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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Archive for February 14th, 2011

Obama mortgage reform proposal

Posted by WARREN MOSLER on 14th February 2011

If this is actually the jist of the proposals they make no sense to me.
For me the starting point is the question,
‘Is there public purpose supporting home ownership for lower income earners?’

Under current institutional arrangements, I’d say yes, and come up with an entirely different set of proposals, as I did
a while back for my website.

As is, looks to me like an obstacle to higher levels of output and employment.

Mortgage Costs to Rise As Government Lessens Role

February 11 (AP) — The Obama administration laid out three broad options Friday for reducing the government’s role in the mortgage market. All three would almost certainly lead to higher interest rates and costs for borrowers.

The administration said in a report that the government should withdraw its support for the mortgage market slowly, over five years or more. The report describes a path for winding down the troubled mortgage giants Fannie Mae and Freddie Mac.

But rather than making a single recommendation, the administration offered Congress three scenarios and will let lawmakers shape the final policy.

The options are:

— No government role, except for existing agencies like the Federal Housing Administration.

— A government guarantee of private mortgages triggered only when the market is in trouble.

— Government insurance for a targeted range of mortgage investments that already are guaranteed by private insurers. The government guarantee would kick in only if those private companies couldn’t pay.

Posted in Housing, Obama | 27 Comments »

recaption of the day

Posted by WARREN MOSLER on 14th February 2011

Gandhi disagreeing with Nehru on how low the unemployment rate can go without generating inflation.

Posted in Employment, Inflation | 17 Comments »