Thursday, December 6, 2007

The interest rate freeze

I saw that Bush negotiated an interest rate freeze yesterday and sat down to research it so I could rant about it. It ends up, though, that based on the available information it looks like a pretty decent solution.

The proposal first off only addresses subprime loans. That means I could not have gone out and refied my house a year ago into a crazy 3% teaser rate ARM that was going to cause me to lose my shirt in 2 years and come out way ahead of where I am now. Somebody with my credit can't use this. We're talking about people who got into a crazy 11% loan that jumped to 15% after the end of the fixed period.

It secondly doesn't even try to address people who can't afford their homes even at the introductory rate (which is probably a good portion of the subprime market). So if you got yourself into a house you couldn't afford at 11% the government isn't going to pay for you to keep your house or twist somebody's arm get them to give you a 6% loan.

The people who own securitized subprime loans were about to have huge drops from foreclosures if the government didn't bail them out so something had to happen or people would lose their houses and the securities they owed would lose a bunch of value as well. The mortgage owners (banks and traders) ended up losing some interest on a really lucrative (but really risky) security by freezing the rates, but they were going to lose a good portion of that anyway to foreclosures (and they still might). I do feel a little bad for people who own a lot of these securities (cough, CountryWide) because it's an insane risk that is only worth taking because of the incredible return on it and this deal lessens the return while keeping a lot of the risk. I would rather the government not have to use its, um, influence, to get them to agree to terms. Maybe their actuaries say the risk vs. return numbers come out best with a two year freeze, for instance. Having said that giving people who you know can't manage money a ripoff loan that has rates going into the stratosphere in 2 years makes you a financial pusher, so I'm not getting teary eyed about them losing some of their return.

The CNN/YouTube Debate

I should note before I start this, I haven't actually watched the CNN/YouTube debate. I expected it to be a complete joke and from all I've heard I wouldn't be disappointed.

There's a lot of hubbub around the conservative blogs about operatives from this or that Democrat who asked questions during the debate. I find it moderately interesting that CNN had the time to arrange their retired general's airfare but not enough time to do a quick google search and see if he was on anybody's campaign, but that's not a real issue.

Even if he really were a random undecided voter, very few of the submitters were so important to CNN that they flew them in to watch the debate. Because I haven't watched the debate I don't know how many, but I've watched 5-10 questions and only one of them was flown in. So the one guy I know of who they paid to appear in person first asks why the candidates "think the US military so unprofessional they cannot serve with gays" and then after getting a response to his question says they didn't respond to his question (they did, he just didn't agree) and follows up with a long about how destructive "Don't ask don't tell" is and how it has nothing to do with unit cohesion.

I know some people who share the general's view and would make an issue of it when voting. I know a lot of people voting in the Republican primary. I don't know of any overlap. It might be an important issue to the news board at CNN, but it's just not that important to the average Republican primary voter.

Given the relative importance of issues to Republicans (the people who a Republican primary debate is aimed at) it would have made sense to fly in the abortion questioner (a John Edwards supporter), but of course there's the same issue with her question. She asked what the punishment should be for abortion if it were made illegal. After getting an answer (which didn't actually address the question, because it's not a federal matter) Cooper kept hammering what the punishment should be, but that presumes the fed should stick its nose in the states' business, which hardly any conservative agrees with. There are a few right-to-life amendment people out there, but they're not the majority of Republican voters.

I'll note I watched the guy who asked if we would make a commitment to Iraq. He actually sounded like a conservative and also would have been a good candidate to fly out there.

I bring this up for two reasons, the first is that CNN didn't really need to research those two people (one of which was their star of the show) to see if they were open supporters of Democrats. They should have known just by listening to their questions that they were likely Democrats and certainly not representative of Republicans. I think this should have automatically excluded them from a primary debate for the Republicans because there's a limited amount of time and I would rather see it spent on issues people who are voting in the primaries actually care about. At the very least, it should have prompted CNN to do more research on those individuals, which in 5 minutes would have turned up their avowed support for particular Democrats.

The second is that I think this behavior would be shameful even if the Democrat debates got the same treatment with obviously Republican questions, but they don't. I'm certain you can search in vain for a question asked in the Democrat debate on if we would once again abandon our allies to torture and death when victory is in site as we did in Vietnam, or if we would continue to get Supreme Court justices who override the will of the elected representatives of the American people based on selected pickings of international law, or how their health care plan affects the already burgeoning unfunded liability of medicare and social security. I would actually go farther and say that you wouldn't find questions worded like this even if Fox hosted the debate, but we'll never get the chance to see if I'm right.