As far as we know President Obama has yet to sign the bill, but congress has passed an extension of the $729,750 “super conforming” loan limit for high cost areas through the end of 2010. Considering the extension was attached to legislation without which most federal agencies will have to shut down by midnight tomorrow, we’re guessing it’s signed.
Congress Passes Stopgap Funding Plan, Higher Mortgage Limits [Bloomberg]
If Lowering Rates Isn’t Working, Perhaps Increasing Limits Will [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by dub dub

    But of course! You can’t stay in orbit without oxygen.

  2. Posted by Debtpocalypse

    Dim-witted politicians see “high cost areas” as an apparent “problem.”
    So-o-o-o-o… they subsidize loans for people seeking to purchase those houses.
    Which helps sustain the high cost fetched by those areas.
    Idiots.

  3. Posted by jlkjkljlkjkl

    LOL so the problem with housing is availability of credit for high prices -not the prices themselves.
    Do we really want to own paper currencies with these intellectually failed inflationists such as Bernanke in control?

  4. Posted by "Dave"

    No, what we all want is a decade of deflation, slack capacity, 30% unemployment, starvation, and super cheap housing. It worked just fine during the Great Depression and it can work again…
    According to this blog, all SF housing is sinking like a stone even with super-conforming subisdization from congress so how exactly is this pumping up the market?

  5. Posted by Outsider

    Agree. Just look at Detroit…

  6. Posted by anonn

    Agree. Just look at Detroit…
    What does that mean? Is it anything like, “just look at Japan” ?

  7. Posted by jlkjkljlkjkl

    Being unemployed and in a bread line is exactly the same as being employed but paying $50 for a loaf.
    Additionaly inflation and unemployments are not tied together -you can still have depression era unemployment with massive inflation -which is what Bernanke and all the rest of you intellectually failed Keynesians are leading us towards.
    Deflation isn’t necessarily a bad thing -look at Zimbabwe.

  8. Posted by ex SF-er

    This is a repost from a dead thread a few days ago but it is applicable here:
    ===
    If you notice, the housing support is getting BIGGER over time, not smaller.
    we started with a modest tax credit that had to be repaid. this caused a little bump in the market. Then we changed it to a tax credit that DOESN’T have to be repaid. this helped goose the market a bit more. Now we’re extending the credit, AND we’re extending it to more people (not just first time homeowners, raising income limits, etc)
    The same thing happened with toxic assets. First the Fed took solid assets, then more dodgy assets, and then toxic crap.
    First we had the PDCF, then mini TARP. Then Mega-TARP. Then we added TLSF and TALF and other letters that I forget. (order of facilities might be off, who can remember them all anymore? except for the greedy bankers who will continue to feed at the trough while trumpeting their free market earnings)
    we started with “foreclosure moratoriums” then we had increasing foreclosure assistance ending with an expanded HAMP.
    Then the Fed started buying MBS, and then even Treasuries
    All of these actions serve a single purpose: to bail out the banks. PART (not all) of bailing out the banks is trying to refloat the housing market, because the Fed/Govt correctly understands that there is a tsunami of overleveraged houses out there. If they are allowed to go to foreclosure then the banks fail openly (all the big banks failed over the last 2 years, but are held in zombie state so we can all pretend.)
    I see two key points here:
    1) eventually, each level of support gets exhausted, and then a new level of support must be added… typically a bigger level of support.
    2) the government/Fed has openly stated their intentions and will not stop until they are forced to stop. “There will be no more Lehmans”.
    (how do you think they intend to keep the other zombies afloat?)
    just like a crack addict. the addict will keep smoking their crack until someone else pries the pipe out of their fingers or until they are dead.
    I agree with Shiller (and I’ve said this for well over a year now): economic forecasting is useless, because there are not economic models that work, because we don’t have a market system right now.
    We have crony capitalism and a centrally influenced market (although not fully centrally controlled it is significantly influenced).
    Thus, to predict the future of the various markets, you must understand POLITICS.
    SF housing will rise so long as Global politics are favorable to housing. SF housing will crash if those politics change.
    (for instance, if foreign central banks stop buying our debt).
    I’ve said this before as well: watch the Treasury market. we won’t get much warning IF (not when, if) things collapse. But the Treasury market will hopefully forewarn us. Rates going up means that FCBs aren’t buying and also that the Fed isn’t monetizing. This will mean that the political will for our current global system is waning.

  9. Posted by curmudgeon

    ex-SFer….all food for thought. But where to put one’s money if we get the warning signs from the treasury market?

  10. Posted by Don

    Lower taxes on rich people and subsidize their mortgages so they can extract equity with second mortgages to employ poor people and then tax poor people to lower taxes on rich people and subsidize their mortgages…..I think it just might work!!!

  11. Posted by ex SF-er

    ex-SFer….all food for thought. But where to put one’s money if we get the warning signs from the treasury market?
    I hesitate to say because much of this depends on what transpires between now and then IF this should occur.
    The most logical answer at this time would be foreign currencies (but gotta choose wisely since many currencies are sick right now), gold/silver or other precious metals, and other hard assets that do NOT require debt. Also I may consider productive assets.
    One might consider buying one’s own house, but no more (at least early on), because rising interest rates and a tightening lending environment may make housing less affordable, thus housing may fall precipitously in value. (like what happened in end-2007 but on a grander scale).
    the point in general won’t be to make money, it will be to lose the least. Somewhat like Argentina. (I’m not saying we’ll be a repeat Argentina, I’m saying that the things that worked in Argentina may work in our future environment).
    But again: one will have to look at the political climate at the time this occurs IF it happens. My guess is that there will be a fierce propaganda machine running that will label anybody buying gold as an “economic traitor” as example… taxes will likely need to go up significantly on “the rich” (which may include most people with jobs, and certainly “rich” people with things like a house or a 401k as example). There will be a fierce search for things like foreign bank accounts (Like the recent US vs Swiss Bank situation) to search for tax havens etc…
    On a side note: I still feel quite confident that we are going to have another major market dislocation (my so-called “W” shape recession) and I still feel that our economy is sick as a dog, with almost nothing being done to repair the sickness.
    I don’t know if our leaders will drive us to a currency crisis, but they’re certainly trying their hardest to do it.
    They are making nearly every textbook mistake that has ever been known in the history of recessions…
    If they would have taken that $23 Trillion and funneled it to the American Citizens/Small Businesses and also used it to resolve our Too Big to Fail Problem, then I would have felt that it was an expensive endeavor, but it might have had some positive effect.
    But instead we used most of that money as the biggest money grab in the history of Earth, funneling it to a very few numbers of people where it has literally been squandered, and in doing so we set up the biggest moral hazard lesson of all time.
    The lesson:
    gamble as much as you want. If you win: record bonuses (see Goldman Sachs this year)
    if you lose: the taxpayer will bail out out. and the taxpayer will pay to make you even bigger.
    All of the big banks are back to their old games EXACTLY as they had done before.
    We’ve done nothing about Credit Default Swaps, nor are we trying to do anything about them
    Nothing about major leverage
    Nothing about funky accounting
    Nothing about the shadow banking system.
    and the bills out there right now focus to make all the above problems WORSE. it would be laughable if it didn’t make me want to throw up.

  12. Posted by Jimmy (No Longer Bitter)

    Kind of a pitiful footnote to ex-SFer’s post: with regard to SBIR (the last remaining hope for independent small tech business startups), DoD reauthorized the existing program for 1 year (14 year reauthorization was passed by the Senate, the House reduced it to one), and a continuing resolution for the other 10 agencies who participate was passed that keeps the program alive for 3 whole months until Jan. 31.
    Now there’s a great show of support for the little guy!
    The SBIR program allocates $2.5B/year, in a highly competitive process, to small businesses developing new technologies. That sum is 1/1000th of the bailout that big banks received with no questions asked.
    Some (former) startups who received SBIR funds when starting out: Qualcomm, Symantec, and a whole long list of other companies of all sizes.
    Imagine what new technologies and businesses could be built with $2.5 Trillion in investment. I’m sure glad we spent it where we did, on the banks, who are the real engines of creativity and productivity in this country.

  13. Posted by Troy

    you can still have depression era unemployment with massive inflation
    Not sure how this works.
    Much of what we pay for real estate is simply site value, which has no cost of production.
    Don’t know about you, but paying for my land use entitlement is THE major budget item in my personal outgo. Should my income remain flat but taxes, food, energy, insurance go up I’ll just HAVE to go to the LL and tell him to lower the rent or I walk.
    In the end J6P has to negotiate with either the LL or the boss as to what his disposable income is. In depressions, the boss has the whip hand here.
    Japan is the example of deflation debt spiral. Too many buildings, not enough people, or jobs for that matter. Doesn’t matter what MZM is in this case I suspect.

  14. Posted by tony

    Thx Ex Sf-er. I have on almost same line of thinking. Fed is doing nothing just making bubbles bigger. But underlining is much biger they know economic unrest results in political unrest “im an emigrant from east europe who saw an experienced first hand falling of east block”
    It looks like the whole global system is flawed and unfurtunately small guys like us have no place to hide. Im a small business owner who works 13 hours a day and have no debt and own no property.
    I tell you this I never seen so many new $100.00 bills in my life. The printing machine is out there full force. Yes maybe you can hide on gold or gold index gld but is so much risk you can take on gold. The big CB if they wana manipulate price of gold they can and small guy will be wiped out. So honestly my opinion no place to run no place to hide.
    Taxes is given that will go up is already talk of adding a service tax. (so small guy will take it even deeper with no vaseline).
    It will be matter of time before stock market will tank again and people will figure it out that keeping zombies alive just postpones the reckoning day thats all.
    sorry to everyone for the gloom and doom views and for my poor english

  15. Posted by EBGuy

    The SBIR program allocates $2.5B/year, in a highly competitive process, to small businesses developing new technologies.
    Got to love the graphic from the Wall Street Journal blog — the VCs just can’t wait to try and get their mitts on the SBIR and STTR money. Thankfully the Senate seems to be able to show some restraint.

  16. Posted by Jimmy (No Longer Bitter)

    We can thank Kerry, Landrieu and the Senate (even Barbara Boxer signed on to support the SBA Continuing Resolution) for keeping SBIR for small businesses. Without their leadership (in particular, John Kerry) the entire program would’ve been thrown to the wolves years ago.
    At this point its impossible to say how the stalemate between House and Senate will be broken. DoD even went so far as to attach their SBIR reauthorization to the defense spending bill (keeping the program and the small business size definitions intact). (That is unprecedented, btw, since SBIR is usually under the purview of the SBA). Senate passed a 14-year reauthorization, and the House whittled it down to 1-year.

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