MSNBC Breaking News: Paulson says homes crisis presents 'significant risk' to economy

[brooklynite]

Source: MSNBC

WASHINGTON - Treasury Secretary Henry Paulson called Tuesday for an aggressive response to deal with an unfolding housing crisis that he said presents a significant risk to the economy.

In the administration’s most detailed reaction to the steepest housing slump in 16 years, Paulson said that government and the financial industry should provide immediate help for homeowners trying to refinance current mortgages before they reset at much higher rates.

He also called for an overhaul of laws and regulations governing mortgage lending to halt abusive practices that contributed to the current crisis.


Read more: http://www.msnbc.msn.com/id/21322471/

---

Good thing his message is in sync with the President...

[tandot]

1. Another one to be filed under "no shit, Sherlock"

"an unfolding housing crisis that he said presents a significant risk to the economy."

I guess the whole Bush administration was totally surprised by that: "no one could have imagined...blah...blah...blah..."

[David Zephyr]

2. The Federal Bank needs to make another cut this month.

Oil is up and I doubt that the Fed will make another cut, but Paulson is correct.

[depakid]

3. Yikes!

If he does that the bottom may well really fall out from under the US dollar. :scared:

[Andy Canuck]

5. Your right,

the US economy is in a horrible spot. If interest rates are lowered than incentive to invest in the US dollar is lessened. The US dollar is bought because it gets a strong return based on the interest rate. Other nations are not in the same crisis as the US and for the first time in my living memory, the US interest rate is going down while other nation's are steady. The Canadian prime rate has always been pegged about a percentage point higher than the US rate in order to attract investors, but the US always received more investment, because the greenback was considered intrinsically more valuable. That isn't the case any longer, so as interest rates in the US go down, other nations will buy different currency to invest in. On the other hand if you keep interest rates the same, then millions of people are going to be out of their homes and the housing market is going to freefall. Sadly it is a double bind, either decision leads to the same bad result.

The Double Bind presidency.

[spotbird]

20. If he does, it's

because he wants the bottom to fall out from under the dollar.

The question is how an ordinary schmuck protects himself from this kind of malfeasance.

[acmavm]

4. No, this was just the final straw. The bush** administration and

our legacy from little Billy Clinton (NAFTA/CAFTA) fucked our economy.

[OzarkDem]

7. WTF? Clinton wrecked the housing market?

I won't even dignify that with a discussion. Do some research, ok?

[Acadia Blue]

9. Really. Thats such a stretch. Everyone else did it but them.

[depakid]

18. Actually, you might want to dig a little deeper

Housing, per se is the tip of the iceberg.

See: The Long Demise of Glass-Steagall

http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html

You might find yourself going...hmmmm.

[RUMMYisFROSTED]

24. Hmmmmm.

Hmmmmm*.



*The gilded hmmmmm. Thanks for link, interesting.

[fed-up]

11. I believe it was mid 1990's when capital gains tax from sale of 1st $250K homes was eliminated

this encouraged people to start "flipping houses" and they became more of an investment vehicle instead of a "home"

then in came the predatory lenders and ....

[acmavm]

13. Don't be stupid. I meant that economy started tanking right after

Billy Boy left office. He came in on the dot.com bubble and left as it was bursting. And in the meantime he left us a legacy all right. All the good that used to be manufactured here are now made anyplace else but here. And THAT is Billy Bob's legacy. The housing crash (caused by a lot of really crooked behavior and greed) is just the straw that might break the proverbial camel's back.

Try to think beyond the obvious next time so I don't have to spend so much time helping you out.

[subsuelo]

27. hi acmavm

you mention the crooked behavior and greed... do you have any specific articles or sites you can point to for more reference? I just want to learn more, not challenge you on the point thanks

[KingFlorez]

6. Duh

They are just now figuring this out? This is practically common knowledge already.

[cornermouse]

12. shhhhh.

Don't bother them. They're finally thinking.

[Demeter]

8. Okay, Who Woke Up the Treasury Secretary?

Go back to sleep Henry, short of pitching a coup, there's nothing you can do about it anyway.

Like Bush is really going to stand for regulation, and deprive his "base" (the haves and the have mores, remember them?) of one penny of their ill-gotten gains!

[Acadia Blue]

10. His middle class and working class are too stupid to realize

that he has taken them for a ride south. Dummies. Stupid dummies

[Broadslidin]

14. Influenced by Blatant Bribery, Our fetid two political party system terminates Glass-Steagal

Trash Canning the Grass-Steagal Banking Act of 1933,

brings out once again,
the Real greed driven U.S. bank practice
of premeditated financial deceptive policies.

Let the conned lil twit customer be damned.

After all,
J.P. Morgan Chase Private Bank Big Money Accounts
conveniently stashed in St. Thomas; V.I.
are highly protected by the
U.S. Imperial Federal Government.

Personally,
with the Fatherland dripping in Imperial Blood,
this self absorbed U.S. can go to __:evilgrin:__ ...!

[hatrack]

15. "Breaking News"?!?

:wtf:

[brooklynite]

16. Was when I posted it...

[hatrack]

19. Oh, no, not you Brooklynite - I mean, where has this guy BEEN for the past 2 years?

:toast:

[JPZenger]

17. Decrease in Housing Prices is Good

The sharp increase in housing prices in California, Florida and many other places was unsustainable. The incomes were not high enough to support those prices. The only way people were able to afford the escalating prices was because of "innovative mortgages" such as mortgages with teazer rates or ones in which you only paid interest.

The fact that prices have come back down to circa 2005 levels in boom areas is a good thing. We need housing prices that are based upon an actual ability to pay.

This could have been worse. Congressman Bob Ney (R-Federal Prison) tried to get a "reform" bill passed. It had some very weak regulations upon the mortgage industry - but would have overturned any State laws that were stricter. Fortunately, he didn't get a chance to get his bill passed.

[End Of The Road]

21. Thanks for the best laugh...

I've had all day -- re: "R-Federal Prison"! That's the state about half of our elected officials should reside in.

[mrdmk]

22. Like the Bush Jr. Administration was going to do any about the Housing Market

For the past five years, the economy was considered doing well because of New Housing Sales. Bush pro ported that more people own houses than anytime in history. Besides the rich getting richer, the GNP is based on New Housing Sales, also the jobs and the financing that are produced by this market. Of course the housing market makes up about 1/2% of our GNP, but that the difference between 2.25% GNP growth rate and 1.75% GNP or less growth rate. The Bush Jr. Administration knew about this Bubble years ago as many people did who were predicting the housing market collapse. The problem is, for political reasons the Bush Jr. Administration let the housing market go to the point where the U.S. economy is now up shit creek without a paddle.

[aquart]

23. Yeah, but TV news assures me there's no reason to panic.

Everything will be just fine.

Because our economy is grrrreat.

[CountAllVotes]

25. no sh*t

I heard there are 40,000 homes in Las Vegas that were recently built. No buyers though. To add to that, they have another 30,000 being foreclosed. That adds up to 70,000+ homes with no one living in them.

I have a grand idea. Why don't we take all of the people living in those toxic FEMA trailers and let them have one of these empty homes to live in. An occupied home is always worth more than one that is not occupied.

A deal could be worked out with the occupants. YES, it could happen and it could work.

However, greed rules this sick society we live in so perhaps my "grand idea" isn't worth two hoots in hell.

*hoot hoot*

:kick:

[Zenlitened]

26. Right on schedule. And in another 6-8 months...

... he'll admit to what's obvious RIGHT NOW:

This is not merely a "housing crisis." It's a fake money crisis.

Bank fund aims to gird debt market

By Walter Hamilton, Los Angeles Times Staff Writer
October 16, 2007

NEW YORK -- Three major U.S. banks unveiled plans Monday for an $80-billion fund to buy bonds whose values have plummeted in the wake of the credit crunch induced by the sub-prime mortgage meltdown.

(snip)

The complex financing vehicle being created would serve as a buyer of last resort for troubled bonds held by other complex entities -- known as structured investment vehicles -- that are affiliated with and managed by Citigroup and other banks.

Such bank-controlled vehicles issue short-term loans called commercial paper and use the proceeds to buy their portfolios of longer-term, higher-yielding assets -- often securities backed by mortgages or other assets.

But the credit crunch did serious damage to the market for commercial paper, and it remains difficult to sell such debt.

More:
http://www.latimes.com/business/investing/la-fi-banks16oct16,1,6348061.story?coll=la-headlines-business-invest

Translation: Too many people woke up one day and realized that the derivatives of derivatives of derivatives they all owned were just about worthless. Like a warehouse-full of ground beef dosed with e. coli from just one cow, the subprime loans contaminated the whole thing. And fast.

Now this whole, elaborate rescue plan basically amounts to everyone agreeing to pretend their little pieces of paper are still worth something. "It's worth $10 billion because we all SAY it's worth $10 billion." :eyes:

[cliss]

28. Red Hot news flash of the day:

The economy will probably collapse over the Sub Prime mortgage issue. And there's not a damn thing Sec. Paulson can do about it. There's not a damn thing the Fed can do about it. They can lower rates, and that will just speed up our demise.

FACT
The U.S. Titanic has struck an ice berg. We struck ice in August of 2007. That's when the first water started pouring in. Ever since then, we've been slowly sinking. They all know it. All the bankers around know there isn't a damn thing they can do about it, except watch the ship sink. The amount is so enormous, they can't bail out the damage.

US subprime mortgages are going to keep resetting at new interest rates, for the next few months. March of 2008 will be the worst. Something like $110 billion dollars worth of mortgages will be reset it will cause the economy to crater.

Too late.