Get Ready for $35 Billion More in Handouts

While I am all for a first world country (especially the richest country on Earth*) providing shelter even for its worst-off citizens, I don't really understand why being a renter has become a near crime in America.

*excluding debt

I am just going to post the programs as they come one after the other to keep them in the public conscience. Feel free to call your local Congress(wo)man and ask if you can contribute directly to these programs via direct withholding out of your paycheck, or if you have to waste time sending the money first to D.C.

I am all for efficiency, so I believe each reader with a house should knock on doors of local apartments and just hand out a few hundred bucks to each tenant. Why mess with the middle man (D.C.)? In fact, just shovel it under the door without bothering to knock - you can hit far more apartments in one evening. Your fellow "future homeowner" will react in glee ... I mean anonymous handouts of money via the mailbox is what the entire U.S. economy is now about.

Again I have a very easy solution to ending this; have those who want this money go door to door to their neighbors to ask for cash directly ... whether they want to buy that shiny new car, or shiny new (or existing) home. Having to actually ask those neighbors (face to face) to break open their child's piggy banks might actually make the "consumers" of said "free money" think about where the money is coming from. I am all for supporting people in time of need when it comes to food or things of that nature.... but really, turning countless more Americans from renters into homeowners, is that now a birthright?

Just put it on the tab Ben! Time to chop down more money trees!

Via WSJ

• The Obama administration is close to committing as much as $35 billion to help beleaguered state and local housing agencies continue to provide mortgages to low- and moderate-income families, according to administration officials. (again, it is one thing to help people retain a form of shelter - it is a whole different animal to steal from one generation to get a the current generation into homes)
• The move would further cement the government's role in propping up the housing market even as some lawmakers push to curb spending at a time of rising debt. (speaking of cement, I believe that's the perfect word for what we are putting on our future generation's ankles - in 15-20 years we can drop them off the boat directly into the ocean and our work here will be done)
• The effort, which could be announced as early as this week, is aimed at relieving pressure on government-operated housing finance agencies, which have been struggling to find funding amid the downturn. These agencies, or HFAs, are a small part of the housing market but are critical to many first-time and low-income home buyers, who can get lower-rate mortgages through an HFA than they could through a private-sector lender. Rates are typically 0.5 to one percentage point lower than commercial lenders. (HFA... FHA... tomato... potato)
• Some state HFAs guarantee loans while others originate mortgages. The agencies also develop affordable multifamily housing or provide financing to developers of such housing.

So again, all these government programs that subsidize rates (or directly handout money which has been the latest evolution) - serve to drive up prices of homes above where they would be in a non-subsidized market. So what happens next? As people cannot afford the new subsidized prices, more and more government programs are necessary to chase the elevated home prices because people cannot afford them... do you see the circular nature of all this? If not, just look at our university system....

• The program could be in place for as long as three years, and would involve the administration essentially buying the debt that these housing agencies rely on for financing.
• The Treasury Department, along with government-controlled mortgage giants Fannie Mae and Freddie Mac, is expected to buy as much as $20 billion of new housing bonds issued by the state agencies.
• It will also provide $15 billion in additional funding, as needed, to help the agencies continue to use a type of cheap, short-term financing.

Why not - last I checked the government is here to provide military, pass laws, and be a landlord.

Of course nothing can go wrong here....

• If the housing agencies default on their debt obligations, taxpayers could lose out. The Treasury plans to charge fees to agencies that want to sell new long-term bonds to the government based on their individual risk factors, to help reduce the risk of default and protect taxpayers.

Details, details. Just do it ... put another notch on the IOU bill. And when this program serves to drive up the prices of low income housing - well that's when the next program to "help" will be announced. Which will in turn drive prices even further, at which time the next program will be announced.

********************************

Not sure if "The Atlantic" is considered "left" or "right" but I agree with their assessment: however the author is one of "those people"... yes you know. I don't want to the say the word publicly. It's shameful... ok, I will. He is... a... a... renter. (boo hiss)

Hmm... this sounds vaguely familiar. The government subsidizing the mortgage market making credit artificially easy -- oh yeah! That was one of the reasons why the mortgage market overheated, and we fell into a deep financial crisis. Have we learned nothing?

Mortgages should only be provided to individuals with solid credit, income that can support their mortgage payments and a sufficient down payment.

Now don't get me wrong: some low- to moderate-income individuals may, very well, fit into that mold. But if they do, then they don't need subsidized mortgages. They should be able to acquire financing the good old fashioned way: through a bank willing to bear the risk. Anyone who can't pass through reasonable underwriting criteria for obtaining a mortgage shouldn't be given one. I know "rent" had become one of the dirtiest four-letter words in America during the past decade, but it's really not immoral to require those who cannot afford homes to rent instead. I rent and don't feel like society has wronged me as a result.

What's so bad about their renting until the market is willing to take the risk on their mortgage instead of the government?

Cue the music! Dooo doo doo do do do doo do.

Comments

[mlonz:]

Hey EEB:

You are very sympathetic. I suppose you have offered some space in your home, some food from your pantry, and a hot shower to temporarily help out a few of the unfortunate.

Oct 01 08:24 PM

[Philly Jim:]

Look, the picture is becoming very clear. The demographics that are growing the fastest in this nation are those which depend most of government handouts. Global investors who usually are comfortable buying long-term bonds have figured this trend out. That's probably one of the most important factors in buying short-term bonds vs. long-term bonds, and stock piling commodities rather than keep dolalrs. In 2050, the U.S. will probably look like a giant, tribalized welfare police state where the federal government taxes working class and wealthy Americans at 85% of their income in order to support the new voting under class. This is probably why bright young people are choosing to begin their careers in Asia, rather than a ghetto infested, crime ridden, deteriorating U.S. city. The only thing that will wake up the real America would be a complete economic collapse and possibly another major war.

Oct 01 08:56 PM

[Philly Jim:]

Everyone deserves a chance, one of America's greatest assets is our education system. It provides everyone a chance. Now, there are those emerging cultures in America which embrace a lifestyle which does not involve aptitude, diligence, or hard work -- just a hand out for the federal government to put checks into. Transfer payments are one of the major reasons why states are going broke! The ghetto culture is being perpetuated by the media as well, just flip to MTV or visit a public school one day.


On Oct 01 06:26 PM The Geoffster wrote:

> Living as I do in a major American city, I see first hand the need
> for public housing, food stamps, welfare and other transfer payments
> to the poor. In fact, the need seems to increase proportionately
> to the demand. I don't have any charts to prove this, nor am I working
> up an article, but my eyes do not deceive me. My bias has always
> been toward the liberal view that conditions would improve for these
> poor souls if we could just provide them with the educational tools
> to advance beyond the gutter. Sadly, many of our multi-generational
> poor do not appear to have the makeup to succeed in a post modern
> society. More sadly still, I'm coming around to the notion that if
> you see a man in the gutter, he probably belongs there.
> Disclosure: SH

Oct 01 09:00 PM

[MarvinMBA:]

Were going to be pay for the lack of Financial Supervision which some of the great USA institutions promised when they were set up. They were set up to avoid just the serious downdraft we are in. I wish I knew what economic/business model will provide growth for the next 20 years but at this time I'm out of ideas...High Tech and High Education might be the only way out but the higher institutions in California are turning away students...seems to me that the bailout is bailing out the bankers instead of spending where it really counts..MarvinMBA

Oct 01 10:58 PM

[WTFOver:]

Oh, what a great idea! Except that the property will be stripped of anything with value, will probably be used for drugs, and will burn to the ground when the Meth chemicals explode. What bank wouldn't want to implement this idea!


On Oct 01 06:27 PM MarvinMBA wrote:

> I suppose we all need a place to sleep and I'm all for letting those
> evicted from their house to have a second chance...let them stay
> free in vacant houses held by the bank. This sounds like a giveaway
> program but the alternative is to sleep on the streets. It sounds
> communistic but the hell with names and I do not want anyone to die
> because Uncle screwed up the economy...do you???

Oct 01 11:32 PM

[cyndikus:]

I would be a lot more sympathetic if during this time of putting poor into housing, the buyer might have tried to purchase a home they could actually make payments on. You know what I mean, just like the rest of us buy a small, old first time buyer type home. Here in California there were so many no doc loans that put first time buyers, many from Mexico, into $400,000 3,000 square foot brand new homes. There was no possible way for these buyers to keep the house , ever. Then many of these people bought two homes, when the price went up they cleaned out the equity to buy an Lincoln Navigators. It was hard to listen to them cry about predatory lending... One woman cried because she thought 2% increase in lending rate meant the payment went up 2%, then she went on to note that she owns 3 homes she is about to loose. Then there is ACORN who is till writing loans and we all know how they qualify lenders, claim them as dependants and get EIC credits. It's become a joke, no wonder the poor have no desire to work their way to the top when the government is tripping over itself to provide everything.

Oct 02 12:25 AM

[Lsente:]

The clip is f*cking priceless. I thought I was watching CSPAM...

Oct 02 02:01 AM

[fleeing omega:]

+1

On Oct 02 02:01 AM Lsente wrote:

> The clip is f*cking priceless. I thought I was watching CSPAM...

Oct 02 02:50 AM

[John Galt:]

> While I am all for a first world country (especially the richest country on Earth*) providing shelter even for its worst-off citizens, I don't really understand why being a renter has become a near crime in America.

Many would agree that providing for people with less than you is noble, but what about doing it at the point of a gun?

Why can't people keep more of their own money, and donate that money to causes they believe in like their church, their favorite non profits and causes they believe in...

INSTEAD of forcing people to pay insanely high taxes, and then fight over where that money goes... You might not want money being used to fight wars in Afganistan, I might not want my money going to people who can work but choose not to.

You want shelter for the poorest Americans... so they subsidize it... don't make everybody else pay for it backed by force.

Oct 02 08:43 AM

[TeresaE:]

We have been paying the poor to stay poor for decades. Clinton thought he made some good changes, like requiring those receiving subsidies to work, but like all good government programs it was destined to fail.

Now many of our poor don't get cash handouts, yet they get free rent, foodstamps, utility subsidies, college/vocational and for many, medical care.

The government HAS to know that these people are illegally making, and not declaring, some cash. No one can live without cash, or how do the poor buy toilet paper? put gas in cars? smoke?

Anyway, years and years of subsidies have created such stellar examples of human nature as Detroit, the south side of Chicago, Gary Indiana, to name but a few. The politicians have lined their pockets (and friends/families), the schools are worthless and the game continues on. Now the poverty is systemic and we not only discourage any attempt to lift your family out of poverty, we encourage and financially award those that make even worse choices.

As to America, well, this is not the first time in history an empire spent money it didn't have providing bread and circuses for those that contribute little, or nothing. Or spent money waging wars in other countries, neglecting their own borders and taxing the wealth generating base out of existence.

I'm sure this time, the magic that is modern economics will lead to a different outcome, after all, we are America

Just like lending money to future squatters in 2009, will turn out differently than did in every other year in history. I'm just sure of it. Why aren't you? [/sarcasm]

Oct 02 08:58 AM

[Hot Richard:]

When I read "Get Ready for $35 Billion More in Handouts", I thought "This will be nice. I'll ask for just $10 million personally." Then I realized I won't be getting any money. Big frowny face!!

Mark, you might want to read some Rothbard about how a state that extends its role to include providing housing (and many, many other services) leads to reduced liberty. You and I disagree on collectivism's value.

Oct 02 09:15 AM

[Hot Richard:]

And by "a state that provides housing" I mean "forcing people to pay for housing for others."

Oct 02 09:19 AM

[TripleG:]

My answer to Trader Mark, et al is.....
1) My Bible says that God commands us to help the poor and needy, yes even with an occasional freebie handout when they don't even deserve it. We have no choice in the matter.

2) Being a renter isn't such a bad thing. I sold my house in the Chicago burbs at the very peak of the housing craze and haven't bothered to dump 100K's into another one (yet, I'm still waiting on a market bottom). It was one of the best financial moves I ever made and I have "no worries".

Oct 02 09:41 AM

[John Galt:]

These home owners are/were glorafied renters anyway...

No money down, and the ability to walk away... How can you call that home ownership when you have no equity or ownership?

What does a "1st world country" have to do with anything... People in a first world country should be forced at gunpoint to give money to other people that live within their borders that don't have ...?

Look if you want to give your money to those people fine. Just don't try and change the laws to force others to have to as well. "Life, Liberty and Property", not the land of equal results.

If anything, I'd rather give my money to a hard working person in Africa/South East Asia that was unluckily born into the wrong system...

Oct 02 09:55 AM

[tripleblack:]

The only investment I bought and held during the recent troubles (I bailed completely to cash July 2008) was my home, where of course I LIVE.

I guess I DO view it as an investment, particularly since I bought it originally for $89k and its worth (even today) 5 times that much, but the fact is that I may never move from this location, so its probably going to be my ONLY 'buy and hold' investment down the pike.

I maintain a mortgage, mainly because I have been able to conduct my own tiny dollar carry trade with the money over the years.

So I would encourage others to emulate what I have done, it works if you have even a smidgen of self-discipline, but I am against that "encouragement" including the government taking my resources at the barrel of a gun and transferring my hard-won money to someone "less fortunate".

You cannot use government to redistribute wealth, in the end, you can only use government to destroy it. Government is also markedly inept at CREATING wealth, of course.

Human nature and collectivism do not mesh, and creating a highly artificial condition in which physical force is used to test the incompatibility just proves the axiom that those who do not learn from history are doomed to repeat it.

Oct 02 11:19 AM

[TeresaE:]

I do donate to charities that use the money wisely. Monthly, not just at Christmas. If I had more money, I would donate worldwide to trustworthy efforts. No where in the bible does it state that I should give my money, by threat of incarceration and property seizure, to an entity full of paid for life people that become rich on the blood of the working in this country. Tell me how it is that people making $170k and less become multimillionaires in Congress? Let them donate, they don't work full time anyway.

The point is that handouts rarely result in a leg up. They usually result in an individual that becomes entitled to do nothing and complain that it is not more.

I could tell you many stories of real life cases of welfare and the end results. Most people wouldn't be surprised to know that I have more examples of bitter people on lifelong entitlements, than I have success stories.

Point is, read our Constitution and the Federalist Papers and many accounts written about and/by our founding fathers.

Then tell me where it says I should have to work 50% of the year to pay all the bloodsucking governments I am beholden too.

Want to fix our problems? Quit asking for the government to take care of us and start demanding people figure out ways to take care of themselves. It would be a much better world than what we have now.


On Oct 02 09:41 AM TripleG wrote:

> My answer to Trader Mark, et al is.....
> 1) My Bible says that God commands us to help the poor and needy,
> yes even with an occasional freebie handout when they don't even
> deserve it. We have no choice in the matter.
>
> 2) Being a renter isn't such a bad thing. I sold my house in the
> Chicago burbs at the very peak of the housing craze and haven't bothered
> to dump 100K's into another one (yet, I'm still waiting on a market
> bottom). It was one of the best financial moves I ever made and
> I have "no worries".

Oct 03 01:02 AM

[58robbo:]

there is no need for public housing. there are towns in this country where perfectly liveable homes are being destroyed without the first thought as to how these homes might be used to deal with the growing homeless problem. all this to prop up the price of real estate instead of allowing the banks to fail. there is absolutely no difference between this policy and roosevelt's policy of destroying livestock and plowing over crops while millions had little to eat!


On Oct 01 06:26 PM The Geoffster wrote:

> Living as I do in a major American city, I see first hand the need
> for public housing, food stamps, welfare and other transfer payments
> to the poor. In fact, the need seems to increase proportionately
> to the demand. I don't have any charts to prove this, nor am I working
> up an article, but my eyes do not deceive me. My bias has always
> been toward the liberal view that conditions would improve for these
> poor souls if we could just provide them with the educational tools
> to advance beyond the gutter. Sadly, many of our multi-generational
> poor do not appear to have the makeup to succeed in a post modern
> society. More sadly still, I'm coming around to the notion that if
> you see a man in the gutter, he probably belongs there.
> Disclosure: SH

Oct 03 12:25 PM

[sethmcs:]

Who actually gets the handouts? The poor? Hardly, follow the money. Medicaid benefits hospitals and doctors. Rent subsidies benefit landlords. Food stamps benefit supermarkets etc.

Oct 03 06:18 PM

[TeresaE:]

Actually if you follow the dollar the money more benefits pharmaceutical companies (the single largest expense in "health care," the largest taxpayers and totally ignored) and local taxing entities, because rental units are taxed at higher commercial rates.

All dollars flow back to the tax man. All decisions flow back to that which will grow the government larger and continue feeding the beast.

You are on the right track, you just stopped at the "evil" we have been told is evil (the "rich" doctors and businessmen). Keep looking the real evil is the system, not those that bust their butts to try and claw their way out of the bottom.


On Oct 03 06:18 PM sethmcs wrote:

> Who actually gets the handouts? The poor? Hardly, follow the money.
> Medicaid benefits hospitals and doctors. Rent subsidies benefit landlords.
> Food stamps benefit supermarkets etc.

Oct 03 10:05 PM

[437339:]

Theresa E

You are correct ! When GW Bush passed medicaire D , The prices of drugs in America went up 17 % . Now , with Obamacare , NOTHING is being done to ;" limit " the OBSENE profits the drug firms + insurance " firms made in this country .Healthcare in Denmark , Brussels , Germany is state of the art . Obamacare mimics the God-awlful healthcare systems present in Canada + the UK . 90 % of the profits that drug companies make in in the US . Folks , what is WRONG with this picture ?

Oct 03 10:40 PM