Obama Now Has No Choice Except To Announce A Major Homeowner Bailout After The Election

Obama Oct2010

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.

Click here for 15 signs that housing will collapse without intervention >

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