Open Forum (2/16-2/22)

By Dave Fratello | February 16th, 2009
This week should bring us the new president's answer to the housing crisis.

He's planning a press conference Wednesday in Phoenix, of all places. (Hence our pic.)

It's one of the ground zeroes of the housing bubble, and a city whose name will, at the very least, tempt a speechwriter to prophesy the end of the housing bust.

More on all of that as the details flow in, but it sounds like the core goal hasn't changed much:
Then-Sen. Obama, in an Oct. 2008 presidential debate: "we've got to stabilize housing prices" and "help ordinary families be able to stay in their homes, make sure that they can pay their bills."

Senior presidential adviser David Axelrod, on "Fox News Sunday" (via this WSJ article): the plan will help in "raising home values that have been plummeting" and, according to the WSJ, would "reduce Americans' payments on troubled mortgages" – possibly limiting housing payments in reworked mortgages to 31% of pretax income.
Helpful hint: If you are not yet in default on your mortgage, get in default ASAP so you can qualify for some help.

MBC expects to be every bit as skeptical of this plan as we were of the other guy's plan last Fall. (See "Buy Up the Bad," which assessed a proposal to have the government buy mortgages en masse and shed any inconvenient principal amounts above a home's current value.) As we said then:
Intervening to prevent market forces from having their way with home prices has a great appeal, at least in the final 4 weeks before an election. But does anyone pushing these ideas really think the declines can be halted?
We're thinking the answer to that hypothetical question is a qualified "yes." They do.


As always, please use this week's "Open Forum" thread for news clips, off-topic questions & discussions of (virtually) any nature. (You don't have to have an opinion on blogs.) And keep it clean.

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