Great piece on how the entire bailout is one collossal waste of money and example of “throwing good money after bad.” For example, the pledged total bailout funds pf $8T exceed the entire market cap of the S&P 500. Wow.
Useful collection of bearish charts. While a certain optimism has its place, the naive hope that we can unwind the lunacy of the last ten years and the inherent instability of our post-1970s experiment with fiat currency is not exactly conservative. It’s stupid. And I’m sick of stupid people talking half-intelligently about a bottom in 2009 or 2010. No one knows where it is, but it’s probably a ways off.
Incidentally, of all the stupid things that have come down the pike in recent years, one of the dumbest is the idea that conservatism is all about optimism. It’s not. It’s a certain attitude about change that includes a love of traditional American institutions and folkways rooted in a respect for our heritage, our ancestors, our past, including that past’s recognition of the necessary limits of government and human nature. Our Founders’ achievements acquire even more respect in light of the human material with which they were working and the sorry history of most other times and peoples. By contrast, the left’s pessemism, which was in full effect in the 1970s after Vietnam, was rooted in contempt for Western Civilization, a cult of the exotic, and hatred of our known way of life. That affectation does not mean we must, in order to oppose them, embrace a naive, exceptionalist optimism which is much more the province of America’s Englightenment-rooted liberals and their gospel of “progress.”
Finally, Gary Becker and Dick Posner both dissect Obama’s housing help for losers. Just to be clear: I don’t like the bank bailouts, but I don’t like them for the same reason I don’t like most expensive welfare state projects and see no reason to have two huge welfare programs in the name of symmetry: they’re both inefficient, they reward bad behavior, they don’t come with the strings and incentives of private charity, they distort markets, and they siphon money from the most productive people and companies and give it to unproductive people. Like most welfare, the collectively harmful but personally beneficial skill of wrangling funds from the public coffers is the only thing being rewarded.
I’ve been opposed to all of this nonsense: the stimulus, the TARP, and now the housing help for improvident homeowners. After all, we’re not talking about sending people to Siberia but foreclosure; they can still rent, and they can buy again some day. They and new homeowners would both benefit from allowing prices to find their natural floor. Liquidate everything. Obama’s problem is that all his sour talk about our hopeless economy is parried with incredible (literally) optimism about the power of government to sort everything out without any tradeoffs. His limousine liberal supporters, indebted young professionals, private business owners, fixed income recipients, anyone with any position in the stock market, and those who do pay their mortgages are all about to find out they’re the “rich” that are going to get soaked becuase there simply are not enough hedge fund empressarios to foot the bill, and they too have lost huge sums of wealth due to their stupid gambles.
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Actually, they can’t rent. It is a rare landlord who doesn’t ask for a recent credit report before renting to someone these days.
What do you think would happen to all the economic indicators if everyone obstructing and critiquing Obama’s plan just stepped back and said “I don’t think it’s going to work, but I’m willing to give it all the chance in the world to prove my point.” Me, I think the economy would turn the corner and start up again. I think it’s all this obstructionism that’s holding it back.
Maybe he can decalare a national emergency and suspend the First Amendment for a while so that we obstructionists who dare to point out that the problem was too much spending and inflated prices and delaying their liquidation and decline is a bad policy. It’s not like crap like this has not been tried before, usually with disastrous hyperinflation as the epilogue. I don’t like how that movie ends, and an important part of politics is opposing bad policy, no?
PS Anyone can rent with a big enough deposit, risk premium, or the like.
Sure. Those who have lost their homes have those kinds of deposits. If they did, they wouldn’t have lost their homes!
The huge majority of opinions on FDR’s programs are that they worked and greatly reduced the suffering occurring during the last great depression. There is no way to know how deep it would have been without those programs, and deepness as well as duration matters.
I totally disagree and suggest you read Amity Shlaes’ new book as well as Murray Rothbard’s The Great Depression.
Incidentally, do you pay income taxes? What bracket? I feel like those of us paying for this bullshit should have more say.
There are also two other new books about FDR’s policies that come down on the positive side. There was a joint review of all the new books along with a survey of the literature in the Guardian not that long ago.
And yes I pay income tax at a teacher’s level, and I will not apologize or accept a lesser voice than those who earn more. In fact, I believe that goes against the US’s founding principles.
It seems to me the logical corrolary of “no taxation without representation” is no redistributionist taxation of the wealthy by the poor. Property restrictions on voting were very common in America until the Jacksonian era. 40% of voters pay no taxes; they should not get to tax the top 5% because they have only the upside (at least in the short term) in this game. It’s totally unfair.
I would like to float a proposal for an economic stimulus plan past you for your consideration. The basics of the idea are in an article at http://tinyurl.com/dknr3c . Please review this article and let me know what you think. This will be the basis for a more in depth paper on the concept.
Thank you for assisting with this project.
Robert K. Minniti, CPA, CFE, Cr.FA, CFF, MBA
There is an increasing number of landlords willing to accept smaller deposits and crappier tenant credit ratings because they are also up shit creek.
Think about it, a lot of foreclosures results in a lot of new landlords, who need to fill up their houses. This means that the increased supply forces landlords to reduce rents and lower credit rating requirements. As an owner of a house I used to live in but now must rent out, I understand this on a personal level.
Where I don’t agree with Roach is that I think there is a very substantial minority of homebuyers who are in trouble but who shouldn’t be characterized as improvident. Anyone who bought a home in 2005-2007 was forced to pay a whole lot more than it was worth, and in places like Phoenix or Las Vegas or Riverside County, that person now owes far more on the mortgage than the house is worth. In normal times, if one loses a job or is forced to move, one can sell the house at a price at least close to what one paid for it. That is obviously not the case for many right now, and I don’t think the average joe should be faulted for not realizing his local housing market was dramatically overpriced and near total collapse.
So while I agree with Roach that Obama’s supposed fix is a bad idea that will drive mortgage rates higher and further screw things up, I have a lot of sympathy for at least a substantial minority of those “improvident homeowners”.
I agree, some were doing things like buying a house they could afford or in the fear that prices would keep rising and were simply unlucky. It sucks. Foreclosure (or voluntary renegotiation by lenders) is still the best answer. None of that will help the guy making $25K with a $400K note in Pasadena, California or Ft. Myers, Florida and other similar hotbeds of speculation.
Good read but just can’t go with your thoughts, I feel it’s totally unfair. It will be nice if you read more bookes onit to give better post.