Economic Reform

So I scan the news from time to time and this article caught my eye.

Now I'm all for helping people become more financially secure. In fact I like the idea of being financially secure myself (I'll let you know when that happens). But it does strike me as just a little odd that the President of the United States would be talking like a mortgage salesman. Quite frankly it bothers me.

Regardless of any controversy of any stimulus package or packages, whoever approved them for whatever reason (not really interested in debating that point at the moment), I do not think that the President of the United States has any business telling people to go out and refinance. No business whatsoever.

When the President says "That is money in their pocket." I suppose he is referring to the millions of people expected to take advantage of the lower rates. But my question is whose pockets are really getting the money? A loan is a loan and interest is interest and as long as people are paying interest to banks then the banks are getting the money.

A person can refinance until the cows come home but unless there is a job to pay the new mortgage with it makes zero difference. A person can refinance a hundred times but if they don't have the income to support the 140% of the value of the home they own they still won't be able to pay it. A person an apply for a hundred loans but if their credit is completely destroyed because they haven't been able to pay their bills for the last year it makes no difference. In which case there is zero money in anybody's pockets (unless, of course you are a bank and received a handout to subsizide not giving loans to people whose credit has been destroyed because they don't have a job and couldn't pay their bills.)

In short this is no more economic reform than is Entrecard buying back credits and will have no more benefit for the economy that the latest sales at Wal-Mart. Offering a government backed discount on any product is dangerous at best. Doing so to this degree is shameful and quite possibly disastrous.