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Housing industry to join the bailout line

November 25, 2008 by  

Industries fight for government fundsFirst, it was the financial industry requesting federal funds. Next, automakers said they needed a bailout, too. And now, the housing sector is apparently gearing up to ask the government for a $250 billion rescue package.

House-builders are lobbying for a Fix Housing First stimulus, including a 10 percent tax credit for homebuyers and a federal subsidy to lower mortgage rates, the Wall Street Journal reports.

The sector claims that action is needed to prevent the country from falling into a cycle in which declining home prices negatively affect banks that hold mortgage-backed securities, which in turn depresses the economy further.

However, some critics argue that the plan favors encouraging new home purchase, instead of modifying existing loans held by homeowners.

They raise concerns about the danger of artificially inflating the housing market, creating demand that does not exist.

"The government does not have the tools to rewrite the laws of supply and demand. By artificially increasing prices, we are encouraging more building," Harvard economist Edward Glaeser told the news provider.

It is still uncertain how Capitol Hill would respond to the homebuilder’s request. Congress recently denied funds to automakers, saying that companies needed to present a viable plan before they could receive taxpayers’ money.
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  • Wiley

    Here we go again!! The way the FED will be printing money to fund all these bailouts may end up to be a good thing.  Look at it this way.  There’s a glut of cars on the market because people can’t afford to buy them because they are losing their jobs, homes, etc..  New cars are sitting in lots going nowhere.  There’s a glut of banks out there because they made so many foolish loans to customers who don’t have the money to pay back the loans.  Banks are failing.  Now we have a glut of homes.  Used homes have been forclosed on, and the housing industry wants to continue building new homes.  People who were forclosed on are now renting for less than their house payments and they don’t have to pay for the upkeep.

    So, maybe if the FED keeps printing money, there will be a glut of worthless paper out there and the FED will have to rely on the government to bail them out.  They could end up goint out of business, failing like many other banks in the country.  You did know the Federal Reserve Bank is a privat corporation didn’t you?  The treasury department just contracts them to print money for the government.  I’ll bet we could outsource  the money printing to China and save a bundle! 

    I have an idea!  I’ll open up a hotdog stand and call it the Federal Hotdog Reserve Bank.  I could bail out the FED with hotdogs.  They wouldn’t have to buy fuel for their grills. They could fire up their grills with their new worthless money.  Well, that’s probably not a good idea.  They have enough hotdogs running the FED as it is.  They might make a mistake and throw big Ben on the grill.  Even a hotdog is worth more money than the fiat bills printed by the FED.  

    Let’s see now,  how many hotdogs will a new house cost? (Anyone remember the phrase, “Not worth a continental”?)

  • http://hotmail Andy

    I THINK MOST OF THAT MONEY SHOULD BE GIVEN TO PEOPLE # 1 THAT’S WHERE IT CAME FROM IN THE FIRST PLACE, # 2 IT IS POSSIBLE THAT WHEN THEY PAY OFF THEIR MORTGAGE,
    AND CREDIT CARD BILLS, DO SOME PURCHASES WITH THE MONEY WE MIGHT EVEN SEE A BIT OF ECONOMY UPSWING. OH SURE SOME PEOPLE MAY DO SOME DRINKING WITH THE MONEY,
    BUT I THINK AMERICANS ARE CLOSE TO LEARN THEIR LISTEN AND DO GOOD WITH THE OPPORTUNITY . OFCORCE THE BIG BOYS,AND THE BANKS WOULD  HAVE TO LIVE WITHOUT ALL THE INTERESTS THEY USUALLY GET RICH ON, BUT HEY THERE ARE MILLION OTHER PLACES THEY WOULD STILL GET THAT. NO GOVERNMENT WILL EVER SURVIVE WITHOUT PEOPLE, BUT TROUGH INCENTIVES THE PEOPLE NEED TO WANT TO WORK WITH THEM.
    ……………………………………………………………………………………………………………………..Andy

  • TeresaE

    Doesn’t anyone else notice that our government is picking and choosing the industry winners/losers?  Banks-big yes, big checks, manufacturing-big screw you, we’ll see with housing & airlines.

    Michigan has been doing this for the last 5 years.  It hasn’t worked out too well.  Doubt it will work out better on a federal level.

    While the government prints money (which will eventually send us into a whole new horror-hyperinflation) to save the true powers in this country, they KNOW that thousands of small businesses will fold if one of the Big 3 file bankruptcy.  That means MILLIONS more job losses in an industry that has been in a depression for the past 2-3 years.

    I’m sick of this, “financial services/high tech” jobs BS.  50% of our population is not CAPABLE.  So, just how the hell are the rest of us supposed to support 50% of the population with no ability to earn a living?

    And, if our country continues down this disasterous path, that is EXACTLY what will happen.

    Happy days.

  • Bob Livingston

    This is completely ridiculous. Their claim… “that action is needed to prevent the country from falling into a cycle in which declining home prices negatively affect banks that hold mortgage-backed securities, which in turn depresses the economy further” is and has already happened! This is a big part of the current problem. It’s too late to ‘prevent’ this! Bob.

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