Obama want to reform Fannie and Freddie. There are a few options on the table, but Little Red Riding Hood does not think the porridge in any of the bowls is quite right.
Please consider White House wants less government in mortgage system
The Obama administration wants to shrink the government's role in the mortgage system -- a proposal that would remake decades of federal policy aimed at getting Americans to buy homes and would probably make home loans more expensive across the board.The correct option is to get rid of Fannie, Freddie, the FHA and HUD. The government should not provide any backstop or any guarantees at any time. Unfortunately that option was not on the table.
The Treasury Department rolled out a plan Friday to slowly dissolve Fannie Mae and Freddie Mac, the government-sponsored programs that bought up mortgages to encourage more lending and required bailouts during the 2008 financial crisis.
The first option proposed by the administration would give the government no role beyond helping poorer and middle-class borrowers through agencies like the Federal Housing Administration, which provides insurance on mortgage loans.
The second and third options would give the government a role as an insurer of mortgages, and each would prompt mortgage companies to pass along fees to borrowers.
Under one, the government would step in to guarantee private mortgages during a severe economic downturn, such as another housing slump, but would provide limited support during normal times.
The third option would be more complex. The government would insure a targeted range of mortgage investments that already are guaranteed by private insurers -- serving as a "reinsurance" broker to those financing companies. In the event the private insurers couldn't pay the owners of the mortgage investments, the government insurance would pay.
The third option would leave the government with the largest role and probably have the smallest impact on mortgage rates. While lenders would have to pay fees, which would ordinarily drive rates higher, the government guarantees would also make mortgages a safer investment. That would attract more private money and hold rates down.
Some are concerned that private lending may dry up. If it did, so what? The government has no business promoting housing or taking on risks best suited for private markets.
Here's the deal: If lenders knew there was no government guarantees, they would not make as many stupid loans. If they don't make stupid loans, there is far less risk that lending freezes up in the first place.
Moreover, if somehow the lenders do go broke as a consequence of making poor loans, bondholders and shareholders will pay the price, not taxpayers. Pray tell, what is wrong with that?
Cheering the Demise of 30-Year Mortgages
In a free market, we may very well not see many 30-year loans issued. Why would any lending institute want to lend for 30 years at an interest rate of 5% anyway?
We might even see new products like 8-year, 10-year, or 12-year loans. Such loans would help ensure equity paybacks quickly, reducing risk for everyone on both sides of the transaction. If that forces people to buy a smaller house, so be it.
A home should be an affordable place to live, not a debt-trap or method of leveraged financial speculation for 30 years.
Borrowing short and lending long for 30-years (while attempting to hedge in between) is a recipe for disaster. Fannie and Freddie have already gotten into serious trouble over it. If that practice stops, we will all be the better for it. Thus, we should all cheer the demise of 30-year loans.
If we would just get government totally out of the way, housing will recover a lot quicker, with home prices far more stable, than with government guarantees or half-assed measures. It's time we remove the government crutch completely. For more on this line of thinking, please see Mortgage Rates Hit 1-Year High; NAR Whines for Government (Taxpayer) Support of Fannie, Freddie; "*" the NAR
We have tried everything else, and everything else failed, so why not try the free market for a change.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Babies are big business. Nobody wants to be a bad parent, so there is great pressure to be sure you have not just the essentials, but the best essentials for your new baby. If you're a first-time parent, you have no experience to guide you. The helpful salesperson at the local Baby-Mega-Super-Store will be more than happy to provide you with a mile-long list of what, you're assured, are really and truly the essentials.
Well, I'm here to tell you different.
My fourth child is scheduled to make her appearance in just a couple of months. My oldest child is not yet five years old. For the last several years of my life, I've been a card-carrying, dues-paid, full-fledged member of the baby club. Many of those "essentials" you see for sale just turn into extraneous stuff that you have to keep cleaning, moving, and, at times, paying for. Save yourself some money and space, and stock up only on what you'll actually use. Here's my list of needs. (See also: Which Baby Products Are a Waste of Money?)
A Place to Sleep
A decent crib, a good mattress, and enough bedding to keep baby comfortable are essential. You don't, however, have to buy a crib new to get a good one. Search your local classifieds for a used crib; just make sure you get one that isn't more than five years old. It should be sturdy, with small spaces between the slats and all hardware intact. Most cribs that have been made within the last five years convert easily into toddler beds.
Salespeople at the Big Baby Box Store will scare you with talk of scoliosis and try to get you to buy the premium mattress for your crib. I bought the mid-grade; it's obviously firmer and nicer than the cheapest option, but it's also as firm and nice as I need it to be for peace of mind.
As far as what to put on the mattress, keep it simple. Bumper pads are not necessary and can even be a suffocation hazard. Same goes for big, fluffy comforters, pillows, stuffed animals, or piles of blankets. For the first six months or so, you'll want to have a mattress cover, five crib sheets (frequent spit-ups and diaper incidents make extras really nice to have around), and a couple of lightweight blankets. When the weather is cool, dress baby warmly so she won't get cold during nap time and night time.
A Place to Play
For the first several months of your baby's life, mobility won't be an option for him. This means, basically, that you can plop him down on a blanket, and he's not going anywhere. This also means that baby doesn't really need a swing, a bouncer, a play center, a play pen, a walker, a baby papasan, or any of the other play area options out there.
The caveat on this is when your baby does start to get mobile. Rolling, scooting, and then crawling will introduce a whole new world of possibilities. At that point, it's nice to have one or two confined play areas handy, so you can keep your baby entertained and safe while you need to do something else. But you don't need all the options.
Before you buy, test out what your friends have; go have a play date and put your baby in your friend's swing. If he's screaming in five minutes, don't spend $100 on a swing. If he's happy, it might be worth the investment. I've had the best response from my children with a very basic baby swing, a little reclined baby seat, and a Pack 'n Play that serves as a confined play area and can be moved to any room of the house, the yard, a friend's house, or Nana's house.
A Way to Travel
A safe car seat and a sturdy stroller are investments worth making for your new baby. You'll get the best deal on new items by purchasing a car seat/stroller combination; those will start at about $150 new and go up from there. The same advice applies to car seats and strollers as to cribs. If you're purchasing used, make sure the car seat/stroller isn't over five years old, and inspect it thoroughly to be sure it's in good condition.
The only other "travel" item I've used over the years is a front-pack baby carrier. I got a good brand, and it's lasted through heavy use with three babies. These seem to be mainly a matter of personal preference, however; if you can't picture yourself walking around with a baby strapped to your chest, don't buy one.
Clothes
Brand-new babies, prone to random bouts of spitting up and explosive diapers, can go through quite a few outfits in a day. Stock up on essentials that are comfortable for your baby and easy to get on and off: ruffles, ribbons, bows, zippers, buttons, and extra clothing "decor" tend to make the dressing process complicated and long (not fun when your baby is screaming), and, generally, the more "stuff" on an outfit, the less comfortable your baby will be in it.
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AOL Bolsters Local <b>News</b> Investment With Acquisition of Outside.in <b>...</b>
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Psychologist shows why we “choke” under pressure – and how to <b>...</b>
U.S. News & World Report – September 21, 2010. The Dwarfs were right! Whistling while you work makes you do your job better. Daily Mail – September 22, 2010. Psychologist studies sports 'choke'. United Press International – September 21 ...
Robert Reich: The Real <b>News</b> on Jobs
On our current trajectory, the unemployment rate will continue to decline. But so will the pay and benefits of most Americans. The real story isn't about jobs, it's about the ever decreasing standard of living for the middle class.
bench craft company
AOL Bolsters Local <b>News</b> Investment With Acquisition of Outside.in <b>...</b>
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Psychologist shows why we “choke” under pressure – and how to <b>...</b>
U.S. News & World Report – September 21, 2010. The Dwarfs were right! Whistling while you work makes you do your job better. Daily Mail – September 22, 2010. Psychologist studies sports 'choke'. United Press International – September 21 ...
Robert Reich: The Real <b>News</b> on Jobs
On our current trajectory, the unemployment rate will continue to decline. But so will the pay and benefits of most Americans. The real story isn't about jobs, it's about the ever decreasing standard of living for the middle class.
bench craft company
AOL Bolsters Local <b>News</b> Investment With Acquisition of Outside.in <b>...</b>
AOL has acquired local news aggregator Outside.in, according to multiple reports.
Psychologist shows why we “choke” under pressure – and how to <b>...</b>
U.S. News & World Report – September 21, 2010. The Dwarfs were right! Whistling while you work makes you do your job better. Daily Mail – September 22, 2010. Psychologist studies sports 'choke'. United Press International – September 21 ...
Robert Reich: The Real <b>News</b> on Jobs
On our current trajectory, the unemployment rate will continue to decline. But so will the pay and benefits of most Americans. The real story isn't about jobs, it's about the ever decreasing standard of living for the middle class.
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