Comments (9)

• Person

  Wouldn't this actually be one of the "unknown" cases? If you rewrite contracts, then yes, that contracts demand (since it's harder for demanders to secure financing), but at the same time, you keep some homeowners from going into foreclosure, thus contracting supply. So, it could go either way.

  Published: December 9, 2007 9:49 PM

• Brent

  Good point, Person, but I think it is obvious, upon reflection, that demand is what is really weak - at least at the current / recent high price levels.

  There have been other measures, such as one passed in Minnesota, that have dampened demand, too.

  Published: December 9, 2007 11:21 PM

• Yancey Ward

  Well, we could pass a law banning home sales that transact below the prices of Summer 2006. That should solve the problem.

  Published: December 10, 2007 9:14 AM

• happylee

  Mr. Ward is on to something! We need a new Blue Eagle campaign!

  Published: December 10, 2007 4:48 PM

• Bruce Koerber

  Intervention is sometimes ego-driven and purely motivated by self-aggrandizement.
  Intervention is sometimes ego-driven and the result of pure ignorance.
  Sum these up and you have the following: intervention is always ego-driven.
  Those who knowingly intervene for short-term results practice ego-driven intervention for self-aggrandizement.
  Those who practice ego-driven intervention because they do not understand how the economy works are ignoramuses. The irony is that all of the empirically trained economists who harbor the hint of intervention in their minds do not understand how the economy works and, therefore are qualified for the 'ignoramus' distinction!

  Published: December 10, 2007 5:38 PM

• mikey

  From Schiff's article:

  "With the majority of our near 10 trillion dollar national debt financed with short-term paper, what happens when interest rates rise? Will the government extend the maturities of one-year treasury bills, tuning them into 10-year treasury bonds, forcing holders of government debt to accept below market returns for extended time periods?"

  In addition to repos the FOMC also has the option
  to make permanent purchases of T-notes.Interesting that the newest info on the size of this account was 6 years old(that I can find so far)It was 535 billion in 2001.
  So rather than an obvious partial default, as outlined by Schiff above, wouldn't the Fed be more tempted to increase the size of its permanent open market account with outright purchases? Very inflationary I know.But at this point I wouldn't rule anything out.

  
  

  Published: December 10, 2007 6:01 PM

• Danimal

  Let alone the moral hazard associated with the incentive to depress your fico score in order to qualify for a bailout!

  Published: December 11, 2007 10:42 AM

• Government Backed Refinancing

  While it is true that the home prices would go down, there is many other factors that already drawing the prices down. Look at the speculators alone who though they'd be in for an easy flip for some simple profit. But the problem here is also of basic supply and demand.. I have a house I want to sell, I know people can't get mortgages and I need to sell it at less than I want.. I may hold the house, and wait for prices to rise, thus limiting the supply of houses to market.

  Published: December 20, 2007 9:11 PM

• dmandman

  somone spammed this site on my blog and thought someone needs to say something about it! http://www.fakepaycheckstubs.com IS THIS LEGAL? No wonder why we have the subprime mess why have when lenders USE FAKE DOCUMENTATION to help PUSH the loan through and hence MAKE thier commissions! dispicible and blatent!!! NOW BANKS ARE BAILING OUT THESE CROOKS??? SOUNDS LIKE Savings & Loan SCANDAL of the 80's ALL OVER AGAIN!!! See this site with your own eyes at http://www.fakepaycheckstubs.com

  Published: January 12, 2008 3:40 PM