…and Who They’ve Decided to Help (2)

El Presidente‘s new “stimulus package” and the Democratic roll-over version of same is theoretically meant to stimulate the economy by giving money to people who really need it and will spend it on basic necessities to keep the economy humming. These are the people who haven’t seen a raise in 25 years or have been out of work, yes? Well, no, not exactly.

On Jan. 24, House leaders and the White House announced a preliminary deal that included stipends for all workers and breaks for business, but no money for extended unemployment or food-stamp assistance and no mention of permanent tax changes.

So who’s getting this bail out besides the banks? Guess what George W Bush’s idea of a “needy” consumer who deserves aid might be. Yup, you guessed it: the near-rich.

Elizabeth and Ben Kilgore are back in the real estate market. All it took was a little-publicized section of the economic stimulus package President Bush signed into law last week that lowered the borrowing cost of buying a more expensive home.

***

[I]f the limit on loans backed by a government-backed housing finance entity like Fannie Mae is raised from $417,000 to the full $729,750 she has been hearing about, Ms. Kilgore said, “we will be able to get a 30-year fixed mortgage for less than what we’re paying now plus our homeowner’s dues.”

Mr George “Silver-Spoon” Bush is less concerned with the people about to lose their homes (he’s offered virtually nothing to help them) than he is with making sure the well-off don’t have to scrimp and that they get a good deal on that Big New McMansion they’ve got their eye on. God forbid they should get stuck with a (yecch!) condo. *shudder*

Three years ago, when they bought their first home, they resigned themselves to buying a condominium because it meant taking out a mortgage they knew they could manage.

“This will push us into a price range that’s now financially possible,” said Ms. Kilgore, a real estate agent in Marin County.

Yay! The Kilgores are now Republican for life. Screw the rest of the country. THEY GOT THEIRS! Eyes on the prize, people.

The temporary change in the loan limits is not about to revive the housing market on its own. But in some of the higher-priced regions of the country that have been hit hardest by the flagging real estate market, it could make a big difference. For if anything is going to breathe new life into the local housing economy in places like the San Francisco Bay Area, San Diego, Washington and Boston, it is home buyers emboldened by the prospect of larger loans at lower interest rates.

(emphasis added)

There you go. Things are so bad the upscale markets are starting to weaken, and what does Silver Spoon key on? Hint: NOT the people on marginal incomes who got royally reamed by real estate scam artists and the banks who expected to make fortunes on their predatory practices. No sir. No relief for them. And no relief for housing markets in areas where they’re imploding because wages are low (the South, for instance). No no. We’re only concerned about the “flagging real estate market” in “higher-priced regions”.

Priorities, people. Priorities.

Daniel Billett, a mortgage broker in Seattle, where homes in the downtown area sell for a median price of around $400,000, said that he, like dozens of people he knows, is poised to refinance an existing jumbo loan at a lower interest rate.

“As soon as the loan limits are implemented and lenders are accepting applications. I’ll be the first in line,” said Mr. Billett, whose company, Response Mortgage Services, has been receiving a steady stream of inquiries from clients in recent weeks. “I’m going to save hundreds, and I mean hundreds, of dollars every month on my current jumbo loan, by switching to a conventional loan.”

That’s who Silver Spoon cares about. Not you. Are we clear?

How the Mortgage Crisis Got to be a Crisis….(1)

There’s a certain irony in the mortgaghe crisis, and a certain justice, though that justice is about to become, as always, injustice in order to protect the Usual Suspects. The ironic justice of it was put succinctly today by one Edmund Andrews in one of the Grey Lady’s patented business stories. Whether he meant to or not is another question.

Over the last two decades, few industries have lobbied more ferociously or effectively than banks to get the government out of its business and to obtain freer rein for “financial innovation.”

But as losses from bad mortgages and mortgage-backed securities climb past $200 billion, talk among banking executives for an epic government rescue plan is suddenly coming into fashion.

A confidential proposal that Bank of America circulated to members of Congress this month provides a stunning glimpse of how quickly the industry has reversed its laissez-faire disdain for second-guessing by the government — now that it is in trouble.

I guess he did.

Yes, it’s that old Round Robin of Yesteryear:

Deregulation -> Speculation -> Collapse -> Govt Bail Out

I know. You said that would happen when the Dereg Boys came around selling their snake oil with high-falutin’ promises and their fingers hovering bare inches from the pocket you keep your money in. And you were right. So was I. Who could have predicted that business would use deregulation as an excuse to bring back all the old scams (along with a few new ones) that created the last economic collapse?

You could. So could I. In fact, WE DID.

Who could have predicted that when the shit hit the fan and the greed, the wild speculating, the lying, false annual reports, phony accounting tricks, and outright scamming of both customers and their own investors threatened to bring down the whole House O’ Cards, the very same con artists who’d created the mess would be banging on the Treasury’s doors with both fists and demanding our tax money, screaming, “Save us! Save us!”

Well, you could have. So could I. In fact, WE BOTH DID.

Despite our predictions (pretty easy, not-too-hard-to-figure-out kind of predictions, sort of like, you know, predicting that the sun will rise in the east), y’all just went ahead and listened to the Siren Song of Greed thinking they (The Great They) was gonna make y’all rich. Despite many warnings, signs, and signals that what they wuz gonna do wuz make theirselfs rich by skimming your money, y’all went ahead and decided that De-regulation wuz a Good Thang. And now they’re gonna make you – all of us – pay through the goddamn nose to save their sorry asses.

See, E Andrews misses something kind of key.

Bank of America suggested creating a Federal Homeowner Preservation Corporation that would buy up billions of dollars in troubled mortgages at a deep discount, forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates.

“We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bailout of the bond market,” the financial institution noted.

In practice, taxpayers would almost certainly view such a move as a bailout. If lawmakers and the Bush administration agreed to this step, it could be on a scale similar to the government’s $200 billion bailout of the savings and loan industry in the 1990s.

(emphasis added)

Not really. Unfortunately, more than $$$200BIL$$$ has been thrown at the banks to solve this problem already, more than half from the govt and it ain’t done shit except buy the investor class and the financial class a li’l more time before it all caves in, like propping up a sagging, rotten roof with toothpicks – A LOT of toothpicks. Another $200BIL$$$ wouldn’t fix it, either, but if such a package does get aimed at aiding the borrowers (the victims) rather than the lenders (or “perps”), it would actually do more to limit the damage than the so-far followed policy of having banks and govts “lend” $$$BILLIONS$$$ to, you know, each other.

It would mostly benefit banks and Wall Street firms that earned huge fees by packaging trillions of dollars in risky mortgages, often without documenting the incomes of borrowers and often turning a blind eye to clear fraud by borrowers or mortgage brokers.

A rescue would also create a “moral hazard,” many experts contend, by encouraging banks…to take outsize risks in the future, in the expectation of another government bailout if things go wrong again.

If the government pays too much for the mortgages or the market declines even more than it has already, Washington — read, taxpayers — could be stuck with hundreds of billions of dollars in defaulted loans.

Uh, yeah. And where have we heard that before?

Oh yeah: every time deregulation goes smash, here come the perps and the con men and the bankers and their lobbyists with their hands out.

Will we EVER, you know, learn? These people haven’t changed since Cato was a Roman slumlord. Enough is never enough and they don’t care who pays for their folly and greed as long as it isn’t them. (Which means it’s always, you know, us.) Can we just stop believing their lies now, please? Pretty please?

Oy.

Congressmen Go Hungry on Food Stamps (Updated)

This is a stunt. It isn’t even an original stunt. It has been done before periodically by other legislators. Still, it makes the point.

Rep. Tim Ryan (D-Ohio) stood before the refrigerated section of the Safeway on Capitol Hill yesterday and looked longingly at the eggs.

At $1.29 for a half-dozen, he couldn’t afford them.

Ryan and three other members of Congress have pledged to live for one week on $21 worth of food, the amount the average food stamp recipient receives in federal assistance. That’s $3 a day or $1 a meal. They started yesterday.

Rep. Jim McGovern (D-Mass.) and Rep. Jo Ann Emerson (R-Mo.), co-chairmen of the House Hunger Caucus, called on lawmakers to take the “Food Stamp Challenge” to raise awareness of hunger and what they say are inadequate benefits for food stamp recipients. Only two others, Ryan and Janice Schakowsky (D-Ill.), took them up on it.

“All of us in Congress live pretty good lives,” said McGovern, who ate a single banana for breakfast yesterday and was going through caffeine withdrawal by midday. “We don’t have to wake up worrying about the next meal. But there are a lot of Americans who do. I think it’s wrong. I think it’s immoral that in the U.S., the richest country in the world, people are hungry.”

A very good friend of mine knew, liked and campaigned for Jim McGovern while she was alive (he was running for State Rep then). She was an Irish redhead – a hard city broad, tough as nails and as skeptical as they come, and she thought he was a decent guy. I don’t doubt her. And I appreciate his willingness to try to drum up some media attention for the problem of hunger in this country as it has exploded during the Bush years.

Having said that, it shouldn’t really be necessary for him to have to prove that $1 a day isn’t enough to live on. Only movement conservative Republicans believe it is, and as we all know, proving something they don’t want to believe is a waste of energy. They’ll just shut their eyes, block their ears, and recite Grover Norquist at the top of their lungs like Monty Python’s Gumby Family – you know, the ones with the bandages on their heads – reciting “You’ve got beautiful legs!” in unison no matter what question they’re asked.

But the timing for this stunt isn’t random. There’s a reason for it. Continue reading

Response to Mr Blair 1

This is one of those posts that started out to be a comment on someone else’s blog until I decided that a) it was too long for a comment, and b) the issue has enough resonance to deserve wider exposure.

A brand-new blog (born March 17, barely a month ago) called Asset Almanac and authored by one Benjamin Blair linked to Monday’s post on infant mortality along with posts on several other blogs he’d never heard of that also featured pieces on the NYT article. Mr Blair’s point in this particular post, gently made, was that we were all having “knee-jerk responses” that aren’t “constructive” because they “impl[y] we ought to return to the good old days pre-welfare reform.”

Before I do answer him, however, I want to acquaint you with Mr Blair so we know who we’re dealing with and can put his remarks in some kind of context.

He describes himself as a “do-gooder…always working for fragile nonprofits” whose “passion” is for something called “asset development”. Asset development, it turns out, is a relatively new anti-poverty strategy built around, apparently, teaching poor people to save money.

The logic is very simple (important ideas are often simple): 401k account-holders save more when there’s a company match; perhaps poor people (few of whom have access to any 401k account, much less a matched one) would save more, and have a better chance of clawing their way out of poverty, if their difficult efforts to save for the future were also matched (…picture penguins marching through the polar winter — that metaphor may suggest the discipline and sacrifice necessary to save on an extremely low income). Michael Sherraden at the Center for Social Development at Washington University had that epiphany (well, not the goofy penguin part — I take full responsibility for that) and he wrote about it in his 1991 book, Assets for the Poor: A New American Welfare Policy. He argued that asset development, as opposed to (or in addition to) income support, is what can give poor people a chance at financial security and real self-sufficiency.

The beauty of the matched savings account is that the match can be used as not just an incentive to save but also a source of leverage about what to save for. Matched savings accounts, dubbed individual development accounts (IDAs), allow low-income people who complete a required financial education program to use their savings and the matching funds (which are often a generous two or three times the amount saved by the individual, up to a certain limit) to invest in a productive asset such as a first home, higher education, or the capitalization of a micro-business; in other words, the kind of investment that has been shown to move many people permanently up the economic ladder, and though certainly not risk-free investments (which we are being reminded of with the current subprime mortgage crisis), they have proven to be more practical and effective than most other investment options for the poor.

As regular readers have probably already guessed, warning flags starting going off all over the place, if not red then at least blazing orange. The idiotic concept that the poor are poor because they don’t manage their money well enough or save enough has been a right-wing talking-point for a generation, largely employed to frame the blame for poverty on the poor themselves and then sidetrack the discussion into a thoroughly useless cul-de-sac that neatly avoids the only real long-term solution whether we like it or not: income redistribution, an idea that drives our home-made oligarchs into fits of pique and panic.

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Minimum Wage Deal Cut in Senate

The Senate has just passed the minimum wage bill which will go to the president as part of the supplemental package funding the war in Iraq. The bill, worked out in Conference Committee mainly by the Democratic majority, will cut the $$$12Bil$$$ in corporate tax breaks originally demanded by Senate Republicans under a threat of filibuster to a still-extortionate $$$4.8Bil$$$.

An improvement of sorts, I suppose.

Though the Senate initially approved tax cuts worth about $12 billion over five years, House negotiators wanted less than $2 billion. The final figure, $4.84 billion, includes several provisions, including giving expanded tax breaks to restaurants and other small businesses that hire disabled veterans and residents of poor neighborhoods as well as allowing small businesses to write off a greater portion of their investments for tax purposes.

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Welfare and Medicaid Cuts Raise Infant Mortality Rate

Conservatives kill babies.

Not with their own hands, of course. They don’t strangle them in their cribs. They let their anti-life policies do it for them.

For decades but especially for the last 12 years, the very same conservatives who scream that the removal of an unformed scut of cells in a womb is murder have been systematically depriving real life pregnant women who will be carrying to term of luxuries like food and adequate medical care because they’re “too expensive”.

At the Federal level, Medicaid and welfare have been consistently cut every year conservatives have ruled the roost in order to trim taxes to the nub for the rich, hand over $$$billions$$$ in corporate welfare to their masters campaign contributors, and prosecute a war nobody wanted on behalf of neoconservative imperialists too dumb to know enough to come in out of the rain. In primarily liberal Democratic states, some of that safety net has been replaced but in the predominantly-conservative Southern states, it hasn’t and the results are coming in. They’re not pretty, but then nothing much in conservative-run America is these days.

The policies of so-called “pro-life” conservatives are raising infant mortality rates in the South to the such a point that Third World countries have lower rates than parts of the US. Are we proud yet?

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After Katrina: What the Democrats Are Up Against

In his recent press conference, memorable for a series of hypocritical and borderline-false statements, King George the Clueless berated the Democratic Congress for stuffing his supplemental war funding bill with what he called “pork”. Some $1.2B of that “pork” was headed for New Orleans and the Gulf Coast, the majority of it targeted for housing construction and redevelopment. It was the first housing appropriation of any significance in the 12 years since the Republicans took over the House, and the first to directly address the devastation to housing when Katrina hit.

During the 12 years that Republicans ran the House, their leaders didn’t pay much attention to affordable-housing activists. Despite soaring rents and complaints of a deepening affordability crisis, House Majority Leader Tom DeLay (R-Tex.) told his conference that he didn’t want to see housing bills on the floor. He thought housing programs were unreformed welfare….

But now that Democrats took over the House in November, their leaders are affordable-housing activists. Liberals Barney Frank (Mass.) and Maxine Waters (Calif.) run the two panels overseeing housing policy after agitating for years, without success, for increased government rent assistance. They came to office promising to pass the first major housing legislation since the early 1990s.

Last month, the House passed their bill, a measure to address the housing shortages that have festered on the Gulf Coast since Hurricane Katrina hit in August 2005. After the storm wiped out 82,000 rental units in New Orleans, DeLay blocked a housing bill from Richard H. Baker (R-La.) because, sources said, the majority leader did not consider Baker a “team player.” But Nancy Pelosi (D-Calif.), now speaker of the House, campaigned on Katrina inaction — a prime example, she told audiences last fall, of the “do-nothing Congress” — and vowed a fast reversal. The resulting Democratic bill includes several bold precedents, including a “right to return” for all displaced hurricane victims and “one-for-one replacement” for all demolished public housing units.

So actually appropriating the money you promised so glibly while you posed for a photo-op in Jackson Square after the storm passed is your idea of “pork”, Mr President? It was easy to make promises you knew Tom DeLay was going to kill, wasn’t it? But Tommy is back killing bugs and fending off corruption and fraud charges while comparing himself to Christ (link via Digby). Now that Nancy Pelosi is Speaker and the bill has actually passed, it’s “pork”? But…it was your idea, Your Majesty. Remember?

Fine words backed up by…nothing. And now that the Democrats have done the work for you, you won’t sign it? Are you going to veto these, too?

Democratic leaders say the Katrina bill — which has yet to come up for a vote in the Senate — is just a beginning. They hope to create a huge affordable-housing trust fund, restrict predatory lending, expand rent subsidies and tax credits for low-income housing, and push the federal government back into apartment construction.

“It’s night and day,” said Michael Kane, an affordable-housing advocate in Boston. “The atmosphere has totally changed.”

Housing has been a major problem for a decade, not just in New Orleans but all over the country. Rents have shot through the stratosphere while wages have remained stagnant for 20 years, the affordable housing market has shrunk beyond belief, the subprime mortgage market is imploding due to high-risk mortgage practices loaded with small-print clauses, tricks, and hidden charges (that’s deregulation for you), and you installed a HUD Sec who thinks it’s his job not to do his job. Marvelous.

Meanwhile, the crisis deepens.

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