Ecobabble in full bloom
This article tells us right from the get go with its title that its going to be a biased hit piece. Ecobabble? Are they talking Greenpeace or the economy?
as the Federal Reserve's open mouth committee earnestly spread the message, in big city and rural hamlet alike: There's no credit crisis. So why, we wondered, is gold bolting above $700 an ounce? And why, as Joan McCullough of East Shore Partners put it in her Friday dispatch, did "the central banks of the world pump their brains out yesterday," including the beloved Fed, to the tune of $31.25 billion?
The feds have been behind the curve but even they know there is a credict crisis. As for the $31 billion pumped out.......its the XMAS shopping season....the world banks in XMAS countries always flood the markets with liquidity during this time period. But for someone who doesn't know that factoid, $31 billion might seem to be a very scary number.
It's a question as old as philosophy: Is there a crisis if no one sees it? The answer is a most unphilosophic -- you bet! And a credit crisis is what we've got. As it happens, it's just the nation's monetary managers who are blind to it; any number of folks see it quite clearly, including, oddly, a bunch of solons in Washington. The problem then becomes a wholly different animal: What are they planning to do about it?
What is this BS. No one has denied there is a crisis. There is a big crisis that could get bigger if the responsible entities do not react.
The wrong thing, of course.
Wow. No surprise here......look no further than the title.
As we suggested last week, there is a rush to clamber on board the bailout bandwagon. The thinking is exquisitely Washingtonian: The credit crisis, upward spiraling delinquencies and foreclosures in tow, was caused by a surfeit of bad loans. So it obviously follows that the proposed solution is a flood of worse loans.
Huh? First the thinking is Wall Street......Paulson is the former head of Goldman Sachs, the most successful broker on the Street. Secondly, its not creating a flood of new loans; its the same bad loans being made more viable.
Apart from its sheer inanity, the notion that people who are in serious trouble because of outright improvidence or suddenly reduced circumstances or simple bad luck -- but, in any case, because they can't meet their mortgage obligations -- will somehow be hunky-dory if payments were only slightly less onerous, faces a few other impediments.
Obviously, the author is choosing to duck the issue. The problem is the homeowners were fine as long as rates were at their teaser rate. Its the reset to a much higher rate that is creating the problem. Keeping rates at the teaser level for 5 years will allow the homeowner more time to improve their income or allow their property to improve in value so they can refi or sell at a profit.
Most of these "rescue" schemes put the onus for making the adjustments to the mortgages on the lenders;
Where it should be......after all, if there is an identifiable culprit who is still on the hook, it's the lenders.
presumably somewhere behind the curtain will lurk the government as a kind of co-signer. It sounds to us like a perfect prescription to scare the lenders silly and choke off a recovery in the mortgage market for a decade or so.
Not if the lenders tighten up their lending requirements and stop providing loans to people with poor incomes and/or credit ratings.
There's also another little problem. As the always astute Stephanie Pomboy of MacroMavens asks rhetorically, "How do you get a lender to renegotiate a mortgage when you don't know who the lender is?"
Enough.......this article is so poorly written with such an incredible bias, its not worth continuing to refute its silly points.
Why are you such a bear on this issue? Because 'your book' is about investing in gold? |
