Comments (11)

• Nick

• --
  Lenders will learn the lesson that their contracts aren’t safe; contrary to popular belief, the government will not serve to enforce the law. (Or rather, the “law” can change on a dime, depending on the public’s mood.)
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  Hello hello. This is the outside world of non-Austrian economists calling. We call that above 'laws can change' concept 'democracy'. Please see the Constitution for more details.

  [...]politicians are the last people we should trust to restore integrity and soundness to the mortgage industry.
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  Robert I would say that the subprime disaster shows that *lenders* are the last people we should trust to restore integrity and soundness to the mortgage industry.

  How about this
  1. tax the mortgage industry
  2. use the proceeds to regulate the mortgage industry

  History shows that so-called 'free markets' need regular cooling interventions by the nanny state to prevent it from melting down and putrefying like a potato salad in the hot sun. No need to give thanks, we've got your back.

• Published: December 8, 2007 8:50 PM

• Brent

• Nick,

  Don't be such an idiot - if you can help yourself.

• Published: December 8, 2007 9:51 PM

• DenisL

• As far as I can tell the Presidents plan has no teeth and only suggestions. It is really not clear why the banks were not already doing what is being suggested, i.e. coax the upside down mortgage payer to hang on to the house and make payments of some type and hope things turn around. It is all a lot of smoke and mirrors with no real world impact. The plan makes it seem like the government and the mortgage lenders are doing something, when they are not. I am not sure what all the hullabaloo ia about. If someone could enlighten me on the specifics of this, I would appreciate it.

• Published: December 8, 2007 10:12 PM

• Jake

• I think Peter Schiff sums it up quite nicely in this article titled, "The Mother of All Bad Ideas":

  http://www.europac.net/externalframeset.asp?from=home&id=10965

• Published: December 9, 2007 3:20 AM

• Dave McCullough

• Hello Jake,
  Peter Schiff's comments sum it up rather nice. The worlds economy is ready to "default" within a year or two. Right now Canada, Europe, and China are worried that their currency will not depreciate as fast as the US buck. Every one it seems wants to work for the lowest tolerable wage in order to sell its products to the most indebted country and in turn receive rapidly shrinking T bills [ in terms of actual worth ] as payment. Not a situation you would volunteer to be in. My advice to anyone listening, and it is only worth what you are paying for it of course, is to get rid of any debt you have. Sell any stocks you have and convert the cash into tangible assets like a bit of gold or silver or lead with a copper jacket and a suitable gun to use it in.

  The Fed lowering the interest rate at this time and the G8 following suit will probably trigger massive inflation and to counter it the next administration will jack up the interest rates within another year [ Hello 1980's ] causing even more mortgage defaults. Plus the new problem with the still lurking ABCP problem will fudge up the cash flow for any meaningfull development.
  Dave

• Published: December 9, 2007 6:59 PM

• Working Guy

• Nick Wrote:
  --------------
  *lenders* are the last people we should trust to restore integrity and soundness to the mortgage industry.

  How about this
  1. tax the mortgage industry
  2. use the proceeds to regulate the mortgage industry
  --------------

  The problem Nick (and others) is that the government engendered the crisis in the first place by pushing interest rates so low. With passbook savings rates at less than 1% it makes no sense to save but rather take on debt. Why collect interest at 1% when inflation is (supposedly) at 2.5%? You end up -1.5% at the end of the year. This was indeed the case from 2000 t0 2004. Home buyers made the choice to take on huge debt because it appeared to be a bertter deal to buy a house and then pay it off with inflated dollars.

  The governement goofed the first time; the government is the last institution we can trust to rectify the situation? BTW the U.S. Fed Reserve has punished savers for quite some time.

• Published: December 9, 2007 8:56 PM

• Anthony

• I wish governments would regulate the sort of people that come out these days as well. We need fewer trolls like Nick.

• Published: December 10, 2007 7:01 AM

• TokyoTom

• Anthony, why not see people like Nick as an opportunity?

  "Trolls" like him are actually the mainstream. Shifting the flow is not without effort. He's showing up because he's interested.

  A little like me I suppose?

• Published: December 10, 2007 7:55 AM

• Anthony

• Interested parties inquire, they do not make derisive, snide comments. You, on the other hand, exhibit an understanding of Austrian Economics (are, in fact, an Austrian) and make an effort to be understood and understand other viewpoints. I'm not sure why you'd want to put yourself on par with someone who has done nothing but assert that libertarians are wrong.

• Published: December 10, 2007 8:23 AM

• George Gaskell

• We call that above 'laws can change' concept 'democracy'. Please see the Constitution for more details.

  Please read this: http://mises.org/store/Democracy-The-God-That-Failed-P240C0.aspx

• Published: December 10, 2007 8:23 AM

• Q-now

• The people are in charge. The people are on the demand side of this. Learn to know what they know.

  this crisis that seems to be global sets the stage for a an organized political and economic reform, that will take place around 2010 or 2012. Noticeably, the phases are seen it begins in 2008. Will take 2-3 years of preperations. This prep. is obvious, there must be a cover. No one can stop this, it is as natural take over as a stream of water. One could convert all assest to gold and move to a remote part live off the land. However, it is futile, if they don't get to you, being alone will. As for my self I would rather die then miss this! I will hep those I can I have on some level I am very sorry about this.
  I am a former triad. it is true. I wish it not.

• Published: December 11, 2007 1:26 PM