| Search by tag or site | Login to my blog ? Start my own blog |
 |
Millionaire Now! by Larry NusbaumThis blog is based on the organizational principles found in my new book, "Millionaire Now! - A Financial Toolbox with Seven Steps to Wealth". |
Pimco's Gross Calls For Troubled Homeowner Bailout
Here’s what influential bond guru Bill Gross from Pimco in Newport Beach said in his current market commentary …
"The ultimate solution, it seems to me, must not emanate from the bowels of Fed headquarters on Constitution Avenue, but from the West Wing of 1600 Pennsylvania Avenue. Fiscal, not monetary policy should be the preferred remedy, one scaling Rooseveltian proportions emblematic of the RFC, or perhaps to be more current, the RTC in the early 1990s when the government absorbed the bad debts of the failing savings and loan industry. Why is it possible to rescue corrupt S&L buccaneers in the early 1990s and provide guidance to levered Wall Street investment bankers during the 1998 LTCM crisis, yet throw 2,000,000 homeowners to the wolves in 2007? If we can bail out Chrysler, why can’t we support the American homeowner?"
Mr. Gross is calling for new fiscal policies of "Rooseveltian proportions" -- the creation of a Reconstruction Mortgage Corporation. If the government was willing to absorb the bad debts of the savings and loan industry through the Resolution Trust Corporation, why "throw 2,000,000 homeowners to the wolves in 2007?" Gross asks.
"This rescue, which admittedly might bail out speculators who deserve much worse, would support millions of hard working Americans whose recent hours have become ones of frantic desperation," Gross says, rejecting suggestions by the Wall Street Journal that homeowners facing foreclosure get used to renting again.
Expanding on an earlier Fortune column in his September Investment Outlook, Gross says cutting short-term interest rates won't stop adjustable-rate mortgage rates from going up, and would only guarantee the resurgence of the kind of speculative investing that got us into the current mess.
Personally, I do not favor a government style bailout. We are not talking about savings deposits here. These are individual mortgage loan products turned investments once securitized. No one was "bailed out" when they lost money in internet stocks. And, just who will decide where bailout money will go?
Borrowers and lenders need to come together, case by case, and negotiate a workout. I recognize that the lenders won't talk to their borrowers until after they are delinquent. Terms and conditions need to be reworked and pre-payment penalties should be waived. 2-28 ARMs can easily be extended, with no new qualifying, into 5-1 ARMs.
- How Different Investments Did This Past Week
- Pre-market Open News & Links For Friday
- Canslim.net Morning Comment And Links (for Traders)
- Fed Sees Languishing Demand For West’s Housing
- There's More Agony To Come
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
- September 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- March 2007
- February 2007
- January 2007
- December 2006
- November 2006
- October 2006
- September 2006
- August 2006
- July 2006
- Millionaire Now!
- The 7 Steps to Millionaire Now!
- Build Your Financial Plan
- RETIRE RICH: Survival Guide
- ASSET ALLOCATION MODEL
- THE BIG ROLLOVER IS HERE
- THE END OF THE GRAND SUPERCYCLE?
NOTE: Please click on the charts below to enlarge them [read more]
NOTE: Please click on the charts below to enlarge them if [read more]
NOTE: Please click on the charts below to enlarge them if [read more]
<< My Home | TheMoneyBlogs Home