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Tuesday, October 07, 2008

Presidential Debate Live Blog

Well, actually, I am unable to watch the debate live because I have a prior commitment. Feel free to post your comments. Really good comments will be moved to this post when I’m back in front of the warm glow of my monitor.

UPDATE: OK, I’ve had a chance to watch some of the “highlights” of the debate. From what I saw, they both stunk up the joint about equally. Given that Obama is ahead, a tie equates to an Obama victory. Read the comments of this post for more detailed analysis.

Posted by Owen at 1851 hrs

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Here goes Obama with his predictable Bush-bashing when asked how either party can be trusted with the economy. Now he’s talking about how spending billions on his health care program will fix things. Unbelievable.
Posted by on October 07, 2008 at 2020 hrs

What is McCain’s point about stabilizing home prices? He seems to be suggesting that the government will buy up bad mortgages and then sell the house back to the owner at the current, depreciated price? So the government takes the loss? That was not my understanding of the bill that was just passed.
Posted by on October 07, 2008 at 2022 hrs

McCain hits Obama on earmarks and spending. Good. Drilling, nuclear. Better as a bipartisan politician than Obama who doesn’t buck his party line. Much better answer than his first couple.
Posted by on October 07, 2008 at 2024 hrs

That’s not in the bill that was just passed. It’s a new idea that I believe the WSJ floated in the last day or two.
Posted by on October 07, 2008 at 2026 hrs

Watch out for .. da-da-da-daaaaaa … Obama Cronies.
Posted by Brian Dunbar on October 07, 2008 at 2027 hrs

HAH! BHO sez he wants to go through the budget line by line and eliminate programs that don’t work. Show us the list RIGHT NOW!
Posted by on October 07, 2008 at 2028 hrs

McCain is acting like he’s half asleep.
Posted by on October 07, 2008 at 2028 hrs

Obama is for clean coal. He should tell his running mate.
Posted by on October 07, 2008 at 2032 hrs

Obama sez we can become more fiscally responsible by having more people “share in the burden”...too many people are living “too high on the hog”...doesn’t want an across the board spending freeze as McCain recommends. So, raising taxes will get us out of our economic crisis. Excellent. Now he’s arguing against his own position that he laid out a couple weeks ago when he said he may have to hold off on his tax increases.
Posted by on October 07, 2008 at 2036 hrs

Again Obama spins the yarn about the U.S. only has 3% of the world’s oil reserves. How can he repeatedly get away with this?
Posted by on October 07, 2008 at 2047 hrs

McCain again takes the wrong option - Big Government R&D;over entrepreneurship to develop alternative energy...Arrrggh!
Posted by on October 07, 2008 at 2050 hrs

Man - last time I visited my doc he had computers out the wazoo. Whose doctor doesn’t have a computer? Hands?
Posted by Brian Dunbar on October 07, 2008 at 2053 hrs

3% using 25% - and using it for the good of mankind for over 200 years!!!
Posted by on October 07, 2008 at 2053 hrs

Brokaw seems to think both these guys are stupid assholes. Brokaw is right. How can anyone tell them apart?
Posted by on October 07, 2008 at 2053 hrs

Brian - my wife works at Columbia-St Mary’s Ozaukee...still all paper charting.
Posted by on October 07, 2008 at 2053 hrs

Hadn’t heard about the nat’l C of Commerce group being against McCain’s health plan. McCain didn’t knock it down.
Posted by on October 07, 2008 at 2055 hrs

OH MY GOD. BHO just said health care “is a right.”
Posted by on October 07, 2008 at 2057 hrs

There you go...health care is a right! A peek behind the Obama curtain of socialism.
Posted by on October 07, 2008 at 2057 hrs

One might think listening to the debate that government is the mechanism that everything in this country is controlled by.

The pervasive pandering seems to be if there’s a problem, demand government fix it. Oh for someone to be honest and suggest that people need to take it upon themselves to endeavor to improve their life and the best they should expect from government sometimes is for it to get off your back.

Instead we are going to buy up mortages for the VERY people who are to blame?

So first we bail out companies who fuck up…

Then we bail out homeowners who fucked up…

There is NO incentive in this country to be accountable. Take care of yourself and you’ll just be paying for everyone else.
Posted by on October 07, 2008 at 2058 hrs

I’ve only watched on Tivo the first 25 minutes or so.

Holy crap are both these guys bad. We’ve got some real problems....serious problems. And I feel like I’m listening to Uncle Fester and Urkel here. I don’t think either of these guys can provide the type of leadership, both solutions and confidence, to get the job done.
Posted by on October 07, 2008 at 2058 hrs

Now BHO sounds like Yogi Berra in the Aflac ads.
Posted by on October 07, 2008 at 2058 hrs

Greedy bankers hiding in Delaware...say it ain’t so, Joe!!!
Posted by on October 07, 2008 at 2059 hrs

"Insurance companies don’t give you the fine print”

Every farging insurance form I’ve ever seen is filled with the stuff. Perhaps the problem is people not reading the fine print they’ve got.
Posted by Brian Dunbar on October 07, 2008 at 2059 hrs

Steve, I couldn’t agree more. This is the worst slate of candidates I’ve seen in my lifetime.
Posted by on October 07, 2008 at 2059 hrs

I agree Steve.

The leadership, solutions and confidence don’t exist.

Neither does the balls to tell it like it is. (does that fall under leadership?)
Posted by on October 07, 2008 at 2059 hrs

Uncle Fester and Urkel...funny!!
Posted by on October 07, 2008 at 2100 hrs

Brian, that would fall under “personal responsibility”...apparently an outdated concept.
Posted by on October 07, 2008 at 2103 hrs

We didn’t intervene in the Holocaust? Somebody get BHO a history book.
Posted by on October 07, 2008 at 2105 hrs

Steve, I agree.

I don’t think we’ll get quality candidates until we get a new party, or get rid of the two high school cliques we have now.
Posted by on October 07, 2008 at 2108 hrs

Tony,

It’s fairly obvious he meant to intervene sooner, and we did not get involved in WWII because of the Holocaust at any rate.
Posted by on October 07, 2008 at 2109 hrs

Obama is willing to violate Pakistan’s sovereignty. McCain wants to cooperate with them.
Posted by on October 07, 2008 at 2112 hrs

Liberal vs. Liberaler.
Posted by on October 07, 2008 at 2113 hrs

"I don’t think we’ll get quality candidates until we get a new party, or get rid of the two high school cliques we have now”

Yup. That sums it up about right.
Posted by on October 07, 2008 at 2114 hrs

"Green behind the ears”? Good one, Yogi.
Posted by on October 07, 2008 at 2114 hrs

He forgot to mention Cambodia after we prematurely pulled out of SE Asia (under Carter’s watch) and, BTW Clinton did nothing in Rwanda. On Iraq, there were also humanitarian issues under a brutal dictator that get no play with BHO.
Posted by on October 07, 2008 at 2114 hrs

Aw c’mon: Bomb, bomb bomb, bomb Iran was funny.
Posted by Brian Dunbar on October 07, 2008 at 2115 hrs

The question I must have missed, that both candidates keep answering, is “Senator, why are you going to be a one term president?”
Posted by on October 07, 2008 at 2115 hrs

If Mccain wants to score some huge points, he should say how he reaches across the isle.
he should say when he is president he would even work with senetor obama on issues.
Posted by on October 07, 2008 at 2116 hrs

Thanks, ATV. Yes, for a non sequitur, it was a great analogy.
Posted by on October 07, 2008 at 2117 hrs

Gettin’ testy here. Good stuff.
Posted by on October 07, 2008 at 2117 hrs

Careful, Putin is a black-belt judo master…
Posted by on October 07, 2008 at 2120 hrs

What have we had, like a half-dozen audience questions? How come Brokaw gets to ask all the questions?
Posted by on October 07, 2008 at 2121 hrs

BHO claims GWB and McCain said it wasn’t important to catch bin Laden. I must have missed that announcement.
Posted by on October 07, 2008 at 2123 hrs

Obama - reduce our energy consumption. Where’s my sweater??
Posted by on October 07, 2008 at 2125 hrs

Iran’s nuclear ambition. Hmmm, what’s that tune again...bomb, bomb, bomb...bomb, bomb Iran
Posted by on October 07, 2008 at 2127 hrs

So far this seems very much like a tie to me. Both have gotten in some punches, both have missed opportunities for punches. Both have seemed knowledgeable and confident but have also not directly answered some questions. I think calling it for either at this point is more a function of your preferred policy solutions/ideology. I don’t think this debate will tilt it for either candidate.

However, I considered the other debate to be mostly a tie, Obama coming off maybe slightly better, and polling of undecideds gave it to Obama pretty definitively. So I am not on the same wavelength as the people whose opinions make a difference. In fact, I can’t fathom how anyone can be undecided, so I’m not much of a judge.
Posted by hope on October 07, 2008 at 2129 hrs

McCain indicated that he would send in the troops if Iran attacked Israel, regardless of UN security council approval. Obama wants to talk prevention instead of answering the question. What a surprise. Now he’s lying about GWB administration not being involved with talks with Iran and N Korea.
Posted by on October 07, 2008 at 2130 hrs

Tony,

Not sure about McCain, but I seem to remember Bush saying something to the effect of “I haven’t given it a lot of thought”...I think it came up in the ‘04 election.
Posted by on October 07, 2008 at 2132 hrs

Hope,

Very good analysis. I agree.
Posted by on October 07, 2008 at 2134 hrs

McCain didn’t land enough blows to make a difference.
Posted by on October 07, 2008 at 2136 hrs

Agreed. I’ll give him credit for lying less than his opponent.
Posted by on October 07, 2008 at 2138 hrs

The distinctions between Obama’s Pakistan and Iran/Israel answers are down right breathtakingly scary.

That being said, Obama hogged and played out the clock. That’s a win for Obama. McCain needed, not necessarily a game changer, but a couple of memorable moments. Didn’t happen.

Brokaw tried to keep the rules in force, but came off as too much of the show. His questions also sucked.

The “what don’t you know” question was the best. Note that Obama basically ignored it and talked about all he knew.

With Obama outspending McCain 3:1 on TV McCain needed this audience to see something substantive and ‘wow.’ We didnt’
Posted by Fraley on October 07, 2008 at 2157 hrs

I’d have more confidence in turning the reigns back over to Bill Clinton than either guy on the stage tonight.

Obama is too young and inexperienced (btw, I’m younger than him, but I still don’t view him as knowing what the hell he’s doing) I see Jimmy Carter part II. I see a good guy, but not a leader. Not even close. We need a leader right now more than anything.

McCain? I question whether he really even comprehends the campaign slogan lines he keeps repeating.
Posted by on October 07, 2008 at 2207 hrs

McCain is not even trying to win!! I long for a conservative and feel sorry Palin has had to be hooked up with a loser.
Posted by on October 07, 2008 at 2214 hrs

As I said after the last debate, I don’t want to get bogged down in policy and issues, because that isn’t what these things are all about. That said, I also don’t pretend to know what really trips the trigger of an undecided voter, but here are my observations on things that might.

It isn’t fair, and it isn’t right, but McCain’s age and physical limitations have got to be hurting him. He just doesn’t look or sound Presidential, and wandering around the stage in the background almost writes its own SNL skit this weekend.

McCain’s critique of Obama’s lack of experience has got to be falling on deaf ears to anyone watching these debates. While you may disagree with the conclusions Obama draws from his experience, his ability to speak in detail about a wide range of topics undermines this McCain talking point.

Here’s my one policy comment (and I did hammer Biden on his same sex marriage answer last week, so my picking on isn’t entirely partisan).

I give it to McCain for coming out with a new message on the economy tonight. I question how his plan plays to his base or to those who are making their mortgage payments. I know what I’m thinking is..."so property values in my neighborhood would go down under this plan because the federal government is going to reassign a lower value to the house the guy across the street bought at a mortgage he couldn’t afford?”

It doesn’t seem like he thought it all the way through to me.
Posted by on October 07, 2008 at 2217 hrs

McCain was on the attack, but he didn’t score any big points. Obama looked presidential. He’s going to ride that right to the white house.
Posted by scott on October 07, 2008 at 2217 hrs

Wow. Obama made McCain look like a bitter old man.

It might be time for McCain to suspend his campaign again.
Posted by on October 07, 2008 at 2225 hrs

Lefty, the plan is that he’s not going to foreclose on the guy across the street once the Feds own the mortgage. When the bank forecloses, you put a house on the market during a very distressed time. So it sells for even less and brings down the value of your house and all the others in the neighborhood. The spiral we are in doesn’t stop.

By simply having the government reduce the mortgage on a house, it doesn’t reduce the “value” of the house. The house never hits the open market to cause this spiral effect that we don’t really see in Wisconsin but is prevalent in Las Vegas, Orlando, Denver, etc.

Plus by keeping the guy in his house, you also have side benefits of stabilizing the neighborhood and helping a taxpayer.

The only problem with this plan is that the government is essentially buying every guy who really couldn’t afford his house, a house. So aside from the costs, you have the moral hazard issue.
Posted by on October 07, 2008 at 2301 hrs

On one of the post-debate pundit-fests, I heard a figure of $300 billion for McCain’s mortgage buyout. That’s new money, not included in the $700 billion already allocated. So much for the “spending cuts” he was trumpeting in the last debate.
Posted by on October 07, 2008 at 2306 hrs

"The only problem with this plan is that the government is essentially buying every guy who really couldn’t afford his house, a house.” In doing so the government creates a whole bunch of problems. It artificially inflates housing prices, thus screwing everyone looking to buy a home. It continues the spiral of people paying excessive property taxes on property that is overvalued. It effectively subsidizes housing, a portion of the economy that is currently relatively unproductive, at the expense of more productive sectors.

This was an absolutely dreadful idea that needs to be put on the shelf right next to GWB’s “we need to put a man on Mars” idea.
Posted by on October 07, 2008 at 2315 hrs

Man, I wish I had gotten a mortgage I couldn’t afford - I could have used the “virtual” equity to get a new car, big-screen TV, gaming system, computer, etc. - and now the government would just “lower” the amount I owe.

Wonder what will happen when these home values go up again? Will these people be able to get new equity loans? Or, will the government actually get a little of ours back??
Posted by on October 08, 2008 at 0040 hrs

I watched on DVR. These debates are atrocious. Cumulatively, these are the two worst major party candidates on the same ballot that we’ve seen since Bush 41 and Dukakis in 1988.

Neither one seems to have any real clue. McCain’s strategy seems to be one desperate gimmick after another. Obama doesn’t seem to offer any details on anything since he’s clearly ahead, and so he just plays it safe.

I could hold my nose and vote for McCain in spite of his terrible strategy but for the fact that Sarah Palin is about the dumbest thing I’ve had to endure since Admiral Stockdale. Also, the fact that she runs her state primarily through cronyism is disgusting. Conservatives should support government based on merit, not based on giving your high school buddies high-paying jobs.

This race is done. That’s not defeatist, just reality. Obama likely wins by 5-6 with around 350 EV’s. The only question remaining is the size of Obama’s coattails.
Posted by Recess Supervisor on October 08, 2008 at 0137 hrs

This race is done. That’s not defeatist, just reality.

I have to agree with you, RS. I think it’ll be a bit closer, but I do believe Obama will win.

Yes, McCain has turned out to be the terrible candidate I thought he’d be, but the real reason Obama will win is the economy.
Posted by on October 08, 2008 at 0747 hrs

Anyone here coming to drinking right in november? I’ll be thirsty.
Posted by scott on October 08, 2008 at 0753 hrs

Curious that you mentioned Bush41, RS. That was exactly my reaction. This was a debate between Carter and Bush41. God help us.
Posted by on October 08, 2008 at 0813 hrs

Man, I wish I had gotten a mortgage I couldn’t afford

Same here. I wish I hadn’t worked my ass off at a full time job, with three kids, and built my own house. I was the general, I did all the rough carpentry, all the electrical, all the insulation, all the drywall, all the finish carpentry, and managed all the subs. Then when we rolled the construction loan into a mortgage in early 2004, I took the responsible route and locked in a 30 year fixed at higher rates that the ARMs that were available at the time. Where’s my reward for being responsible and hard working?

It’s my hard work that allows me to have over $75K in equity in my house even with this depressed market and my responsibility that allows me to afford my mortgage payments every month regardless of what the Prime Rate is. This country is fucked up, there are no consequences for anything unless you follow the rules and make rational and responsible decisions; then you’re going to get it in the ass, and no one will be there with the lube.
Posted by on October 08, 2008 at 0818 hrs

McCain’s critique of Obama’s lack of experience has got to be falling on deaf ears to anyone watching these debates

Much like Obama’s incessant talk about “the past 8 years” and “bush this bush that”??

I give it to McCain for coming out with a new message on the economy tonight. I question how his plan plays to his base or to those who are making their mortgage payments.

Going in, the consensus was that McCain needed a home-run. I think his genius advisors must have sat and brainstormed this one up a few hours before. I thought the same thing… First, just how large of the undecided electorate is that carrot going to appeal to?

Once again I wonder why McCain left the opportunity on the table over the past 3 weeks to play to the segment of the population that did things right. Bought a house they could afford, made their mortgage payments, etc etc.

Neither of these blindly roving politicians are offering anything to the segment of the population that has been accountable and self-sufficient.

This race is done. That’s not defeatist, just reality. Obama likely wins by 5-6

I agree.

No doubt in my mind Obama will be elected.

As I said in a post earlier. This race was given away by McCain the week of Sept 22nd.
Posted by on October 08, 2008 at 0952 hrs

No doubt in my mind Obama will be elected.

Frankly, I think the only reason it’s even close at this point demonstrates how bad a candidate Obama really is. If the Dem pick had been Hillary she’d be up by at least 10 points right now.
Posted by on October 08, 2008 at 1024 hrs

Ditto #56.

What a f--K up I am! Paid off my house as well as property up-north in 10 years by working, sacrficing, and making extra payments when I could have partied and let the taxpayers cover my ass! We conservatives are financial idiots in a liberal world.
Posted by on October 08, 2008 at 1027 hrs

Interesting hypothesis. I’m not so sure, though. Even though she (was) enormously popular among many Democrats, her divisiveness is so severe it crosses party lines. Plus, she is the only person in America who could have united the Republican party against the Democratic ticket.

I think, frankly, that we’d see national polls looking much as they do now, but with a different configuration of battleground states.
Posted by scott on October 08, 2008 at 1028 hrs

What a f--K up I am! Paid off my house as well as property up-north in 10 years by working, sacrficing, and making extra payments when I could have partied and let the taxpayers cover my ass! We conservatives are financial idiots in a liberal world.

Right… And think of all the people who… If J Mc were to be elected and put his “mortgage buy-back” program in place that were making their payments and could afford their payments (but had one of these ARMS) would see the opportunity to take advantage of a government program.

...oh wait… my bad… No one would ever work the system like that…

Frankly, I think the only reason it’s even close at this point demonstrates how bad a candidate Obama really is.

I agree…

A democratic house, democratic senate, and democratic president. All the hard working people in this country who pay their own bills and take care of their own shit better look the fuck out. Hold on to you wallet, the socailists are coming.
Posted by on October 08, 2008 at 1038 hrs

A little game for you.

We keep hearing about John McCain’s record in the US Senate, but one thing about from that record.

Next time you run into McCain supporters, ask them cold what John McCain did in the US Senate over his generation long career. We’ll spot you McCain-Feingold, which most Gopers hate. Betcha $10 you will be greeted with an open mouth stare. $20 if you get to ask Sarah Palin tomorrow.

I know I’m going to hear back about Obama, so I can rip off three things about That One.

Try it. It’s fun.
Posted by on October 08, 2008 at 1058 hrs

Typical conservatives. Blame the victim. Hurricane? You should have got out of the way! Mortgage crisis? Too many poor homeowners saying yes to risky bank loans.

Your favorite explanation when the shit hits the fan is to point the finger at the folks most splattered by it. Your favorite response is to do nothing, claiming that it’s their own fault and thus not your responsibility and by the way we don’t want to be socialists.

You’re just too goddamned worried and obsessed over the idea that someone, somewhere might be irresponsible and not get punished for it. As long as you can identify who to blame and make sure they’re punished, we need not worry about ‘what to do.’ We are under no moral or practical obligation to do anything in this little fever-dream of grade school ethics.

I sometimes think that in your perfect world we would have no social safety net programs. Lots of people would suffer because of it, but you’d be secure in the knowledge that they all brought it upon themselves. As long as everything’s “fair” it doesn’t matter if millions of Americans lives worsen.
Posted by scott on October 08, 2008 at 1100 hrs

I disagree, in part. I think it’s more likely that we see Obama try to stake out a centrist position in order to triangulate against the lunatic fringe in Congress.

Without a Republican president, Democrats will be positioned to accept all the credit and take all the blame for the next two years. I won’t say that 2010 will be a Republican year - it may be more accurate to say that the political reality of same-party rule coupled with the races on the table in 2010 means that 2010 is probably not a Democratic year. I expect modest givebacks in the House and the Senate.

I have no doubt that Obama is ideologically liberal at heart, but I do have some faith that his approach to governance seems to indicate that his leadership style will likely be pragmatic - which will be a refreshing change from what Bush 43 has ended up being. Funny too, since Bush 43 seemed like such a pragmatist in his 2000 campaign but ended up inflexible and unwilling to admit a mistake.

All the conservatives survived eight years of Clinton, and they’re all still alive. All the liberals survived eight years of Bush, and they’re all still alive. That America has managed to endure and prosper over time is perhaps a greater testament to the American people than to the goobers we sometimes elect.
Posted by Recess Supervisor on October 08, 2008 at 1117 hrs

scott, go with hyperbole if you want, but we have seen the death of personal responsibility.

I don’t care how slow you are when it comes to economics, things like 125% of value mortgages, interest-only mortgages and examples of people with little-or-no income buying property do not make any sense. Whose fault is it really? When the single mom on the North side signed for $800k in loans, was it a result of the plans of the GOP or the “community organizers” like ACORN?

As far as a “safety net”, conservatives do support the concept...just not the “hammock” that liberals have turned it into. It was supposed to be a temporary thing, not a multi-generational lifestyle...but I guess those guaranteed votes are a very desirable thing for a guy like Obama. If he gets elected, with a Democratic Congress, we will find the breaking point.
Posted by on October 08, 2008 at 1122 hrs

Typical conservatives. Blame the victim.

Blame the victim? Are you kidding? Do you not get it? Us responsible ones are the victims. How can a person who gets a government sponsored mortgage rework a victim? How is a person who doesn’t insure their house in a hurricane zone a victim? When my Wisconsin Home Owners insurance rates rise because of Hurricane Katrina, that makes ME the victim. Try thinking scott, please!
Posted by on October 08, 2008 at 1133 hrs

It isn’t that someone might not get punished for irresponsibility Scott. It’s that you desire to punish me for their irresponsibility while simultaneously rewarding them.
Posted by on October 08, 2008 at 1140 hrs

re #73

Scott:
Scary that I somewhat agree with you..HOWEVER and a big HOWEVER, is that it is not the government’s job to look after every individual who made a bad decision That’s what friends, family and personal responsibility are for.

(a.k.a. Pave the roads, defend the shores and get the hell out of the way)
Posted by on October 08, 2008 at 1209 hrs

it is not the government’s job to look after every individual who made a bad decision

No. But sometimes it is. Sometimes there is a moral obligation. Other times it’s more of a practical matter. Often, it’s a little of both.

If I could prove that it will ultimately cost us less to bail out homeowners who can’t pay their ARM mortgages than it will cost us to just let them lose their homes, would you go for it? (I don’t really know that this is the case, I’m just supposing.) Or would you still find it onerous in that the “guilty” people weren’t being made responsible for their irresponsibility?

If I could prove that it ultimately costs less to fund job and educational opportunities for poor Americans than it costs to do nothing, would you do it? Or would you be against it on the basis that they were being “rewarded” for their irresponsibility and lack of hard work?

If I could demonstrate conclusively that making people participate in social security was more effective at reducing poverty among the elderly than, I don’t know, giving them super IRA accounts to save their own money, would you be in favor of it? or would you object to it on the basis that people should be responsible for themselves?
Posted by scott on October 08, 2008 at 1326 hrs

It will cost us nothing to let them lose their homes. It will save money. They can, after all, simply move into a different home, or, god forbid, an apartment.

Why, Scott, do you always insist on puishing me for the excesses of others while rewarding their excess?
Posted by on October 08, 2008 at 1339 hrs

I should have written “punishing” above.
Posted by on October 08, 2008 at 1340 hrs

A nationwide rash of home foreclosures costs us nothing? I think there are some people who would disagree with that.

Besides, I’m not insisting on anything. I’m asking a hypothetical. I really don’t know what the answer to the crisis is.
Posted by scott on October 08, 2008 at 1342 hrs

If I could prove that it is ultimately unsustainable to inflict government control (and “protection") on every facet of our lives (because when there are no consequences, there can be no reward), would you understand our point?

The case in point would be the USSR.
Posted by on October 08, 2008 at 1403 hrs

The main problem I see with reducing the principle from people’s mortgages and allowing them to stay in their home is that it completely unravels the central principles of risk that our capitalist system is based on. It is throwing out the baby with the bath water. At some point there has to be some consequence for misguided action. If there isn’t any consequence anywhere along the line we have completely undermined one of the fundamental principles of what made our countrys economic system work so well for the past 200+ yrs.

If I see that my neighbor who drives a nicer car than I do, has a fancier tv than I do, has a nicer laptop than I do, and whose wife has a bigger diamond ring than my wife has overpaid for his house and gets to refinance the principal on his house to a value lower than I paid for my house what kind of a sucker am I to continue to struggle to pay my mortgage on which I now owe more than the house is worth?

Placed in that situation some people are going to decide to stop paying their mortgage and start spending their money on themselves. When they get to the point of eviction they will come crying to the deep pockets of Uncle Sam.

It might appear to be more costly to deal with the failing banks than dealing with millions of foreclosures, but the ultimate goal has to be to keep people in their homes. Are more people going to keep paying their mortgages if they see that foreclosure is a terribly costly and painful process or are more people going to keep paying on their mortgage if they see that the government is going to bend over backwards to make sure the don’t get evicted?

Obama has some of the best economists this country has to offer working for him. I sure hope they can come up with a better counter proposal to discredit this insanity that McCain rolled out last night.
Posted by on October 08, 2008 at 1405 hrs

The case in point would be the USSR.

Wow, hyperbole much?

Seriously, though. I’m not confused about the point you’re trying to make. I get it. I’m not asking for a soviet style economy. Nobody is. I’m reminded of conversations in which I suggest a moderately more redistributive tax system and I’m immediately accused of wanting everyone in America to make the same salary.

Specifically, I didn’t say “every facet of our lives,” you did.
Posted by scott on October 08, 2008 at 1412 hrs

Well written 3rd Way, your concerns are my concerns. Personally, I don’t think the Govt should be involved with it at all. Mortgage Reworks are nothing new, and it should be between the Bank and the Borrower, and nothing more.

The bank has a vested interest in keeping a borrower in the house, certainly more of a vested interested than Joe Six Pack tax payer. That’s all the inducement needed with Banks to rework mortgages, whether it’s lower interest, longer term, or even reduction in principle… it’s something that the Lender and the Borrower need to fix, not the responsible tax payers of this country. I have absolutely no problem with it this way… but once the Fed steps in, then I have a real problem with it.
Posted by on October 08, 2008 at 1421 hrs

I didn’t say “every facet of our lives,”

Take a look historically...how much closer are we to their model than we were at the start of the Cold War? And with Obama, and his socialist philosophy, we’ll get a whole lot closer to “every facet.”
Posted by on October 08, 2008 at 1423 hrs

As an addendum to #86, I’d like to add that the only reason a bank might not see as large of an interest in keeping houses from foreclosure is that the policy makers have their golden parachutes ready just in case they do foreclose too many houses, and lose too much money. There needs to be equal responsibility and accountability from both the Borrowers and the Lenders.
Posted by on October 08, 2008 at 1424 hrs

The bank has a vested interest in keeping a borrower in the house That used to be accurate, because the bank didn’t want to own it...what happens now that they can “sell” it to the Federal Government? Again, no consequence to inhibit the risk.
Posted by on October 08, 2008 at 1429 hrs

You cannot bail out the buyer without bailing out the lender. Not allowing a rash of foreclosures and/or renegotiated loans is the danger, Scott. A bubble exists. continuing to inflate further is the worst possible scenario.

Keeping people in their homes is a poor goal, 3rd way. Some people need to lose their homes. The people in danger of foreclosure are those people who have no equity anyways. They are already renting for all practical purposes. They should not be in their homes, and having the government keep them there is done at the expense of worthy homeowners.
Posted by on October 08, 2008 at 1431 hrs

Wiaggie, I think you’re vastly overestimating our nearness to soviet-style economics and government intrusion. And you’re equally mistaken when you liken American Democrats to socialists (presuming you mean European variety as you find in France, for example). But then, i’m never sure what you guys mean when you say “socialist.” To some of you it means just having a program like social security or unemployment insurance. Do you know what Obama would be called were he running anywhere else on earth? A conservative. That’s not a defense of his policies, but a reminder that you’ve lost perspective badly if you think American Democrats are teetering on the brink of communism.
Posted by scott on October 08, 2008 at 1432 hrs

You guys make interesting points against the homeowners’ bailout. But not one of you seems to know anything about the costs of just letting nature take its course. In fact, one of you flat out stated that there is no cost to it.

Can nobody think of any costs to weigh out against these issues you’ve brought up?
Posted by scott on October 08, 2008 at 1434 hrs

The point, Scott, is that we will reach market equilibrium in housing regardless. You cannot avoid it. There are no economic costs associated with this. It is the most efficient solution. It is the various bailout programs that inflict cost upon the economy and its’ participants.
Posted by on October 08, 2008 at 1441 hrs

BVBB - I agree that some people need to lose their homes and some people need to take huge losses. Many already have. It is completely unfair to the people that bit the bullet and walked away from their investments with big losses to step in and write down principal for others that are in the same position.

There is going to pain in this, the only question is who hurts and how bad. The irresponsible need to learn there is a consequence with the risk involved in being overleveraged. Allowing the system to teach a harsh lesson every now and then has worked for the past 200+ years, it is going to work for the next 200 years if we can all learn from this lesson.

There is a point where that lesson inflicts an injury worse than the original offense. We have to be cautious that the lesson doesn’t hurt all us too much (that can happen by intervening too much or not intervening enough). We are all going to get hurt, it is just a matter of the degree of pain.

Things are not getting better with this crisis. I was just reading about how much higher the reset rate of adjustable rate mortgages are going to be if they reset in the midst of the currently frozen credit market. In the coming months the rate of foreclosures could be much worse than it is today. Further erosion of the housing market is going might hurt all of us with equity in our homes just as badly as the government writing down the irresponsible borrowers debt.

Preventing an epidemic of foreclosures is a worthy goal. As I said before I hope Obama can come up with a counter proposal that creates strong incentives for people to keep paying their mortgages. Fear is usually a great motivator. McCain’s proposal takes the element of fear out of the equation.
Posted by on October 08, 2008 at 1506 hrs

Wow, 3way - I agree with your entire post (except the part about Obama coming up with a better plan)! Talk about dogs sleeping with cats!

Seriously, McCain’s plan has to be about the worst “solution” I have heard to date on how to fix the housing mess. If that’s the best we can do, we’re in deep do-do.
Posted by on October 08, 2008 at 1523 hrs

Socialism
1. Any of various theories or systems of social organization in which the means of producing and distributing goods is owned collectively or by a centralized government that often plans and controls the economy.
2. The stage in Marxist-Leninist theory intermediate between capitalism and communism, in which collective ownership of the economy under the dictatorship of the proletariat has not yet been successfully achieved.

The government has started buying commercial paper (in place of private banks), will soon own (or somehow have control of) a fairly large portion of the nations housing, is looking to take over the health care industry...and people like Maxine Waters have already threatened to nationalize the oil industry. I’d say we’re drifting towards socialism at a pretty rapid rate...and too many Americans think it’s a great idea.
Posted by on October 08, 2008 at 1536 hrs

There is no credit crisis, 3rd way,and you cannot and will not prevent a further decline in housing prices. Housing may have to fall as much as another 40% in areas.

There is a crisis in credit for people and banks who have no collateral and who wish to buy and sell overpriced assets. Trying to alleviate that is going to simply further inflate the bubble, that is the goal of all the various bailout plans.

The difference we have is that I believe housing is grossly overpriced and that we are already swimming in credit and debt. The total ratio of debt to GNP is higher now in this country then it has ever been. That makes it awfully difficult to argue that we lack credit. The solution is not more credit.
Posted by on October 08, 2008 at 1546 hrs

Don’t look now BVBB but we have some serious problems with our credit market.

From Bloomberg today:

About $23.7 billion, or 87 percent, of the ARMs underlying bonds whose interest rates begin adjusting next month track Libor rates. Six-month dollar Libor has climbed to 4.02 percent, from 3 percent on Sept. 15.

The deepening of the credit crisis that started last year amid record defaults on subprime mortgages, contributing to $593 billion in writedowns and losses at banks worldwide, may end up causing more borrowers to fail to make their monthly payments. Libor rates, which track how much banks charge each other for loans, help set the cost of everything from credit cards to corporate loans.

``America’s homeowners are going to get uncomfortably familiar with ‘LIBOR’ starting next month,’’ the New York-based Citigroup analysts wrote.

Libor rates have soared since the bankruptcy of Lehman Brothers Holdings Inc. last month as financial companies hoard cash.

The average subprime borrower facing an adjustable payment for the first time next month would face a monthly payment increase of about 18 percent based on Libor rates as of Sept. 30, rather than the 10 percent that would have occurred based on the rates on Sept. 15, the analysts wrote. The payment would be $1,951, instead of $1,807, they said. Fannie Mae and Freddie Mac loans would be boosted to $1,021 on average, instead of $904.

You know that credit is the oil that keeps this big capitalist machine chugging along. The whole machine is going to seize up if we can’t keep it well oiled. This doesn’t mean we need to keep overly inflated assets inflated. The housing market can’t heal until the broken parts get reset in the proper position. Reseting those broken parts is going to be real painful for some people, it already has been.

Was it you that coined that “drunkenomics” thing the other day? Whoever did was exactly right. We are a nation of drunk on an overabundence of cheap money. Greenspan was ordering round after round then snuck out the back door when the tab arrived. McCain wants to pour us another drink. The free market fundamentalists want to kick us out of the bar, down a flight of steps and into the gutter. Somebody needs to slap us in the face, tell us to sober up, give us some cab fare and call a taxi to take us home. We all better hope Obama is that somebody. He is going to have to make a decision on how to deal with a whole lot of drunk assholes. No matter what we have to deal with a hangover. Hopefully we won’t have to deal with a hangover and a broken jaw.
Posted by on October 08, 2008 at 1631 hrs

Allowing those assets to decline will result in a decrease in the money supply and a decrease in credit. That’s why all these plans try to pretend that the price of the assets isn’t going to decline. If the price of the assets declines, then there is less backing for the credit and thus less credit. that’s why the fed keeps dropping rates: they are pretending that the economy isn’t already awash in money.

Credit isn’t the oil for all of capitalism nor will the whole machine freeze up without cheap credit. The speculative parts of the machine will freeze up, but frankly I don’t have a problem with that. The question is whether we will throw the baby out with the bathwater. I don’t see a need or reason to do that, but the bathwater has purchased a lot of influence and it appears that the powers that be do indeed favor the bathwater over the baby.
Posted by on October 08, 2008 at 1651 hrs

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