Dean Baker: Not One More Tax Dollar For the Banks

[marmar]

via AlterNet:



Not One More Tax Dollar For the Banks

Posted by Dean Baker, Comment Is Free at 4:30 PM on November 30, 2009.

The millions of American families struggling to keep up with their bubble-era mortgages are the ones who deserve help.




The big talk in Washington these days is "helping homeowners." Unfortunately, what passes for help to homeowners in the capitol might look more like handing out money to banks anywhere else.

The basic story is fairly simple. Tens of millions of U.S. homeowners are now underwater: they owe more on their mortgage than the market value of their home. The reason is that they bought homes at bubble-inflated prices earlier in the decade. Economists and other policy wonks insisted that housing was a great buy, even as house prices got ever more out-of-line with economic fundamentals.

Needless to say, the Wall Street crew was eager to cash in on the mania, peddling deceptive mortgages and reselling mortgage-backed securities all over the world. These deceptive mortgages have now "reset" to higher interest rates, leaving many people unable to afford their mortgage payments. However, even at lower interest rates, homeowners who purchased houses at bubble-inflated prices would find themselves paying far more for their homes than they would to rent a comparable house.

As a result, these homeowners are effectively throwing money away every time they make their monthly mortgage repayment. They would be much better off renting the same house and putting the savings in a retirement account or some other form of investment.

The gaps between mortgage payments and rent can often be quite large. A study that we put out at the Center for Economic and Policy Research calculated a family that purchased a small home in Los Angeles near the peak of the bubble could save $1,640 a month by renting rather than owning. This comes to almost $20,000 a year. In Phoenix a family who purchased a home near the peak of the bubble could save $420 a month or $5,000 a year. In Miami the savings would be $1,940 a month, more than $23,000 a year. ............(more)

The complete piece is at: http://www.alternet.org/blogs/peek/144270/not_one_more_tax_dollar_for_the_banks/

[FiveGoodMen]

1. A-fucking-MEN!

[HCE SuiGeneris]

2. Billions in bonuses. Where is the money coming from?

Trading futures. Siphoning off 401K money in reckless trades and jacking up commodity prices at the expense of the consumer. We are being fleeced from all sides by these banksters. When is too much, too much?!