Re: McCain on the economy

On Tue, 25 Mar 2008, Rita wrote:

On Tue, 25 Mar 2008 10:20:37 -1000, "Alvin E. Toda" <aet@xxxxxxxx> wrote:

On Tue, 25 Mar 2008, Rita wrote:

On Tue, 25 Mar 2008 10:57:11 -0700, Islander <nospam@xxxxxxxxxxx> wrote:

I just watched McCain's speech on the economy and am amazed at the audacity of it. I'll do a complete comparison of it to the positions of Clinton and Obama, but here is one of the most blatant positions that he expressed:

He advocates increasing the down payment required for home mortgages. His argument is that foreclosures happen because the homeowner does not have enough equity in the home. This is yet another Republican attempt to blame the victim. Foreclosures happen when various variable interest mortgage schemes are coupled with increasing interest rates and a falling market. When a family can no longer afford the increasing payments they default. Increasing the down payment may make them even more desperate to avoid loss of their investment, but it is mostly motivated by the lending industry to increase what they stand to recover when the family can no longer make the payments.

Once again, McCain demonstrates that he not only does not understand the economy, but that he prostitutes for the corporations that stand to profit from his policies.

At its best this is a very simplistic analysis of the subprime fiasco and what caused it. Like it or not, for whatever reasons, the adjustable rate mortgage loan was created by the mortgage industry and these loans were aggressively marketed and sold.

He also ignores that this mortgage debt was passed off to numerous financial institutions, sliced and diced and packaged in a variety of creative new securities.

McCain was on target when he said economics was not his strong suit. Take him at his word on this if on nothing else.

There may be a point to the large down payment. I was watching a program on the real estate business in Hawaii recently-- where it is still good. In fact, luxury condos seem to sell out in less than a day. The business person-- may be an escrow company-- said that subprime has allowed a lot of people with money "off the record" to buy homes. Here many work at multiple part-time jobs to make ends meet. Some employers don't want to pay state-mandated benefits if a worker works 20 or more hours a week. It's against the law not to report income. But be that as it may, a large down payment would differentiate those who have the means-- but not on the record-- and those who do not, of buying a home.

Downpayments are one element in the mix. But hardly the only one. McCain ignored many other causes of the subprime muddle.

I'm not crazy either about bailing out entities such as Bear Stearns. But the judgment of the Fed was that without it the market could go into freefall. They hoped to prevent other such firms that dealt with securities derived from these mortgages from also falling apart. I don't think it was meant, in any way, to reward Bear Stearns. I don't know if this will work and obviously there is some finite limit on the Fed assuming all this shaky debt.

I think regardless of political party most of us would like to avoid a total melt down. Not to reward anyone but for our own good.

Yes all the pundits say that the govt has prevented a run on these types of banks.
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