The Pope, the Queen and Nelson Mandela walk into a bar. Mandela: “I say, that chap Obama tried to use us as the start of a joke, but true to form, he couldn’t finish, just like he said hope and change, close Guantanamo in a year, eliminate waste from government, build an economy on solid foundations, immigration legislation by the end of the first year . . .”
O’bama: “I'm told the last three speakers here have been The Pope, Her Majesty the Queen, and Nelson Mandela, which is either a very high bar or the beginning of a very funny joke.”
There were these Presidential advisors, Geithner, Goolsbee, Jarrett and Sperling
- the beginning of a not so funny joke.
What's Irish and is spread throughout suburban America? Patio furniture.
Speaking of housing.
I wrote you in March 2009 (included in post script) offering an idea to clean up the securitized mortgage fiasco. My plan was to calculate the loss, charge it to the lenders ie banks (who would be bailed out by Tarp – unforeseen by me at the time). The write down reduces the mortgages, giving owners a market valued chance to keep their home, thus saving many deserving families. Geithner’s plan flooded the banks with money and a fool hardy plan to bailout underwater mortgages without reflecting market values. I still remember in February 2009 you said you didn’t want to pre-empt Geithner’s solution which he presented in March 2009. There was no solution – the emperor had no clothes and still doesn’t.
The housing market is a significant part of the economy and influences durable goods purchases. A loss of wealth is felt by home owners because of low market values and contributes to stalling consumer consumption.
Your government’s implementation of Tarp has not addressed the housing market. I also didn’t like the seeming give a way of tax payer money, billions in a cash advance to Goldman Sachs for the CDS, advances which AIG refused to pay and paying out 100 cents to the dollar for the CDS where the recipients were expecting no more than 60 cents to the dollar.
The situation is muddied by your selection of staff members. Wm Daley was on the Board of Fannie Mae. The New York Fed, under Geithner created the belief that housing only goes up. Tom Donilon, National Security Adviser, was at Fannie Mae. Tom Nides, at the State Department, was at Fannie Mae. Jim Johnson was the CEO of Fannie Mae, was on the selection committee for your vice presidential candidate and is currently on the board of Goldman Sachs and head of their compensation committee. Did you say you were opposed to group think?
The victims are people whose homes are under water but needn’t be if mortgages were re-aligned to market values, something Tarp was supposed to do.
Your government has been inducing inflation hoping to re-inflate the housing market to negate the low prices. You don’t care about the cost of food or gas.
Irish seven course dinner. A potatoe and a six pack.
PS
March 8, 2009 Proposal to address the securitized mortgage crisis.
The government consolidates all bundled securitized mortgages, uses a task force of Audit firms to re-value them, then re-distributes the actual mortgages back to eligible holders. The banks will properly show mortgages in their long-term assets instead of current assets when they held the securitized slices (An improper accounting shift to enhance executive bonus's). We will end up with a mortgage market true to capitalism.
Detailed explanation.
Securitized mortgages means mortgages were bundled then tranches of the bundle were sold off. Every mortgage is local so this instrument is invalid.
1)Collect all bundled mortgages.
2)Classify the Mortgages
Within each bundle is a list of mortgages.
All the mortgages must be placed on a master list.
This list must be sub-divided in the following order:
Region/city New England, Rust belt, New York, East coast,
Florida, Nevada etc
Interest rate Standard prime, escalating interest rates including subprime
Current market value divided by mortgage
Mortgagee income to mortgage amount -ability to repay
Within each region you will be able to determine three categories
Low, medium and high risk.
3)Calculate the write down.
4)Collect all holders of bundled mortgages
5)Pro-rate the write down according the portion of the bundled mortgage holding.
6)Classify holders
Banks allowed to issue Mortgages in US and those not allowed.
7)Re-distribute the gathered mortgages to the banks allowed to issue mortgages in the US.
The US government only has jurisdiction over banks allowed to issue mortgages in the US.
The other holders will get no mortgages, it's a risk they took.
If this is too severe offer silent partner relationships with the banks with title.
The redistribution will have to depend on what the data looks like.
Redistribution must be as fair as possible so should be done before a Judge (We want justice).
Ideally regions would be distributed to a regional bank but markets may have to be tranched among several banks to fairly spread the risk
31-May-2011
National Home Prices Hit New Low in 2011 Q1 According to the S&P/Case-Shiller Home Price Indices
Data through March 2011, released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show that the U.S. National Home Price Index declined by 4.2% in the first quarter of 2011, after having fallen 3.6% in the fourth quarter of 2010. The National Index hit a new recession low with the first quarter’s data and posted an annual decline of 5.1% versus the first quarter of 2010. Nationally, home prices are back to their mid-2002 levels.
