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Warren Buffett: Housing Market “Remains In A Depression”

RNC Communications - May 7, 2012

Warren Buffett Tells CNN’s Poppy Harlow That The Housing Market “Remains In A Depression” And That It Is Having An Effect On Business

CNN’s Poppy Harlow: “It's always interesting to hear his take on the economy because he's a man who invests with very simple, straightforward rules but I was a little surprised to hear how sorta — how  he just doesn't think that the housing recovery is here really in any way, shape, or form. The word he used for housing, still, today is a ‘depression.’ That's how we started out our interview. Take a listen to his words.”

Warren Buffett: “The housing market is the one big element that still remains in a depression. Not just a recession. It will come back …”

Harlow: “Still in a depression?”

Buffett: “Well it still is, when you're building 600,000 housing units a year in a country like ours, that is really – that is depressed so that affects our business, it affects our insulation business, it affects our carpet business and every place else we see pretty robust activity.” (CNN’s “News Room,” 5/7/12)

Obama Doesn’t Disagree, Even He Admits Housing Is “Probably The Biggest Drag On The Economy”

“This Summer At The White House, Obama Offered A Rare Acknowledgment That His Response To The Housing Crisis Had Fallen Short.” (Zachary A. Goldfarb, “Obama’s Efforts To Aid Homeowners, Boost Housing Market Fall Far Short Of Goals,” The Washington Post, 10/23/11) 

  • Obama Said That Housing Has Been The “Most Stubborn To Us Trying To Solve The Problem.” OBAMA: “We’ve had to revamp our housing program several times to try to help people stay in their homes and try to start lifting home values up.  But of all the things we’ve done, that’s probably been the area that’s been most stubborn to us trying to solve the problem.” (President Barack Obama, Twitter Town Hall, Washington, D.C., 7/6/11)
  • President Obama Said “I’ll Be Honest With You, [Housing] Is Probably The Biggest Drag On The Economy Right Now.” OBAMA: “Well, it’s a good question.  And I’ll be honest with you, this is probably the biggest drag on the economy right now that we have -- along with I know the frustrations people have about gas prices.  What we’ve really seen is the housing market, which was a bubble, had greatly over-inflated in all regions of the country.  And I know I probably don't get a lot of sympathy about that here because I can only imagine what rents and mortgages you guys are paying.” (President Barack Obama, Remarks By The President At A Facebook Town Hall, Palo Alto, CA, 4/20/11)

Treasury Secretary Timothy Geithner: “But Our Programs Have Dramatically Underperformed What We Thought. … We Are Very Disappointed And Frustrated By It And We Have A Lot Of Challenges Ahead.” (Treasury Secretary Timothy Geithner, Committee On Financial Services, U.S. House Of Representatives, Testimony, 10/6/11)

As Obama’s Housing Efforts Flounder, Millions Have Lost Homes To Foreclosure

“Meanwhile, 2.5 Million Homes Have Been Lost To Foreclosure Since 2009 …” “Meanwhile, 2.5 million homes have been lost to foreclosure since 2009, an additional 4 million are in the foreclosure process or seriously delinquent, and home prices are still falling in much of the U.S., shrinking household wealth for millions of Americans.” (Julie Schmit, “What Went Wrong With Foreclosure Aid Programs,” USA Today, 12/12/11)

Obama Has Helped Only 1.7 Million Avoid Foreclosure Of The 9 Million Homeowners He Promised. “President Obama pledged at the beginning of his term to boost the nation’s crippled housing market and help as many as 9 million homeowners avoid losing their homes to foreclosure. Nearly three years later, it hasn’t worked out. Obama has spent just $2.4 billion of the $50 billion he promised. The initiatives he announced have helped 1.7 million people.” (Zachary A. Goldfarb, “Obama’s Efforts To Aid Homeowners, Boost Housing Market Fall Far Short Of Goals,” The Washington Post, 10/23/11) 

  • The Administration’s Foreclosure Prevention Programs “Have Had Little Impact On The Overall Housing Sector.” “The administration is already using taxpayer funds from its $700 billion bank bailout program to help prevent foreclosures and give struggling Americans a reprieve on their mortgage payments. But the programs have had little impact on the overall housing sector.” (“White House Says Needs To Deal With Housing Problems,” Reuters, 6/5/11)
  • “To Date, Administration Programs Have Permanently Reduced The Debt Of Just One Tenth Of 1 Percent Of Underwater Borrowers.” (Zachary A. Goldfarb, “Obama’s Efforts To Aid Homeowners, Boost Housing Market Fall Far Short Of Goals,” The Washington Post, 10/23/11)

Obama’s Housing Policies Have Not Helped Anywhere Near The 7 To 9 Million Homeowners That He Said They Would. “The Obama administration's initial foreclosure-prevention programs, launched in early 2009, were intended to help 7 million to 9 million people. So far, they've aided about 2 million, and not all of those are out of foreclosure danger.” (Julie Schmit, “What Went Wrong With Foreclosure Aid Programs,” USA Today, 12/12/11)

  • “Programs Begun Later Have Also Faltered. One Intended To Help At Least 500,000 Has Helped Just A Few Hundred A Year After Its Launch.” (Julie Schmit, “What Went Wrong With Foreclosure Aid Programs,” USA Today, 12/12/11)
  • “Another Initiative To Extend $1 Billion To Help The Jobless Or Underemployed Avoid Foreclosure Ended In September, Obligating Less Than Half Of Its Funds.” (Julie Schmit, “What Went Wrong With Foreclosure Aid Programs,” USA Today, 12/12/11)

Few Of Obama’s Housing Initiatives “Had Much Impact,” Because “Administration's Effort Did Little To Help” The Unemployed. “One of the main problems with Obama's foreclosure prevention program was that the housing crisis had already spiraled beyond unaffordable mortgage rates. Homeowners were defaulting because they didn't have jobs -- and the administration's effort did little to help them. In response, Obama rolled out a multitude of initiatives designed to help the underwater and the unemployed. But few of them have had much impact.” (Tami Luhby, “Has Obama’s Housing Policy Failed,” CNN Money, 1/18/12)


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