CEI Daily - Mortgage Foreclosures, Stimulus Mistakes, and Geithner


Mortgage Foreclosures


Some argue that delaying mortgage foreclosures will stabilize housing prices.


Research Associate Alex Schibuola says that the foreclosures, even if delayed, will dramatically lower housing prices.


"We know that [the foreclosures] are coming eventually. Therefore in, say a year, we expect prices will decrease once the foreclosure process is re-initiated because those houses then show up on the market. [...] If sellers expect that prices will fall in the future, they will want to sell at today’s relatively higher prices. As a result more people start selling now which increases today’s supply and this brings down today’s prices. This will continue until future prices are equated with today’s prices. Why? Because if expected future prices are low relative to today’s prices more people would like to sell to capture the relatively higher selling prices of today.



Stimulus Mistakes


Stimulus money went to prisoners and dead people.


Senior Counsel Hans Bader says that even when stimulus money went to law-abiding living citizens, it wasted taxpayer dollars.


"The stimulus also contained giveaways to wealthy trial lawyers, who are some of the biggest donors to liberal politicians.  It expanded welfare and largely repealed welfare reform.  It has paid for abandoned bridges to nowhere and unnecessary government buildings in cities with rapidly shrinking populations."





The Washington Times argues that if Timothy Geithner were in the private sector, he'd be fired already.


Warren Brookes Fellow Kathryn Ciano explains why Tim Geithner is an expert in expanding government but a failure at expanding business.


"For a business to hire a new employee, that company’s bottom line must benefit from the hire. If it costs $20,000 to hire a new employee, the business will only hire if it anticipates earning $20,001. If the bottom line cannot support the cost of a new worker, she simply will not be hired. Funds alone cannot generate jobs. As with any financial interaction, money is only as good as the probability of your being able to use it. When dollar hopefuls are very uncertain about their ability to use money in the future, they save it. Businesses are not like government; they are risk averse."