Yves Smith on Ezra Klein
From Yves Smith at Naked Capitalism:
Princeton economist Alan Blinder recommended a Home Owners Loan Corporation style mass refinance. She Who Must Not Be Named came out for it in her campaign. Joe Stiglitz, Paul Krugman, Nouriel Roubini, Mark Zandi, Jeff Merkley, Brad Miller, Ellen Seidman and others backed it. Krugman and Neil Barofsky have also argued the Administration could at a minimum have used $50 billion in unused TARP funds for mortgage mods. Adam Levitin (arguably the top US expert on mortgage securitizations) recently proposed a “bad bank” as a way to implement pooling and standardized restructuring of underwater mortgages. Top mortgage analyst Laurie Goodman has also long advocated principal modification, and she has established that they have much lower redefaults than other types of mortgage modifications.
Or how about using bankruptcy to write down mortgages to the current value of the house, something now done in bankruptcy for every type of collateralized loan except primary residences? Advocates of that approach included the Congressional Oversight Panel under Elizabeth Warren’s chairmanship, and more recently, the IMF. A bill passed in the House but was nixed in the Senate.
How about principal writedowns with shared appreciation mortgages, advocated by Andrew Caplan and Luigi Zingales? Even Greg Mankiw pointed to an approach suggested by John Geanakoplos and Susan Koniak a way to work around those pesky servicers. Dean Baker has pushed for an own to rent program.
So, Niall Ferguson lies and so does Ezra Klein. And apparently our best and brightest have been offering lots of solutions to Obama’s deaf ear. I’m not sure where this leaves us: perhaps with a more concrete notion that both POTUS candidates are creatures of the banksters. And I think we already had that figured out.
The hard part is we must face the realization that the political class at the national level has been completely captured by the corporatists. A vote in the presidential election is pointless. The Ponzi will be perpetuated at our expense.
It seems the only denominator worthy of consideration is the amount of austerity the candidate presumes to inflict and Obama wins that contest easily. However, I suspect that Romney and Ryan, despite the latter’s bullshit, are actually closet Keynesians in regard to the Ponzi. But I suspect that whereas Obama has merely ignored the housing problem, Romney may really turn the screws to the poor and middle classes. My fear is that Romney could finally destabilize the country, something you must admit Obama has yet to do. It may be the case of dealing with the devil you know, rather than chancing the one you don’t.
The last thing I need desperately from Romney right now is the lack of details concerning his plans. Worse is the selection of the snake oil salesman, Ryan, put out front in their absence. These, combined with those yawing, rabid Tea Party Austerians offer a choice of fascism over Obama’s road to totalitarianism.
So, I’d rather limp along with Obama than ride the whirlwind with Romney until such time as a thoughtful nonviolent democratic movement arrives. I contend that just as with the housing problem, many great ideas abound; we need only to avail ourselves of them.