533,000 hard working Americans lost their jobs last month. This is considerably more than what was expected and is hard to fathom. The US automakers will no doubt use this to their advantage today in Congress.
Mortgage foreclosures rates rose to 2.97%. This coming after a leaked "plan" by the Fed to buy up consumer mortgages. I sincerely wish people would wake up to this political theater. The Fed has no real interest in helping homeowners, only their buddies on Wall Street. If the Fed does end up doing such a plan, I have the following problems with it:
- The Fed is using OUR MONEY, so their perceived charity is a slap in the face.
- It would be a gross redistribution of wealth and perhaps the biggest case of moral hazard yet: confiscating wealth from responsible mortgage borrowers and subsidizing those who have been irresponsible or have fallen on hard times due to economic conditions. Either way, redistribution of wealth is unconstitutional and the Founding Fathers made it clear that they were completely and utterly against measures that supported it. Foreclosures, like bankruptcies, play a key role in the economy: they flush out the bad and make way for the good.
- Even if the Fed somehow came up with a plan that made economic sense, four words come to mind: "Too little, too late"
- You cannot artificially prop up home prices any longer, this is the very thing that created the problem in the first place. In doing so, you are simply flushing taxpayer funds down the toilet and making the bubble bigger. The facts remain: we built too many houses, the government encouraged lending to risky borrowers, and consumers bought houses they did not need and could not afford. Reconfigure all the mortgages you want, but a mortgage is still expensive if you don't have a job.
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