President Vows To Cut Mortgage Costs

More magic wand waving coming from the Obama Administration. This time, the president vows to help lower Americans’ mortgage costs with a new “plan” – details to be worked out by new Treasury Secretary Timothy Geithner.

“Soon my Treasury secretary, Tim Geithner, will announce a new strategy for reviving our financial system that gets credit flowing to businesses and families," Obama said in his weekly radio address. No pressure there, Tim.

I’m not sure frozen credit markets are necessarily the problem at this point. Credit rates are at historic lows – there is money to be lent. The problem is, is that consumers and businesses are already saddled with debt, and hesitant to take a chance in the current environment. Consumers are busy paying down current obligations and worried about employment; and businesses don’t have incentive to expand as the business cycle continues to contract.

It’s a difficult situation, and one that I feel will be compounded by needless government spending and intervention. Ultimately, there is a role for government in this economy as a short-term consumer and long-term business facilitator, a role that unfortunately is not well-defined in the current pork package winding its way through the corridors of Congress.