|
-- Posted Thursday, 26 June 2008 | Digg This Article | Source: GoldSeek.com
Rick’s Picks Thursday, June 26, 2008 “Phenomenally accurate forecasts” Small wonder that Congress' approval ratings are wallowing down around 14 percent these days. They could go even lower, too, by the time the World's Greatest Deliberative Body's latest Foreclosure Rescue Plan plays out. Have you heard about it? This legislative barf-bag is already attracting its share of flies, and it's not even law yet. Everyone wants a piece, and the Congressional Black Caucus of course thinks that it doesn't do enough to address the needs of African Americans. (For a complete list of all others whose needs may not have been adequately addressed, please consult the national phone directory on the Internet.) But, get this, some allegedly Conservative "Blue Dog" Democrats have the chutzpah to ask who's going to pay for it. Not to worry, since it will only be providing a measly $300 billion to the FHA, which would channel the money to "distressed" homeowners. Too bad taxpayers were not given the option of betting it all on the spin of a Big Six wheel. At least that would have given them a sporting chance of seeing a return on their money.
The shaping of this legislative turd has been duly reported on the news pages of the Wall Street Journal, but you have to read Tuesday’s lead story to get a bracing whiff of it. What it will provide, first of all, are the kind of mortgage loans that led to the "subprime mess" in the first place -- which is to say, loans to homebuyers who cannot come up with a downpayment. The private sector is no longer making such loans, and the FHA itself has told its benefactors on Capitol Hill that it no longer wants to make them either. Of course, that didn’t prevent the bill from sailing through Congress. As Thomas Sowell once said, "There is nothing so bad that politics cannot make it worse."
How Bad?
How bad is "worse"? Well, consider the advertisements that some homebuilders have been using to drum up business when the new funds come available, presumably to the kinds of home buyers that private lenders would not touch with a ten-foot pole. D.R. Horton is promoting "100% financing" for some Maui condos that start at $498,000. and in Seattle, reports the Journal, local builder Quadrant Corp. is advertising townhouses that “can be purchased with as little as $500 down. ‘Use your coffee budget to move into a new home,’ says an online promotion.' ” And in St. Louis, the Journal notes, “another builder is promoting its suburban homes with an enticement for those ‘looking for something to spend [their] economic stimulus check on.’ ”
We reel at the thought of this hair-of-the-dog solution being trotted out to counter the housing bust. Can anyone be so stupid or gullible as to believe that opening the door wider to distressed buyers will ultimately help the real estate market?
***
Saving America
We don’t have any easy answers, but we’re hoping to hear from readers with ideas about how to return the U.S. economy to health. The person who submits the best essay on the topic What Will Save America will receive not only a scholarship to the Hidden Pivot seminar, but also unlimited access to post-graduate tutorial sessions held each week during market hours. The value of this package is $1,150, and a week into the competition we’ve received no fewer than 21 submissions, including one that argues that Americans need, more than anything else, to get serious about diet and exercise.
Essays should be 750 words or less and must be received at this e-mail address by no later than July 15. For details about the Hidden Pivot seminar and comments from those who have taken it, click here.
Our own idea about how to save America is to become a global leader in energy. A solution that works for the whole world would be a triumph for Yankee know-how on a par with the invention of the automobile assembly line. To stimulate thought on this topic and others, we will be presenting occasional guest commentaries by people with backgrounds in science and engineering. Economists need not apply. In the meantime, we welcome any contributions at the e-mail address linked above. We’ll print the best of them once the competition has concluded next month.
*** Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2008, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Thursday, 26 June 2008 | Digg This Article | Source: GoldSeek.com
Previous Articles by Rick Ackerman
|
