KeNo's Housing and Economic Portal: Sunday September 11 Housing and Economic stories

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TOP STORIES:

Obama Seeks The Ultimate Free Lunch For Housing, And It's A Bank Bailout In Disguise - (www.businessinsider.com) Fannie and Freddie are owned by US taxpayers. The Obama administration wants to dump all of these proposals on the backs of taxpayers, perhaps without addressing the problem that "American homeowners currently owe some $700 billion more than their homes are worth." Supposedly this can be done at "little to no cost." Obama is either too dumb to see what's going on or he simply does not care what it costs to buy votes. I believe both. Bank Bailout in Disguise: Depending on precisely how the proposal is implemented, the effect may be to take poor performing loans off the balance sheets of banks and hedge funds and dump the risks squarely on the backs of taxpayers via Fannie and Freddie. It's no wonder Geithner supports it.

Cheap Mortgages, Americas Hidden Entitlement - (www.theatlantic.com) Amid all the clamor about entitlement reform during the struggle to raise the debt ceiling, one enormous cost - and potential source of future saving - largely escaped scrutiny: the billions of dollars the United States spends to support the mortgage market. Even before the 2008 financial crisis, the government assumed the credit risk on most loans, which allowed banks to offer better rates, but ultimately left taxpayers footing the bill when the housing market collapsed: $138 billion and counting. During the crisis, the government became even more involved in the mortgage market by rescuing Fannie Mae and Freddie Mac and agreeing to backstop larger loans. This furnished enough liquidity to prop up the housing market and helped bring about the low mortgage rates of the last three years. But getting in has proved much easier than getting out. Today, the government backs 95 percent of new loans, leaving taxpayers more exposed than ever. That could finally be about to change. After next month, federal loan limits in expensive areas like Boston, New York, and Los Angeles are set to decline from $729,750 to $625,500. Had the lower limits applied last year, the government would have backed 50,000 fewer loans. But even this modest pullback may not happen. At the urging of homebuilders and realtors, lawmakers in both parties want to extend the higher limits, possibly for good. It's an early skirmish in the larger battle over the government's proper role in the mortgage market. And the issue isn't just when to pull back, but whether to do so at all: Many Americans have come to regard cheap mortgages as an entitlement.

California lawmakers try to head off Amazon sales tax referendum - (www.latimes.com) THESE CALIFORNIA POLITICIANS ARE MORONS!!!! State lawmakers escalated their war with Amazon.com Inc. on Thursday with a fresh attack aimed at the Internet giant's refusal to collect taxes on its sales, which a new law requires. The legislative move would halt Amazon's campaign to put a referendum on the June ballot asking voters to overturn the state's Internet sales tax law, which took effect July 1. In a bit of legislative legerdemain, the state Senate Appropriations Committee took the language of that law, tweaked it and put it into a so-called urgency bill. As an urgency bill, the legislation, should it pass, would nullify the existing law, invalidating Amazon's voter petition, and the new law would be immune from a referendum. Amazon, the world's largest online retailer, apparently was blindsided by the maneuver. It would not comment. "I don't know what Amazon will do, but I hope it will decide it's going to pay the sales tax," said state Sen. Loni Hancock(D-Berkeley), one of the authors of the original sales tax collection bill.

Merkel: Markets Won’t ‘Blackmail’ Euro Leaders - (www.bloomberg.com) German Chancellor Angela Merkel said investors are trying to “blackmail” governments into helping debt-strapped European countries, underscoring the need for all euro-area governments to reduce debt. “After the states bailed out the banks, the financial markets are again trying to blackmail states and tell them, ‘You’ve made so much debt,’” Merkel said today at a rally of her Christian Democratic Union in the eastern city of Brandenburg, about 50 kilometers (30 miles) from Berlin. The solution is to press “countries that are highly indebted to really do their homework and get their debt down,” she said. “A Europe with a common currency requires common duties.” Merkel is underlining her stand on the euro region’s debt crisis in local election rallies in August before national lawmakers vote next month on a second aid package for Greece and an expansion of the powers of the European Union’s crisis fund.

Bernanke Blames Politics for Financial Upheaval - (www.bloomberg.com) The Federal Reserve chairman, Ben S. Bernanke, said Friday that the political battle this summer over the federal government’s borrowing and spending had disrupted financial markets “and probably the economy as well.” In remarks that went well beyond his previous calls for Congress and the White House to address the nation’s long-term fiscal challenges, Mr. Bernanke suggested the process itself was broken. “The country would be well served by a better process for making fiscal decisions,” he said. Mr. Bernanke said he remained optimistic about future growth — he gave no indication that the Fed would increase its economic aid programs, though he said the central bank’s policy-making board would revisit the issue at a scheduled meeting in September — but he warned that the government had emerged as perhaps the greatest threat to recovery. “The quality of economic policy-making in the United States will heavily influence the nation’s long-term prospects,” Mr. Bernanke said in the much-anticipated speech, delivered at a policy conference held each August here at a resort in Grand Teton National Park.