8/31/07
Today our “free market” president announced a plan to use the FHA and the tax code to help homeowners who are in over their heads to refinance their mortgages and keep the houses they obviously could not afford in the first place. As the President explained:
"This has led some homeowners to take out loans larger than they could afford based on overly optimistic assumptions about the future performance of the housing market. Others may have been confused by the terms of their loan, or misled by irresponsible lenders. Whatever the reason they chose this kind of mortgage, some borrowers are now unable to make their monthly payments, or facing foreclosure."
The President went on to say:
"Anybody who loses their home is somebody with whom we must show enormous empathy," the president said at an Aug. 9 news conference. "The word `bailout,' I'm not exactly sure what you mean. If you mean direct grants to homeowners, the answer would be no, I don't support that."
Well, no, Mr. President, we can have sympathy for people who have lost their homes, but we can’t have empathy with or for them unless we, too, have lost our homes to foreclosure, and most of us haven’t. Most of us haven’t lost our homes in foreclosure because we purchased homes we could afford, made sure we had a financial cushion before we bought such homes, and have been fortunate not to have had to endure a financial problem that exhausted that cushion. Some people are losing their homes in foreclosure due to circumstances beyond their control, but most are losing their homes because they purchased homes they could not afford, homes they had no business purchasing in the first place, and homes that they never really owned anyway. As the AP story said:
A key element of Bush's plan would allow homeowners with good credit histories, but who cannot afford their mortgage payments, to refinance into mortgages insured by the Federal Housing Administration to keep from defaulting. (Emphasis mine)
Despite his protestations against the word “bailout,” what our purportedly “free market” but actually economically illiterate and statist. (One cannot be the latter without being the former.) President is proposing is that we who have been careful with our money and who have purchased homes we actually could afford subsidize those who bought their “dream houses” regardless of cost in order to bail out a mortgage industry with a disregard for its customers that is matched only by the utter lack of financial knowledge displayed by its sales force and, in many cases, its upper management and to save the proverbial bacon of other financial players who plunged into “investments” with little regard for risk or its price.
No wonder people do not make wise economic decisions! They are rewarded for financial irresponsibility and punished for financial rectitude. Perhaps those of us who have practiced the latter are really the stupid ones—why be careful with one’s money when the government will always be there to clean up your mess? After all, it’s never YOUR fault! And we wonder why our national savings rate regularly hovers around 0%, give or take a few basis points.
This proposed bailout has confirmed my recent belief that what we need is a no exceptions balanced budget rule. I used to worry that politicians would only use such a rule to raise taxes to match their insatiable spending habits rather than borrow to match those lascivious designs on the taxpayers’ wallets. Now, however, I have come to believe that such a policy would act as a check on such spending and on the inexorable growth in government of which it is a part. As it is now, taxpayers must pick up only the interest, if that, on any new spending, so the resistance to never ending government growth is muted to the point of inaudibility. That would change if the budget had to be balanced and, thus, new programs had to be paid for in, effectively, cash. In the case of the President’s latest bright idea, if people had to actually reach into their pockets and pay for the irresponsibility of their big spending neighbors in order to bail out a pack of financial hyenas and mountebanks, the outcry would be so great that no president, no politician, would even think of proposing such an economically destructive and politically oppressive wealth transfer.
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2 comments:
Right again, Kimosabe. Other than the fact that President Bush takes instructions directly from The Man above, there is little indication that he is, or ever was, a Republican. He starts wars like a Democrat. He seeks bailouts like a Democrat. And he stacks the judiciary like a Democrat (Roosevelt, in particular). {There is a closing line here for Dylan fans that remember the song, which I will leave to your imagination}.
9/8/07
I like the way you think, piso mojado. I, too, believe in the things the Republicans SAY they believe in (limited government, sane, self-interested foreign policy, etc.) but to which they were only, or at least are only, paying lip service.
I can’t conjure up the Dylan song to which you refer, but I can think of the last line from a Who song, “We Won’t Get Fooled Again,” something about the new boss being the same as the old boss. Perhaps the song was written by Dylan. I didn’t think so, but my musical knowledge post, say, 1962, is limited. It is ironic that “We Won’t Get Fooled Again” became a hit when the previous holder of the supposedly coveted “Republican most in favor of big government” award, Richard Nixon, was in power.
The Pontificator
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