Bailout Analysis II

This is a manageable “crises.”

 

In Zip Code 92026 (North Escondido) an average of about 8 homes come on the market each day. While there are no specific statistics, few people even try to sell right now unless they are in economic distress – but that definition extends to illness, age, job transfers, etc. – so let’s say six of those eight are short-sale, foreclosures or something just short of that.

 

Of those six, I would be willing to bet no two are with the same bank or other lender.

 

Those are manageable numbers for a case-by-case analysis. Wall Street has a headache because we have foot trauma and are bleeding profusely, so Washington (both political parties) are prescribing aspirin for the headache – that is because to a carpenter every problem is a nail. Washington wants to do what it always is inclined to do – throw money at the problem, and it often papers over the problem.

 

In this case the initial bailout proposal was 4 pages – it is now 110, and growing. Few Legislators have read the proposed Bill, and still fewer have the mental capacity to understand it. In most cases, elected Legislators have the intellectual capacity of a half-dozen Rhode Island Reds.

 

What they do have is a hammer, and they swing it wildly hoping to find a nail – and as luck would have it, they do on occasion.

 

I have already published my short list of culprits – but that can await an inquest.

 

 

 

Bailout Proposal

Mau I suggest a better idea than a “bailout.”

 

If you accept the premise that the economic crises was triggered by bad loans causing foreclosures, causing a further lack of liquidity…etc.

 

Then the answer is to simply put a moratorium on foreclosures for 180 days to stop the hemorrhage. During the moratorium, each UPCOMING foreclosure/short-sale gets analyzed, homes remarked to market, and interest rates returned to market rates.

 

That will allow the hemorrhage to stop, the housing market to stabilize at admittedly a reduced value, and the only “harmed” entity will be the banks with a lot of bad paper.

 

I would love to see a newspaper accounting of which banks hold what percentage of toxic loans. My personal bank is still loaning, and there are a number of banks I know that are still loaning – admittedly to people of good credit, who are the people to whom loans should be made.

 

I analyze the housing market daily because I am “in the business” but do not depend upon that market for my income. No home I have EVER sold in 31 years is now, has been or is threatened by foreclosure. I have never sold a home in foreclosure or short sale. It is just not my market.

 

There is one Realtor in North County who, according to a NCTimes article, sold more than 70 homes now in foreclosure. Yes, he needs to be perp-walked, along with the banker he used, and the people who fraudulently signed their loan papers IF they  lied about their income.

 

Before pointing fingers, let’s stop the bleeding without using taxpayer money to bail out Wall Street. Work at the other end – it is the root cause of the problem. Wall Street is bleeding because of the hemorrhage at the street level.

 

 

Is a Bailout Constitutional?

I thought I understood the US Constitution fairly well, but my copy does not include the word “bank,” much less the power of the US Government to own them, or bail them out.

 

I even went on-line and did a search within the on-line copy of the Constitution for the word “bank.” I also did a search for “Wall Street” — and you know what I found?

 

Nothing.

 

Darndest thing.

 

As to the bailout, I see the power to coin money…but that is it. I assume some think the bailout is a derived right, like privacy, and a right derived from a derived right like Roe v. Wade.

 

I sometimes wonder why we keep the Constitution except as an icon.