It’s not often you’ll hear me say that. But this time I agree with Jim Cramer.
Congress, according to Cramer, wants to give a $6 billion tax rebate to some of the United States’ biggest homebuilders, a group that’s partially responsible for today’s housing mess. But that’s what happens when homebuilders threaten to withhold political contributions after being left out of the stimulus package.
The bill, if passed, would allow homebuilders and "other firms affected by the mortgage meltdown, such as investment banks, to use losses in 2008 and 2009 to get back taxes they owed over the previous four years," costing the government between $6 billion and $28 billion in future tax revenues.
This should be interesting. Give homebuilders $6 billion. What’s the worst that could happen? It’s not as if they’ll use the money to build more homes, add market glut, and kill off the price of your "safe" housing investment, right?
But Congress and the homebuilders aren’t the only ones blowing smoke up the American tailpipe.
Our "brilliant friends" at the National Association of Realtors would have us believe Existing Home Sales to Stabilize Before Upturn in Second Half of 2008.
"The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in February, slipped 1.9 percent to 84.6 from an upwardly revised reading of 86.2 in January, and was 21.4 percent lower than the February 2007 index of 107.6. "The slip in pending home sales implies we’re not out of the woods yet, though an era of successive deep sales declines appears to be over," Yun said."
That’s the lowest since 2001. Yeah, sure a 21.4% drop in that index is a sure sign of stability. In all honesty, could Yun even predict his way out of a paper bag?
But wait, there’s more…
According to Bloomberg.com, "Boston Federal Reserve Bank President Eric Rosengren said the delay in a rebound of U.S. home sales continues to “surprise.”
"People have been expecting a recovery in housing much sooner than it has occurred and that’s continued to surprise on the downside,” Rosengren said in a telephone interview with Bloomberg News.
Rosengren said it’s “confounding” that housing shows little sign of recovery after the Fed’s six interest-rate reductions since September. Fed officials are in the eighth month of a credit crisis that began with rising delinquencies on subprime mortgages.
“The housing market is still weaker than we would like and that has contributed to some of the financial problems as well,” Rosengren said."
That’s right. He’s surprised. What surprises me is that he still has a job.
Some one please make Greenspan go away…
The man that helped create subprime, the housing malaise, and the financial crisis that’s killing ordinary hard working Americans is now saying the problem will soon be over.
"Former Federal Reserve Chairman Alan Greenspan said the drop in U.S. home prices will probably end "well before” early next year as the number of houses on the market diminishes, aiding an economic rebound.
"It will not be until early 2009 that we will get close to having eliminated most of this” home inventory, Greenspan told a conference in Tokyo today sponsored by Deutsche Bank AG and co-hosted by Bloomberg LP. "But it is very likely that home prices will stabilize well before that.”
Greenspan added that the extent of damage stemming from the collapse of the subprime-mortgage market won’t be known for months. He described the credit crisis as the worst in 50 years, echoing the assessment of International Monetary Fund economists."