosure crisis now is being fueled by a spike in defaults in states like Louisiana, New York, Georgia and Texas, where the economies are rapidly deteriorating and thousands are losing their jobs. …
That trend highlights one of the biggest challenges confronting the Obama administration’s mortgage relief plan launched this week. While the $75 billion plan could help change the loan terms or refinance up to 9 million homeowners, unemployed borrowers will have a hard time qualifying.
That can only weaken the balance sheets of the financial system. But straitened circumstances shouldn’t stand in the way of other great enterprises, which as President Obama says, none dare morally oppose.
President Obama yesterday presented his goal of fixing the healthcare system as a political imperative, as well as a moral and economic one: Americans, he said, will no longer stand for soaring costs that have bankrupted millions of families, hobbled businesses, and crowded out other public needs. …
Though he repeatedly emphasized the need to compromise, Obama said he would not stand for a stalemate, which he said threatens the “very foundation of our economy. Those who seek to block any reform at all . . . will not prevail this time around,” he said. …
In a conference call yesterday morning, Health Care for America Now, a coalition of about 800 liberal groups, declared it would fight to include a public insurance plan to help keep costs down. Later, in a statement, the group said it was “no surprise [Republicans] don’t want choice if it threatens the profits of the private health insurance industry.” …
In his budget last week, Obama set aside $634 billion over 10 years for healthcare, what he called a down payment on an overhaul that many analysts estimate will cost more than $1 trillion …
“Nothing is harder in politics than doing something now that costs money in order to gain benefits 20 years from now,” Obama said.
Maybe’s got that one upside down. Nothing is easier than spending money now that people 20 years down the road will pay for. Charles Krauthammer, commenting on the President’s desire to implement his health care, education and carbon trading programs, wrote that whatever action the current situation demanded, it seemed curiously subordinate to a pre-existing political agenda whose importance, unlike the balance sheets of the banks, remained completely unchanged.
At the very center of our economic near-depression is a credit bubble, a housing collapse and a systemic failure of the entire banking system. One can come up with a host of causes: Fannie Mae and Freddie Mac pushed by Washington (and greed) into improvident loans, corrupted bond-ratings agencies, insufficient regulation of new and exotic debt instruments, the easy money policy of Alan Greenspan’s Fed, irresponsible bankers pushing (and then unloading in packaged loan instruments) highly dubious mortgages, greedy house-flippers, deceitful homebuyers.
The list is long. But the list of causes of the collapse of the financial system does not include the absence of universal health care, let alone of computerized medical records. Nor the absence of an industry-killing cap-and-trade carbon levy. Nor the lack of college graduates. Indeed, one could perversely make the case that, if anything, the proliferation of overeducated, Gucci-wearing, smart-ass MBAs inventing ever more sophisticated and opaque mathematical models and debt instruments helped get us into this credit catastrophe in the first place.
And yet with our financial house on fire, Obama makes clear both in his speech and his budget that the essence of his presidency will be the transformation of health care, education and energy. Four months after winning the election, six weeks after his swearing in, Obama has yet to unveil a plan to deal with the banking crisis. What’s going on?
“You never want a serious crisis to go to waste,” said Chief of Staff Rahm Emanuel. “This crisis provides the opportunity for us to do things that you could not do before.”
Health, education and energy—worthy and weighty as they may be—are not the cause of our financial collapse. And they are not the cure. The fraudulent claim that they are both cause and cure is the rhetorical device by which an ambitious president intends to enact the most radical agenda of social transformation seen in our lifetime.
He’s going to save the patient, even if he kills him trying. “I’m from the government and I’m here to help you.” Yes, you.
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30 Comments
1. blert:Can you say: FOUR YEAR PLAN ?
NEP with a vengeance….
Is he Stalin’s sock-puppet ?
Mar 6, 2009 - 12:37 am 2. Doug:“Cooper returned from retirement last summer to run the bank and doesn’t earn a salary or bonus, but he says the restrictions affect other TCF employees.“
Mar 6, 2009 - 12:47 am 3. PA Cat:The polite term for O’s “fixing the health care system” is quackery.
Mar 6, 2009 - 1:15 am 4. wildernesscalling:The very depth of this crash can be solely laid at “0″ feet, “0″ administration has stoked the flames of this financial crisis for their own gain just as Rahm Emanuel words continue to echo, the over use of this scheme will wear the Adrenalin out and sap the energy from even “0″ own ardent supporters, it won’t be long before a minor crisis will wag the dog or the administration will create a major crisis in hopes of adverting the obvious glare of the people at the ineptness of “0″ administration, it’s not too late if we all start to murmur it now it will soon become a deafen roar, hopefully before it is much too late! “Impeach 0, Pelosi and Reid. Impeach 0, Pelosi and Reid. Impeach 0, Pelosi and Reid”
Mar 6, 2009 - 1:56 am 5. Doug:Rep. Frank Pushes For Prosecutions Over Meltdown
!!!
Mar 6, 2009 - 2:47 am 6. Doug:Gordon blue [Mark Steyn]
Jonah, there are two possible explanations for the humiliations inflicted by the Obama Administration on Mr Brown:
One is that (as several alleged experts have told me) in this area the president genuinely differs from his predecessors. Take that Martin Gilbert biography of Churchill the Prime Minister gave him: I’ll wager Obama will never read a word of it. To him, Sir Winston is not the great wartime leader, the indispensable man in civilization’s darkest hour (1940-41), but the post-war leader responsible for the ruthless suppression of the Mau-Mau rebellion in his father’s Kenya. Churchill is not the way to Obama’s heart.
And, in a broader sense, he has no particular attachment to “the west” – to the transatlantic partnership, the Anglo-American relationship, any of it. As I touched on in NR the other week, to his admirers he represents a cooler post-western “hybridity”. And, given where he chose to spend his entire adult life, that seems entirely likely.
The simpler explanation, which I find more persuasive, is that he’s just too narcissistic: He’s the star and these foreign prime ministers are rather dreary extras. And unfortunately he’s not a good enough actor to conceal his lack of interest in them. And his courtiers take pretty much the same line, which is why it never occurred to them that some no-name Brit would be insulted at not getting the multi-flagged joint presser.
(For what it’s worth, I heard similar reports of the president’s remoteness on his flying visit to Ottawa, where the only person he seemed to get any kind of kick out of was Her Majesty’s vicereine, Michaelle Jean, who happens to be a fine-looking woman, if you’re into leftie babes.)
Mar 6, 2009 - 2:51 am 7. weSwinger:Good morning BC, the word of the day is OBTUSE. Used in a sentence: President Obama is so obtuse that if a bank were on fire, he’d try to put it out with a bandage.
Mar 6, 2009 - 3:15 am 8. lc:From and excellent link in the “Which Way…George? post, moneyrunner #11…the US is not a free market economy; it is a mixed economy. Sectors of the economy, like the technology sector, are free market (and look at the results), while the financial system is heavily controlled…by the government (look at the results).
I think the whole “under-regulated” arguement is disingenuous at best.
Mar 6, 2009 - 5:06 am 9. bogie wheel:A couple thoughts:
1. People who bought houses they couldn’t afford, or who foolishly put their existing homeownership into jeopardy by using the house as an ATM, are a separate category of problem than people who are about to lose their homes (or their rentals) due to unemployment.
As bad as a cascading foreclosure crisis is, and it is indeed bad, it will likely pale next to a skyrocketing unemployment rate.
The difference between the former and the latter is, in the former scenario, people wind up renters rather than homeowners, while in the latter, people wind up living on the street.
If you can put out only one of those two fires, put out the unemployment fire first.
Stop the economy from tanking and taking people’s jobs with it. For any president who is serious about governing, that should be the first and only job on his domestic agenda for the foreseeable future.
Forget the whales … save the jobs!
2. Agree with Krauthammer. Spending $$$ on nationalizing health care, crushing the energy industry with cap-and-trade and sending consumers’ energy bills soaring as a result, throwing $$$ at increasing the college diploma holders 4, 8, 12, 16 years down the road, does NOTHING to stop the economy from tanking and stanch the job hemmorhage.
Which leaves either stupidity or willful destruction of what’s left of the free-market system, and thus the private sector (as a competitor to govt) along with it, as explanations for the series of tax-and-spend debacles being rammed down our throats.
3. Health insurance and health care costs are indeed a big deal to the working class, and the Dems have scored a lot of political points off talking about (some would say exploiting) those concerns. But up till now the perceived crisis point has been EITHER/OR: either your meds … or the roof over your head.
What if the Dems, in fixating on health care, fail to fix the economy and cost working Americans both the meds and the roof over the head?
No “free” health care. No job. No home.
What then?
Mar 6, 2009 - 9:32 am 10. bruce:Yes, the economy is worsening outside of the big states, but did anyone think that maybe, just maybe, sub-prime borrowers who *could* make their payments increasingly see little benefit in doing so? Who wants to be a idiot making their mortgage payments when you could be getting a bailout? To the Obama administration, “homeowners” gaming the system for a bailout, even ones that never had the wherewithall to be homeowners, is not a bug, its a feature.
Mar 6, 2009 - 9:52 am 11. lc:How far would tort reform go towards bringing down health care costs?
Mar 6, 2009 - 9:54 am 12. ag:For the last few decades (essentially since the collapse of the USSR during Bush senior years) I started to appreciate more the old K.Marx’s predictions after the French revolution in mid 19-th century.
Mar 6, 2009 - 9:59 am 13. Dave D.:..#9 : ” What then ? “,
Mar 6, 2009 - 10:05 am 14. buckets:…Then it’s election day in 2010 and the deck gets reshuffled. Democrat Congresscritters join the ranks of the unemployed and we start to rebuild what they broke.
..All of you folks out there, hold up your hands and show me what you’ve got left in your retirement accounts ( crowd holds there hands over their heads in the Obama ” O ” position ).
Tort reform has been trumpeted as a solution to all our problems, but it’s a red herring. Sure, we’re all a bit disgusted when an enormous and probably wrong jury verdict makes national news. There are, tort reform advocates always forget to mention, pretty adequate mechanisms in place to reduce or limit obscene punitive damages awards.
I will say that serious reform is needed for the class-action lawsuit systems we currently have in place. There are great benefits to wronged individuals who otherwise couldn’t afford to hire an attorney and sue on their own, but many of these class actions are nothing more than shakedown operations writ large.
When you talk from firebrands about imposing more limits on a citizen’s right to sue or collect damages, remember this: in the coming years,as the power of the individual is undermined and weakened by an ever increasing government presence in your life, the courts may be the only place you can get a fair hearing.
Mar 6, 2009 - 10:06 am 15. noprisoners:Bruce @#10
I think that you nailed it. I have anecdotal reports that, of the homeowners in default in the Phoenix area, up to 25% are faking it for just the reasons you enumerated.
Hell, I jokingly said to my wife “let’s stop paying and get bailed out”. We are not in an endangered condition but; what the heck, let’s get back part of what they are taking from us.
Disclosure: that’s not how we roll.
Mar 6, 2009 - 10:25 am 16. always right:NOOoooooo! Et tu, Wretchard?
I know the America (heck, the whole world) landscape will look very different from just 2008.
But A Sinking Titanic?
Mar 6, 2009 - 10:29 am 17. Subotai Bahadur:#16 always right
OK, how about a different metaphor. Instead of the SS Titanic, how about the IJMS Shinano?
Shinano was, at the time of her sinking, literally the largest ship in the world. A converted Yamato class battleship, she had been made into a huge aircraft carrier. Before being completed [watertight doors not yet installed and testing of damage control systems not done] she was ordered to go to a different port that was considered safer from American attack. She and her 3 destroyer escorts sailed on November 28, 1944.
She was spotted by the submarine Archerfish. Despite being slower than Shinano, Archerfish was able to use the Shinano’s defensive zigzag pattern to get into firing position and launched a full spread of 6 torpedoes before being forced to dive by the escorts.
Several hit, and water poured in. Remember, no internal watertight doors. Despite the best efforts of the crew, the ship was sinking. For 4 hours, the captain ordered the course to the original destination [Kure] maintained, at full speed, despite the flooding. There were several ports within range he could have made, or places he could have deliberately run the ship aground so she could be salvaged and repaired; but not until shortly before she sank did he try to beach her. Didn’t make it. Most of the crew died, and Japan lost its newest and largest warship because the captain was sure that she [and he] were invincible, despite immediate evidence to the contrary that she was mortally wounded.
Obama would rather that the nation “sink gloriously” rather than deviate from THE PLAN.
Subotai Bahadur
Mar 6, 2009 - 11:28 am 18. Neil:There’s the beginnings of impeachment talk out there. I suspect that within six months there will be some support for it in Congress. If wiser heads push it along, they might even manage to force him out during his first term. I say that would be a disaster.
Obama’s right. He won. As much as I hate it as an entrepreneur, even my own family members voted for him knowing full well what Obama promised to do to people like me. This fever must be allowed to run its course–Americans must, unfortunately, feel the full measure of the pain that is coming as a result of their actions. They must decide for themselves that Socialism is a dead religion.
Obama must be given plenty of rope and be allowed to hang himself with it. If this experiment is terminated early, “progressives” will never believe the termination was legitimate, and Obama will become a symbol that tears the country apart. There must be no modern-day Brutus, no Marc Antony praising Caesar.
We must grit our teeth and see this through to the bitter end.
Mar 6, 2009 - 11:43 am 19. buckets:Neil @ 18
Well, I think you’re plain wrong. I attribute your view to naivite. The fundamental changes that are being made to the system are basically irreversible. Once the govt spigot gets cracked open, it pours out and there’s no way in hell we’re ever going to get it closed. I would love impeachment – not because I loath Obama, but because of the massive and undisclosed paradigm shifts that O and his COngress are bringing about.
People will look back 25 years from now at Obama’s time in office, and say “Yeah, that’s when it started. Couldn’t they see what was happening right under their noses?” Rome is disintegrating from within, and all we can do is hope the barbarians stay away from the gates.
Mar 6, 2009 - 1:05 pm 20. RWE:I heard today that it has been admitted that most of the people being helped by the mortgage initiative are ones that have multiple loans. In other words, real estate investors. The head of the FDIC even admitted that it was not practical to just help people who did not lie or did not deliberately overextend themselves.
Subtoi No. 17:
Actually, what killed the Shanano was not the lack of watertight doors, because the ship was still very robust – had a lot of design margin, in other words.
The Captain saw that things were such that normal damage control procedures would handle things adequately. So he turned further damage control over to an inexperienced junior officer.
The torpedoes had cracked the ship’s aviation fuel storage tanks. This made things rather smelly. So the novice damage control officer decided to turn on all of the blowers and get the odor out of the ship. This produced the world’s largest Fuel Air Explosive, and when that detonated there was nothing else to be done.
So your comparison is especially apt. Instead of doing what makes sense and let the people who screwed up get screwed – and thereby limit the damage – our Novice POTUS Damage Control Officer is creating the world’s largest Fuel Air Explosive.
Man the lifeboats. See you on that island with the people from Lost.
Mar 6, 2009 - 1:26 pm 21. bogie wheel:There’s the beginnings of impeachment talk out there. I suspect that within six months there will be some support for it in Congress. If wiser heads push it along, they might even manage to force him out during his first term. I say that would be a disaster.
“Impeachment talk?” So what?
The Constitution delineates what are impeachable offenses. They are:
“treason, bribery, or other high crimes and misdemeanors.”
Meaning – he has to break an established law, or commit treason as defined in Article III.
Disliking a president, even vehemently disagreeing with his policies, even suspecting that he is a narcissistic megalomaniac bent on permanently changing the balance of power between government and the private sector in this country, are not grounds for impeachment.
Inflating policy differences into criminal offenses is what the other side does.
It would be a good idea for us to follow the Constitution, because I’m pretty sure that if we don’t, nobody will.
If he’s “merely” a screaming disaster of a policy jackass, then we turn him out in the next election. However, if he goes beyond bad policy into illegal/treasonous acts, then there are provisions for dealing with that.
But he has to play his hand first. Reactionary and preemptive opposition does no one any good.
So on that note I agree with you — things must “play out” a lot further — but for long-term, constitutional reasons, not political ones.
Mar 6, 2009 - 1:28 pm 22. Neil:buckets @19
Naivete? Such a charming ad hominem attack, and with not a scrap of anything to back it up. In my opinion it’s naive to believe you can save the Republic by impeaching the man.
The American people voted for Obama because they listened to him denigrate business, listened to him promise loaves and fishes to the world, and listened to him promise to pay for it with tax cuts for the middle class. And they said “that’s our man!”.
If Obama’s policies are not seen to fail (and they will fail, and fail quickly), how long do you think it will be until another “community organizer” comes along with the same smooth words, the same promises, the same old axe to grind?
No, this must end here. America’s fascination with socialism must be unlearned by hard experience. Conservatives and libertarians must be seen to fight back, and must articulate a forceful alternative to Obama. But it can only end when the people make their own decision to throw the bum out.
Mar 6, 2009 - 1:34 pm 23. always right:17 & 20.
Thanks for the better metaphor.
(O)ur Novice POTUS Damage Control Officer is creating the world’s largest Fuel Air Explosive.
Once he started it (i.e. down this road), is there any other damage control measure(s) could be put in place IN TIME to de-risking the catastrophe in the making? In other words, is the lifeboat (‘abandoning ship’) the only option? That makes the same scenario as Titanic, doesn’t it?
At this rate, President ZerO may be give two full terms before voters learn anything better.
Mar 6, 2009 - 3:20 pm 24. kbdabear:One ticking bomb awaiting mortgage holders is not covered by the DemSM. Think of the anagram PITI (Principal Interest Taxes Insurance)
Judges, banks, whoever may be able to rework principal and interest, maybe even insurance to terms easier for the homeowner or commercial property owner, but TAXES are usually paid to localities through the mortgage payments. Taxes cannot be reworked by the judges and with the growing hunger for funds and deficits faced by municipalities, property taxes are sure to rise in frightful ways.
Homeowners capable of paying the current principal, interest, and insurance portion of their mortgages may be faced with tax foreclosures. I see this as a growing threat that the tax loving DemSM will undercover until the smoke is unmistakably a conflagration.
Mar 6, 2009 - 4:14 pm 25. buckets:Neil-
Obama got elected President because he presented himself as a tax-cutting/ responsible/ stop wasteful govt spending /strong on national defense/ moderate. I certainly don’t remember O mentioning during the debates any promises to rack up trillions in deficits and start kissing Russian and mullah ass his first weeks in office.
I don’t think most people really knew who Obama was; in part because the press never asked the tough questions, and in part because O is simply a charismatic guy.
If you believe that all 60+ million Americans who voted for Obama understood exactly who they were voting for, and desired the domestic agenda and foreign policy we’ve seen thus far, I would also call you “a relatively unobservant student of the American political scene.”
OOOOOO, what do you think about them apples?
Mar 6, 2009 - 4:57 pm 26. buckets:I might otherwise agree with you, Neil, but I really think much of the damage being done right now is of the permanent and paradigm-shifting kind. If you think we can make it through his presidency unchanged, well, I wish I shared your optimism.
Cheers
Mar 6, 2009 - 5:01 pm 27. RWE:Always Right 23.
To me “abandoning ship” does not mean digging yourself a bunker in the New Jersy Pine Barrens or buying property north of Winnipeg but rather refusing to be the Cow that the Socialists like to milk and the Communists like to slaughter.
How one does that varies with your situation, but I am sure it means not investing any more in the stock market, making sure you have a safe place to go, saving money (or gold) and defering purchases, stocking up on food and/or ammo, etc. None of those are bad things to do even if the economic forecast was sweetness and light for as far as the eye can see and we were all producing musical farts that played “Zippedy Do Dah.”
And get organized. Not a bad thing at any time, either.
Mar 6, 2009 - 5:30 pm 28. ag:Re. 18 “If this experiment is terminated early, “progressives” will never believe the termination was legitimate,” I think you are mistaken. “progressives” will always be “progressives”. They will never believe their umpteen experiment could go wrong. No! Not this time and with us in charge! They are perpetual hampsters: always busy scheming and improving other people lives. The only solution I know is to terminate the “progressives”.
Mar 6, 2009 - 6:48 pm 29. ppipps:I just posted on this site, only to see my words removed when I refreshed. Did I say something wrong?
Mar 6, 2009 - 9:39 pm 30. 3Case:In “fixing” the health care system, the Lord O and his minions, likely, will kill my Wife. I pray, near daily, for Grace that the ragamuffin Republicans can stop that horror or that the progression of her rare disease delivers her from the predations of national healthcare bureaucrats.
As with Global Warming, the Healthcare Crisis is a hoax meant to deliver money and power from the people to the Democrat Overlords and their Heepish minions…Heepish, the combined lot of them.
Mar 6, 2009 - 10:52 pm