He is a wise man. Click pic for larger image.

That’s becuse he must have seen this chart over at Dr. Housing Bubble blog Click the image for larger view:

Lots of talk of extending the first time buyer tax credit into 2010.  Nothing is cast in stone yet, but I suspect it soon will be.  Here are some of the details of what is being discussed from Subprime Blogger:

The first time home buyers tax credit extension is getting very close to being finished.  The latest update is that the extension will offer tax credits to home purchases under contract by April 30th, 2010 while allowing another 60 days to close on the sale.  The biggest change we see in the newest proposal is that the income levels for the tax credit have increased.  The new proposal is individuals up to $125,000 and couples up to $250,000; this is an increase from $75,000 for individuals and $150,000 for couples.

For “move-up” buyers or individuals who have lived in their current home for five or more years the tax credit would have the maximum of $6500.  Please remember that this just a proposal and nothing has been confirmed yet.  Overall, it looks as if the tax credit extension is a reality and many first time home buyers are going to get their wishes of having the tax credit moved forward.

In the short run this is good for Realtors, buyers and for sellers.  In the long run, it is disastrous for buyers and for the housing market overall.  In this scenario the taxpayer is footing the bill for subsidized housing, maintaining artificially high prices.  Basically, they are trying to re-inflate the housing bubble as a means of getting the economy going.  It will work, after a fashion.  As long as taxpayer dollars are pumped into the system.  As soon as the flow of dollars dries up prices will resume their fall towards a somewhat lower market based price floor.

Update: Yep, it’s on the way.

The Dodd-Lieberman-Isakson Amendment to extend and expand the Homebuyer Tax Credit is contained in the Unemployment Insurance extension bill. You can take a look at a very top line overview of the current proposed tax credit by clicking here.

Although the Senate was not able to reach a procedural agreement to schedule a vote on the bill, the Senate is expected to vote Monday evening for a “Motion to Invoke Cloture.” This means that if 60 Senators vote “yes” on the cloture motion, the Senate will then be able to schedule a vote on the bill that contains the Dodd-Lieberman-Isakson Amendment. Once the Senate acts, the homebuyer tax credit must still go to the House of Representatives for action.

I can’t link to it because it’s contained in an email from Alex Perriello, President & CEO of Realogy Franchise Group, the parent company for Century 21.  He urges us Realtors to quick like a bunny hop on the phone and call our Congress Critters and support this bill.  I’ll call and oppose it.

Using taxpayer money to try and re-inflate the housing bubble to stabilize the economy is nuts.   Especially when the very same government is doing all in its power to knock the pins out from under the economy in every conceivable way.  This notion has more holes than a ton of Swiss cheese.  Don’t get me wrong, I LOVE Swiss cheese!  A sustained recovery in the housing market depends upon a sustained recovery in the job market.  No job, no income, no money, no pay the mortgage.  This seems obvious and elementary to me, but it utterly escapes the vote pandering hacks currently running the asylum.

This deal is set up a tax rebate, that is, they send you back up to $8,000 of your hard-earned tax dollars next year when you buy a house.  This just in: it cost the government $28,000 for every $4,500 they rebated on the cash for clunkers boondoggle (because, you know, nobody can do things as efficiently as government!)  What’s it going to cost them to rebate that $8,000?  Probably no more than $40,000 or so.  With Federal tax revenues down (actual, not projected) by 31% the last time I looked I’ll be surprised if they don’t pay out that $8,000 in brand new Obama bucks good for papering your wall or providing target practice for your canary.

The economy cannot be sustained by the the housing market, and the housing market cannot be long sustained by government subsidies.  That the attempt is being made to do just that is a clear indication that Bernie Madoff was a piker, a boy playing a man’s game.  The real Ponzi artists are the career kleptocrats swilling Kool-Aid in Washington, Sacramento and other points along the Twilight Zone Express.

All aboard!

This would be just unbelievable but for the fact that it makes sense in a certain world of warped logic. Our Great Leader and his band of Merry Dumbkoffs are going for the hair of the dog, mmm, mmm, mmm! Unbelievable? You be the judge:

A Poisonous Cocktail
Expanding the Community Reinvestment Act.

. . .

In short, the CRA is compelling banks to make trillions in loans to individuals who have poor credit and who often can’t or won’t make their payments.

Now comes Rep. Eddie Bernice Johnson, D-Texas, and 50 other co-sponsors (all Democrats) of H.R. 1479 the “Community Reinvestment Modernization Act of 2009,” who want to expand the CRA to include not just banks but also credit unions, insurance companies and mortgage lenders. Congressman Barney Frank, chairman of the House Financial Services Committee, has supported the idea in the past. The SEIU and ACORN, along with a host of other activist groups, are also behind the effort.

President Obama has been a staunch supporter of the CRA throughout his public life. And his recently announced financial reforms would make the law even more onerous and guarantee an explosion in irresponsible lending. Obama wants to take enforcement of the CRA away from the Federal Reserve, the FDIC and other financial regulators who at least try to weigh bank safety and soundness when enforcing the law, and turn it over to a newly created Consumer Financial Protection Agency (CFPA). This agency’s core concerns would not be safety and soundness but, in the words of the Obama administration, “promoting access to financial services,” which is really code for forcing banks to lend to those who would not ordinarily qualify. Compliance would no longer be done by bank examiners but by what the administration calls “a group of examiners specially trained and certified in community development” (otherwise called community activists). The administration says, in its literature about the reforms, that “rigorous application of the Community Reinvestment should be a core function of the CFPA.”

Oh, joy! Oh, unalloyed happiness! Happy Real Estate Days Are Here Again! Yes, let’s do take the very same instrument that annihilated the housing industry in the first place, make it bigger, wider and load it up with all kinds of extra whammy and at the same time strip it of even the semblance of responsible oversight then turn it loose with complete confidence that this time it will yield a better result. I mean, seriously folks, what could go wrong?

What this is, dear readers, is a baldfaced attempt to re-inflate the housing bubble. Because, you see, housing is a key industry, so if we pump up housing the whole economy will rise with it. And yes sir, it will. It’ll rise for about a year, I guess they’re calculating, just in time to make people happy for the 2010 elections. What else can the incumbents do, after all? It’s not as if their plans were sustainable in the long term, so with the lamentable demise of ACORN they’ve got to figure another way to gin up the votes to stay in office. Evidently they aren’t feeling very confident that the expenditure of the other 85% of the bailout money between now and then will do the trick.

I guess it isn’t bad enough that we are running the printing presses night and day just to come up with money to lend ourselves. It’s not bad enough that the banks are keeping huge chunks of foreclosed homes off the market lest they depress the market (Seriously, what are they going to do, hold ‘em for non-paying tenants forever?). It’s not bad enough that the Fed is handing out trillions of dollars to someone somewhere (Nowhere Man?) and won’t say how much and to whom. No, I guess not.

Seems to me that we are largely recreating the Great Depression in our day. Sure wish I had a nice, thick wad of Euros or Yen or something other than dollars (heck, I’d feel better if I just had it in dollars!) squirreled away somewhere I could fall back on when this Titanic goes down by the head. Sure hope you have a decent plan.

There are days when I wish I were a drinking man.