“Surge” or “Stay the Course?”
Depleted and demoralized by the huge sums it has already spent (and arguably squandered) trying to stabilize a still-hostile environment, the U.S. must decide its next move.
The three choices are to: 1) double down (“surge”); 2) “stay the course”; or 3) declare victory and get out.
U.S. forces in Afghanistan?
Try, the federal government and the U.S. housing market.
A partial list of all the direct and indirect financial support provided to the housing market to date includes:
–Record low mortgage rates, courtesy of the Fed’s $1.25 trillion purchase of mortgages.
–Zero percent short-term interest rates, intended(?) to resuscitate the banks and promote private sector lending.
–Hundreds of billions shoveled into Fannie Mae, Freddie Mac — and prospectively, FHA –to enable them to (continue to) fund and guarantee a huge chunk of all U.S. mortgages.
–Tax credits and incentives to home buyers, expanded and extended through April 30, 2010.
–A combination of financial incentives and political muscle designed to induce banks to modify non-performing mortgages in their portfolios.
In light of all the foregoing, the two, $64 billion (times 10) questions looming over the 2010 U.S. housing market — indeed, economy — are: 1) how much financial support will the government provide to housing going forward?; and 2) how long can it afford that amount?
Oh, yeah — one last question: isn’t “limited surge” an oxymoron (like “jumbo shrimp?”).
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