The headlines blare. The Media blitz is on. So what are the details of today's U.S. Treasury released Homeowner Affordability and Stability Plan?
Well, we have an executive summary:
The plan claims it will not aid speculators or house flippers, but how specifically it does not specify.
Stabilize home prices by reducing principle of the loan and the U.S. taxpayer ponies up the cost.
They are also reducing interest rates and the refinancing past the actual current home value. Also, they are allowing bankruptcy judges to reduce the principle owed on a home and mortgage modification.
My fundamental problem is home prices are still too high relative to wages. Propping up over inflated prices and ignoring wages is beyond logic. Yet the Obama administration ignores the over supply in the labor market through guest workers, illegal labor, global wage arbitrage and offshore outsourcing.
Why isn't wage deflation front and center in these policy proposals?
CNBC quotes economist Mike Schenk:
Labor markets are deteriorating and will continue to deteriorate,'' Schenk said. "Regardless of how affordable things get, those trends in labor markets are having a huge impact on confidence and on people's ability and willingness to make large financial decisions like purchasing a house.''
Hello! Thank you, someone is pointing out to buy things one needs a solid, stable income which supports the costs of owning a home!
Below is the CNBC report: