THE MONEY PIT IS ALIVE AND WELL
The government continues to throw money into that giant hole they keep in the Capitol’s basement. This time the money is going towards an extension of the first time homebuyers tax credit. CR is reporting that it’s essentially a done deal. I’d like to think that lobbyists aren’t the ones who pushed this through, but that’s just impossible to believe since anyone in their right mind can understand the incredible waste behind such a bill.
Aside from the fact that this is an expensive attempt to fix market prices (how Capitalist of them!) it’s easy to see that the program is not having a massive impact on new buyers (see here for more details). The beneficiaries of the program are homebuyers who would have purchased a house regardless of the program. And all of this is to provide the buyers with a 4.44% discount. I just can’t think of one single reason why anyone thinks this is a good idea.
This wasteful spending is getting to the point where I almost hope the economy falls off a cliff. Why, you ask? Because that seems to be the only way we can get the attention of these people in Washington who think they’re using Monopoly money up on Capitol Hill (our Monopoly money!). I really hope I am wrong that all of this wasteful spending will come back to bite us in the end, but common sense tells me I am not wrong….The beat goes on. Goldman Sachs wins! The housing market life support system just got turned back on and boy is it wasting a lot of time and energy….
An extension is “less bad” than it could have been?
I think people have become numb to the numbers, if they ever were able to do the math. It will take the economy falling off a cliff to get folks to wake up.
TPC Reply:
October 27th, 2009 at 8:13 PM
No one cares. 10 billion here. 10 billion there. The only thing that has come of this whole crisis is more recklessness.
More money from the money pit:
“In a stark reminder of how some battered financial firms remain dependent on government lifelines, GMAC Financial Services Inc. and the Treasury Department are in advanced talks to prop up the lender with its third helping of taxpayer money, people familiar with the matter said.
The U.S. government is likely to inject $2.8 billion to $5.6 billion of capital into the Detroit company, on top of the $12.5 billion that GMAC has received since December 2008, these people said. The latest infusion would come in the form of preferred stock. The government’s 35.4% stake in the company could increase if existing shares eventually are converted into common equity.”
http://online.wsj.com/article/SB125668489932511683.html
TPC Reply:
October 27th, 2009 at 8:13 PM
nice….
Oh, goody. More Cash for Shacks. “Free” money from Benny and Timmy’s helicpoters for the “free” market. Yippee! They’re coming to take me away…ha-ha, hee-hee, ho-ho…
this stuff makes me sick. Nothing about this program makes sense to anyone with any knowledge of economics. It’s sickening how easily politicians can be bought by lobbyists.
There have been many rumors that the first time home buyers tax credit extension would be part of a bill with the unemployment benefits extension but at this point this does not seem likely. Senate Majority Leader Harry Reid is adamant about having the home buyers tax credit extended before the expiration of November 30th.
TPC Reply:
October 27th, 2009 at 10:07 PM
It’s going to pass by Friday. That’s the rumor.
“And all of this is to provide the buyers with a 4.44% discount”
Rather than providing buyers with a discount, it is providing sellers with a premium. It should be called the Home Sellers Tax Credit.
Doug Terpstra Reply:
October 28th, 2009 at 10:41 AM
Indeed. I believe that is exactly what is happening—a brilliant play on the gambling psyche of American society. It’s a great deal for the banksters, who enjoy great leverage as speculators rush back in and bid up property 20% or more, dwarfing the value of the credit. We’re seeing a mini-bubble here in Phoenix, where once again, 30% of sales are by investors and the remainder are low-down, high risk FHA (government) loans. If the banksters are benefitting, it’s a safe bet the “Home Sellers Tax Credit” will be extended, even expanded directly to investors.
Convenient timing passing this on Friday following the GDP numbers (which GS just announced will be worse than expected). Maybe they can push up the vote to coincide exactly with the GDP number.
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