Forced Mortgage Refinance Does Not Create Wealth. Mark Calabria

Via Cafe Hayek. Here original article.

The New York Times has gotten Washington all worked up with the suggestion that we can turn around both the economy and the housing market if only Fannie Mae and Freddie Mac gave all underwater borrowers an automatic reduction in their interest rate. 

The thinking, as illustrated by that world class economist Matt Yglesais, is  “with a lower monthly interest payment, an indebted household can pay down other debts more rapidly. A less-constrained household will increase its consumption of goods and services.”    What this misses is that a mortgage is one person’s liability, but another person’s asset.  By replacing a mortgage that yields 6% with a mortgage that yields, say, 4%, you decrease the value of that mortgage (or mortgage-backed security).  So whatever increase in consumption you get from making the borrower better off is reduced by making the investor worse off.  There’s no magic in wealth redistribution. 

I’ve argued all this before, but the reality is that the push to give underwater borrowers a free re-finance is not about economics, it is about politics.  Heading into the 2012 elections, this plan offers Obama the chance to give millions of borrowers (and voters) a freebie.  Of course, it isn’t free.  Even if the investor is the taxpayer, as in the case of Fannie and Freddie, it is simply a transfer from one set of taxpayers to another.

I was a little surprised, however, at Yglesais’s admission that he just discovered ” that Fannie & Freddie are overseen by an independent regulator.”  That’s mortgage finance policy 101.  But then why let any study of the facts or details get in the way of a good political giveaway.

What again is the great tragedy of borrowers being stuck with mortgage rates of 5.5 or 6.0 percent?  Those are quite low by historical standards.  And if the borrower wanted their rate to decline when overall rates decline, they should have taken out an adjustable rate mortgage.

Pandora’s Briefcase. It was a dazzling feat of wartime espionage. But does it argue for or against spying? Malcolm Gladwell

Via Arcadi Espada.

Extract:

In April 30, 1943, a fisherman came across a badly decomposed corpse floating in the water off the coast of Huelva, in southwestern Spain. The body was of an adult male dressed in a trenchcoat, a uniform, and boots, with a black attaché case chained to his waist. His wallet identified him as Major William Martin, of the Royal Marines. The Spanish authorities called in the local British vice-consul, Francis Haselden, and in his presence opened the attaché case, revealing an official-looking military envelope. The Spaniards offered the case and its contents to Haselden. But Haselden declined, requesting that the handover go through formal channels—an odd decision, in retrospect, since, in the days that followed, British authorities in London sent a series of increasingly frantic messages to Spain asking the whereabouts of Major Martin’s briefcase.

It did not take long for word of the downed officer to make its way to German intelligence agents in the region. Spain was a neutral country, but much of its military was pro-German, and the Nazis found an officer in the Spanish general staff who was willing to help. A thin metal rod was inserted into the envelope; the documents were then wound around it and slid out through a gap, without disturbing the envelope’s seals. What the officer discovered was astounding. Major Martin was a courier, carrying a personal letter from Lieutenant General Archibald Nye, the vice-chief of the Imperial General Staff, in London, to General Harold Alexander, the senior British officer under Eisenhower in Tunisia. Nye’s letter spelled out what Allied intentions were in southern Europe. American and British forces planned to cross the Mediterranean from their positions in North Africa, and launch an attack on German-held Greece and Sardinia. Hitler transferred a Panzer division from France to the Peloponnese, in Greece, and the German military command sent an urgent message to the head of its forces in the region: “The measures to be taken in Sardinia and the Peloponnese have priority over any others.”

Read full story.

Protesta en el Capitolio: Las impresiones de Sara Martha Fonseca

Vía La revolución de los gladiolos.


Grabación de la conversación entre Mercedes Perdigón y Sara Martha Fonseca sobre la protesta realizada en el Capitolio de La Habana.

Tariffs, not so good. Donald Boudreaux‏

Read full.

Extracts:

“While free trade works when economies are fully employed, tariffs must be used when economies are depressed….  Why do you [Boudreaux] deny this necessity?”

Second, if the premise of your argument is correct, you should not stop with obstructing cross-border trade.  You should propose also that, say, people be prevented, during recessionary downturns, from buying used cars (think of all the auto-factory jobs that would thereby be created); that people be prevented from preparing meals at home (think of all the restaurant jobs that would thereby be created); and that people be prevented from sleeping at home (think of all the hotel, motel, and B&B jobs that would thereby be created).

Música 31.08.2011

Jazz internacional - Concierto del trombonista sueco Nils Landgren.

Se emite el concierto facilitado por la UER del trombonista sueco Nils Landgren acompañado por la NDR Big Band de Hamburgo en Octubre de 2009. El resto del programa se completa con miscelánea de discos variados.

Jazz Internacional - Concierto del trío del pianista británico Kit Downes.

Se emite el concierto facilitado por la UER del trío del pianista británico Kit Downes en el Festival de Jazz de Cheltenham (G.B.) en Julio de 2010. El resto del programa es un homenaje a la memoria del pianista francés Michel Petrucciani (1962-1999), cuando se cumplen 48 años de su nacimiento. Emitimos una de sus actuaciones en directo, con su trío, en el Village Vanguard de Nueva York en Marzo de 1984.

Jazz internacional - Perrine Mansuy desde el Festival de Jazz de Montpellier en Julio de 2010.

Se emite el concierto facilitado por la UER del trío de la pianista francesa Perrine Mansuy desde el Festival de Jazz de Montpellier en Julio de 2010. El resto del programa se completa con miscelánea de discos variados. 

Venezuela: tasa de homicidios se duplicó en 12 años . Fabiola Sánchez

Leer completo.

Extractos:

La tasa de homicidios en Venezuela se ha incrementado en más del doble en los últimos 12 años hasta alcanzar en el 2010 un índice de 57 asesinatos por cada 100.000 habitantes, lo que convierte al país en uno de los más violentos de la región, afirmó el miércoles el directivo de una ONG dedicada al tema de la inseguridad.

La situación de inseguridad que padece Venezuela es “muy dramática”, indicó Briceño en conferencia de prensa al asegurar las cifras que maneja su organización están basadas en informes de oficiales que no se han entregado a las autoridades. El analista agregó que desde el 2005 el gobierno mantiene limitado el acceso a los indicadores sobre homicidios.