Feds To The Rescue?

The incredible uncertainty about the possible/probable next action of the Fed, the Treasury and the Congress is keeping the banks, the equity markets, and us, just plain folks in a state of disarray. It's a little like being trapped in a room with a drunk waving a loaded gun. Do we run, duck, or attack? Our elected and appointed officials who have a track record of running everything they touch into the ground are engaged in debating the strategy for running corporate manufacturers, banks and the mortgage industry, either by direct investment or the creation of oversight committees to provide guidance. One way or another the Congress, which is deeply beholden to the UAW, is going to find a way to throw a lot of our money at the auto industry, or at least the most inefficient members. Toyota, Hundai, BMW, Honda, and Mercedes won't get any of the money because they have efficient business models and don't need it. Mr. Paulson has already delivered a freight car full of money to the banks, so far without increasing their desire to lend to any noticeable degree. Now there is a plan afoot to provide mortgages for home purchase at 4.5%, a full point below the current market rate, in an attempt to spur home purchases. The rate will not be available for refinance, thus no benefit to those who have been diligent in maintaining their mortgage, nor any benefit to those facing foreclosure. We assume there will be another plan to help this latter group. Once more this is a scheme to help a few at the expense of the many. A major problem with our representatives is that they are not smart enough to realize that they are not smart enough. Not even close. We keep putting them back in office, so what does that say about us?
A thought occurred about helping people buy or sell their homes. Why not have real estate agents reduce their commissions so the price of homes would be more realistic? Why does it cost twice as much to sell a home for $400,000 as one for $200,000, or three times as much for a $600,000 home. Same paperwork. Why does it cost between $16,000 and $24,000 to sell a $400,000 home? Reduce that commission by 1/2 and a lot more people could afford the home. Reduce it a bit more and even more people could buy. That would have a dramatic impact on home sales. More than the reduction in mortgage interest. The idea has the same chance of adoption by the real estate community as you have of making a rock float, but why not ask your real estate agent anyway?
As usual,
Thanks for visiting.