Friday, June 19, 2009

Team Obama Believes that 125% Loan to Value Mortgages Make Sense

A common "witty" definition of insanity is doing what has failed all over again in the hopes that the next time it will be different. Does that apply here, per Bloomberg.com in Obama’s Mortgage Refinancing Program May Be Expanded? Here is the intro; read the rest if you can stand to:

Fannie Mae and Freddie Mac may get permission to begin refinancing mortgages with loan-to-value ratios above 105 percent as the Obama administration seeks to boost participation in its anti-foreclosure programs.

“We’re actively considering how to structure a program that makes sense over 105 percent,” Federal Housing Finance Agency Director James Lockhart said yesterday. He said a ratio of 125 percent “is a number” that’s on the table, though “not necessarily the number we’re going to end up with.”

Mr. Lockhart's political masters may think that free living "makes sense". That doesn't make it sensible.

It would appear that the Obama administration is in Never-Never Land. This has gone beyond Alice in Wonderland and Looking Glass World stuff. Or, think of Disney's Fantasy Land. The rest of the world must look at this, gasp, and resolve to move away as soon as is practicable to other than the U. S. dollar as the reserve currency. This does not happen overnight, however, but it did not take more than a few years under Jimmy Carter for the U. S. to be forced to issue bonds denominated in German marks. The U. S. responded with Volckerism. Will past be prologue?

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