Biden’s Act II – Subsidize Housing for the Poor, Take from the Rich – Adding Gas to Inflation

When in economic doubt, tinker with Housing, so goes Janet Yellin in her latest attempt at getting Biden elected. We have seen this movie before. Take from the rich – by subsidizing “first time home buyers and first generation home buyer” with risker loans. Making the rest of us pay higher interest rates.

The fact that more than 15 million illegals now require housing apparently does not effect a housing shortage in any way. Here we go:

“The US housing market is stagnating, but I think a bigger risk to homebuilders and related industries is the tinkering that the Biden administration has promised to do,” Peter Earle, senior economist at the American Institute for Economic Research, told the DCNF.

“One part of the plan is having the Federal Home Financing Association (FHFA) order Fannie Mae and Freddie Mac to lower the interest rate on high-risk borrowers by raising the interest rate on low-risk borrowers. They’ve also been instructed to increase the amount of credit extended to high-risk borrowers.”

The Biden administration, through the FHFA, instructed Freddie Mac and Fannie Mae starting in May 2023 to essentially subsidize higher-risk borrowers with lower credit scores to help them take out home loans in the more expensive market, raising the amount of debt higher-risk borrowers can take on and attracting more Americans to the market. The subsidization of riskier loans puts the broader market in danger by lending out possibly more than people can afford, running the risk of creating a housing bubble while also increasing demand and costs.“

The President has put forward bold proposals to make housing more affordable, including a plan to build over 2 million new homes, which would lower costs by increasing supply, and a new tax credit for first-time homebuyers and first-generation homebuyers.

The Biden administration requested in March $258 billion in funding to help boost housing supply as part of the president’s budget proposal for fiscal year 2025. The flood of cash would not spur new growth but crowd out private-sector construction, adding to an already ballooning deficit that many economists believe is driving a significant portion of inflation.

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Here we have one of my favorite Congressmen try and explain some basic facts to Yellin about three weeks ago, as only he can. “You want to give the country a sugar high just before the election.” Seems so as she works at cross purposes to reign in inflation.

This reminds me of a post I did recently back in May

Jared Bernstein, Economic Adviser, Cannot Answer Basic Question on Monetary Policy

Meet Jared Bernstein who chairs the White House Council of Economic Advisers. Problem? For starters, he is not an Economist. Bernstein graduated with a bachelor’s degree in music from the Manhattan School of Music where he studied double bass with Orin O’Brien. Throughout the ’80s, Bernstein was a mainstay on the jazz scene in NYC. He also earned a Master of Social Work from Hunter College as well as a DSW in social welfare from Columbia University’s school of social work.

Just for laughs and giggles.  “We can’t go bankrupt because we print our own money.”

And if you are still hanging with me…. and want to see the true jiggering of our economy that most anyone can understand….

‘SABOTAGE’: Economist warns what Janet Yellen is doing ‘never works’

The very best of the swamp.