Krugman on Team Bush's mortgage "plan:"
The plan is, as a Times editorial put it yesterday, "too little, too late and too voluntary." But from the administration’s point of view these failings aren’t bugs, they’re features.
In fact, there’s a growing consensus among financial observers that the Paulson plan isn’t mainly intended to achieve real results. The point is, instead, to create the appearance of action, thereby undercutting political support for actual attempts to help families in trouble...
Mr. Paulson’s plan -- or, to use its official name, the Hope Now Alliance plan — is entirely focused on reducing investor losses. Any minor relief it might provide to troubled borrowers is clearly incidental. And it is does nothing for the victims of predatory lending.
The plan sets voluntary guidelines under which some, but only some, borrowers whose mortgage payments are set to rise may get temporary relief.
This is supposed to help investors, because foreclosing on a house is expensive: there are big legal fees, and the house normally sells for less than the value of the mortgage. "Foreclosure is to no one’s benefit," said Mr. Paulson in a White House interactive forum. "I’ve heard estimates that mortgage investors lose 40 to 50 percent on their investment if it goes into foreclosure."
"The appearance of action"...sort of like their plan for the Gulf Coast. And otherwise, there's a degree of consistency: just like with the drug bill, they've chosen big business over the American people.
Heckuva job.
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