Fallout From the Bailout Plan

By DemocracyRules

Some pros, some cons:

(1) Pension plans won't tank, and neither will the holdings in 401(k)'s.  Other investors will also avoid ruin.

(2) It will stop the sub-prime, nothing down, pay-and-pray mortgage foolishness that started this debacle.

(3) The bailout won't directly help people who have lost their homes. It also will not increase the price of houses.  However, it might slow or stop the decline in house prices.  With new and sensible financing available for cheap homes, potential homeowners may be attracted back into the market.

(4) The legislative door is still open to help some  distressed homeowners.  I suggested some ideas in previous posts. 

For example, It may be possible to help homeowners negotiate more stable mortgages, which have higher interest-rates, but have less principal.  The homeowner would pay the same or less per month, but they would own more of their home.  They would also be more likely to keep paying the mortgage. 

These refinanced mortgage arrangements could be worked out later.  They should be structured in a way that they cost the taxpayer nothing.

Pro Patria

Comments

[Dan Oblak - MacBigot.com]

So, where are the cons?

I would have been happy if nothing was done but (2) -- but the (1), (3) and (4) aren't bad either.

Kind of like finding out that the girl you're planning to marry has a more reliable car than you do... 'Where do I sign?'

On the other hand, I wonder why the MSM is getting away with ignoring the Left's hand in creating this environment -- for those smaller banks who saw fit to avoid writing bad loans in the first place, they may find opportunities to forage through some profitable years in the next decade; for those larger banks who chose to humor A.C.O.R.N. and other Obama buddies, I'd love to say 'rot in hell' if it were clear that our economy had some measure of stability at the moment... but it appears to be swinging in the wind at the moment, from the tallest tree in town.
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{From DR -- Thanks for your comment, and good point about the "cons". "The devil is in the details." The problems are in the unintended consequences, which I can't list, because no one knows what they are.

By definition, the free market is actually going on in all our heads, simultaneously. That's where things like the valuation of houses gets done -- inside our collective minds.

When government intervenes in the free market, it cannot possible account for the activities of all minds, and the behavior that comes from them.

As you point out, the government already intervened in the guidelines for mortgage lending,which created this mess in the first place.

A second intervention to fix the problem may or may not work. -- Pro Patria}