Sunday, May 24, 2009

Not Even Trying To Hide It Anymore

And why should they? Republicans have already proven the terrorist fear card will get the Senate to do whatever they want. Why not play it 100% of the time when there's no downside anymore? What's going to honestly happen to the GOP if they do this, they'll lose control of Congress or the White House?

So why not try to scare everyone out of their minds?
Echoing Dick Cheney during an appearance on Meet the Press, Gingrich insisted that “people should be afraid” because of President Barack Obama’s alterations to former President George W. Bush’s terror war.

“If you look at the behavior the last few months, if you look at the effort to open up past wounds,” said Gingrich. “… If you were a CIA employee today, and you understood there were people who wanted a truth commission, that people wanted to say to you, ‘I want to go back six, seven, eight years and I wanna put you on trial potentially … If you look at what Speaker Pelosi said, they lie to us all the time … This has hurt morale. The question is, is the most important thing to us today to find some sort of American Civil Liberties Union model of making sure that we never offend terrorists, or we’re gonna cover your back, we’re proud of you and we want you to defend America.”

Newt Gingrich on on my TV telling me I have to be scared to the point of pissing myself and that Obama is going to get thousands, maybe hundreds of thousands, maybe millions of Americans killed.

Doesn't matter if it's a false choice and a lie if people cave in to the GOP. And Democrats in Congress have been caving in on this since 9/12. Doesn't matter if it's simple Village publicity stunts gone bad. FEAR FEAR FEAR FEAR! OBAMA WILL KILL YOUR FAMILY! ONLY THE GOP CAN SAVE YOU! BE AFRAAAAAAAAAAAAID!

And yet, it works every time. We still treat Newt Gingrich as a serious person.

Another Milepost On The Road To Oblivion

What a concept: not only admitting that the financial system is rigged, but admitting that in order to profit from it, you have to play with the intention of gaming the rigged system.

His honesty is in fact refreshing, but it's in fact one of the logical endpoints of what I've been saying since January 2008. Quite frankly, what do you think the big banks and the insurance companies have been doing for the last ten years if not profiting by in fact gaming the rigged system for themselves?

Would I recommend following his advice? Not in the least. But the guy has a hell of a marketing tool on his side -- "Where's my bailout?" -- and he's marketing the hell out of it. He will sell this system. He will make money from this. The people who buy into this? Not so much.

Good or bad, that's capitalism in 2009, folks.

"Blood In The Streets" Of Phoenix

Phoenix, Arizona is trying to live up to its name as far as the housing market is concerned.
Every weekday morning, Lou Jarvis drives the sun-baked suburban streets looking for investment gold: a family that will lose its house in a foreclosure auction within a few hours.

If the property looks promising, Mr. Jarvis puts in a bid on behalf of any of his dozens of clients eager to become landlords. When he wins, he offers to let the family stay in the house and rent for much less than their mortgage payment.

With this sweltering desert city enduring one of the largest tumbles in housing prices for any urban area since the Depression, there is an unrelenting stream of foreclosures to choose from. On some days, hundreds are offered for sale at the auctions that take place on the plaza in front of the county courthouse.

There is also a large supply of foreclosed families who can no longer qualify for a loan. And that is prompting a flood of investors like Mr. Jarvis, who wants to turn as many of these people as possible into rent-paying tenants in the houses they used to own.
There's three major problems with this.

1) It does nothing to stop the glut of unsold homes on the market in places like Phoenix. Turning homeowners into home renters like this means these individual homeowners aren't getting equity. It's good for the investors, but bad for the renters. It's better than being out on the streets, but should these homes continue to lose equity, both the owner-investor and the renting family are going to have to make tough decisions. This plan only works if there's a bottom to the housing market and prices go back up. If prices go back down, the investor may have to sell the place, and then there's an even bigger problem. Only when new buyers are buying these houses do prices go up. Right now, this plan is just treading water at best.

2) Potential new homeowners still can't get credit from lenders. This remains a problem. Banks are more than willing to refinance existing homeowners with good credit. Refinancing to the new lower rates does lower payments and helps keep people in their homes. But that's again a "treading water" step. Originating new mortgages is not happening. Not in this market. Until new mortgages and new buyers get into places like Phoenix to snap up unsold and new homes, home prices will continue to fall.

Banks and mortgage lenders face the "Paradox of lending." If all the lenders servicing the housing market originate new mortgages, then all the lenders win because new buyers will start stabilizing prices. If only a few originate new mortgages, it won't be enough to stabilize the market and home prices will fall, and the lender loses money and may have to pull out of the market or even go under themselves. If nobody originates new loans, then all the lenders lose.

If you choose to originate new loans, you only win if everybody else does so. If you choose to not do that, you only lose if nobody does so, and there's always somebody willing to take the risk to lend or the government will...ergo you can't lose if you don't originate new mortgages, ergo lenders aren't originating new mortgages. Solid business sense individually, terrible collectively.

3) There's nobody trading up to bigger and better homes. This is still the key to stabilizing the market. Foreclosed entry level homes are one thing, but foreclosed mid-sized and high-end homes are still going unsold. There's a lot more to lose should prices fall, and that end of the housing market already had the biggest bubble built into it. As the old real estate joke goes, "What's the difference between a half-a-million dollar home and a million dollar home? $500,000." That's a lot of money to anyone in this market, and people are trading DOWN, not UP, if only for the relative stability in payments and equity. Losing 20% on a $150,000 home is bad. Losing 20% on a million dollar home is devastating.

Needless to say, this end of the market will continue to see falling home prices even if the low-end of the market stabilizes somewhat, and that's going to continue to be bad.

Mr. Jarvis, 47, the former co-owner of a wood moulding company that thrived in the boom and faltered in the crunch, also made some mistakes. Last spring, he contracted for three new homes in the distant suburb of Copper Basin, convinced that real estate was bottoming.

He was wrong. He managed to get out of two of the contracts but had to buy one of the houses, which is now substantially under water.

You need to buy when there’s blood in the streets,” he said with a shrug. “Even if it’s your own blood.
Ahh, but then again if there's that much blood in the streets and it IS your just end up dead, figuratively speaking. And not many people have the taste for their own blood. The market will continue to get worse.
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