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Sacramento Mortgage Rate Update: The Bailout
Is it right to call this thing bailout or is it really as some would prefer, a rescue? Is it prudent to surrender $700 b of taxpayer money at gunpoint under the imminent threat of a global economic collapse? Is it wise to give the checkbook–no strings attached–to an out-going Treasury Secretary with short-timers attitude and a pile of Goldman Sachs stock still in his portfolio? Are there better ways to solve the issue than just buying the toxic waste of the sub-prime meltdown at a discount in the hopes of selling it to investors for a profit? And if we agree to the deal, is this the end of it or are there yet waves of Alt-A and option-arm defaults still forming at sea?
The opinions range from the scornful to the apocalyptic. It’s the only non-partisan slug fest in evidence during this election season. One thing seems true at the heart of it all: $700 b is no small amount of money to throw at the problem without at least a little discussion. I for one am thankful for the bickering and balking that has carved out a few days to deliberate on a matter of such importance.
Judging by the level of pain and worry I encounter in my day to day conversations, something must be done fairly soon. A tough-love stance will not see us through the credit freeze, much as I believe in personal responsibility, the value of experiencing consequences, and the moral hazard of confirming for Wall Street CEOs that their over-leveraged, profit-crazed gamble fest was a party too big for the cops to bust. So let’s get on with it, but in the process let’s not forget the lessons that are all too obvious: deregulation and self-interest will not create free markets.
As for mortgage rates, after yesterday’s stock market free fall and today’s rally, 30 yr fixed rate are back around 6%. The markets are extremely volatile, and lenders are changing rates in both direction throughout the day. If you have time and feel lucky, float your rate in hopes of more delays on the bailout– excuse me, the “rescue”–otherwise lock with a lender who has a lock renegotiation policy and will let you float down if things get better.
October 1st, 2008 at 9:14 am
Mark -
The proposed bailout does need some checks & balances, and if only to appease some folks, some constraints on executive compensation.
I thought the lead article in the Bee today did a nice job of comparing the current situation to the bank run and credit crisis of 1930.
I’ve heard that the market drop on Monday wiped out over a trillion in value. So the one-day market swing was larger than the proposed bailout. Interesting perspective.
Jim
October 1st, 2008 at 11:58 am
Jim, I guess I’m one of those folks that need to be appeased then. Either that or I want Allen Fishman’s gig.
October 1st, 2008 at 2:01 pm
Very well stated Marc, I do like to draw comparisons between our current “crisis” to those that have occurred throughout history. It is very interesting that so many people in the media are referencing the stock crash of the 1930’s with out taking in account that same international bankers who promoted the inflationary policies and pushed the propaganda which ran up the stock market not only avoided monetary losses but made tremendous gains in consolidation of hard asset’s while, The investing public was left holding the empty bag. These same men are still in power today.
“If we ignore history we are domed to repeat it” we can all agree to that, so why do we so blindly following these same puppet masters plans when even Lawmakers of that era stated the facts…
Congressman Louis McFadden, Chairman of the House Banking and Currency Committee.
“It [the depression] was not accidental. It was a carefully contrived occurrence… The international bankers sought to bring about a condition of despair here so that they might emerge as the rulers of us all.”
And indeed they have had great success in Montagu Norman’s (Bank of England) dream of the world banking system.
“that the Hegemony of World Finance should reign supreme over everyone, everywhere, as one whole super-national control mechanism.” (”Montagu Norman” by John Hargrave, Greystone Press, N.Y., 1942.)
The bottom line is today we are in the same situation as free people throughout history having rapidly increasing debt requiring increasing interest payments, inflation and periodic recessions depressions and the treat of “GLOBAL COLLAPSE” hung over our heads if we do not comply to there demands. Just the same nothing different but the day on the calender.
October 4th, 2008 at 6:28 am
James,
We do seemed doomed to repeat our mistakes, having collectively a one-inch deep historical memory. Is it willful ignorance, intellectual laziness, or have we simply become, as John Taylor Gatto put it, a society “addicted to distraction”?
It’s remarkable that 120,000 of copies of Thomas Paine’s Common Sense were sold, read, and passed along in the American British colonies when the total population was only a couple million people. Maybe it is simply more difficult to get at the truth in an age where disinformation is so easily broadcast. Maybe things have to get bad before we care that much again.
Whatever the cause of our complacency, it is quite clear that for any ambitious hegemon, whether economic, political or military, it is preferable to keep people pre-occupied with the business of scratching out a living such that no time remains to think, question, or search beyond the predigested soundbites for truth. That makes it much easier to herd the sheep in proper direction.
I’m reading Naomi Klein’s Shock Doctrine, which you might enjoy, given the current economic shock and the bailout that was just rammed through under the threat of global economic collapse.