Billions for foreclosure, billions wasted
So now President Obama seems to be interested in providing up to $100 billion for those in foreclosure or about to be. It's a really great gesture. It will surely help his approval rating. And it will help guarantee that he receives the full $850 billion he has wanted for the Democrat proposed stimulus plan.
But I am opposed to this. Not because I don't want people to keep their homes. But because this is a terrible idea.
First there are the homeowners who are not in foreclosure. Those of us that are doing everything we can to maintain our homes are at a disadvantage. We get nothing from the proposed stimulus except the $120 a month that has been stated. Which is little to nothing compared to the cost of a mortgage, and raising a family, while trying to save enough money to ensure that if we lose our jobs we have something as a cushion.
In fact, it seems almost beneficial to allow your home to go into foreclosure these days. The Government is so busy trying to ensure you cannot lose your home that they are basically encouraging people to do so. You can negotiate a lower interest rate, defer payments, extend the life of a mortgage, remove interest, and soon there will be payments from the Government to subsidize your home. Given all that, why the hell is it worth struggling to stay out of foreclosure?
Second, in spending money on the foreclosures it is that much less money spent on the economy. Given I think the stimulus plan is as much of a waste as the Bush stimulus plan, basically a political look good tool or polispeak for the masses. But if spending money is the plan to turn the economy around, why dilute that plan?
In effect the average American will be paying back, at some point in the future via taxes, the money they receive + the money given to homes that are not their own + money given to businesses that made bad business decisions. And that is just the looking forward money (and does not include his new spending for new Government programs). The Government has already obligated us to pay back previous money received + several bank bailouts (which did nothing to improve the stock market and retirement accounts) + auto industry money + bailing out an insurance giant. All while inflation is creeping higher.
And none of the money going to any business or institution has any guarantee of repayment. Nor if there were repayment, any way planned of how that money would be assessed. The money could be used to fund pet politician projects (like ACORN was initially set to receive) or some other Government inspired spending spree. We don't know.
Which says nothing of the fact that the Government has no idea how the money will be spent, or where it is spent. Billions are unaccounted for at this moment, and the Obama Adminsitration has stated it intends to add tens of billions more into the pot with little better knowledge than before. Unless you believe that Congress got a lot smarter since the elections in November. The majority of politicians that were there before are still there. Like Barney Frank and Chris Dodd, who couldn't figure out what was happening in the economy until after the problems hit the news. And they head financial oversight committees, still. Think they are any smarter or more adept than 3 months ago?
But again on the foreclosures. I have enough trouble paying my mortgage, my household expenses, taxes, and preparing for higher corporate taxes. It's hard enough to do all that in an economy that is just flat, and this is anything but. Now the Obama Administration believes I should add on someone else's house? Which I will never get a benefit from.
That's a hard sell to me. Probably why I did not vote for President Obama. These are no surprises. But they are as bad a set of decisions as I expected them to be. This is not going to help the economy, though I expect it to temporarily help the approval ratings of Congress (which needs it badly).
I don't entirely blame President Obama though. This entire stimulus plan was the idea of House Speaker Nancy Pelosi. She has been fighting for this for months, increasing the amount each month as she went along. Pelosi has had the distinction of being the worst Speaker of the House, with a Congress of the lowest approval rating, that accomplished the least things, at a higher cost, than I believe any other Congress has done in 111 sessions. That's like betting on the horse that went lame and was pulled from the race. Obama made the bet so he gets that blame, but Pelosi made the horse lame and that's on her all the way.
Spending tens of billions on foreclosures sounds nice, but that's all it is. Polispeak. It is almost entirely probable that it will have no effect except a long-term negative. In fact it may speed up the downward trend President Obama was elected to fix. But it's going to happen, so be prepared.