I Pinch.
Today I found a NY Times article from 1988 extolling the virtues of the secondary mortgage market and how it allows banks to lend more money with less risk.
Another good one from the WSJ in 2000 about government mandated lending in China — you only need to read the first paragraphs before it starts sounding familiar. Interesting in light of the Fed’s sudden interest in bank lending activity.
So if you have to put together a government stimulus plan (and there really never is a good reason to), how would you do it? The president elect has indicated that he is interested in providing a payroll tax reduction of something like $40 every two weeks for taxpayers with incomes of less that $200,000 (and many people who don’t pay any taxes). Again, if the government is going to try to stimulate the economy by redistributing large quantities of money, this is a much better way to go about it than what Bush & Company came up with last year.
For one thing, it’s really easy to waste an extra $80 a month, and the whole point is to get everyone to spend the money instead of saving or paying down bills like they did with the Bush checks (for the record, I put that money down on a new house). Also, you cut out two expensive chunks last springs stimulus plan: (1) the self-congratulatory letter that the IRS sent out prior to the checks being issued, and (2) the actual costs associated with printing and distributing the checks themselves. Note that those who, like me, had their refunds from the year before electronically deposited, did not actually receive a paper check thus reducing costs somewhat. The estimated cost of the first letter was in the neighborhood of $42 million while the printing, distribution, and administration of the remainder of the program was estimated to be between $300 million and $1 billion.
This is rare praise for the Obama administration, they may have been able to trim a billion dollars out of an $800 billion plan. So I guess the moral of the story is that if you’re going to go ahead and spend the money — and I don’t think that anything is going to stop that train — save on the extras.
Fannie Mae is holding up the sale of IndyMac, demanding that they pay $1billion for bad loans they sold Fannie. Interesting considering that they are both run by the feds. I’d personally like IndyMac to be sold, but that’s mostly because I bought several shares this summer at a price I thought was pretty cheap — just not as cheap as it is now. Its up about 400% since last Friday in anticipation of the sale.
