While continuing to tout an economic recovery that is being missed by far too many, the government and economists say one thing and then move toward the other. The unemployment rate claims one economic version that is talked about openly, but then there are “little things” that various official capacities seek to carry out suggesting they realize full well the discrepancy. The most obvious is the FOMC's reluctance to do much more than talk about rate hikes.
In the US, there hasn't been the same growing favor to revisit fiscal “stimulus” as elsewhere but that isn't to say there isn't any activity.
President Obama's economic advisers and outside experts say the nation's much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.
In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.
On the surface, it seems as banking had gone from being too far forward during the housing bubble and lending skewed way too much toward NINJA to now the opposite in being far too strict. Governments, as always, want it both ways as if it could possibly divine the difference – to have quite robust lending but without any tomfoolery. To move the pendulum back, part of this new push is being undertaken by the Justice Department, as if the law bureau fits within what is clearly “clogged transmission” of monetary policy. The reason for that is certainly a relic from the housing bust, as the Obama Administration is using Justice as a platform to assure banks that there would be no legal repercussions if another housing bust came around again. It's not quite a “get out of bubble free” card, but perhaps as close as there will ever be offered.
There are a lot of assumptions, however, being made on the part of the government to appeal again to housing. The first is, as stated at the outset, that perhaps the recovery and the current economy may not be what is claimed. In more raw policy terms, they assume that banks aren't lending so robustly, especially when compared to the pre-crisis era, because of lingering legal concerns and again overly strict lending standards (as is typical in any asset bubble cycle reversion). I would disagree on that count especially as banks have been hindered more so by monetary conditions (not policy) than affinity for changes in legal potential. In other words, they have more pressing problems in the euro/dollar (and what that means for asset capacity in the first place) than worrying about some distant date with Justice Department immunity.
