Sunday, March 22, 2020

Unsung hero

Mark Calabria,  Director of the Federal Housing Finance Agency, which oversees Fannie and Fredy, announced an excellent policy response to the virus.

People who are in financial trouble because of the virus can stop paying their mortgages. They have to contact their lender, but the process won't take endless paperwork. It won't be reported to credit bureaus. They still have to pay eventually.  People who were already behind at least won't be kicked out of their houses to go share the virus.  People who are renting houses can get the same forbearance if their renters can't pay.

This is classic forbearance -- don't force needless foreclosures -- well measured to the emergency at hand and not creating too many horrible incentives along the way. No, we don't have the federal government forgive every mortgage, either directly or forcing banks to swallow the losses, or all student loans, or all credit card debt. Federal resources are limited and a grand piƱata debt jubilee is not needed and damaging in its own right.

Mar 22 Interview on NPR and an earlier March 19 NPR interview with transcript.

Even grumpy likes to pass along wise policy and good news on occasion.

8 comments:

  1. One of the commenters made a very wise observation. There are maladies out there in the world that kill people but the economy moves on. We as a nation have made a choice to suffer economic damage to save lives. But how much of more can we willingly tolerate? With no pandemic plan in place and policy efforts scattershot - the economic consequences of this are truly dire. I just cannot envision the US signing up for this longer than 1 month.

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    1. Yes, but did you know that 150,000 Americans have died since COVID-19 invaded the US?

      Actually, they died of cancer. And cancer is often triggered by artificial carcinogens. 600,000 Americans or so will die this year from cancer and next year and the year after that and so on.

      The Grim Reaper called COVID-19 primarily strikes the elderly with multiple comorbidities, and elderly smokers. Being a virus it will spread through the population but once, if allowed. Then, herd immunity is obtained.

      Sometimes in life you have to take the least-bad option. The least-bad option now is for everybody to go back to work.

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    2. Collective decision making always makes envisioning how "we as a nation" made any choice "to save lives" and shut down commerce.
      It seems to me Politicians with self-interest have chosen to embrace a safe electoral path, since they will keep getting paid - and blamed.
      The real concern is how long will it take for the populace, as individuals, to choose to circulate again; will police enforce isolation orders?

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    3. OK. Let's review. Coronavirus is HIGHLY contagious. It cvan easily infect the whole population. Its also very deadly. So Population of US: 340 million. Say 3% die (maybe more).

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    4. I agree and for the first time all the choices are bad politically. Lowering the lockdown means a rampant rise in deaths of the elderly and sick. A lockdown means an economy torn asunder and millions of people out on the streets. Another underplayed subplot, due to our profoundly screwed up healthcare system, all of these newly unemployed now have no health insurance and must go to the private exchanges(gulp!). How long before we hear medical horror stories about lost insurance and development of deadly condition throwing them into the financial blackhole?

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  2. Here's a nice research report on the economic effects of the 1918 influenza pandemic, by Thomas Garrett of the St. Louis Fed from 2007:

    https://www.stlouisfed.org/~/media/files/pdfs/community-development/research-reports/pandemic_flu_report.pdf

    The author seems clairvoyant. In Part V, Final Thoughts, the author says:

    "Unfortunately, a 2005 report suggests that the United States is not prepared for an influenza pandemic. Although federal, state and local governments in the United States have started to focus on preparedness in recent years, it is fair to say that progress has been slow, especially at local levels of government. Different levels of governments have been relatively ineffective in coordinating a response to disasters in the past, whereas private charities and volunteer organizations like the American Red Cross often perform admirably and are often the first responders."

    As a people, let this be America's finest hour.

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  3. That was is known as a START. Here is a more thorough solution for the US: The Congresswoman is BRINGING IT with an excellent and illuminating solution to the Coranavirus economic disaster: https://twitter.com/RepRashida/status/1241377540524126208… https://tlaib.house.gov/…/Automatic%20Boost%20to%20Communit… Modern Monetary Theory is how things work folks!

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