Photo: White House flickr
rumours of some major homeowner bailout have percolated for a while, but the government denies anything is afoot.However we think something will definitely happen after the election.
Let’s just quickly run through the points:
- Obama can’t have a weak economy with high unemployment going into the next election.
- Obama has to stimulate, because on its own the private sector is still in deleveraging mode and won’t recover as fast as he needs it.
- But politics means that no traditional “stimulus” is possible.
- This morning’s Case-Shiller numbers show that housing represents a potentially huge drag on the economy still.
- What’s good about housing is that the administration has several tools to fix the issue without Congressional approval. Fannie and Freddie — with a blank check from Treasury — can basically do whatever they want. This is the one area where Obama can do an end-run around Congress.
- The foreclosure-gate situation makes for a really good pretense to intervene.
All the conditions are in place.
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