Peter Schiff: Let the Housing Market Crash 1/23/2009

peaceandlove · 01-25-2009, 01:53 AM

Peter Schiff: Let the Housing Market Crash ~ January 23, 2009

The Home Front by Lake Mullins

Article at: http://www.usnews.com/blogs/the-home...ket-crash.html
Source: http://www.campaignforliberty.com

Earlier this week, I chatted with Peter Schiff, the president of Euro Pacific Capital. Schiff, a notorious bear, argued that the government's response (http://www.usnews.com/blogs/the-home...-paulsons.html) to the housing crisis has only made matters worse and that the best way to help the market would be to let home prices fall further (http://www.usnews.com/blogs/the-home...re-cities.html) . Some excerpts from the interview:

What's your take of the Fed's moves to engineer lower mortgage rates?
It is a bad thing. They are trying to maintain high home prices by keeping interest rates low. That's how they want to create more affordable housing. What's a much more efficient way [to create more affordable housing] is to let home prices fall so that houses become more affordable because they are cheaper. And so people don't have to borrow as much money to buy a house. These low interest rates are only temporary. They can't stay down here.

[See our recent interview with Nouriel Roubini here: http://www.usnews.com/blogs/the-home...t-enough.html]

What should the government do about the foreclosure epidemic?
We should allow the foreclosure process to go through. We should allow lenders to foreclose if that's their choice. We should allow them to work out deals with the tenants if that's what the parties agree to. In many cases, foreclosure is a good thing because it takes somebody out of a property that they couldn't afford and puts it into the hands of somebody who can afford it. There can be somebody who is living in a house that bought it with nothing down—they are not going to make the payments, so why even modify the loan? They don't have any equity. When people own houses without any of their own money at stake, they don't maintain them. It would be better for the bank to foreclose and sell the property to somebody who actually has money, somebody who is a viable homeowner and not some speculator.

So, what would you advise policy makers to do?

Article continues here: http://www.usnews.com/blogs/the-home...ket-crash.html

01-25-2009, 01:53 AM	#1
peaceandlove Avalon Senior Member Join Date: Sep 2008 Location: Turtle Island Posts: 2,776	Peter Schiff: Let the Housing Market Crash 1/23/2009 Peter Schiff: Let the Housing Market Crash ~ January 23, 2009 The Home Front by Lake Mullins Article at: http://www.usnews.com/blogs/the-home...ket-crash.html Source: http://www.campaignforliberty.com Earlier this week, I chatted with Peter Schiff, the president of Euro Pacific Capital. Schiff, a notorious bear, argued that the government's response (http://www.usnews.com/blogs/the-home...-paulsons.html) to the housing crisis has only made matters worse and that the best way to help the market would be to let home prices fall further (http://www.usnews.com/blogs/the-home...re-cities.html) . Some excerpts from the interview: What's your take of the Fed's moves to engineer lower mortgage rates? It is a bad thing. They are trying to maintain high home prices by keeping interest rates low. That's how they want to create more affordable housing. What's a much more efficient way [to create more affordable housing] is to let home prices fall so that houses become more affordable because they are cheaper. And so people don't have to borrow as much money to buy a house. These low interest rates are only temporary. They can't stay down here. [See our recent interview with Nouriel Roubini here: http://www.usnews.com/blogs/the-home...t-enough.html] What should the government do about the foreclosure epidemic? We should allow the foreclosure process to go through. We should allow lenders to foreclose if that's their choice. We should allow them to work out deals with the tenants if that's what the parties agree to. In many cases, foreclosure is a good thing because it takes somebody out of a property that they couldn't afford and puts it into the hands of somebody who can afford it. There can be somebody who is living in a house that bought it with nothing down—they are not going to make the payments, so why even modify the loan? They don't have any equity. When people own houses without any of their own money at stake, they don't maintain them. It would be better for the bank to foreclose and sell the property to somebody who actually has money, somebody who is a viable homeowner and not some speculator. So, what would you advise policy makers to do? Article continues here: http://www.usnews.com/blogs/the-home...ket-crash.html