Monday, January 4, 2010

Economic Insanity Continues, Part 1

More economic insanity in the form of three shockers -- SHOCKERS -- for your head banging pleasure.

Shocker #1:
Yet another government intervention failure

The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.

Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.

As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.

Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.

“The choice we appear to be making is trying to modify our way out of this, which has the effect of lengthening the crisis,” said Kevin Katari, managing member of Watershed Asset Management, a San Francisco-based hedge fund. “We have simply slowed the foreclosure pipeline, with people staying in houses they are ultimately not going to be able to afford anyway.

Hot Air says thus:

Gee, who could have predicted this? Oh, yeah … me, and plenty of other people who wondered how a temporary modification would solve the permanent problem of living with a loan that one could not afford.

The danger of foreclosures will be extended, and now people have fewer resources with which to recover. The only option left for government intervention is to buy the mortgages and forgive part of the principal, which essentially means that all of us will wind up paying for homes we couldn’t afford, either — and which we were smart enough not to buy. That will also encourage more irrational risk-taking in the future, as people will assume that the federal government will once again pick up the tab if failure looms again.

What? An entitlement program whose irresponsible recipients act irresponsible? Shocker!

Shocker #2:
Cash for Caulkers a giant waste of taxpayer dollars

Efficiency like that is just SHOCKING!

Shocker #3:
Obama loses more jobs in 1 year than any other President in modern history

As we look back over 2009 we can now report that Barack Obama lost more jobs in his first year in office than any president in modern history. Barack Obama lost over 4 million jobs alone since his failed stimulus was passed in February.
USA Today reported:

Even before Barack Obama took the oath of office, his economic advisers projected that without hundreds of billions of dollars in government spending, the U.S. economy could lose another 3 million to 4 million jobs on top of the 3.1 million lost in 2008.

It turns out they were optimistic. Even with the $787 billion stimulus package that Obama signed in February, more than 4 million jobs have been lost in 2009, the worst year for job losses since World War II. The jobless rate that advisers projected would peak at 8% has topped 10%.

And it took him until December to hold a jobs summit to address the problem.

And Doug Ross reports that things are likely to get much worse before they get better.

I don't know about you, but given Obama's campaign rhetoric about creating jobs and jobs being his number one priority, I'm just shocked -- SHOCKED -- at the fact that he has failed on this most important of issues.

New year, same ol' economic insanity.

There's my two cents.

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