Mortgage Math Doesn’t Add Up
by Jeffrey JenaI am no Nobel Prize winning economist like Paul Krugman. I didn’t go to Harvard or Dartmouth like the president and his economic brain trust of Geithner and Paulson. I did, however pass seventh grade math at Holy Family School in Ashland, Kentucky and the way I see it, something doesn’t add up.
Way back in October, (you remember October, it was when the Worlds Series was going on), the President was saying unless we slapped down seven or eight hundred billion dollars to get rid of bad mortgages and other “toxic assets” we were going to slide down into the abyss of economic ugliness from which there was no return. We needed to do it, right then! Now! Today! Wait, is this a four day weekend? Ok, we’ll do it Monday. Do you remember? So we ponied up the dough and that solved the problem, right?
Then change came to Washington and there was change! The new President said that unless we plunked down another nine billion to one trillion were going to slide down into an economic abyss from which there was no return. We needed to do it today, now…I think you get the picture. Do you see the change? It’s subtle, but it’s there, the amount went up by about two hundred billion! That’s change I can believe in.
Now the Wizard of Odd, Tim Geithner says that he wants the private sector to put up another trillion or so to get rid of “toxic assets.” He’s saying that private money is needed to get credit flowing again.
Don’t forget somewhere in there was a budget for everything else that came in around 1.2 trillion and another four or five hundred billion for walking around money.
So here is how I see it from a seventh grade math perspective. To get rid of toxic assets we have put out about to two trillion seven hundred million dollars. To make the math easy, let’s say the average mortgage is 200,000. So, 200,000 divided into 2,700,000,000,000 equals 13.5 million. Do I have that right?
There are roughly two hundred and seventy million Americans, so at an average of four to a household that equals roughly sixty-seven million households. Let’s say that, and I know this is a high estimate, 75% own a house, and so there would be just over 50 million mortgages in America meaning the government has bought up over one quarter of all of the houses in the country for that amount of money? I ain’t buying it! Where is the money going? Here’s the kicker, I don’t think anybody knows where all the money is going.
Maybe the way to handle the toxic assets is to say that any toxic waste is a problem for the EPA to handle and they could put some guys in bio sits and bury the lot of them somewhere in the Nevada desert. We could get Al Gore to issue a carbon credit and hope the 2010 elections get here before the bill comes due.
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65 Comments
Oh, you're so silly!! They don't actually have to add anything up!! They're Democrats. All that funny money that came out of thin air has evidently been spent and they just NEED some more, that's all.
From the Washington Post today and posted on drudgereport.com –
"The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.
The government at present has the authority to seize only banks. "
http://www.washingtonpost.com/wp-dyn/content/arti...
This should send a big chill down everyone's collective spines…and by collective, I mean, that is apparently what we will be from now on.
What's funny, actually, is that Paul Krugman agrees with you to some degree. He says the plan won't work either.
Must be that new Jeff, the one where 2+2 can equal whatever is needed to justify socialism.
Great catch by the way!
The CBO has essentially said we would have been better off doing nothing. All of these failed companies need to go into chapter 11 and restructure their companies and labor contracts. But there’s the problem. Obama and the other criminals in DC are beholden to the unions and they do not want these companies going into bankruptcy where they can dissolve the labor agreements. Obama would rather fleece taxpayers for Trillions, pour the money into union coffers thereby subsidizing private businesses and keeping them from chapter 11.
This does not address the underlying issues, which are exorbitant union contracts. Therefore we’ll be subsidizing this problem over and over just as we now see with AIG.
Chapter 11 is the answer, not fleecing the taxpayer. That’s how its always been done but obama and his braindead goons want to reinvent the wheel into a failed socialist model.
As the great Ronald Reagan said, these people think if you throw enough money at a problem it will go away. Government isn't the solution, government is the problem.
Today, after cussing ANOTHER blue streak, I wrote about needing to march on Washington. Those of us who fuel this country (you know, those of us who actually pay taxes) still have some power, albeit our window of opportunity is shrinking by the day, and while we have it we should wield it. I want to be part of the clan that saves us from the clan that seeks to destroy us.
I say we plan a road trip.
Jeffrey, you don't get it. We are not supposed to ask questions like "where is the money?" We are supposed to swoon and kneel to allow the annointed heroes to touch the crown of our heads so we can be saved. then we go to streets and encourage the lost souls who do not yet see the greatness of our government to turn their lives over to the almighty Pres.
Who are you to question the Obamessiah? Where were YOU when he created the world?
They just print the money and the problem's all solved! Right? No?
pretty much working like everyone else to pay the taxes he needed to fund creation.
Join the collective. Resistance is futile.
Just heard Rush say the 'private sector' will be 'loaned' a big chunk of the money in this bailout and they don't have to pay it back.. Wonder who the 'money' men will be?
Hey Jeffrey, I'm a former Ashlander.
It doesn't matter where the money is going. All that matters is the Chinese keep buying our t-bills and our mints don't run out of ink and paper.
I'm going to, in a roundabout fashion, reply….
Some of the AIG supporters tell us that European companies might poach our best and brightest from AIG unless we allow them bonuses. I am worried about breaking contracts because rule of law is dreadfully important. Keeping the superstars, not so much. Remember the 'smartest guys in the room' were Enron.
Dave Ramsey wrote about a smart doctor who through really clever investments of big bucks made five million bucks. And how if the doc had played things simple, he'd probably have ten million bucks.
Dick Francis wrote about how criminals think they are smarter than normal joes, but what the criminal had was opportunism, not intelligence. Am I smarter than an AIG guy if I take my baseball bat, clobber him on the head, and steal his car? For those who are Democrats, the answer is 'no.' Being willing to cheat, and compliment yourself on your courage and intelligence and skill are characteristics of criminals.
I want people who are honest first, and if they are only 140 IQ, well, that's all right. Just smart enough to manage things. I want people who see 2+2 and instinctively think '4' instead of trying to half-clever things up into a debacle.
A lot of times the 'this is so brilliant you can't understand it' is preluded to a con job. And Mr. Jena has just did the math, and exposed part of the con. Its because he's dumb enough to be honest.
I'm with you. The tea party movement needs to go one a road trip.
Jeffrey you are clearly confused. Did you not see Michelle "check out my arms" Obama planting the garden last week? That was a garden full of money trees. That's where all of this is coming from…right…
Its tough work to create a world, and rewrite mathematics. Only the OOOOwemadeabigmistake could do it.
No they just print money and the problem is still Left!
Thanks Jeffery. I needed 'hair of the dog' after yesterday. Sorta kinda…
I don't know where the money's going. I'm upset, confused and bewildered. I didn't buy a ticket to this passion play, but I'm in the crowd. Lots of us are yelling and screaming, but no one person or group has done a single thing to put the brakes on this runaway train.
However, at some point, there is going to be hell to pay. Too much is at stake, and the way this administration has hastily run rough-shod over so many people, from ALL walks of life, the scales will tipple. The tippling point is scary to comprehend. Something is telling me that we're talking something a little more dynamic than an election…
That's right. The problem is **Left**
Look at AIG. A bunch of their money has gone to firms like Goldman Sachs and a bunch of European banks to pay off policies on credit default swaps. Why these institutions should be made whole for any losses they had is beyond me. Other than the fact that Sachs gives $$$$ to Dems….
Have bus pass, will travel! Anytime. I think we should change the local Tea Parties on April 15 to one big one in DC.
It really is scary how power hungary Obama is becoming. Who really wants America to turn socialist? The millions of people that have died for the country and we just give it away. There is change coming. It's called changing to Socialism. So I guess he can say didn't lie.
wow hungry*
Jeffrey Jena for Treasure Secretary!
This article should be up on Drudge, published on the front page of those newspapers that are actually being read these days and, most importantly, required reading by the crooks and liars on Capitol Hill (gag) – give 'em time to read it too. Seems to make it pretty obvious that no one is keeping track of the dollars hemorrhaging from taxpayers' wallets.
REPEAL THE STIMULUS!
He got help from AlGore right after he finished inventing the internet and the carbon credits scheme.
Tennwriter, you have such a good point. After reading it I realize that those –
"… people who are honest first, and if they are only 140 IQ, well, that's all right. Just smart enough to manage things. I want people who see 2+2 and instinctively think '4' instead of trying to half-clever things up into a debacle."
- are the reasons I held George Bush in high esteem – rightly or wrongly – he never seemed to be weighing his words as if in an attempt to pull a fast one on the listener. So I never saw the power in the idea that he was stupid, clearly he was not stupid, but he sure did seem to be straightforward.
Obama and the other criminals in DC are beholden to the unions and they do not want these companies going into bankruptcy where they can dissolve the labor agreements.
However part of the reason for asking for these new powers to take over companies is to break contracts with labor like the bonus agreements. So what's the message? Big collectives that support Democrats get protected, while the individual gets squat? Wait, hasn't that always been the real liberal message?
That said, I should add that he and others, if they say they wanted to regulate Fannie Mae and Freddy Mac, clearly did not fight well and hard enough.
What I find scary about this is that Mr. Obama also wants to put a cap on all Executive pay. Even for companies that did not dip their extremities in the TARP pond. SOCIALISM here we come.
I wonder if that will also apply to the Union Entertainers and Athletes?
The tyrannical liberal govt marches on. Apparently pelosi has floated the idea of giving leftist rags [“newspapers”] tax-exempt status so long as they do not endorse a candidate. This stupid clown thinks she’s clever. So what we’ll have is profit-generating company bashing all things Conservative, as they do now, but they’ll be tax exempt.
We have a president attacking a private citizen [Rush] and others who dare criticize the fuehrer, we have the govt threatening to unconstitutionally tax a segment of the population, we have veiled threats coming from the tyrants in DC that they will publish a list of all the AIG individuals who collected a bonus.
This is the tyrannical govt the Founding fathers warned us about. The question is, what are we going to do about it?
I work in the power industry, buying and selling energy. Carbon credits are the biggest boondoggle created. It will do nothing but increase the bill to the rate payers.
And if he gets executive pay oversight, it's a real short step to managerial pay oversight. Then assistant manager, then shift leader and so on. Stopping of course at union employees.
Who is John Galt, indeed.
Why would it, they "earn" what they get paid.
If we're going to go this route, then I say put income limits on politicians — both before and for five years after. See how Pelosi likes giving up her $90 MILLION! How many poor families can that feed I wonder?
Why would it, they "earn" what they get paid.
If we're going to go this route, then I say put income limits on politicians — both before and for five years after they serve. See how Pelosi likes giving up her $90 MILLION! How many poor families can that feed I wonder?
If every American tax payer got $300,000 that would be less than all the bailout money, and it would have gone to people who need it. People could pay off houses, credit card debts, buy new cars and TVs. All this would stimulate the economy more than poring money into poorly run companies. I, of course, wouldn't take the money due to my conservative principles. Yeah right.
More like a garden of some stuff that would make the growers of Humboldt County jealous.
Bailouts just delay the inevitable. These firms are fundamentally broken and only heavy restructuring can save them.
Actually, this kind of Chauvezian activity is just what I expected out of this administration. I just didn't think it would take place this soon. I do wonder how many of the people who voted for Obama now have clear thinking brains and ponder about what they helped to create.
I have come to realize that absolutely no one within the political arena nor anyone within the economic/Wall Street arena knows what the heck is really going on much less how to fix things. It seems that Obama threw his cabinet together at the last minute, without much thought. Now we are paying for it. At one time I did think the talking heads on the money channels were kind of intelligent. Not now.
We're screwed.
Actually, this kind of Chauvezian activity is just what I expected out of this administration. I just didn't think it would take place this soon. I do wonder how many of the people who voted for Obama now have clear thinking brains and ponder about what they helped to create.
I have come to realize that absolutely no one within the political arena nor anyone within the economic/Wall Street arena knows what the heck is really going on much less how to fix things. It seems that Obama threw his cabinet together at the last minute, without much thought. Now we are paying for it. At one time I did think the talking heads on the money channels were kind of intelligent. Not now.
We're screwed.
There is a group planning a National Tea Party in DC on the 4th http://marchforliberty.org/marchdetails.html.
I just found it.
Actually, bailouts help the politically connected… at the expense of all of the rest of us.
You said it Andrew! Congress is always quick to act with "our" money! In these tough times have they given up their automatic pay increases or private jet traveling? Are Chris Dodd and President Obama going to have their campaign contributions from AIG taxed at 90%? After all, they're looking out for me, right?
Jena wouldn't qualify – he actually pays his taxes!
Great article Jeff. The amount of money is so ridiculous, no one is even asking where the money is going, but journalists used to report how much the war in Iraq costs us daily. Actually, why should Congress care where the money is going – it's not their money.
I'm trying to draw a comparison between those who are slick and not overly bright despite their claims of brilliance like the folks at AIG and the people at 1600 Pennsylvania. Both these problem areas drink from the same poisoned well of Hubris and Sloth is my speculation. Calvin Coolidge and J.P. Morgan would both be appalled at their descendants.
We can defend Wall Street from predation by socialists, but always with open eyes realizing that many of them would be happy with fascism, and that they are real good at self-promotion.
I'm trying to draw a comparison between those who are slick and not overly bright despite their claims of brilliance like the folks at AIG and the people at 1600 Pennsylvania. Both these problem areas drink from the same poisoned well of Hubris and Sloth is my speculation. Calvin Coolidge and J.P. Morgan would both be appalled at their descendants.
We can defend Wall Street from predation by socialists, but always with open eyes realizing that many of them would be happy with fascism, and that they are real good at self-promotion.
Thank you.
Its not that being clever with words is bad, but so many nowadays think a smooth phrase is all that is needed for true intelligence, character, and hard work. And its likely that Poseurs, a form of evil, despised GWB because his honesty was a rebuke to them as it showed their weaknesses up.
I believe the whole charade is government right or left saving itself. When TARP reared it’s ugly head, as a for instance, Gov. Schwarzenegger was trying to float an 8.8 Billion dollar bond, no takers, the underwriters rated CA paper as junk. This was happening all over the country in many states(mostly blue). Politicians weren’t gonna have their jobs programs in jeopardy, and, “by God, the sleezy Washington politicians got together, and proceeded to cover their a$$es. I always worry when there is an unnatural bipartisanship not based on a right, left thing just Washington politicians raping the tax payer. Do you remember how happy they all were when the TARP legislation passed, glad handing right and left, "yuk. I believe they were happy because they were saving themselves, and you quit hearing about municipalities and their bond problems. Just a thought.
Don't be silly Andrew. We all know that 2+2 equals…five.
I have a clipping of a speech up on my refridgerator that W gave at the West Point commencement:
"Some worry that it is somehow undiplomatic or impolite to speak the language of right or wrong. I disagree. Different circumstances require different methods, but not different moralities. Moral truth is the same in every culture, in every time, and in every place. Targeting innocent civilians for murder is always and everywhere wrong. Brutality against women is always and everywhere wrong. There can be no neutrality between justice and cruelty, between the innocent and guilty. We are in a conflict between good and evil, and America will call evil by its name. By confronting evil and lawless regimes, we do not create a problem, we reveal a problem. And we will lead the world in opposing it."
Did he have it right or what?
Ken,
Would that be 5 million, or 5 trillion? What amazes me is the people who don't seem to understand that there's a big difference between a million, a billion and a trillion. I have talked to some people who actually have said things like, "Well, once you spend a billion, a trillion doesn't seem that unreasonable." Yikes! I will admit no one is ever going to accuse me of being a math wiz, but seriously? Are people that dumb in America, today?
Oh! Forgot to say, great article, Jeffery! I loved the "Wizard of Odd" name for Geithner. He is a creepy little man, isn't he? He reminds me of a evil Keebler elf. If you haven't seen the clip, YOU MUST got to Hot Air, and watch the clip of Geithner being quizzed by that great brain Maxine Waters. It is almost as good as when she quizzed that bank CEO awhile back and he told her he had no idea what she was saying. Geithner's responses to her insane blathering mostly is just some freaky facial expressions, sometimes looking like he is constipated, or has a brain freeze. Awesome.
I think the biggest mistake people on the right are making is believing Obama is stupid. He's not. He knows exactly what he is doing, everything is going exactly as he planned. He is counting on the fact that people don't usually expect that someone would be so audacious to implement the plans he is planning. He is putting forth this new government/private business plan, where the very people on Wall Street that he has been talking down for weeks now, are supposed to want to come forward and work with the government. Why should they? If they make any money, they run the risk of being dragged out in front of the public and being flogged by the Am people as greedy pigs. Not to mention running the risk of being taxed at 90-100%.
He wants this plan to fail! Then he can say, I tried, it didn't work. This capitalism junk doesn't work, now we're in an even bigger boondoggle, so we have to take over ownership, and have government run everything. This my friends, is Socialism. When the Am. people get scared enough, they will be crying "Help us! Help us!" Remember, never let a crisis go to waste. Don't believe me? Bookmark this, I am afraid I am going to be right.
My recollection is that in September of 08, Treasury Secretary Paulsen sought Congressional authorization for moneys to buy toxic assets- but that he subsequently decided not to go this route (deciding instead to infuse banks directly with cash). So Paulsen's initial asset purchase plan never happened.
My recollection is that in September of 08, Treasury Secretary Paulsen sought Congressional authorization for moneys to buy toxic assets- but that he subsequently decided not to go this route (deciding instead to infuse banks directly with cash). So Paulsen's initial asset purchase plan never happened.
Here is what I would consider a conservative approach:
Make the entire Mortgage Payment a tax deduction.
1. Home Values .Tthis would make home owning a greater tax hedge, which should incentivize people to own homes, which should help stem the falling values.
2. Credit Markets. allow extra payments against princicple (possibly up to some limit) to be included in the deduction, thereby incentivize people to make extra payments, which would add liquidity to credit markets.
3. Home Owners. While helping ease the liquidity problems, would have opportunity to pay down mortgages and gain equity, which should add incentives to own,increase equity, stem defaults..
4. Banks. Shift future interest payments into current liquidity, affect bank balance sheets and add incentives to create new loans to replace the lost earnings from interest payments that would no longer be out on the horizon.
5. Government. Current accounts would be impacted by giving a tax break, but considering the $ of debt that they are adding to the future, we the people lose either way.
http://www.alistz.net
Well, I guess that's just the Big Freakin Hillbilly in me! I never seem to do the right things…Thanks for reading
I am working on a scam, oops I'm sorry, an enviromental plan, to starts selling carbon deficits when they figure out that it's getting cooler! Care to invest?
Go Cats!
Definately!
I will take a loan out on this bridge that I recently bought in the San Francisco Bay area.
Jeffery,
It is very dangerous for you to do the math it will only bring trouble to your door step. You remember when President Obama said he wanted to "redistribute the wealth". Well he is only doing what he promised. If people thought he was talking about the poor well that is there problem. Look at what George Soros made last year it was only 1.1 billion. You can't finance this kind of change on that little budget. You can only make the big bucks when markets move rapidly up and down and the up again then down and then up. Get with the program and follow the money. Invest in the change.
/sarc off
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