| No relief in sight, Rudd warns homeowners
KEVIN Rudd has warned homeowners of "tough times ahead" as the Reserve Bank yesterday strongly indicated that struggling families face another interest rate rise next month. A rate rise on February 5 would be a double whammy for already struggling families, who last week suffered more mortgage pain when the country's major banks raised home loan rates. At a meeting in Sydney with Deputy RBA Governor Ric Battelino and Treasury Secretary Ken Henry yesterday, the Prime Minister and Treasurer Wayne Swan were told the grim news that Australia's inflation rate would remain high for some time. Last night Mr Rudd told The Daily Telegraph any interest rate rises in coming months were a legacy of the Howard-Costello Government. "Now Australian families face some tough times ahead, with inflation expected to continue rising," he said.
Stimulus Package: What's in and Out
Housing rescue: Making it easier for thousands of homeowners with ballooning interest rates to refinance into federally insured loans and allowing Fannie Mae and Freddie Mac to buy loans larger than $417,000. _Unemployment insurance: Extending benefits past 26 weeks. The White House wants to limit extensions to the handful of states with unemployment rates exceeding 5.5 percent. _Food stamps: A boost for benefits. WHAT'S OUT .
Savings and loan crisis cost taxpayers too much
Economic bubbles that burst get government bailouts. That's historically the way it's worked. The need to stabilize the farm banking system was given as the reason for the mid-80's farm aid. The savings and loan crisis cost taxpayers far more than deposit insurance could cover. Today, it's the Adjustable Rate Home Mortgage bubble that has burst and the Bush administration is attempting to cushion the blow with a plan to help borrowers refinance. 1.8 million ARMs reset to higher rates this year. The Bush administration worries that as many as 1.2 million of these are at risk of foreclosure without help. As was the case with the 1980's farm crisis, the government's plan doesn't bail out banks directly. The mortgage industry will lose $150-400 billion as a result of subprime mortgage losses.
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