This is no bailout for Main Street America

[MrCoffee]

In reality, a $25bn mortgage deal with banks is a drop in the ocean – given US homeowners' $700bn of negative equity - Richard Wolff

Consider simply that the negative equity of US homeowners is estimated now at $ 700bn. That is how much more they owe on their homes than those homes are worth. This new bill proposes $26bn in aid for that problem. No such timidity attended the trillions provided for the trickle-down bailouts since 2007. The banks are happy with this proposed settlement's low cost to them.

While the government's help to homeowners is far from adequate or just, it represents a partial and late recognition of trickle-down economics' inadequacy as policy. It further concedes the need for some trickle up. What happens next depends on the evolution of this crisis and of the political forces gathering strength.

Those factors will determine how long the beneficiaries of trickle-down economics can sustain the policy's dominance and continue to shift its costs onto the mass of people through austerity programs. Those same factors will also determine whether we see next a further shift to trickle-up economics – or a more basic challenge to an economic system whose instability is so severe and so socially costly.
http://www.guardian.co.uk/commentisfree/cifamerica/2012/feb/09/bailout-main-street-america

[bluerum]

1. This is trickle down reincarnated in 2012. Same shit. Different name.

[fascisthunter]

2. oh... you are just a purist!

[ProSense]

3. So

"In reality, a $25bn mortgage deal with banks is a drop in the ocean – given US homeowners' $700bn of negative equity"

...many experts

Mortgage Settlement and Negative Equity

by CalculatedRisk

<...>

I've seen several people argue the settlement is too small to have much of an impact on housing. They compare the size of the settlement to overall negative equity. As an example from the Financial Times:

The trouble is that the $32bn is small relative to estimates of a $700bn gap between house values and underwater mortgages: it is just 5 per cent of that total.

Note: the $700 billion estimate comes from CoreLogic's Q3 negative equity report.

If we compare the principal reductions to total negative equity, it does seem like a drop in the bucket. However if we think of it terms of a reduction in the number of loans that are 90+ days delinquent and in the foreclosure process, this could be significant.

The FHFA estimates approximately 1 million borrowers will be offered principal reduction modifications, although that estimate may be a little high. Perhaps 500 thousand is a better estimate, and some of them would have received modifications anyway - but the overall number of principal reduction modifications will probably increase by several hundred thousand with the settlement.

- more -

http://www.calculatedriskblog.com/2012/02/mortgage-settlement-and-negative-equity.html

[Fumesucker]

4. There's two kinds of people in this world..

Too big to fail and too small to matter.

It's sort of like being in a poker game, if after half an hour you don't know who the mark is, you're the mark.

[rfranklin]

5. that amount is less than 16% of the bonuses that were paid last year....

Key Facts
■ $156 billion. The seven banks are projected to pay $156 billion in compensation in 2011, a 3.7% increase from last year’s combined compensation pool ($151 billion).
■ A Good Year? Six of the seven banks set aside more money for compensation through the first three quarters of 2011 than they did in the first three quarters of 2010.
■ Goldman Sachs. Goldman Sachs’s compensation pool has decreased by 13% in 2011, but the bank’s 38,900 employees are still projected to receive an average of $362,862 in compensation.
■ Bank of America. Despite a dismal year, Bank of America set aside 7% more compensation through the first three quarters of 2011 than it did during the first three quarters of 2010.
■ JPMorgan Chase. Investment bankers at JPMorgan Chase are projected to make $386,148 in 2011, in contrast to employees in the bank’s retail financial services division, many of them tellers, who are projected to make an average of $61,130.