No Country For Grown Men
The coverage today was all about the Rate Freeze Plan. It was almost palpable when the realization came that the plan is a window dressing only. I had hoped that the heated discussion of the merits of the plan would ignite a large scale "timeout" where even average folks would mull over things for a moment. Judging by the feedback on various media sources, an overwhelming majority are basically sick to their stomach about the rate freeze idea. Most have concluded that all things real estate were overdone, and that things must correct over time. I was pleasantly surprised by this.
The problem is that government officials and the banks/lenders were out in force slamming the plan as, get this, NOT DOING ENOUGH! They want more help in propping up a failed financial scheme that has run out of time. FED rate cuts, expansion of Fannie and Freddie, and various freezer plans are not hinted at, but outright demanded by the industry. The players would have you believe that the entire financial system will collapse without a home price prop put into place. The craven demands for aid coming from the very people that brought this all about is both sad and a perfect commentary on our society today. If you read the article on Herb Greenberg's blog I linked to yesterday you understand that this was indeed round one. Round two will be so disastrous for the banks that it is hard to imagine the wails of pain they will cry when things really turn south. And this brings me to my main point.
Enough is enough. Not one of the entities involved in the scam that was mortgage lending has any desire to help you. The FED could care less about your job, your finances, your life. The entire machine right now is running full speed to keep you spending and keep you in debt that is just barely serviceable. Not one thing should be done for the banks and the lenders until a full and clear accounting has been done on what the hell was going on for the past 4 years. Answers that must be found:
- The models you were using relied heavily on ever increasing home prices. Now that home prices are in decline, what do the models say?
- How much money will be lost if home prices fall 5%? 10%? 20%?
- How much of a pay cut across the industry will you take to help offset the costs of the losses?
- Why were people given loans without any documentation, income verification, and no money down? How exactly did you think they were going to pay for the loans?
I am sure you can think of a bunch more. The point is that there are serious questions that need to be answered. Instead of acting like this will all go away with a few rate cuts, all involved need to come clean about what is going to happen as home prices keep falling. To steal and change the title of a new film, the USA right now is "No Country for Grown Men" in that we are led by people that think they can handle everything and keep the public in the dark. It has worked great so far. When the next calamity in the housing bubble happens, and it will, they may find that the little children they are in charge of want some answers.
Friday means Rock Blogging!
The immortal Jimi Hendrix with "All Along the Watchtower":
My personal favorite Led Zeppelin song, and one amazingly no one seems to ever have heard, "No Quarter". Amazing song:
Black Sabbath with the bluesy but all metal "NIB" another favorite:
Have a good night.