Famed bond fund manager Bill Gross
Mr. Bill.
(But wait - that's not fair.)
"If we can bail out Chrysler, why can't we support the American homeowner?" Gross wrote in his monthly investment outlook on PIMCO's Web site.
And they still make Chrysler trucks, thanks to it, even while the company had bounced around and is now in the hands of some pagan outfit, I guess, called Cerberus (?).
With nearly 2 million homeowners at risk of losing their homes this year and with housing prices rapidly receding, Gross said President Bush, not the Federal Reserve, is the best hope for "almost homeless homeowners."
As Chant noted in a previous message, they can simply walk away from the debt. Surrender the house, and apparently all is forgiven, magically, save that they have that mark on their credit record. But should they build up that nest egg again, that 'bad credit' can quickly disappear - despite what people are told.
I think it bodes well for investment in rental property. And perhaps there will be a rise in rental prices. It also presents a buying opportunity to those able to profit from a bust on the promise that the property is valuable, or that they can purchase so low that even in a falling market they can still 'turnaround' for a few dollars.
But people, all, would prefer such folks could keep the house, and renegotiate for better - or original - terms. The ARM is a contract with constantly changing terms. Fixed rate is all that should be available to the poor. ARM should have always been seen as a premium instrument, for the wealthy. Of course, people would have complained - how come the rich get such . . .? Well, this is why.
While the central bank has been reluctant to do so, Gross warned that such a move would not necessarily guarantee that adjustable-rate mortgages would not keep climbing
It's an instrument, a contract. It has no life or intentionality of its own, Bill. Where usury has one sense of any interest, generally it's meant excessive interest. When these rates changed, they went from ethical loans, to usury.
There's a way to stop usury, Bill - simply don't raise the rates. Renegotiate the contract. If the borrower could pay the lesser rate, then that's what the borrower pays. It would essentially mean new fixed loans to replace the ARMs. In olden days, there even used to be something called a, moratorium. But then - government - Bill's great 'white knight' - most likely is the crippling cause for such grief. Because it is - government - I would guess, at all levels, that over-regulates financial businesses and probably, by forms, and notes, and copies in triplicate, would disallow such renegotiation by making it otherwise difficult by a hosts of rules and forms, and fees.
Take the government out of it, maybe you don't have quite the crisis.
Home prices have also been hard hit recently, falling 1.5 percent during the second quarter, according to the National Association of Realtors. While falling home prices "might be healthy", the decline could represent an asset depreciation not seen since the Great Depression, warned Gross.
Maybe Bill would prefer that the government bail out Apple or Microsoft, when its stock 'depreciates' on market trading. It's like the Soviet citizen, today, when asked about this problem or that - well, I think the government is going to . . . Perhaps Bill wanted all those small towns bailed out when the population moved to the city. Bill wanted, perhaps, all the local city governments funded so that old towns wouldn't become ghost towns. If government had simply subsidized the 'oakies', no great emigration to the west. And how much does Bill think the government should be subsidizing all these various folks over the decades? Or does he not see that he is asking for just that?
If Chrysler was bailed out, might GM be next? But would Microsoft ever be? What about some high-flying wireless company that can no longer charge the exorbitant rates for easy money? What about the next huge fund that gambled and lost? And so on.
Government as quick fix. Might it even be political? Might Bill be promoting for Democrats, as a Democrat? No one says, here. What compassion - instant subsidy payments to home-owners who have missed more than two or three payments? The ranch is saved - thanks to government, thanks to government subsidy, just as the Democrats have always said? Could it be that Bill is a politico?
Maybe Bill should look less to the government and promote less government, instead. If lenders and borrowers can work it out, and salvage what had become usurous loans, then let the government stand out of the way of that. There's a role for regulation. But if the government allowed the 'market' to operate as a medicine show, then it certainly needs to step aside for a market to genuinely address the present imbalance.
Gross made a handful of policy recommendations for the White House, including creating an agency to coordinate bailouts or aid for homeowners and making adjustments in the government's Federal Housing Authority program.
Mr. Bill, indeed.
"Your stocks and risk-oriented levered investments will spring to life like the wild flowers in Death Valley after a flash flood," Gross wrote.
While all would prefer to see people who can pay, pay on original terms, or renegotiate according to their budget, government could very well be the obstacle. Less government, not even more 'coordinating agencies'.
Topic: Ridiculous! (Read 495 times)