Brace for Impact: Team TOTUS comes out for extension of homebuyer tax credit

Update: Marty Feldstein agrees with MiM on the GDP and double dip  (too bad he endorsed Obama and later let himself be used as a tool like Volcker)

Third-quarter growth “was boosted by the various fiscal stimulus policies,” Harvard University professor Martin Feldstein said in an e-mail. “The danger remains of a serious slowdown after this and a possible double dip” of the economy in 2010, he said.

*Montage by Delta1111111

In an apparent  reversal of  sentiment from that expressed by HUD chief Shaun Donovan in his testimony to Congress just weeks ago when he said it was very expensive, the WH is endorsing the extension of the homebuyer tax credit (details at end of post).

IMO this policy reversal, combined with TOTUS’ failure to laud the GDP data today (he merely commented that he is not satisfied as Americans need work) can mean only one thing.

The internal economic projections of the WH team led by Romer rolling stimulus expectations waaaay back last week, are WAY WAY WORSE than expected. They see the double dip coming and are trying to get in front of it with more stimulus spending in an extended homebuyer tax credit which will do what clunkers did,  cannibalize future sales and leave a wider gap in the future with additional deficits.

So MiM’s forecast for artificial GDP bumps in 3Q and 4Q  ’09 may need to be extended into 1Q 2Q 2010 if they are going to keep throwing money at anything that will give a temporary boost to GDP. Of course the coming tax hikes they are building into the system with the deficit they are growing will CRUSH our economy for years to come but that seems to be beyond their timeline, and thus not their concern.

Clearly the goal is political with everything they do, I guess that comes from Rahm. But that being said, I would expect they are playing dice hoping to keep GDP artificially high going into 2010 Congressional mid terms.

Of course since it is not organic GDP growth jobs are not coming with it so I don’t see the payoff in this policy unless they think Americans will look at stock markets and GDP and feel happy despite being unemployed and foreclosed upon? DOW right now, 3:14 pm up 200. It is high on sugar and our economy is a diabetic on dialysis over here! Today is the anniversary of the 29 collapse btw…there was a HUGE rally after that followed by the utter collapse of the economy as a CNBC guest notes now…HA he said sugar high! I said that! I will add this video when CNBC posts it 🙂

Question is, can they pull off this GDP stimulus spending for that long while simultaneously driving down the dollar without a total collapse of our economy from the CRUSHING deficit? We shouldn’t have to even pose that question. This is like giving the car keys to a raging alcoholic after an open bar at their ex’s wedding.

Doubling down on bad medicine.  I am past girding, I am bracing for impact (sadly no Sully at the wheel, we have Pelosi and Reid)..

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Original Post: In an apparent  reversal of  sentiment from that expressed by HUD chief Shaun Donovan in his testimony to Congress just weeks ago when he said it was very expensive, the WH is endorsing the extension of the homebuyer tax credit:

The nation’s top housing official expressed doubt over the need to extend the $8,000 tax credit for first-time home buyers, and said that the Obama administration was reviewing whether the additional cost of extending the credit was worth any benefit in home sales.

Shaun Donovan, the secretary of the Department of Housing and Urban Development, told a Senate hearing on Tuesday that there was “clear evidence” that the tax credit had benefited the housing market. But he said that the “real issue” in considering an extension was whether an extension was worth the cost to the government in lost tax revenue.

The actual cost of the credit won’t be known “until Americans have filed their tax returns,” he said. “And so, we feel it’s very important within the administration that we gather as much data as we possible can in advance of that before we make a final decision.”

This was just 2 weeks ago folks!

Mr. Donovan said that he understood that the impending expiration of the tax credit meant that the administration needed to make a decision soon so that the market could plan accordingly. Mr. Donovan said he didn’t believe a “catastrophic decline” in home sales would result if the tax credit were allowed to expire on Nov. 30, though he said that an expiration could have some “negative implications” for the market….

And today they send out Geithner to say EXTEND THE TAX CREDIT!

Bloomberg:

The Obama administration endorsed plans to extend an $8,000 tax credit for first-time homebuyers, saying it is helping stabilize the nation’s housing market.

The tax break, enacted earlier this year as part of an economic stimulus package, has “brought new families into the housing market and contributed to three consecutive months of rising home prices,” Treasury Secretary Timothy Geithner said today in a statement. The tax break will expire Nov. 30 unless Congress intervenes.

Senate Democrats have announced plans to extend the credit until April 30 while expanding it to include higher-income Americans and some who already own homes.

Senate Finance Committee Chairman Max Baucus said today the new plan would offer a $6,500 credit for homebuyers who have lived in their prior residence for at least five years. Couples earning up to $225,000 and individuals up to $125,000 would qualify for the break, Baucus said. That’s up from the current $75,000 limit for individuals and $150,000 for couples.

“The success of the American economy is closely tied to the success of the housing market – by helping to stabilize the housing market, the homebuyer tax credit has helped to shore up the economy as it begins to recover,” said Baucus. “This would enable an even greater number of potential homebuyers to take the credit.” Millions of renters earn more than $75,000, he said.

Here’s a question for good ole Max who initially balked at this spending: What will happen to all those rental property owners whose tenants you claim will buy houses? What about the people who work for those property owners? Unintended consequences. All the government can do is steal one man’s profit and give it to someone else. They do not CREATE anything. Only private capital CREATES JOBS. My God I sound like Larry Kudlow. My dad is smiling in heaven.

Democrats have been pushing to include the provisions in an unemployment benefits bill, which has been held up by a disagreement with Republicans over other proposed amendments….( read the whole thing).

October 29, 2009. Tags: , , , , , , , , , , , , , , , . Economy, Finance, Foreclosures, Housing, Obama Administration, Politics, Popular Culture, TARP, Taxes, Unemployment Statistics, Wall St. 4 comments.

Stiglitz agrees with MiM ‘W’ economic forecast…

Hey let’s put on some Ritz MiM style, the grand chief poohbah high muckety mucks of the ivy league intelligentsia Feldstein, Stiglitz, Krugman, Gross you know their names…and they all loved them some Obama…Well now Stiglitz is the latest to go on record echoing MiM’s position which we took here on the blog lo these many moons ago…the flat L leading to the double dip….

CNBC:

Nobel laureate economist Joseph Stiglitz on Thursday gave a gloomy assessment of a rebound in the U.S. economy, saying he does not see a resurgence in the strong consumer spending that has been a key driver of growth.

poohbah…But Stiglitz said the U.S. economy faces the possibility of low economic growth over a long-term period or the possibility of a “double-dip” recession whereby a recovery is not sustained.

It is not possible to predict whether we have a malaise or a W (shaped growth pattern). But there is a significant chance of a W,” he said. “It is not as if the second dip is going to be as bad as the first dip,” he said. Instead, it could mean the economy rotates through a process of low growth followed by contraction.

“We are not seeing a recovery of sustained consumption,” in the United States, said Stiglitz, who said he has been consulted on an informal basis by the Obama Administration to talk about the major economic issues….

Gee I wonder why, ‘we are not seeing a recovery of SUSTAINED CONSUMPTION’?? Could it be because THE FRAKKIN IDIOTS IN DC ARE SCARING THE EVER LOVIN CRXP OUT OF WE CONSUMERS WITH THEIR HARE BRAINED SPENDING AND TAX PLANS??!! HMMMMNNN? Could be rabbit, could be!!! Is TOTUS doing bugs? Would I add this gigantic spending plan if the economy was about to collapse in a second leg down? You might TOTUS you might!

Have said it before, will say it again- What a bunch of maroons. For a group of the ‘Smartest People Evah’ they are awfully dense about how their ‘visionary changes’ impact real world consumers. Their pie in the sky ideas of de-industrializing the US and slowing population growth and greening everything and the greater good, cap and trade, change housing codes nationwide, pay cash for clunkers, take over car companies, then health care, they are really SHOCKED that 21 Century Americans do not want to go all ‘neo socialist Luddite’ with them…

wall_st_bear_small

They can claim anything they want, but they pixxed away 800 billion in ways that do not help the consumer feel safe and spend, have jobs and spend, pay off some debt and spend. There is no THERE there in that spendulus. All it did was ADD to consumers low expectations and high deficit concerns. The S & P financials are headed for a second crash IMO, commercial RE is about to hit the FDIC in a wave of bank failures and the end of 2010-11 will see a tripling of the current residential foreclosure wave as we have discussed here before.

They are SOL in the 2010 elections, they simply don’t have the money to fix what they have done with the spent bullets of the spendulus and TARP bazooka, they are out of ammo, the FED is making noises that they are split on continued quantitative easing and MBS purchases. Bill Gross at PIMCO says they will have to stay loose and keep buying to keep rates low or send housing off the second cliff. This is precisely why Krugman was suddenly pro giant deficit and Gross is making noises about the end of stimulus being a problem.

News flash geniuses Americans will not support ANY MORE GIANT SPENDULUS bills. That ship sailed baby, and sunk. It was overloaded with ‘interest group’ payoffs…I heard an analyst on Caterpillar CAT today talking about how the spendulus was less than 3% infrastructure and CAT will not have a bump in 2010. Remember TOTUS in Elkhart and talking with CAT workers? How awful. And now Pete Stark D-outoftouch is talking about laying a tax on all Wall St stock transactions to pay for billions in what? You guessed it INFRASTRUCTURE. Fuggedaboudit.

Treasury is out talking up additional mortgage help for homeowners as they see all this coming, and yet in the face of all this Team TOTUS is STILL going to attempt a 1 trillion dollar health care bill? The Administration needs to find religion and go moderate or 2/3 of Congress can go home in 2010…

Young Frankenstein courtesy of cristiancd

Bugs Bunny courtesy of chrispdx

September 3, 2009. Tags: , , , , , , , , , , , , , , , , , , , , , . Economy, FDIC, Finance, Foreclosures, Healthcare, Housing, Obama Administration, Politics, Taxes, Unemployment Statistics, Wall St. 3 comments.

Economy: Marty Feldstein says we may see second dip; what about that housing data?

There you go. Now Feldstein is on board with the W shaped recovery (like we under edumacated consumers who actually buy the stuff we import and produce!) . This comes weeks after Geithner and Summers were off the rez talking about the possibility of tax hikes for the middle class. Buffet (another person TOTUS liked to wave around as proof of his moderateness in the primaries) is also calling for caution calling Hey Big Spender to D.C. in editorials and is expecting the dollar to drop…

Bernanke and the Fed seem to be expecting a long flat bottom to the L shape. PIMCO is on record with 1-2% GDP growth for a generation. Now we have Feldstein and Buffet on record the spending has to stop and TOTUS still clinging to his tax promises which are written in smoke….

The only way I see to avoid the double dip is for Team TOTUS to start governing as moderates and staunch the bleeding of the red ink and the pillaging of the drivers of GROWTH (ie private capital and comfy consumers who feel safe spending)…

What about the housing data today? We had a 7+% jump in existing home sales. Break it down with Diana Olick on CNBC

U.S. Existing Home Sales Yr/Yr
$0 – $100,000 Up 38.8%
100,000 – $250,000 Up 8.7%
$250,000 – $500,000 Down 6.2%
$500,000 – $750,000 Down 8.9%
$750,000 – $1,000,000 Down 10.6%
$1,000,000 – $2,000,000 Down 23.3%
$2,000,000 + Down 32.4%
Source:  National Association of Realtors

Averages rallying on the surface data DOW up 135 to 9486; S&P up 16 to 1023 and NAS up 23 to 2012. But the drill down data is not as rosy as the topline number would appear. We have short sales, foreclosures on the very bottom end homes <100k jumping almost 40% but the mid to top end is flat to negative..WSJ:

A survey found that one in eight U.S. households with mortgages was in foreclosure or behind on its mortgage payments during the second quarter, putting added pressure on programs aimed at preventing foreclosures.

While foreclosure starts have slowed on the subprime loans that ignited the mortgage and banking crisis, loans extended to borrowers with good credit are deteriorating at a faster clip as falling home prices and mounting job losses weigh on more households.

The Mortgage Bankers Association said its latest survey, released Thursday, showed that 13.2% of mortgages on homes with one to four units were at least a month overdue or in the foreclosure process in the April-to-June period, up from 12.1% in the first quarter and 9% a year earlier.

As home sales have picked up in recent months, some were expecting foreclosures and delinquencies to ease. But Jay Brinkmann, chief economist at the MBA, said foreclosures weren’t expected to peak until later in 2010 when the economy improves.

“Just because we see prices level off doesn’t necessarily mean we’ll see a big reduction in foreclosures,” said Mr. Brinkmann, in part because many homeowners would still owe more than their homes were worth…

WSJ - Nick Timiraos

WSJ - Nick Timiraos

The foreclosure numbers are rising along with unemployment. This is a long shallow bottom if the anti capitalistic interventions in the markets and economy at large stop.

It is the first leg down on a ladder to Carterville if they ignore the public sentiment (we being 70% of our economy and the impetus for inventory buildup and job creation) which is expressing itself not just at townhalls but in the weak consumer sentiment and spending data….

Leave the economy alone! Leave it alone!

Sweet Charity courtesy of jwsnowden

August 21, 2009. Tags: , , , , , , , , , , . Economy, Film, Finance, Foreclosures, Healthcare, Housing, Immigration, Labor Department, Obama Administration, Politics, Taxes, Unemployment Statistics, Wall St. 2 comments.

Market Update: Averages close lower…

wall-street2

We gave some back, naturally, after yesterday’s big gain…no bombs dropped in the hearing today with Geithner and Ben, I think markets are holding their breath and waiting to see what the ‘tone’ of TOTUS address tonight is as well as what direction the Crazed Critters and the Crippling Budget take..

IMO they are going to try to push this cap and trade through – TOTUS loves him some green, he sees it as his legacy, LOL, 65 days in, economy in the shixxer and TOTUS is going to kill all production to burnish his future statuary….

DOW closes down 115 to 7660

S & P down 16 to 806

NAS down 39 to 1516

GLD pulled in quite a bit in two days, down 26 today to 925, almost low enough for MiM to pull the trigger again;

MiM mantra is that everyone should have some insurance in their portfolio in GLD either via an ETF or physical shiny stuff in your safety deposit box…we are more conservative than most in that we want 20% in GLD but surely no one is denying you need to have some GLD at this point…hey dont call me shirley..

MiM will NOT be watching TOTUS live, LOL..we will cover the reviews manyana..We do not want to be exhorted to do our part and be a bridge over troubled waters after they lambasted executives last week….or hear the calls to tax all carbon or cost contain medical treatment..not after the CBO estimates, it’s completely irresponsible to stick to this budget plan and they know it….frakkers

Marty Feldstein was all over it again today..suggesting recession will last well into 2010, which is the MiM call, Yeah I’m a negative Nelly so sue me….

The recession in the United States will stretch well into next year, probably raising the need for another fiscal stimulus package at least as large as the first one, prominent economist Martin Feldstein said on Tuesday.

Feldstein, a Harvard University professor who is a member of President Barack Obama‘s Economic Recovery Advisory Board, told Reuters that the stimulus would offset only a relatively small piece of the likely fall in spending, exports and construction.

“I’m afraid that the economy will continue to slide down well into next year,” Feldstein, a former head of the National Bureau of Economic Research, said in an interview in Beijing where he was attending a conference.

“I don’t know when it will end, but the forecasts that it’ll end later this year I think are too optimistic,” he said of the recession…..

March 24, 2009. Tags: , , , , , , , , , , , , , . Economy, Obama Administration, Politics, Taxes, Wall St. Comments off.

The Stimulus: Where’s the Beef?… Housing waits for a hero….Feldstein drops support for stimulus

The more we look at the Stimulus Package the more it seems all bun little beef…

Conservative economist Marty Feldstein was won over by Obama and endorsed his proposed stimulus after a highly publicized group of the creme de la creme of economics and markets and Treasury gathered under the auspices of advising the incoming POTUS on all things economic…

After the January 6th meeting of movers and shakers with slide rules and Brooks Brothers suits, lol, the WSJ reported:

The onetime presidential adviser to Ronald Reagan might even be considered the least likely advocate of government spending to boost the U.S. economy.

But given present circumstances, the Harvard University economist has changed his mind. Mr. Feldstein will be featured Wednesday at a Democratic economic forum, along with Robert Reich, former labor secretary and longtime liberal. Democratic leaders now mention Mr. Feldstein’s support when they discuss their economic recovery plan, criticized by some as a pricey grab-bag of liberal goodies.

“We’re down to fiscal policy, which pains me a bit, more than a bit, but I don’t think we have a choice,” said Mr. Feldstein.

Though a Republican, Mr. Feldstein, 69 years old, has longstanding ties to many of the economists tapped to serve in the Obama administration. His most famous student, Lawrence Summers, was named to head the Obama White House’s National Economic Council.

Let’s get to what Mr Feldstein proposed in that meeting with the economic team to Obama.  Housing …rant on/, the root cause of our collapse, the kernel of our chaos, lol, housing, is the underlying asset in all the frakin securities that the geniuses cant figure out how to price to get them off the banks’ books into a ‘bad bank’….

Anywho perhaps if, while they keep working that out, we stopped the collapse in housing by putting in an artifical floor, we could stop the death spiral of deflation long enough to enact stimulus and allow cyclical recovery and boost consumer confidence..that is my plan but hell no one listens to me!!! /rant off

We covered Feldstein’s proposal on housing here..we know we are a broken record but it is simply STUNNING that these geniuses are still failing to address the root cause of the underlying asset losses, THE FRAKIN HOUSING DEFLATION….they ALL tell us housing will be addressed (see Paulson in ANY speech) and it never seems to get off the damn ground somehow…

(I even heard Mitch McConnell tell Larry Kudlow today that the first amendment to the Senate stimulus from the GOP will be on housing, when the GOP is coming to the rescue of homeowners before POTUS we have a problem Houston) but I digress:

Feldstein confirms what we at MiM have been hearing and reporting; HOUSING will be key to this package.  Forget what you have heard in the proposed stimulus package breakdowns to date, it is housing that is key to the financial and economic advisers. The housing plan will include principle write downs and an attempt to build what Feldstein calls a ‘firewall’ to stop a continued drop in housing values from pushing more Americans underwater on their LTV ratios…will it come from Son of Tarp or the stimulus? No word yet but it is coming….

Keep in mind most economic forecasts worth their salt call for an additional 15% drop in home values in 2009…Feldstein is CLEAR that the FED actions alone will NOT repair housing, it is merely keeping it in a holding pattern, he says all the fiscal stimulus will do nothing without a housing program…

Feldstein says if we are lucky, we will see a bottom at the end of 2009. This puts the kaibosh on the hoped for 2009 recovery that some rose-colored glasses wearing talking heads have called for.

So Feldstein layed it out at a bigwig meeting with Obama’s top peeps, highly covered in media..again Obama was lauded as the great uniter of the greatest minds of our time….and Feldstein came out convinced the package would include these actions….and to what end??He didn’t put it in the bill. What DID get in the bill is as shameful as POTUS tells us Wall St bonuses are IMO…

Today Feldstein dropped his support after seeing the stimulus  package…..see today’s WaPo: An $800 Billion Mistake:

As a conservative economist, I might be expected to oppose a stimulus plan. In fact, on this page in October, I declared my support for a stimulus. But the fiscal package now before Congress needs to be thoroughly revised. In its current form, it does too little to raise national spending and employment. It would be better for the Senate to delay legislation for a month, or even two, if that’s what it takes to produce a much better bill. We cannot afford an $800 billion mistake

-snip-

The problem with the current stimulus plan is not that it is too big but that it delivers too little extra employment and income for such a large fiscal deficit. It is worth taking the time to get it right….Why not a temporary refundable tax credit to households that purchase cars or other major consumer durables, analogous to the investment tax credit for businesses? Or a temporary tax credit for home improvements? In that way, the same total tax reduction could produce much more spending and employment…

(more…)

January 30, 2009. Tags: , , , , , , , , , , , , , . Economy, FDIC, Finance, Foreclosures, Healthcare, Housing, Labor Department, Obama Administration, Politics, Popular Culture, TARP, Unemployment Statistics, Wall St. Comments off.

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