Here's a skill we’ve all developed by now, but too often get rusty on: looking for the unsaid.
Take this article in the New! and Improved! Wall Street Journal, “Washington Takes On the Mortgage Mess”. Thank God someone’s doing something.
What started as a slump in home building and rising delinquencies on dodgy mortgages has evolved into a financial crisis and a likely recession. U.S. authorities are scrambling to respond.
Last week, the administration said the Federal Housing Administration may guarantee mortgages for up to 100,000 homeowners, many of whose homes are now worth less than they owe on their mortgages.
In addition, the Senate passed a package of measures including a tax credit for buyers of foreclosed properties, funds to state and local governments to buy and rehabilitate foreclosed homes, and tax breaks for home builders. The bill’s prospects in the House and the White House are uncertain.
Okay, I know I’m not educated in the ways of haute finance, but doesn’t the Senate’s package focus on help for buyers of foreclosed houses and the construction industry? I mean, a hundred thousand mortgages guaranteed when projections mention four million defaults? If so, why are the sellers hurting more than the buyers? They were making out like bandits, you should pardon the expression, during the boom and now they’re not, so the relative gap is significant, that’s certainly true. But they’re not on the street, like the people who fell for the subprime scam.
The Journal, personfully struggling for identity in the Murdoch era, tries to focus the blame on the consumer for borrowing too much, and on the government for not co-signing the loans, with the following questions.
Okay, so an attentive person would have considered that an adjustable-rate mortgage begun at a time of historically low interest rates had essentially only one likely future. Can’t go down, won’t stay here forever, what’s left?
But here we are, and the question now is, who benefits from the public largesse? The less perspicacious who fell for a financial scam? Or the financial corporations who perpetrated that scam?
I’m betting on the latter.