Am I the only one who finds it a bit ironic that Democrats, never ones to miss an opportunity to exploit envy of the wealthy, are pushing for a bailout of the jumbo mortgage market?
Jumbo loans are the ones too big to qualify for backing by Fannie Mae and Freddie Mac; the current limit is $417,000. So what gives?
Federal regulators appear to be shifting tack following intensified criticism from Democrats on Capitol Hill over their handling of the mortgage crisis.
Ben Bernanke, chairman of the US Federal Reserve, indicated government-backed lenders could play a limited role in alleviating stress in the so-called jumbo mortgage market.
The Office of Federal Housing Enterprise and Oversight also provided increased flexibility to Fannie Mae and Freddie Mac to provide “greater assistance to subprime borrowers and others who may have difficulty refinancing their existing mortgages in the current environment”.
Senator Charles Schumer told the Financial Times that pressure from Democrats was “finally starting to stir the administration from its slumber. We seem to be getting through”.
All I can think is that some of the most outrageously bubble-liscious housing markets, where the middle class has taken on $417k-plus mortgages just to get fairly modest living quarters, happen to be in blue states — California, New York, Massachusetts, etc.
We might get a better idea of where this is all going today when Bernanke and Hank Paulson testify before the House Financial Services Committee about the subprime meltdown — assuming the congresscritters aren't too preoccupied with grandstanding and exhibiting their cluelessness about basic economics. (At least Ron Paul is on the committee to offer some clarity and fresh air.)
In other news… I suspect the Chinese don't have this capitalism thing figured out as well as perhaps we thought:
China is to enforce a freeze on all government-controlled prices in a sign of Beijing’s alarm about rising popular anger over inflation, now at its highest rate in more than a decade.
The order freezes a vast array of prices still under the control of government in China, ranging from oil, electricity and water to the cost of parking and park entrance fees.
The order, issued jointly by six ministries on Wednesday, comes after a vaguely worded announcement on the need to prevent price rises by the State Council, or cabinet.
“Any unauthorised price rises are strictly forbidden . . . and in principle there will be no new price-raising measures this year,” the ministries said. Events since the initial State Council announcement that inflation in August hit an 11-year high of 6.5 per cent appear to have galvanised the bureaucracy into a tougher stance.
Hello? Price controls = shortages. Obviously the State Council hasn't paid attention to what's been going on in Zimbabwe:
Zimbabwe's annual inflation rate slowed in August to 6,592.8% from July's record of 7,634.8%, according to the Central Statistical Office (CSO).
The slowdown came in the midst of a price-control programme imposed by President Robert Mugabe in June.
Businesses were ordered to cut or freeze prices for items such as bread and milk.
But critics say the measures have just deepened the chronic food shortages suffered by Zimbabweans.
Gee, ya think?