Tuesday, February 23, 2010

More on Socialism from the Obama Admin

Yes, the Obama gang finally showed their (all-red) color with ObamaCare V3.0.

And there's more.

A new Treasury proposal:

[ ] seeks to mandate Foreclosure Abatements and Mortgage mods. These (and other related) policies that have shown themselves to be ineffective, and ultimately, counter-productive.

Barry Ritholtz (studiously non-partisan kinda guy), comments:

One of the most disappointing policy initiatives of the Administration to date has been the expensive and ineffective attempts to fight foreclosures at all costs.

The net impact of this is to artificially prop up home prices and reduce the number of real estate transactions. In the high foreclosures regions (California, South Florida, Arizona, Las Vegas), the foreclosure process have driven prices down to the point where buyers have materialized and sales numbers are improving significantly. The uptick in real estate transactions benefits durable good sales, increases mortgage volume, and positively impacts other real estate related activities.

As wrenching and unpleasant a process as foreclosures may be, the net impact of artificially high real estate prices is even more problematic. It punishes savers and first time home buyers (think Newlyweds).

One of the side effects NOT mentioned by Ritholtz is this: if property values remain high (artificially or otherwise), local Gummint TAX revenues are artificially supported, too.

Beyond that, banks are not forced to write down/off the assets, which (we all know) is merely a game. You might want to avoid buying bank stocks...

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