The stock market has reached new highs, home sales are soaring and interest rates are in near record lows.
All this suggests the end of the housing crisis is here, but with weak employment gains and declining household incomes much of the public thinks the economic recovery is a myth.
They’re half right.
If you’re looking for a job, a better job or a job with benefits, the economy sucks. The latest employment and unemployment data from the Bureau of Labor Statistics claims that we gained 88,000 jobs in March, a number only made possible if you don’t count the 496,000 people who left the workforce.
If you’re earning less you’re not alone.
“Median household income was $50,054 in 2011, 1.5 percent lower in real terms than the 2010 median, 8.1 percent lower than the 2007 (the year before the most recent recession) median ($54,489), and 8.9 percent lower than the median household income peak ($54,932) that occurred in 1999,” according to the U.S. Census Bureau.
So who is benefiting?
Well, let’s see:
- Freddie Mac had 2012 profits of $11 billion.
- Fannie Mae had profits of $17.2 billion in 2012.
- The government advanced $187 billion to Fannie Mae and Freddie Mac. Nearly $50 billion has already been repaid.
- The Federal Reserve had 2012 profits of $90.6 billion and generously shipped $88.4 billion back to the US Treasury.
- Federal Housing Administration (FHA) mortgage reserves have been bolstered by $20 billion in the last three years because of policy changes and premium increases.
To understand the size of these numbers consider that in 2012 Apple made $41.7 billion while Google had a profit of $10.7 billion.
Privatize the profitable
When you hear chatter about privatizing Freddie Mac and Fannie Mae, when you hear people saying we need to shrink the FHA program, please ask three questions:
• First, who, specifically, will get the profits and revenues now being generated by Fannie Mae, Freddie Mac and the FHA?
• Second, how, exactly, will borrower costs decline from new efficiencies? Why can’t we have such efficiencies today?
• Third, will taxpayers have any obligation to bail-out Wall Street investors in the event of losses? Will any government guarantees be required?
And if no one will answer your questions, just follow the money.