Insane America: Obama Wants You to Bailout the Neighbors Who Live Next Door

[Breaking News Breaking News]

Wednesday, February 18, 2009 at 7:44PM
dailybail.com

Have we lost our collective minds. I woke up this morning, and apparently I now live in Havana, where Castro is leading a parade of unemployed clowns all driving '57 Chevys.  Team Obama: pehaps you missed the message the American people have been trying to communicate.  Stop The Bailouts. All of them.  And we sure as hell did NOT want you to extend the bailout to homeowners.  This is a country of responsibility, and you are giving those who played by the rules the middle finger salute.

The newest twist on government bailouts commenced officially today with relief for your irresponsible neighbor.  You are now paying for his greed and stupidity, and perhaps even the Hummer and Corvette he bought with his home equity loan that he'll never re-pay.  Yes, you are footing the bill for his vehicles as well.  It's all pooled capital. He purchased near the top with no money down, got a $200k home equity ATM, bought all his toys, walked away from the house and both mortgages last year when prices plummeted. No recourse.  Before walking away, he secured a mortgage on a newer home 2 blocks away that was a short sale.  He got in the newer house for 50% less than he paid for the 1 across the street from you.  His credit is now damaged from the walkaway, but in 3 years that will disappear.  And guess what, his new short sale purchase now qualifies for mortgage assistance under Team Obama's Plan to Save the Asshats.

Since the Mortgage Foreclosure Bailout Plan was announced Wednesday the outrage has been palpabe. For most taxpayers, the ongoing bank and auto bailouts, though more costly and extremely un-popular, do not resonate personally. But bailing out an irresponsible neighbor who purchased more house than he could afford is understood by everyone.  Particularly our most maligned housing sub-group, renters, all of whom made an intelligent choice NOT to participate in the real estate bubble, yet now are being asked to subsidize the mistakes of those who did.  Considering that renters already get shafted by the unfair tax subsidies given to homeowners, this proposal accomplishes nothing further than reminding them how worthless they are in the eyes of Washington.

Reuters says Obama's home foreclosure mortgage bailout plan will cost taxpayers $275 billion to help 9 million homeowners and yet most analysts believe it simply won't work.  Housing prices nationwide still have much further to fall as evidenced by this must-see chart from Yale economist Robert Shiller.  Yet Obama and his team seem focused on slowing the decline at great expense until it has been proven indisputably that we are the new Japan.  Where is the change, President Obama.  Every day your administration feels more like the last 20 years of Bush-Clinton incest.

Story and videos here:
http://dailybail.com/home/2009/2/19/insa...ho-li.html

[Breaking News Breaking News]

The Audit — February 19, 2009 06:05 PM

CNBC Editor: The People Are Revolting!

Santelli plays Mel Brooks playing Louis XVI

By Ryan Chittum

In the annals of CNBC cluelessness, this morning’s outburst by the channel’s Rick Santelli is up there with the worst.

This is an example of what’s wrong with a certain kind of financial journalism, the kind where people of like backgrounds spend all day staring at tickers and interviewing each other.

The segment couldn’t more clearly illustrate the disconnect between the financial-services sector, certain financial journalists, and, you know, “reality.”

This was CNBC’s worst performance in an entire week—since Michelle Caruso-Cabrera, Dennis Kneale, Roben Farzad & Co. made horses’ rear-ends of themselves trying to squeeze investment tips out of two of the leading thinkers on the global financial crisis, Nouriel Roubini and Nassim Nicholas Taleb.

What sent Santelli, CNBC’s hot-air, oops, “On-Air Editor,” over the edge? The homeowner bailout. Of course, he didn’t get himself into nearly this much of a lather over the trillions of dollars we’ve given to Wall Street welfare cases and the busted banks. Oh no. He’s mad that non-financial-service-professionals, otherwise known as homeowners, or, according to Santelli “losers,” are up now for help—to the tune of $275 billion, much of which would go to the banks anyway (emphasis mine):

Why don’t you put up a website to have people vote on the Internet as a referendum to see if we really want to subsidize the loser’s mortgages or would we like to at least buy cars and buy houses in foreclosure and give them to people that might have a chance to actually prosper down the road and reward people that can carry the water instead of drink the water?

Which reminds me of the French Revolution scene from Mel Brooks’s History of the World: Part I:

Count de Monet: “The People Are Revolting!”
Louis XVI: “You said it—they stink on ice!”

Look, we have no problem with robust commentary. And the hothead thing is part of Santelli’s schtick. The man has to make a living, we suppose. He’s gone off on bailouts before (he actually walked out on a segment a few months ago after a heated discussion).

He’s also been wrong. The segment he walked out on was in the midst of the mid-September meltdown when he was calling for a delay in a bailout of the crippled financial system, which nearly everyone now agrees kept us from a catastrophic meltdown and depression. But even then, he didn’t question the need for something to be done to bail the financiers out.

And he’s not been afraid to take on the powerful, like his own network’s carnival barker, Jim Cramer (see this entertaining YouTube mash-up), over Cramer forgetting his own bullishness at the top of the market.

But watching CNBC lately is like stumbling onto Easter Island just after the natives chopped down their last tree. It’s like a lost world over there. Somebody send up a chopper.

But then, this may be a sympton of a wider disease.

We at The Audit have written repeatedly about the blame-the-homeowners meme that’s been so popular in misdirecting people away from the real culprits in the crisis: the financial-services boiler rooms that created all those junk mortgages and bundled them into crap securities for sale to all-too-trusting rubes (aka “clients”) around the world.

I understand there’s a powerful undercurrent of outrage from some people who are paying their mortgages (or renting) who disdain those who aren’t or can’t.

But let’s understand what’s going on here. This homeowner bailout isn’t really even aimed at easing people’s suffering. It’s aimed at the banks, whose downward spiral will not stop until the housing market stabilizes.

The question is do we step in and try to engineer the softest landing we can—or do we let it feed on itself until we all go down?

But what I’m really interested in isn’t the pros or cons about the homeowner bailout. Reasonable people can and do disagree about that. What’s really fascinating is the peek it offers into how CNBC—or at least part of it—thinks.

At this point, the financial network is channeling the culture it covers. The barrier between reporter and subject has nearly dissolved.

First, for a journalist to go off with “Tea Party” rhetoric while maligning millions of down-on-their-luck folks out there is just wrong.

The idea of calling some family in Lehigh Acres, Florida, “losers” because they happen to be caught in the maelstrom of a crippled local economy? Or the 90-year-old retired widow Addie Polk who, facing foreclosure on a probably predatory Countrywide second mortgage, shot herself when the sheriff showed up to evict her. Those people are not “losers.”

This crisis is far beyond the point where only the guilty, like speculators in Florida or condo developers in Vegas, are getting punished. I’ve written before that I have no sympathy for them. But regular, hard-working folks are getting swept up in a tide that keeps rising and has gone all tsunami on many places. Lots of cities around the country are already in depression, so we’re going to demonize the people who are unlucky enough to live there? Go back eighty years and Santelli would be calling the Okies and the men in the breadlines losers, as well.

Second, there’s this startling bit from his rant from the trading floor:

SANTELLI: These guys are pretty straightforward and my guess is a pretty good statistical cross-section of America—the silent majority.

If you think the makeup of the trading floor is representative of America, you’re just delusional. But a country of financial-services professionals does fit CNBC’s worldview.

Third, the CNBC anchors ate this rant up, as did their producers apparently, who kept egging Santelli on with his only-half-joking “Let’s start a revolution, we’re going commie like Cuba” rhetoric.

SANTELLI: They’re not like putty in our hands. This is America! How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their mortgage?

CROWD: Booo! 

RANDOM TRADER: (leaning over to the mic) How ‘bout we all stop paying our mortgage? It’s a moral hazard!

ANCHOR: This is like mob rule. I’m getting scared.

SANTELLI: Don’t get scared. Cuba used to have mansions and a relatively decent economy. They moved from the individual to the collective. Now they’re driving ‘54 Chevys, Maybe one of the last good cars to come out of Detroit…

We’re thinking of having a Chicago Tea Party in July. All you capitalists that want to show up to Lake Michigan, I’m going to start organizing it.

ANCHOR: Mayor Daley is marshaling the police right now.

Hey, I’m sure it makes for good ratings. Lots of luck with that. But I’ve got an idea for some even better shtick:

Have Santelli report live from the South Side for a couple of weeks. Or better yet: Merced, California, or Fort Myers, Florida.

Interview someone who isn’t a trader.

UPDATE:

Don’t miss Julia Ioffe’s take over at The Kicker on what Santelli had to say this morning on Today.

UPDATE Part Deux:

Check out my follow-up post on what this surge of outrage means for the press.

http://www.cjr.org/the_audit/cnbc_editor...p?page=all

[Breaking News Breaking News]

Plan to buy foreclosures meets with criticism

Money not allocated equally, some say they are being shut out of process

The Associated Press
updated 7:41 p.m. ET, Mon., Feb. 23, 2009

IRMO, South Carolina - Tucked into the economic stimulus package signed by President Barack Obama last week was $2 billion to expand a nascent and controversial program to help U.S. cities and states buy and fix up foreclosed homes.

Last month, the Department of Housing and Urban Development signed off on hundreds of grants to all 50 states totaling almost $4 billion. The Neighborhood Stabilization Program, as it's known, was passed last year as part of a housing rescue plan that was regarded at the time as the most significant housing legislation in a generation.

But critics have assailed the program for the lack of money it will send some hard-hit communities, a dearth of oversight and the discontent stirring among residents who want a say in what happens to their neighborhoods.

"What houses are gonna be involved? We still don't know that and we're a month away from the funds arriving," said Mike Aaron, president of the Livingston Avenue Area Commission, a group in a foreclosure-ridden area of the Columbus, Ohio. "That's what's making us uneasy right now."

The total amount coming into Ohio, for example, is $258 million, and Columbus is getting $23 million of that. Those figures do not include new money from the stimulus package and HUD has said it has not yet decided what the guidelines for the new grants will be.

Aaron said Columbus has rebuffed his group's attempts to talk about the best ways to use money, which has already been awarded to the state.

"We need to be involved in the process," said Aaron, who is pressing for an oversight board comprised of city officials and residents.

And then there's back biting about who gets how much.

The first round money is being divvied up based on the number and percentage of foreclosures, number and percentage of homeowners behind on their mortgages, and the concentration of subprime mortgages.

While the formula sounds fair, some of the results aren't. California and Florida are both getting more than $500 million in federal help, even though California has 500,000 foreclosures — around twice the number as Florida.

Vermont, meanwhile, is getting the minimum of $20 million, even though the state had less than 150 foreclosures last year and the lowest foreclosure rate in the U.S., according to RealtyTrac Inc.

Some city and county officials are also questioning the government's math.

Almost one in 10 houses in Merced County, California, are in foreclosure, one of the highest rates in the U.S. Yet the county will get just $2 million of the money going to California.

The city, which has a foreclosure rate of 12 percent, will get just $1.4 million.

Economists say lenders will surely benefit from the plan, though it doesn't include enough money to be considered a significant backdoor bailout for banks.

"In terms of bailing out lenders it's hardly the biggest thing out there but surely there will be cases where the land purchases will be in least in part to help politically connected lenders," said Dean Baker, co-director of the Center for Economic and Policy Research, a Washington-based thinktank.

In many cases, government officials plan to dole out the money to nonprofit organizations and smaller government entities that will purchase homes.

Critics and local housing officials are shaking their heads over the carte blanche grantees have in how they spend the federal funds. One South Carolina county said it would consider proposals to put homeless or HIV/AIDS patients in foreclosed homes eligible for the grant, while officials in Florida's Miami-Dade County said they plan to snap up foreclosed apartments with grant money despite staunch public comment against it.

Many of the proposals called for renting out the homes to low- to moderate- income families.

On the streets of neighborhoods pockmarked with vacant houses, many residents said they'd welcome new neighbors no matter how they got into the homes.

"I would want to put somebody in it, whether they're renting it or not. That's a house that somebody could be in," said Cheryl Poole, a 51-year-old Irmo resident worried about home values and the empty house across the street from her one-story ranch.

On the other extreme is Debra Oakley, a 55-year-old woman who said she isn't so sure she wants a new neighbor.

The two houses to the left of her home are vacant, including one that nonprofits are being encouraged to buy using stabilization grant money.

"I've often wondered about what kind of people would move over there," said Oakley. "I like it just like that: vacant."

Susan Popkin, a researcher at the nonprofit Urban Institute, said many homeowners have grave concerns about their changing neighborhoods and how that might affect their already declining property values.

In major cities nationwide, tensions have risen recently as federally subsidized renters move from housing projects and violence-ridden neighborhoods to nicer communities in suburban areas.

"The fear is real. The reality isn't," Popkin said. "The thing they're anxious about is what's already happening in their neighborhoods."

That's true in Columbus, Ohio, where 84-year-old Walt McKinley said he'd welcome any help to rescue their neighborhoods.

McKinley, who lives in the city's downtrodden Linden neighborhood, said he worries the spread of foreclosures in his neighborhood will drive up crime and wants the city to use the grant to demolish the house next door to his, which has been vacant since it was foreclosed upon and the owners abandoned it over the summer.

"I told 'em at work that if possible, I would even drive a bulldozer myself and bulldoze it," McKinley said. "I would be happy to."

But critics say there's no guarantees that McKinley's neighborhood or other hard-hit communities will benefit from the grants. No one is tracking just how the money will be spent and grantees have been tightlipped on their plans.

HUD will monitor how states and cities spend neighborhood stabilization money, but leave it to local governments to monitor how passthrough grants are used by nonprofits and other, smaller government groups.

Many Republicans opposed the first round of stabilization grants and don't want to increase the program. They say additional money will just give more slush funds to disreputable nonprofit groups.

"Instead of trying to work out troubles in the existing funds, we're basically doubling the size of the program and potentially doubling the size of the problem," said Frederick Hill, spokesman for the Republican Oversight and Government Reform Committee, about the House of Representatives' plan to double neighborhood stabilization grant money.

Some economists also have expressed concerns over a lack of oversight.

"The record of housing authorities are not very good. It's certainly reasonable to be concerned that the money will end up going to politically connected lenders and developers and not do very much for communities," Baker said.

URL: http://www.msnbc.msn.com/id/29357034/

[Rebel]

This is socialism for the rich--actually fascism. I am utterly ashamed of what the U.S. government has done to its citizens and of what the government has become. If I had the means and ability to live elsewhere I would get out of this country permanently. The U.S. is now a disgraceful and dangerous place to live.

[Richard]

I agree, they’re getting crazy with all these bailouts. They’re only making things worse. Making things worse is what governments do best. Anything that they try to fix always ends up worse than it was. Here’s another perspective on the mortgage bailouts.

Obama HURTS 100 Million to Help 9 Million

February 22, 2009 ·
Dear President Obama,

HI!,  yoo-hoo, over here, we are 100,000,000 men, women and children who rent and we seem to be invisible to you and the media (including NPR, New York Times and the Wall Street Journal) but clearly our numbers make us important.  We are wondering why you are helping 9 million people at the expense of me and my 99,999,999 friends, neighbors and fellow countrymen.   Not to mention the additional millions of former homeowners who will soon join us because they rationally decided to live within their means and rent.

But how is your plan hurting 100,000,000 renters?  It is hurting them in three major ways:

1. By putting a floor (and debatable how stable or realistic that floor is) under housing prices above what they were before the bubble began you are continuing to price renters out of the market.
   
2. By raising the deficit you are going to be putting some of the tax burden on renters (yes some will go to homeowners as well).
   
3. Because many former owner-occupied properties have turned into rentals rental prices are actually falling.  By keeping people in houses they can’t afford you will, in effect, raise rents again.

The net result is that you are charging renters, through the eventual taxes needed to pay for this, for the privledge of NOT being able to afford a house while also raising their current rents.  This reminds me of the former Soviet practice of making soon-to-be-victims of execution pay for their own bullets and then charging their families for their burials.

Point #1: This plan is further eliminating renters ability to buy a home by reducing their income (through higher taxes and raising rents) and through maintaining artificially high prices (through so-called “stabilization”). 

To make matter worse renters comprise those who either can’t or have decided not to overextend themselves to have the “American Dream” (which was originally “life, liberty and the pursuit of happiness” until it got co-opted by marketing experts in the real-estate industry in the last century).  Renters are STILL disproportionately Hispanic and African-American and lower income.  Homeowners are disproportionately white and have higher incomes.

Point #2: Helping homeowners at the expense of renters is yet another transfer of wealth from the lower class to the upper class.  How Bush-league.

Oh and why would the the vast majority of homeowners (who do, truthfully, outnumber renters) care to help us ? Very simply because the  survival of any market (or pyramid scheme which the housing market has proven to be) depends on a continous stream of first-time buyers to fuel growth from the bottom.  By attacking renters you are attacking the first-time buyer base and, while you may temporarily save the market, you are draining the pool in the medium to long term.

Point #3: Homeowners need to watch out for renters if they want to truly protect their home values.

How can you help?  Well if you can’t bring yourself to let the market work out the right price then at least provide renters with some rental income tax deductions so they don’t wind up paying (two to three times) for the mistakes of homeowners.  Additionally this will help incent those on the edge of home-ownership not to over-stretch to buy a house so they can get the equivalent mortgage income tax deduction.  Its the least you can do.

Finally, of those 9 million you are helping, at the expense of 100,000,000, how many got themselves into their situations by cashing out their equity cushion for home-improvements, new cars or family vacations?  I guess its comforting to know that the money we saved by renting will go to buy some nice stuff…even if it isn’t ours.

ADDENDUM: In honor of Rick Santelli’s Tea Party I have posted his poll here so you can voice your opinion to the Obama adminstration.

Rick Santelli  of CNBC (as do I)  want to know the following:

Read the rest here:
http://watchingmarcitz.com/2009/02/22/ob...atrick.net