Video: Michelle talks subprime and economic stimulus on FBN

posted at 3:03 pm on January 31, 2008 by Bryan

It’s axiomatic that whatever you encourage, you get more of. Putting a subprime mess “victim” in the gallery at the SOTU Monday night encouraged what, exactly?

Michelle deals with that and the lack of any “suck it up” candidates in the hunt for the presidency. Giving credit where it’s due, she does highlight the 25 Republicans who voted against the House stimulus package.

The press, however, will continue to do its duty. Allah passed along this link to a story in which the AFP compares the subprime walkabouts to Katrina victims. What a crock.

The streets are empty. Trash rustles down the road past rusted barbecues, abandoned furniture, sagging homes and gardens turned to weed.

This is Shaker Heights, a suburb of Cleveland and a town ravaged by the subprime mortgage crisis roiling the United States.

And it being an election year, the Beltway’s bandits won’t let anything slow them down. Bad press trumps bad economics.

Some of these folks who are caught up on all this may be legitimate victims, but most of them are probably victims of their own bad decisions. Some of them are the very “greedy people” that McCain thinks are all on Wall Street, and they treated their houses like ATMs and are now walking away from the problems that they have created. As InstaPundit says, shouldn’t there be a price for stupdity?


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Well said, Michelle.
Thank you~

bridgetown on January 31, 2008 at 3:13 PM

Well, when I read about Matt and Stephanie Valdez in this article, I just have to agree with Mrs Malkin. Some people should just be “sucking it up”.

Yes, that was very painful.

DMeNTe on January 31, 2008 at 3:15 PM

Preach it sister.

Mcguyver on January 31, 2008 at 3:19 PM

It’s axiomatic that whatever you encourage, you get more of. Putting a subprime mess “victim” in the gallery at the SOTU Monday night encouraged what, exactly?

That’s the truth right there.

I don’t see how the stimulus package is going to do anything stimulatory, realistically. I think Huck et al reference to China is vastly over simplified, but regardless the rebate will do little to nothing about the underlying issues.

Charlie Gasparino said the other day that the lending companies were encouraged by the administration to make high-risk loans to help stimulate the economy. I understand the mentality of don’t touch and let it work itself out, but I don’t think that addresses the underlying issues that brought us to this point.

I know I’m in a minority here, but I don’t think we should demagogue the issue. I think we should find a way to encourage the government not to interfere as much as possible, but also to hold criminal activity accountable and to be accountable for their own policies that contribute to the situation.

Spirit of 1776 on January 31, 2008 at 3:25 PM

want to stimulate the economy put a freeze for 4-6 months on income tax with holding from pay checks .

but heck what do i know .

Mojack420 on January 31, 2008 at 3:26 PM

What we’re seeing her are people that are spending the same way this government is.

If government hold the peoples feet to the fire, will the people then turn that around and force THEM to do the same?

I think we all need to do it….But I really think that the government should start living on half of what it has in the past….without impacting the only area originally given to their control….the military.

Time to cut the government teat off from people and corporations.

Fuzzball on January 31, 2008 at 3:28 PM

When we bought our house 30 years ago and signed a mortgage for 10 1/4% interest, we knew that it was a big investment and what it would take to pay if off, sooooo we didn’t spend more on the house than we knew we could afford to pay for the next 30 years. Refinancing for 6% was certainly a help, but we always kept in mind that we couldn’t live in a mansion, because we couldn’t afford a mansion. We drove used cars, didn’t take exotic vacations and saved our money and got the house paid off. What the problem is now is that we live in an instant generation where they have to have everything now! The want what we worked for, for years, and don’t want to have to put any work into it. Instant gratification without a worry about the consequences. Of course the mortgage companies aren’t blameless either, getting people into houses they knew they couldn’t afford.

flytier on January 31, 2008 at 3:29 PM

good job MM

ThackerAgency on January 31, 2008 at 3:34 PM

I don’t know. I agree with Michelle, but on the other hand sounds like she wants to give Lenders a pass and just blame the Borrowers. Sorry Michelle but you’re gonna have to be a little more even handed with the blame here for my preference. After all, it was the Lenders than made the borrowing so enticing. So if some Lenders end up losing their shirts, hey, “suck it up!”

eclark1849 on January 31, 2008 at 3:36 PM

A thorough beatdown by the hotness.

Metro on January 31, 2008 at 3:36 PM

I am assuming that all of these people who are walking away from foreclosures are going to have FICO scores and credit ratings that are in the tank. So in a way there are repercussions to this. Or is there something I don’t know about?

gator70 on January 31, 2008 at 3:36 PM

Just to add to my comment, then I’ll leave the subject I guess; take this example.

Say my neighborhood sold a significant number of houses to illegals like Tanc was talking about on Cavuto. When these houses are foreclosed on, the property value of the whole area is affected. So the policy affects more than the buyer/lender. I don’t just want to say, hey that’s the way it is. I would like a hard look at both sides of the equation and the government that encouraged it.

I don’t really see how this issue is that much different then our health care facilities going bankrupt by abuse consequent of illegal behavior either.

What the problem is now is that we live in an instant generation where they have to have everything now! The want what we worked for, for years, and don’t want to have to put any work into it. Instant gratification without a worry about the consequences. Of course the mortgage companies aren’t blameless either, getting people into houses they knew they couldn’t afford.

Boy, you hit the nail on the head!

Spirit of 1776 on January 31, 2008 at 3:37 PM

Although I find most business news networks and newspapers to be about as dry as dust and although I take pride in never having watched the Squawk Box or Mad Money etc., I don’t mind watching financial news if Michelle Malkin is doing the talking.

Larraby on January 31, 2008 at 3:46 PM

I read the original Breitbart article in the links about this the other day. I also read the comments at the end of the article. In the comments the readers pretty much debunked the whole story as a myth. The grocery store mentioned did not even exist. The person (Sarah Evans) was not even shown to live in Shaker Heights. The link to the comments … http://comments.breitbart.com/080127183107ahcwfxrz/

indianaconservative on January 31, 2008 at 3:47 PM

Personal responsibility- what a quaint concept.

Eventually, probably sooner rather than later, the
government will go broke, and fail. When a new system
is born, perhaps personal responsibility will re-emerge.

Eventually man will relearn what works, and what doesn’t.

Scotsman on January 31, 2008 at 3:47 PM

Here are the links for Cavuto-Tancredo, btw. Part One, Part Two. The data is from 227 homes in 1 country in CO. Spread that over the nation.

Spirit of 1776 on January 31, 2008 at 3:50 PM

I’m with Fuzzball 3:28 PM

Stop the madness.

bridgetown on January 31, 2008 at 3:55 PM

Some people should just be “sucking it up”.

Whether people suck it up or not isn’t and shouldn’t be Bush’s primary concern. Hank Paulson and Ben Bernanke are primarily concerned with systemic issues that affect U.S. and global markets. There is always a concern about bailing out dumb investors and thereby creating a moral hazard, but the Bush administration has done a fairly good job of supplying liquidity to the markets while they work through some serious problems.

There are going to be millions of investors and homeowners who lose money because of the credit crisis. There will be no shortage of pain. Paulson, by coordinating the banks to minimize foreclosures, is avoiding the use of government money and also minimizing disruption in the economy. Greenspan and Rubin played a similar role in the 1998 LTCM derivative crisis.

Herbert Hoover believed in a rugged individualism. I do too. But he got destroyed in 1932 by FDR, who then went on a rampage of government expansion. Hillary or Obama could do the same. I give Bush & Paulson credit for trying to be on top of this. If they do nothing the Democrats pound the issue into November victories.

dedalus on January 31, 2008 at 4:06 PM

Michelle is looking quite cute, and the Foxnews chick is hot too. Who cares what they have to say? I watched the piece with the sound down.

RWLA on January 31, 2008 at 4:07 PM

It turns out that if you give people free money, they will take it without really worrying too much about giving it back. Because after all, it was free,” Jim Grant says.

What liberals do not understand – in a nutshell

Ann on January 31, 2008 at 4:11 PM

Let the suckers loose their homes.

How else will they learn about poor fiscal decisions?

omnipotent on January 31, 2008 at 4:15 PM

Quick personal story about a second order effect of the meltdown. A friend of ours just finished building a new house, but now she cannot close on it because the investor who was going to buy her condo cannot get the bank to bless off on it because the appraisal is too low. The appraisal on the condo dropped almost 25% in less than one year. Last year, appraisers were in the bank’s back pocket and were giving estimates through the roof in order to put more money in people hands. Now, the meltdown is causing them to lowball everything so they don’t get blamed. My friend cannot carry two mortgages and she cannot sell the condo at a loss. She’s stuck.

BohicaTwentyTwo on January 31, 2008 at 4:25 PM

flytier on January 31, 2008 at 3:29 PM

Kudos to you.

Living within one’s means is possible, and it is possible to thrive while doing it. My husband and I bought our house with a 30 year mortgage and paid it off early. We did not buy what we could “afford” according to the realtors who had advised us in the past. This frees us up tremendously.
I’m grateful to my husband’s and my parents for instilling in us the money-sense that sees the salesmen’s lines for what they are- bait on a very dangerous hook.

Vanquisher on January 31, 2008 at 4:26 PM

I love it when the boss talks about personal accountability…
rewarding bad behavior and decision making with a free ride, the American way?

d1carter on January 31, 2008 at 4:32 PM

What cracks me up is most people, especially those in the media really have no clue as to what caused the subprime crisis.

I had a rather large mortgage and real estate company in the Orlando area until I got out in late 2005. 97% of the loans we originated were subprime loans from First Franklin, Greenpoint, Indymac, Chase, MLN, Freemont, etc. All those lenders are out of business now except First Franklin which is barely holding on.

All those loans were fixed interest payments for the first 2 or three years. They then adjusted according to treasury bills, Libor, or prime rate depending on the program.

The problem arose when the Fed in its infinite wisdom increased interest rates so fast trying to slow down the economy to keep inflation from going up. The problem is when these loans got into the adjustment period the fed’s rate was so much higher than when the loan was originated. The Libor (London inter bank offered rate) and others all tracked closely to the Fed’s rate.

Since all the subprime loans were tied to the Feds rate directly or indirectly the payments adjusted way faster than anyone ever anticipated upward.

These loans were great products that enabled us to make the dream of home ownership a reality for thousands; especially those that had very little money to put down.

Now those lenders are all gone, all the people that worked for them are out of a job, and hundreds of thousands of buyers will be unable to buy houses for years to come. Not to mention the damage it has done to our economy.

The good news is with the Fed lowering the rate 1.25% the past week, it will help those people with adjustable rate loans now have payments that actually reduce. This will lower defaults and foreclosures and help the real estate industry and the economy.

That’s all I have to say about that.

Corey Wayne on January 31, 2008 at 4:36 PM

want to stimulate the economy put a freeze for 4-6 months on income tax with holding from pay checks .

Temporarily cutting the gasoline tax was another interesting idea for putting money into people’s pockets quickly.

The hope by government is to give people money they’ll spend. If they save it then the stimulus doesn’t work since 70% of our economy is consumer driven.

dedalus on January 31, 2008 at 4:56 PM

Stimulation-palooza!

Nice, MM! :-)

D2Boston on January 31, 2008 at 5:02 PM

Great job as always Michelle…thank you for your insight

oldernslower on January 31, 2008 at 5:35 PM

I bought my house a little over 3 years ago. I got some advice from a few friends and took the steps necessary.

What I got approved for was WAY out of means at the time (over 5 times my yearly income), and the real estate agent was trying to encourage me to buy a house for what I had been approved…and I kept on telling her “I really can not afford that!”

I guess being stubborn and ‘thickheaded’ can pay off at times. But is a naive person is pushed like that, they end up with something they can not afford.

lsutiger on January 31, 2008 at 6:47 PM

Some of them are the very “greedy people” that McCain thinks are all on Wall Street, and they treated their houses like ATMs and are now walking away from the problems that they have created
posted at 3:03 pm on January 31, 2008 by Bryan

Does no one understand what is at stake? This is not about the people that made mistakes, that were greedy, that were stupid. Those actions have been done. That argument should have occurred 2 years ago. It wasn’t. That horse has left the barn. We are dealing with the ramifications of those actions.

The stimulus package, the fed cuts, the refi of the subprime is NOT to save them it is to save US. Did not last Tues make you see. We opened the market down 500pts. If not for the FED cut of .75bps we could very easily have been down 1200-1800pts (10-15%) by the end of the day. The FED and federal government saved us from a 1929 crash and the corresponding depression that would have resulted.

I don’t know about you all but I enjoy my 401k, my IRA, my job, my house. I do not relish having to stand in soup lines or live in hoovervilles because of some bad mistakes by some bankers and some subprime borrows. Why should the entire country/world have to suffer through a depression because of some greedy, uninformed people? Our government is there to protect us from not only external threats but internal threats also.

We are not out of the woods yet. But we are alot better off this week then we were last week because our government took the proper steps to stave off the worse financial crisis this country has faced since 1929. Do you really think the FEd chairman vists the House leader for no reason? Do you think that the DEms and REps come to agreement in record time for no reason? Without fighting? I am really tired of people that do not understand economics, the credit markets, how capital moves and how credit is given complaining about the “bailout”. I repeat this bailout is not for the rich bankers or the clueless subprime borrows (of course they will also be helped by these actions) This bailout is for the ENTIRE COUNTRY. Our GDP dropped from 4.9% in the third quarter to .6% in the 4th qrt, consumer confidence is at decade lows, unemployment is rising, credit is becoming harder to get, consumer spending is at year lows. In 1929 people thought thinks were great too. They didn’t call it the roaring 20′s for nothing.

For those who say let the free market handle it. We tried that in 1929 with Hoover. That didn’t work out very well. The market is nothing but the collective EMOTION of the country. Fear was controlling the markets last Tues. Should our entire life savings be wiped out because people were afraid? would you rather the FED and Federal government sat back and watched out entire stock market crash and credit markets freeze up? Watched as the fear spread around the globe and infected every country on the globe? While all the time saying “let them eat cake” The last time we did that we had the biggest move towards socialism in our country’s history (FDR,FDIC

unseen on January 31, 2008 at 9:41 PM

although I take pride in never having watched the Squawk Box or Mad Money etc.
Larraby on January 31, 2008 at 3:46 PM

Why would you take pride in being uninformed about your country’s economy? About how financial reality works? Why outsourcing is occurring, why the dollar is falling, why the markets are down? Why the Fed does what it does? Why unemployment is rising? How best to invest in your future? The list goes on and on. Why would anyone be proud of that? That’s like saying I think pride in not knowing what the canidates support before voting for them.

unseen on January 31, 2008 at 9:53 PM

Corey Wayne on January 31, 2008 at 4:36 PM

you forgot to mention that by raising interest rates it also decreased demand for housing thus causing home vaules to fall. Making it even harder for those with ARM loans to refi because they now owed more than the house was worth. Causing lenders to decline their loan applications. To top it all off the FED did this to decrease inflation but since all the inflation was do to oil price (controlled by OPEC) and food prices (controlled by worldwide growth and governmental programs to increase ethonel) The Fed’s action had no effect to curb inflation.

Now people complain when the government tries to fix their own mistake. Unreal.

unseen on January 31, 2008 at 9:59 PM

Michelle is exactly right: the blast of cash from Washington will accomplish nothing good. Besides being grossly mis-targeted, it’s inflationary…and it won’t solve the problem.

The only move being made which makes any sense is the lowering of interest rates by the Fed. This will moderate the effect of the housing problem, and even make some marginal sub-prime housing situations tenable again (at least temporarily)…while not turning off the pain which is necessary to prevent bad behavior in the future.

Not that the Fed is doing “good”…it’s way too willing to jump in and “do something” without waiting for the natural market correction.

We’d ultimately be far better off if we gave both Congress and the Fed a 6-month “time out” during which they were not allowed to do anything at all.

landlines on February 1, 2008 at 1:10 AM

unseen on January 31, 2008 at 9:59 PM

You are spot on about the oil. Just look at the 70′s and the oil embargo. Inflation went thru the roof. Oil is used in almost everything, plastics, fertilizer, engines, and rising fuel costs increase cost of everything. Why? Every product must be shipped by gas powered machines.

If you made vehicles that ran on cheaper fuels inflation would plummet. The cost of all goods would go down. That makes a dollar go further and therefore people spend more on different products and services from different businesses which gives more taxable income.

It would be a simple increase of revenue and a decrease in expenses.

Corey Wayne on February 1, 2008 at 2:27 AM