U.S. Sets Big Incentives to Head Off Foreclosures

WASHINGTON — The Obama administration on Wednesday began the most ambitious effort since the 1930s to help troubled homeowners, offering lenders and borrowers big incentives and subsidies to try to stem the wave of foreclosures.

People with mortgages as high as $729,750 could qualify for help, and there is no ceiling on how high their income can be as long as they are in danger of losing their homes. Interest rates on loans could go as low as 2 percent for some. Many homeowners could see their mortgage payments drop by several hundred dollars a month, and some could save more than $1,000 a month.

Administration officials estimate that the plan will help as many as four million people avoid foreclosure, at a cost to taxpayers of about $75 billion. In addition, the Treasury Department said it intended to follow up with a plan to help troubled borrowers with second mortgages, which many homebuyers used as “piggyback” loans to buy houses with no money down.

The plan is bolder and more expensive than any of the Bush administration’s programs, which were based almost entirely on coaxing lenders to voluntarily modify loans. While the number of loan modifications has climbed sharply, the number of foreclosures skyrocketed to 2.2 million at the end of 2008, a record.

The new plan, which takes effect immediately, is intended to win much bigger concessions from lenders by offering a mix of generous financial incentives and regulatory arm-twisting. The final impact will depend on how both lenders and the investors who own mortgages respond, but housing experts said the administration had a good chance of achieving its goal.

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This was the first thing that HAD TO BE DONE back at the end of 2007 when the tide of bad sub-prime loans was coming in... So presently, the administration is two years and nearly two trillion dollar behind the starting blocks...

Sure many thrifty people will argue that people losing their home through bad management of their financial affairs is tough titties... But remember, we're all in it here and as mentioned somewhere else on this site, the financial system apparent "morality" is underpinned by a huge gambling operation — like the submerged part of an iceberg, about ten times the size of our piddly regulated system above the waterline — with not a single "morality" bone in it...

Stocks Drop Sharply on Retail Data and G.M. Audit

A day after breaking a five-day losing streak, Wall Street fell to new lows on Thursday as investors reacted to more concerns about the fate of General Motors, dreary retail sales and news that China did not appear poised to increase its stimulus spending.

Renewed concerns about the financial industry were reflected in big declines for the biggest banks. Shares of Bank of America and Citigroup each fell 10 percent, with Citigroup shares briefly trading below $1. JPMorgan Chase was down 12 percent, and Wells Fargo lost 15 percent.

But the broad sell-off dragged all sectors of the market lower. Producers of basic materials like metals and chemicals, whose shares rose Wednesday on speculation about China’s stimulus spending, fell back, as did transportation companies.

Shortly after 3:30 p.m., the Dow Jones industrial average was down more than 300 points, or 4.5 percent, while the broader Standard & Poor’s 500-stock index was down 4.7 percent. The technology-heavy Nasdaq index was off 3.8 percent.

Stocks in Europe also closed sharply lower.

read more at the NYT and see toon at top.

From the NYT

...

Answering a question from a reporter from China, Mr. Obama managed to acknowledge that he had to care most about how American workers and companies were affected by globalization, while still making the argument for why globalization was in America’s best interest.

“Look, I’m the president of the United States. I’m not the president of China,” Mr. Obama said. Then, he added: “It is also my responsibility to lead America into recognizing that its interests, its fate, is tied up with the larger world.”

Mr. Obama said that if America neglected or abandoned poor countries, “not only are we depriving ourselves of potential opportunities for markets and economic growth, but ultimately that despair may turn to violence that turns on us.”

“Unless we are concerned about the education of all children and not just our children, not only may we be depriving ourselves of the next great scientist who’s going to find the next new energy source that saves the planet, but we also may make people around the world much more vulnerable to anti-American propaganda.”

In a rare show of emotion from the international press, many in the room stood up and cheered after Mr. Obama was done.

If Mr. Obama gauged that crowd just right, he also had a few gaffes. The Obamas gave Queen Elizabeth II an iPod loaded with songs and videos — this after weeks of grief from the British press over the 25 DVDs which the couple gave Prime Minister Gordon Brown of Britain when he visited Washington. (The Browns gave the Obamas an ornate penholder made from the timber of a Victorian antislave ship.)

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see toons everybloodywhere... some of us are still toiling at the boilers, unless we're unemployed and the boilers have been moved to China...