A Good Idea to Let Underwater Homes refinance at Today's Rates?

[Lucky]

http://www.nytimes.com/2011/08/25/business/economy/us-may-back-mortgage-refinancing-for-millions.html?hp

The government may propose a program to allow those underwater in their mortgages to refinance at today's new lower rates. Read the article, then tell me if is a good idea, okay?

http://www.nytimes.com/2011/08/25/business/economy/us-may-back-mortgage-refinancing-for-millions.html?hp

[Guest hitoallusa]

Pros and cons have been stated in the article already and its effectiveness in not so clear, unless you can predict the future. Where is Nostradamus? Can someone go through his prophecies and find anything about the housing market? It is so complicated. People live in the houses that they can't afford is wrong in the first place. The housing bubble should be popped completely. Fannie and Freddie should be brought down. Using the housing market to gain votes and give a false sense of prosperity by politicians should be put to an end. It's like building a house on a shaky foundation all over again. Whether you are a democrat or a republican, if something is against common sense that we have to let it go. Unfortunately, we are incapable of doing that. The problems will accumulate and we will yearn for a strong leader. A leader who can break up entrenched interests. Let's just hope that we don't get another Hilter.

[TampaYankee]

I have heard a number of economists and members of the business community say that we will not get out of these doldrums until the new housing market is restored and people remain buried under mortgage debt. and that won't happen as long as we have so many mortgages underwater. They say that while there are some downsides that this really is a no-brainer for the economy.

[Guest hitoallusa]

Although we don't have the housing market that sustained the bubble, americans are resilient and creative. I see signs of them trying to adjust to the current situation and coming up with new ideas to generate growth. Yes big businesses are powerful but we have to remember that they were not powerful at all when they first started. They were like us. My point is that we are forgetting how strong americans are and that americans have overcome many obstacles. I'm positive about our future. God Bless America~~~

[TampaYankee]

Although we don't have the housing market that sustained the bubble, americans are resilient and creative. I see signs of them trying to adjust to the current situation and coming up with new ideas to generate growth. Yes big businesses are powerful but we have to remember that they were not powerful at all when they first started. They were like us. My point is that we are forgetting how strong americans are and that americans have overcome many obstacles. I'm positive about our future. God Bless America~~~

I guess I do not see what you see. Maybe you can elaborate your observatoins?

I'd like to share your optimism but I learned the lessons of the Great Depression and the downslide that got us there. It was more than the stock market crash. There were also three years of Republican austerity measures that added more unbearable weight to the economy which killed jobs and consumer demand and investments and tax revenues.

What ultimately got us out of that was Tojo and Hitler, and a massive, essentially unlimited, government spending program that lasted half a dozen years or more inlcuding Lend-Lease to Britain and Russia prior to our entry, the war effort itself, and the Marshall Plan that rebuilt Europe ; not the 'strength' of us Americans alone. Sure we are a resilient and producitve society, however some economic conditions are so bad that little can be accomplished in less than a deacde to climb out of those conditions unless Americans are mobilized and focused on achieving productive goals in the large, not piecemeal here and there. Otherwise we take the very slow road to recovery. That is our present path.

[Guest hitoallusa]

The US firms has built up a lot of cash and they will soon figure out a way to use it since the interest is so low it's not profitable for them to hold on to cash. The housing bubble has disappeared so there is no good investment for them to put their money into right now but that also means there are many number of opportunities out there. People will find out ways to make money and as long as the next "it" investment is sound then the recovery will take place. I am no fortune teller and yes the economy might get worse. But instead of being pessimistic, let's have hope that we can survive this and do everything in our power to help other people in need. We can work extra hard and be innovative. We might come up with a new way of doing things that will eventually lead us to a new form of society.

I don't necessary agree that Hitler or WWII brought out of the Great Depression. That is hotly debated by many scholars and economists. There are many politicians-both democrats and republicans- take things out of context and promote imperfect ideologies to make absurd arguments. I don't like Bachmann because she claims that she can turn around the economy in 3 months ONCE she gets elected to be president. I find that dangerous and unsound. What she is doing is counter productive. What I can't believe is that there are people applauding and supporting her statement.

I hope we can move onto a society where flawed ideology, bias, and prejudice play no role. It hinders efficiency of our society. We have come this far and I hope we can do that in the future so the society can run more efficiently. Politicians who appeals to emotion and fear, and exploit out of context theories and models should be ousted. I hope that day will come.

I guess I do not see what you see. Maybe you can elaborate your observatoins?

I'd like to share your optimism but I learned the lessons of the Great Depression and the downslide that got us there. It was more than the stock market crash. There were also three years of Republican austerity measures that added more unbearable weight to the economy which killed jobs and consumer demand and investments and tax revenues.

What ultimately got us out of that was Tojo and Hitler, and a massive, essentially unlimited, government spending program that lasted half a dozen years or more inlcuding Lend-Lease to Britain and Russia prior to our entry, the war effort itself, and the Marshall Plan that rebuilt Europe ; not the 'strength' of us Americans alone. Sure we are a resilient and producitve society, however some economic conditions are so bad that little can be accomplished in less than a deacde to climb out of those conditions unless Americans are mobilized and focused on achieving productive goals in the large, not piecemeal here and there. Otherwise we take the very slow road to recovery. That is our present path.

[TampaYankee]

The US firms has built up a lot of cash and they will soon figure out a way to use it since the interest is so low it's not profitable for them to hold on to cash.

Capitalism is based on a simple law of Supply and Demand, not hope or figuring out how a business can use cash -- except for the narrow Wall St Banking sector. Whether it is demand by business from other business or from retail customers, capitalism is based on demand -- honest capitalism anyway. Ultimately, the demand reduces to consumer demand, business demand, or government demand -- groceries, appliances, cars, manufacturing machines, raw materials, heavy equipment, computers, software, and weapons systems, tanks, munitions, teachers, firemen, police etc.

Hope is a commodity that government can spur through generating economic activity by actions. Inspiration alone won't move mountains. More than hope, gov't can lessen the depth of economic slump by temporarily increasing demand to bridge the interval as the long-term plan generates private sector sustained self-generating demand. Just imagine how long it would have taken Europe to recover economically from WWII without the Marshall Plan -- easily a generation. Two generations might not be out of the question, unless there was another war maybe.

Business likes to complain about uncertainty causing them to sit on the sidelines hoarding their cash. THe GOP and Business interests try to convince everyone that uncertainty comes from govt regs and taxes. That is only their attempt to maximize profits, which is what they try to do. That might make a difference to small marginal businesses ( and action is being taken for them) but no business will survive much less expand without demand.

I now business. Business is motivated my making money not by the public welfare. If they can make money they will make money. They will not sit on the sidelines. The great uncertainty is demand. If they had the orders they would be pumping out products and services and hiring people to meet that demand, regs and taxes be damned. Business doesn't work on hope or faith or altruism but demand, demand, demand. They don't manufacture products to sit in warehouses.

The housing bubble has disappeared so there is no good investment for them to put their money into right now but that also means there are many number of opportunities out there. People will find out ways to make money and as long as the next "it" investment is sound then the recovery will take place.

I agree with you that we are a resourceful and innovative people and the next 'it' investment will be forthcoming, maybe next week or next month or next year. However, that will not turn around an economy where seven million to fifteen million people need jobs. Where tax receipts are down hundreds of millions of dollars if not more every year. There needs to be a proactive engagement to get jobs up and running that pay people an income that supports demand for more products and services, which create more jobs to meet that demand. Eventually, as the demand grows it becomes more and more self sustaining. That is exactly how the Marshall Plan worked.

I am no fortune teller and yes the economy might get worse. But instead of being pessimistic, let's have hope that we can survive this and do everything in our power to help other people in need. We can work extra hard and be innovative. We might come up with a new way of doing things that will eventually lead us to a new form of society.

I don't necessary agree that Hitler or WWII brought out of the Great Depression. That is hotly debated by many scholars and economists. There are many politicians-both democrats and republicans- take things out of context and promote imperfect ideologies to make absurd arguments. I don't like Bachmann because she claims that she can turn around the economy in 3 months ONCE she gets elected to be president. I find that dangerous and unsound. What she is doing is counter productive. What I can't believe is that there are people applauding and supporting her statement.

I hope we can move onto a society where flawed ideology, bias, and prejudice play no role. It hinders efficiency of our society. We have come this far and I hope we can do that in the future so the society can run more efficiently. Politicians who appeals to emotion and fear, and exploit out of context theories and models should be ousted. I hope that day will come.

I guess my major difference with your stated views is that for you everything pretty much rests on hope and faith. That is all well and good from a pyschological point of view, for a period of time. However, it is ineffective without a concerted plan to get the economy back to work ASAP. Hope in a vacuum won't survive forever. We need both short-term and long-term plans of action implemented. Wishing and hoping alone will not do unless we are prepared to wait a long time.

If you know how stoke an economy this deep in a hole to generate a three percent to four percent growth rate without creating a signigicant increase in demand then please share

Some might say: increase exports. That is a good idea. We have two problems with that too. First, American products are as cheap as they have ever been considering the dollar is in the toilet vis-a-vis the Euro, Pound and Yen. So we already have a competitive edge in pricing with the exception of slave wages. However, our businesses get around that by shipping our labor work to the third world. That defeats job creation here.

Second, some of our trade partners engage in unfair trade practices that work to our detriment. So we seem to have maximized our advantage for now unless and until we overcome the unfair trade practices which we are loathe to do because many of our big companies are in bed with those other countries. We beg and complain but we do not smack their hands or give kind for kind. I don't see any change in that regardless of who sits in the White House or Congress.

Unless and until we generate a strong jobs program that addresses both near term jobs and long-term economic/business/tax policies, we are on a long road to recovery and travelling in the slow lane.

[Guest hitoallusa]

The fact that companies can save and hold onto cash is a positive sign. It's not ideal but it implies that, at least, they are making profits, they can maintain their pay rolls, purchase equipment and supplies and fortunately they will be able to handle another short term liquid crisis. That's why Warren Buffet is confident. As long as the EU debt crisis can be contained, I think the economy will get better soon. The economic crisis blew a big punch in people's confidence. It changed people's view on our economy; people are scared and lost confidence.

I believe one of necessary qualities of a leader is to bring stability to the society. People need repeated assurance that their hard work will be rewarded, they get paid for their work, they get rights they deserve for paying taxes and observing law, they need assurance that they can keep money in the bank without having to worry in sleep. The stability promotes growth by directing people's innovative energy into action rather than having them worrying about what will happen tomorrow. No one can predict what will happen tomorrow but one can be a bit assured if the same thing happens again and again everyday.

People need confidence and hope that they can overcome the crisis. They need encouragement and assurance that their effort will be rewarded. That's what I am trying to say. I see that in many americans and people around me. They don't have a lot but they are making the best out of some stability- look at some of the African governments, it's chaos down there -that we, at least, have right now to make our lives better. At least our society is stable enough to find food at a local grocery store. That's why I have confidence that we will get out of this. I want all of us to try and do our best and eventually we will come out of this.

[MsGuy]

As long as the EU debt crisis can be contained...

Big, big if.

I want all of us to try and do our best and eventually we will come out of this.

I think we can all agree on that, Hito.