Principal Mortgage Writedowns Not Happening.....

...unless the economy goes into another downward spiral. You see only when put into a corner will the powers that be do anything.

http://www.huffingtonpost.com/2010/03/08/treasury-getting-more-com_n_491012.html

The Treasury is on Fantasy Island drinking it up with Tattoo. They still think the economy is recovering. This is the message they are trying to sell the country. That housing is getting better. That prices will gradually rise. Blah Blah Blah. Since a program of principal write downs would be incompatible with this distorted message and because the only way to stop foreclosures is to force principal write downs, it’s probably not going to happen. Why? Because the bankers run the show. Treasury just keeps the lunch warm for them when they come down to DC.

The only way to get the economy back to a healthy state is to get housing stabilized the right way. The right way is the mortgage cramdown. Everything that has been done so far is to allow the banks to delay their day of reckoning. From accounting fraud, like relaxing Mark-To-Market accounting rules to taxpayer bailouts, the singular theme is extend and pretend. How do we delay the inevitable bank balance sheet implosion? The reason that Treasury doesn't support principal write downs is that they are scared shit less of the ramifications to bank balance sheets. Its a classic not on my watch strategy. The Obama Government is artificially propping up housing prices by basically being the only viable lender left. With the hopes that an impending economic recovery will bolster housing prices, so that we can all go back to enjoying blowing bubbles. If the government for one instance ever even considered this idea which is the only realistic idea that is left, they are basically stating what ever we have done so far has failed. Mortgage cramdown would just ratify the idea that housing is not coming back and prices are still too high. Government wants to white wash and bamboozle the electorate into drinking the cool aid that the economy, employment, and indeed housing has bottomed and soon will recover.

When the inevitable housing foreclosure waves hit the market the economy will follow. If and only when the race to the bottom of the barrel is completed, when the US Financial System is in its final death spiral will we see any type of real program to fix what truly ails America. It might be too late by then.