thegipples/dean baker

From the page: "If Fannie and Freddie incurred large losses on mortgages purchased subsequent to their takeover, it would imply that they overpaid banks for these mortgages. Whether or not this was a deliberate policy, it means that Fannie and Freddie were subsidizing the banks in much the same way as TARP was supposed to do when the plan was initially proposed to Congress."

From the page: "If the government pays for a mortgage modification where the homeowner is still paying more for the mortgage than they would for rent, then the bank gets a big gift from the government, but the homeowner is still coming out behind.

In some cases the government may pay enough to buy down principle that the homeowner is no longer underwater, but the bulk of this money is a gift to the bank, not the homeowner. If a homeowner is $100,000 underwater and the government pays the bank $50,000 to write the loan down to the current value of the house, then the bank has pocketed $50,000, while the homeowner is essentially left breaking even. This is very generous to the bank, but homeowners have nothing to show in this story."

From the page: "CBO assumed that private insurers would find ways to effectively cherry pick their patients (in violation of the law) so that their patient pool will be healthier than the population as a whole. Less healthy patients would opt into the public plan because they would get better treatment. While the CBO analysis shows that the public plan would have higher costs because its patients are sicker, because it projects that the public plan will be more efficient than private plans, it would still lower costs for the health care system as a whole."

From the page: "It is important to recognize that imposing pay restrictions as a condition of receiving TARP money and other special assistance is not interference with the market. Giving these banks money is interference with the market. The marketâ€s assessment at this moment of crisis was that these firms were bankrupt, which would have left most of their executives unemployed. The government chose to over-ride the market by giving the banks the money they needed to survive. The government could have imposed whatever conditions it chose for receiving this money."

From the page: "We could have told them to run around Wall Street naked, to walk on hot coals, to wear stupid looking hats, the choice was shutting down their banks and looking for new jobs.

Instead, we just handed them the cash, no questions asked. Now the banks are bigger and badder than ever and paying out big bonuses, just like before. As things stand, they will be an even bigger drain on the economy in the years ahead than they were in the years leading up to crash."

From the page: "Suppose that this work-share program reduced the number of people who lose their jobs involuntarily by 20 percent, or 400,000 workers per month. This would have the same effect to our job count as adding 400,000 additional new jobs. If this rate could actually be maintained over a full year, then it would imply that the economy would generate nearly five million new jobs."

From the page: "Defense spending continues to be an important factor pushing the economy as it has grown rapidly even as the economy has shrunk. Defense spending now accounts for 5.6 percent of GDP, the largest share since the first quarter of 1993.

...While the growth shown in this report allows us to pronounce the recession ended, it does not provide much basis for optimism about the future. Consumption spending is virtually certain to shrink in future quarters."

From the page: "it is virtually certain that prices will resume their fall and are likely to be 5-15 percent lower next year than this year. This fact makes it possible to assess whether any of the actors in the housing market have learned anything from the previous bubble.

...If there are no changes in behavior among these actors now, when the wreckage of the housing bubble is everywhere, then it is a safe bet that the market is as bubble-prone as ever and the major actors (including the regulators) have learned nothing."