I mentioned as details of Bush’s mortgage plan started to emerge that I was trying to reserve judgment until I saw some discussion of the downstream effects.
Perhaps unsurprisingly, the talk online seems to have focused on some of the same ideas I’ve had—”it won’t help many people”, “it’s unfair that those folks should be helped out when we behaved responsibly”, and “it might provide some cushion to soften a nasty economic mess”.
Two articles I’ve encountered seem worthy of note.
At “Bits of News”, Garrett Johnson has a ranty post chock full of quotes from other articles and graphics to support his assertion that the plans are a bad thing, and are doomed to drive the country to something potentially worse than the Japanese real estate crisis of the last decade.
Over at Calculated Risk, there’s a rather lengthy monologue that doesn’t take quite as pessimistic a view, but is most notable for a technical discussion as to how the plan attempts to preserve contract rights, and how that explains some of the eligibility criteria being used.
At this point, I think I’m going to settle on mortgage relief as being a “damned if you do; damned if you don’t” thing. Any sort of relief will screw up the mortgage and real estate industry as contracts and rates have to begin considering the risk of federal intervention. Failing to provide some relief permits a high rate of foreclosures to continue, prompting some nasty consequences to the greater economy.
And, as to the fairness point….perhaps it’s time to remind myself that, despite executive or legislative decrees to the contrary, life frequently isn’t fair.
1 response so far ↓
1 Jon // 9 Dec 2007 at 8:11 am
Be interesting to see who is picking up the costs for restructuring the mortgage debt. Many of the losses on subprime CDO’s have made it across the Atlantic where there have been some big losses announced by European banks. Presumably the increased losses from this plan will make it over here as well.
This does seem (depressingly) similar to the superfund legislation in the 80’s, where costs for pollution clean-up landed up being paid by the Lloyd’s market in London, which nearly brought the place to its knees - hope the impact on the banks isn’t as bad! (although it did force the Lloyd’s market to modernise and it’s now much better placed, so it wasn’t all bad)