Housing Weighs on the Economy [NYT EDITORIAL] Affordable Housing Follies and the Corruption of Supply and Demand Economics Continue.

Abstract: The New York Times editorial staff has stewed up yet another propaganda piece with sorrow and tears and recommends we keep spending and ignore basic economics. They select but a single item to address that will turn around the economy and that is to bolster up the housing market. Although the phony subprime mortgages got us into this mess and the banks collapsed due to toxic assets from defaulted mortgages, the NYT advises we just find new ways to allow people to keep their houses making the toxic asset mess more menacing and adding to the humungous debts we now cannot pay for. Their plan is to sink the economy French Revolution style and grab everything. The ‘poor’ are only a pawn in the game of redistribution of wealth where most of that wealth will appear in the grimy claws of the leftist elites. The quest for your wealth rushes on unabated and the liberals will burn down our society and dance in the light of the fires to get it.

We can always make rough approximations and slice some pie in various ways to illustrate some new analytical view on any subject as long as we ignore many important facts. A prophetic speech delivered while standing on half a loaf is very effective for the intimidation of the mentally disnimble or the ‘poor.’ This is likened to throwing bags of dimes on the floor at Grand Central Station and watching the fun as they roll around under the benches and clatter down the stairs and the crowd goes wild. Today, we can carve up the housing pie to show that there are really only two kinds of people in the world: those who can cope with capitalism and those who cannot. The NYT ignores this fact. The government, despite its sticky array of erudite folk from the Ivy League who draw high salaries and cushy benefits on the government dole cannot seen to manage to understand basic economic principles, or they don’t wish to. They actually have a better plan for us a little later.

Consider, for the yarn of the day, the current status of home foreclosures. To say that this operation is not run much differently from some freak show at Coney Island opens the sayer to criticisms about his knowledge of even basic economics or finance. Our economy is crashing due to excessive debt[1][2] mostly due to housing speculation based on low interest rates with little or nothing down  and the phony notion that ‘housing is affordable’[3] and can be offered to  those who have no job, credit, are not citizens or worse. Those are now toxic assets. We are 12 trillion in debt, a mere $110,813[4] per “taxpayer” at this moment and not adjusted for the fact that only one half of these people pay only 3% of the federal taxes. That pumps it up to about $200,000 for the rest of us and it is rising. Can we handle some more debt?? Well, we can wonder if the NYT addresses spending and debt in this essay on ‘recovery.’ They won’t and never will.

So, now, enter the egalitarian New York Times, celebrated in song and theater as the Walter Duranty Papers[5] in honor of their most beloved Pulitzer Prize winner, with some nuances for us to ponder:

 “All roads into and out of the recession run through the housing market.”[6]--Housing Weighs on the Economy NYT EDITORIAL Published: November 28, 2009 [Emphasis is mine in all quotes.]

What? We can give partial credit to this statement in that a lot of the problem was mortgage debt defaulting. This statement requires a bit of explanation about the process of  modern disinformation techniques: It is customary for propaganda machines to parrot the Greek circular logic follies and make some crass statement in the first trumpet blast that is offered as eternal truth and then to reinforce this nostrum with a rummage-sale assortment of quips and critiques and new programs thus closing the circle to the delight of the left who have now “heard both sides of the story.” The NYT often conjures articles from ancient decaying precepts and produces a product with a curious blend of rote propaganda[7][8][9][10], noisy and erratic pandering to special interest groups such as unions and certified Ouija board hokum along with other mechanisms. This statement is mostly crap.

Hope vanishes and we weep:

“During the summer, that road seemed to be heading toward recovery. These days, it seems to be headed back toward hard times. A reversal would have big implications for the economy and, by extension, the policies now being pursued by the administration, Congress and the Federal Reserve.” --Housing Weighs on the Economy

No, it [toward recovery] was not.  This is a reflexive protosimian response by the left to avoid comment or even mention the danger signals in our economy such as the [1] plummeting dollar, [2] potential inflation, [3] massive debt, [4] massive spending and [5] the frantic search for any and all taxes that might be applied everywhere. Thus propagandists select a single issue and squeeze it into a selected mold and throw in a few tears to make their point. There was no recovery.

The myopic phrase “road seemed to be heading toward recovery” must refer to several government recovery ‘programs’ that were foolish, expensive and ineffective: such as the notion that we saved jobs by printing money to the tune of $92,000 per job![11] And, we only spent $24,000 per car on the Clunker Follies and a mere $43,000 per house on the housing scam. [12] Now, that is ‘government’ by liberal standards. We are stunned and mortified that these measures failed. This is how liberal Democrats think.

The lament here, translated, is that this probably ‘wasn’t enough’ as Paul Krugman pleads:

“Most economists I talk to believe that the big risk to recovery comes from the inadequacy of government efforts: the stimulus was too small, and it will fade out next year, while high unemployment is undermining both consumer and business confidence.”[13]-- The Phantom Menace By Paul Krugman

And, how do we pay for this? Tax and Spend or Spend and Tax? Which comes first?[14] We spent .787 trillion dollars and the whole pig petered out by November? What does that imply? Oh! We should have spent more like 1.5 trillion and should continue to do so for years. That is a liberal program laid bare for all to see. No clues on how we pay for this?

Lamenting even a small false glimmer of hope:

“Even this month’s other seemingly good news had a dark lining. Reports from industry and government showed that sales of both new and existing homes rose in October. But much of that was driven by buyers who rushed to claim the first-time home buyer’s tax credit before it expires on Nov. 30” --Housing Weighs on the Economy

So, the government threw in a subsidy and the consumers grabbed it and then it went away and the consumers failed to buy into the ‘vision?’ These NYT staffers ought to walk 8^th Avenue in NYC at night and see if they can get a future repeat performance from the hookers for a single payment. Are these liberals so naïve or are they just vicious and churlish?

His Master’s Voice.

“A weakening housing market in a fragile economy is a recipe for pain. Already, nearly a third of homeowners with a mortgage — 15.7 million people — owe more on their mortgages than their homes are worth, according to Moody’s Economy.com. Negative equity combined with high unemployment greatly increases the risk of delinquencies and foreclosures, which, not surprisingly, continue to hit new highs.” --Housing Weighs on the Economy

Somehow, there is no mention of the collective of socialists that schemed to get ‘affordable housing’ for the poor using federal law CRA [Community Reinvestment Act][15][16] and political  harassment machines like Greenlining[17] and the criminals at ACORN[18] and other programs that  perpetuated this failure by offering mortgages  to people with little down and no credit responsibilities. We saw, in May of this year, a 70% default rate on the phony Fannie Mae Home Saver Advance (HSA).[19] How do you expect to ‘help’ those who cannot handle home expenses or debt or both? Oh, just keep forgiving them with more printed money? That is the liberal solution after we note that those people, illegal or not, will overwhelmingly vote Democrats back into office. Well, then that is good politics. Let the opposition pay.

The Quest!

“A question for policy makers is, if real estate is not going to lead the way out of recession, what will? A related issue is where best to aim government resources as the hard times endure. The extension of the home buyer’s tax credit, which failed in its first go-round to spark lasting improvements, was a giveaway to the real estate industry. Relief and recovery efforts that are focused on job creation more directly, rather than on favored industries, are needed.” --Housing Weighs on the Economy

So, the leftists all partied and toasted our government in ballrooms  with trendy and potentially  tax-rescuing marijuana fumes with  poached salmon  with properly chilled Chablis and hatched  a phony idea that  is now deemed a failure and we can somehow call this, what corporate welfare[?], in the form of a “a giveaway to the real estate industry.”  Now, we need some job creation program? What was TARP for? Where are the promise jobs?? Why does the unemployment soar when they promised to keep it below 8%?

A new plan!

“The administration must also be prepared to alter its anti-foreclosure effort if, as expected, foreclosures surge again in 2010.”- -Housing Weighs on the Economy

Here we close the illogical logic loop by, as the dog did, returning to the original unwholesome mess and the impossible failure-oriented original program to restroke it with more printed money.

Getting down to economic basics here while possibly insulting the good folk at the New York Times as they trundle down their little pathways, we need to look a few things:

[1] The GDP is down and what is missing is consumer spending and that is down because of the unemployment rate and the uncertainty about the economy particularly in the hands of the left now in power. Our phony government appears to want to bring that GDP up with government spending.

[2] The National Debt is rising and the printing of money threatens all of us with potential massive inflation in the future. We cannot survive this debt at its current levels and they want to compound the error with more debt.

[3] The housing market is bloated with inventory. We built too much stuff. So did the Irish and Spanish and they have the same problem. Only market forces will raise housing prices so we guess our idiot government will want to build more houses and compound, again, the problem.

[4] Our currency is being debased so things we buy will soar in price. By printing more money they can ‘spread around’ the wealth so everybody has ‘some skin’ in this skin game. The narcotics business operates in this fashion. The spread of VD is another example.

So, in light of this list, the left wants to spend and print more money and give it away to the ‘poor?’ We need to take a brief look at the Toxic Assets that crashed our banks a year ago and just wonder how they became so toxic. When banks lend money for houses they can sell or hold the contracts but somebody depends on payments to continue. When defaults happen then the banks lose asset value and tend to become insolvent. Our government rushes in with electronic money and posts that to the tier-1 capitals accounts[20] to stabilize the banks and give people confidence. Fine. Falling house prices always forces wealth to evaporate by lower credit thus truncating the money supply and forcing a recession. Our low interest rates are now at zero to frantically fight deflation. Low interest rates and easy credit got us into this mess and now we should do more of this?

But, what happened to the toxic assets and the effects of TARP? The assets are still there in banks and lending institutions and many are in the form of securitized mortgage bundles and they are still decreasing in value. The ABX index of AAA rated 2007 subprime mortgage shows that the best bundles are now worth only 28 cents on the dollar.[21] The default rate continues on and there are two factors that the government proposed and implemented to ‘fix’ this problem: [a] an adjudication of the mortgage principal for defaulting mortgages and [b] a reduction in interest rates. What does this do to the lender? This guarantees more loses on these assets and thus again lowers the reserves of the banks. Now, when the mortgage is ‘fixed’ and the holder again defaults then what can we say? We should then again readjudicate the agreement and produce more loses in the value of the contracts? Thus, the government tends to reinforce and abet the very malady that got us here in the first place: massive debt. Fannie Mae then becomes the social garbage disposal unit until they go broke, again, and need some more printed money.  The daisy chain thus grows in diameter.

They want to do it again! Compounding this problem from above  is the aforementioned nostrum that we should somehow slow down or rereadjudicate[22] [read alter --whatever they mean by this term]  more failing mortgage contracts for some social good purported to be related to employment! What does this do to the toxic asset pile? Does it grow? How does this help employment? Suspending payments on a mortgage bundle will make the toxic assets more toxic! What are these people thinking? Can we just print more money and subsidize what is now public housing and let the banks take the loss and the taxpayers pick up the bill? Yes, according to the New York Times. This is a crass violation of the fundamental tenets of capitalism by the belligerent avoidance of market forces. The liberals cannot exist in a capitalist society because they are failures and must advocate failure and celebrate failure. So, they try to undo capitalism.

Yes, that is the plan outlined above in the New York Times Editorial. And how could we find some basis to think that these people are totally ignorant of economics? They answer is that they believe that a redistribution of wealth is more important than a sound economy as supplied by capitalism. The leftist parasites who advocate this are willing to crash our economy [23][24]with the satisfaction that at least part of the wealth was distributed and just maybe they can win some more seats in Congress and finish the job.

This smells like the French Revolution to me.  For those who don’t remember, the Declaration of the Rights of Man and of the Citizen[25] and later follies resulted in the complete destruction of the society in France and later with the curious law that all books would now be the property of the government. Can we substitute the word computer or perhaps media for ‘book’ here and bring this into proper perspective? I think we can.

The liberals have no intention of balancing budgets or ceasing their massive spending and borrowing and printing of money willy-nilly. They will sink our economy with glee and song.

rycK

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