Today’s news contains two positive bits of news from the Obama transition team: first, he plans to ask Congress for a massive infrastructure construction program; second, General Shinseki will come out of forced retirement to head the VA.
Shinkseki certainly deserves vindication; he was one of the few Pentagon honchos to have the guts to tell Bush the truth about Iraq, that it would require as many as half a million troops to pacify the country. Rumsfeld forced him out for being right. Being right, however, is what matters–and Obama will need more people who were right in his cabinet. (Hillary, who was wrong over and over and over, on the other hand, should not have gotten the State job.) I’m glad to see him rehabilitated.
The infrastructure program is just what the doctor ordered–well, half of it, anyway. We need to put more money in homeowners’ pockets so they can keep their homes. Best way to do that: refinance all loans to a rock-bottom 2 or 3 percent fixed rate. Still, it’s a nice start.
Obama still has a long way to go before he loses his rep as a sellout. But this was a good day.
11 Comments.
Infrastructure programs take a long time to get going, especially with the red tape involved. Even the dizzy-headed recent winner of the Sveriges Riksbank Prize says so:
http://krugman.blogs.nytimes.com/2008/12/04/worries-about-next-year/
*refinance all loans to a rock-bottom 2 or 3 percent fixed rate*
No, this is the sort of thinking that caused the bubble in the first place. This can only happen in one of two ways:
1. The government dictates that the banks refinance. Result: Every single institution related to the mortgage industry files for Chapter 11 the very next day. Or,
2. The government subsidizes the loans. Banks keep charging what they were, and the taxpayer picks up the rest. Result: Those taxpayers with mortgages get a huge subsidy from those taxpayers who pay rent. A massive wealth transfer from the poor to the wealthy.
ADDENDUM: The unintended consequence of the reduction in mortgage rates will be a misallocation of capital into housing (and construction, and commodities). People who rent will purchase houses they can't afford into order to get the same subsidy as everyone else. As the number of renters declines, the remaining ones will pay more and more. Eventually, like all bubbles, it will explode on us.
Hillary may not be too bright on mil affairs, but she does have the tribal markings that world leaders respect.
Mold
And there's this: http://www.talkingpointsmemo.com/archives/247116.php
A New Day, indeed. Even verbal support for anyone making under $500k hasn't been heard for at least 8 years.
I have a better idea a to solve the housing crisis:
Let all the people who purchased homes and couldn't afford them foreclose.Then let the people who played by the rules and didn't purchase a home they couldn't afford, purchase the foreclosed homes.
Anyone who purchased a home and didn't know what they were signing doesn't deserve to keep their home. Disclosure documents at the time of (house) closing are replete with,ummmmm, disclosures about the cost of the house and how much and how fast interest rates can change.
We don't need more government, we need less BFing (Barney Frank)
Canada avoided this banking crisis precisely because their industry is more regulated.
In fact, the downfall of most foreign banks was to get hooked in with the unregulated cowboys in the US, on the assumption they were at least sane if not regulated. An assumption even Greenspan admits was wrong. If the father of deregulation can recant, why can't you?
Always Right,
It is not in the best interest for predatory lenders to provide accurate disclosure documents to the people that they are preying upon.
I'm surprised you didn't know this.
Susan,
Almost every document requires a signature or initials from the buyer. If the buyer suspects they were defrauded, they can take the papers they signed to an attorney.
Predatory lending was not the problem. Greed by people thinking their home would go up forever, and they could refinance out of their ARM after 3 or 5 years. Many took a second to buy big screen TV's, cars, vacations, or pay off their credit cards.
The infrastructure plan is too 20th century I bet, it needs to be high tech, it needs to involve renewable energy specifically, and most importantly it needs to not expand the amount of developed land already in use. If anything we need to reduce and radically transform the developed land we already have.
Our agricultural system has to get off of it's obsession with corn & soy, we need to stop farming in flood plain regions, and open them up to growing switch grass and grazing animals in rotational patterns. We need to take other agricultural pasture lands and turn them into wilderness, where a substantial portion of our meat comes from game again: deer, goose, duck, etc.
Almost none of this is going to happen, of course, because we've got such entrenched coalitions defending their turf, because their livelihoods are dependent upon a capitalist system that won't allow them to shift gears, even when they want to.
Nice moves by Obama, but the way I see it, it is still rearranging deck chairs on the Titanic. It is meaningful, but it is still not even scratching the surface of an epic problem that comes down to resource management, energy production, and food production.
"Infrastructure Program" is codeword for wasteful spending on crap. It didn't work for Japan in the 80's and it won't work now.
I've got a truly crazy idea. Let the people have their own money and spend it on what they want, be it infrastructure or whatever. And I don't mean republican fascism-corporatism, but just simple freedom.
Think about it.
Scott
I've got a truly crazy idea. Let the people have their own money and spend it on what they want, be it infrastructure or whatever. And I don't mean republican fascism-corporatism, but just simple freedom.
You are a marxist anarchist.