Treasury’s New Plan – 4.5% Mortgage Rates

Homeowners may soon enjoy mortgage rates as low as 4.5 percent if the Treasury Department has its way.

According to The Wall Street Journal’s on-line addition late Wednesday, the department is discussing a plan that would use Freddie Mac and Fannie Mae to push banks to make mortgages available at more than a full percentage point below the current levels for a 30 year fixed rate mortgage.

The plan under review might lower rates to the 4.5 percent range and would be in addition to a program announced last week wherein the Federal Reserve will purchase up to $600 billion of debt either issued or backed by Freddie Mac, Fannie Mae, Ginnie Mae, and the Federal Home Loan Banks. That program is already having an effect on mortgage rates which have dropped and caused investors to pay more attention to the stocks of banks and home builders.

Probably in response to the earlier new program and the lower rates, mortgage applications jumped a record 112.1 percent as seasonally adjusted over the previous week according to the Mortgage Bankers Association.

The Journal reported that the government would encourage banks to issue new mortgage loans at lower rates by offering to purchase securities backed by the loans at a price equivalent to the 4.5 percent rate; funding the program by issuing Treasury debt at 3 percent.

http://www.mortgagenewsdaily.com/12042008_low_mortgage_rates.asp

Much will be accomplished when the average American withdraws his money from 401(k)’s because of the universal fraud. Shunning it will be.

If things go the way it seems here, this meltdown and the fraud is epochal. During similar times in history, death has been widely meted out to the perpetrators. If one thinks about it, the punishment has to be very harsh to deter future instances, given the $millions, even billions, that have been stolen.

Your 100,000 seems high for those with their necks literally on the line. My guess was 30,000. Personally I would give most of them a minimum of 10 years, with life sentences for the worst.

These people robbed everyone else of their futures and they might be lucky to escape with their lives. That is how great the damage they have caused and that is how great the mob reaction might be.

What draconian punishment do you suggest? Shunning, or is the punishment meted out to Micheal Milken more what you have in mind?

Good luck prosecuting the 100,000 plus senior bankers, analysts, insurance executives, think tankers, regulators and others that sat in plush offices collecting a quarter mil annually in their complicity. Prosecuting this fraud will require either retroactive legislation or a whole new standard of guilt, neither of which have my support.

I have been incendiary on all of those things too, and so has Taft.

Numerous Peachpunditeers absolutely torched Chambliss on them.

More than just finances are at stake here. Our entire society is on the brink. As I see it, the ONLY way to get to the sort of mutual trust and cooperation it will take to rebuild America after this fall is draconian punishment of the Wall Street fraudsters for all the world to see.

As it now stands, as you pointed out, only a FOOL and in this instance the US Government, turns its entire future over to PROVEN thieves and financial arsonists.

Saxby is such a FOOL, even worse, for I and others specifically warned him in advance of voting for TARP that it gave unlimited authority to Paulson. $85 billion of the first $125 billion in bailout funds went to pay BONUSES, and over the next 2 weeks the idiot Saxby was left making a show of his ‘indignation’ that his cronies enriched themselves.

There is zero chance of avoiding a financial disaster, only the chance to break the chain of idiocy known as Keynesian economics, reforming our society, and ending the hold of 2 utterly corrupt parties on the government.

Bush and company have worn their boots out kicking the can down the road. It has become leaden with calamity.

I hear you on the synthetic CDOs, but my g-d man, have you in your life time ever seen such huge investments in buying debt, insecure false bubble debt, with so many slices in the pie being bad debt? Who in their right mind would do that? I hear about Madoff too. But who would take their total self worth of $20-30-50 million plus mortgage there home to continue to invest all in the one man, Madoff?

A greedy fool on both counts, that’s who.

Every one can keep looking back and hauling those to blame as you see it to the guillotine if you wish. But as you do, Rome is burning. I threw my little $.02 in because I hear not one complaint about the $750 billion that is coming from the Democrats, no complaints about GWB giving the auto folks $17 billion, Paulson asking for the rest of the $750 at $300 billion.

If Keynesian policies are wrong, they are wrong for everybody, including Obama. But I hear not one peep. Some of you folks have your own agenda and its seems to be more revenge than solution.

Hyperinflation Part I:
http://www.youtube.com/watch?v=coXFygRP3oE

“The dollar will always be worth something to someone.”

You see, I care more about my country than about sugar-coating reality.

As you know during the Great Depression people who had money did very well. The key was low debt to income ratio.

Taft

You seem like someone pushing for a real hard down turn. I care more about my country than being right.

Goggle search “Weimar Republic” and one finds a woman feeding currency into a furnace, so your point is well taken, BUT…….

Unless the value of your cash approaches nil.

Which the Fed is trying desperately to do right now.

Rep. Gohmert also put forth to suspend federal taxes for a full year. Either one of them would be fine to do under the present system, and here’s why:

The Federal Government doesn’t NEED our taxes.

The American people are finally waking up to that fact. The Feds just turn to the Fed anytime they want to spend money, and the Fed creates it out of thin air and loans it to them. Why do they need our money at all?

The fact is, under the present system, THEY DON’T. When you can print $1 trillion in a day and “inject” it into the economy, why do you need to take a year to remove said cash from my wallet?

To be honest, that’s why I’ve come to the conclusion that supporting the “Fair Tax” is ludicrous. Not because I oppose most of its language, but because its foundation is faulty – it assumes that the Federal government actually needs our money. As we’ve now seen, it doesn’t – not under a fractional reserve system with paper Notes based on empty promises.

I’ve got an idea – forget the Fair Tax, the Flat Tax, the Income tax; support the NO Tax!

Or maybe just go back to what the Constitution originally required:

Article I, Section 9: No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.

To translate: “No income tax, no property tax.”

Do that, as the Framers required, and we’ll get back to what conservatives CLAIM to believe in: Limited Government.

The folks I worked for and work for value my blunt approach for pretty good reason. “Yes” men are like blow flies around cow paddies.

When I have sounded the alarm forcefully on several occasions, it was under penalty of firing, but when the chiefs verified that I was not blowing smoke, it cemented my position.

Of course, a lot of execs are put off by such directness and prefer to lose $millions while saving face and covering up the losses.

The toughest boss looks back from the mirror every day.

Politicians blow with the wind, that is why you make a lousy one.

While I agree that putting a floor under home prices helps a lot, the magnitude of the debt now precludes any paying any interest above low single digits to the end of time. Debt service at anything like normal interest rates is impossible. That is why Bernanke took a huge risk I could not understand by taking them to 5%. The problem is that frugal folks won’t stand by and be stolen from like this.

God help anyone in DC politics if the masses come to learn what synthetic CDO’s are.

Me. I figure that bonds of Georgia and its local governments are a screaming BUY right now. The Feds will be forced to bail out the states, thereby subsidizing the states’ tax-free financing and the expense of their own. Won’t that be WONDERFUL? I relish that conundrum.

As a fisherman, I hate that one too…….Too much competition then for the best fishing spots. The GOPers would build the boat ramps and the Dems would furnish everyone with a sailboat, nevermind there is no wind. A gas engine is too politically incorrect.

Designing and redesigning the Georgia flag is a safer alternative to keep gold domers busy. It and Gator license plates.

I am not advocating anything for myself. Most of my wealth I transferred over to cash type investments 4 years ago. Many of my friends thought I was crazy not to keep taking the ride. And know they call me like I am some sage investor. The truth is I am just a simple dot to dot guy. And if it does not add up I take a pass.

I warned them to not buy a home unless you can rent it more than your payment. Many laughed and could not understand why I did not move into the Mc-mansion neighborhoods. And now they have seen equity go up in flames.

Now if you are the last guy standing with cash a lot of money will be made in this down turn.

My job is to represent what is in the best interest of my stockholders’ bottom line. And I have made money in up or down times. As you know it is all how you position your business.

The recommendation I am making are what I think is best for most people. And I do think the plan does a better job of not using out of control spending with no controls like what is being proposed on both sides.

I do have tremendous respect you for your knowledge. And like you I took great heat for my positions on the economy and Iraq for speaking out early and often.

And my run for office I even put my family at risk for merely warning people about what was coming if we do not fix it. But at the end all I can do is look forward and hope people will listen this time.

I think you have a lot to offer but at times I think your knowledge gets clouded with the attacks you took warning people. I would have you on my team anytime helping with analytics to solve problems. And you are smart enough to know that a softer transition is possible without cold turkey.

If this were 1932 and the USA was a huge creditor, I could understand and support Keynesianism. The problem is that Keynes himself knew better than to suggest that deficit spending and stimulus could work in continuous, growing, and massive doses. He clearly advocated raising taxes and cutting spending when the economy was in recovery.

The problem is that the Keynesian remedy became an addiction that required ever-more potent and massive doses.

The patient is now dead.

It is way past time that folks quit living a series of unsustainable lies.

It is not folks like me who fear draconian adjustment. We have always lived very modestly and we know how to ratchet things down another notch or two. It is the average Boomers, X’er’s, and Y’ers who know only the go-go, “me” wailing, debt addicted society that has arisen that are in terror.

I have lived in a double wide before. It really isn’t that bad. I can do it again. Most on PP cannot say that.

The way out of this thing is the American way – hard work, the constitution, and collaborative effort. All of these bailouts and actions of government are undermining personal responsibility, truth, and the American way. I cannot cut on CNBC without hearing that we need to hide the truth (abolish mark to market accounting) in favor of even more pretending, cure excessive debt with even more debt, fix tight credit by lending to every wino and addict laying around – in short we need more of what caused the mess.

The sooner the lie is rejected and the inevitable is faced, the sooner we will be free of this mess.

The more responsibility and frugality is punished, the more folks will abandon it or take it underground.