Thursday, February 19, 2009

History Shistory

It is strange to me that politicians do not study history. Sure they look for sound bites and fictionalize some real historical characters to make them heroes or villains. But it seems they pay more attention to reruns of Laverne and Shirley than they do to history. And what is of even more concern is that they cannot even remember recent history -- like what happened a year or two ago.

The example that I am referring to (or the most recent) is Obama's rescue of the housing market. As I sit here listening to the morning "news" (or infotainment) they lay out the plan:

  • artificially make the interest rates lower than they should be, so folks could make their payments
  • set aside a big sack of cash for Freddie Mac and Fannie Mae to back up bad loans -- make sure there is a big net promoting housing, making people less fearful of housing costs

The HUD secretary is bumbling about how great the plan is right damn now. He tells us that part of this plan is to make sure the banks have some skin in the game. The government needs to make sure the banks take on some of this risk... not just the taxpayer.

I think the spin for this plan sums it up best. Obama's own words were "It will not rescue the unscrupulous or irresponsible. And it will not reward folks who bought homes they knew from the beginning they would never be able to afford.”

Okay. Sure. That sounds just fine, Mr. President. Let's only rescue those that were responsible, scrupulous and bought homes they could afford. Let's see.... how could we determine who was irresponsible? How could we determine who bought something they could not afford? I know! How about the folks that can't make the payment? Jesus frigging Christ in a shopping cart. Your own words make so little sense. If you are being foreclosed on aren't you in a home you cannot afford -- by definition? Wasn't your purchase irresponsible?

And, lets just go with this plan... just for a teeny tiny second. It's a fine plan. It's meant to reverse the problems in the housing market. Let's see: How did we get here? Oh, I remember:

  • we artificially made the interest rates lower than they should be
  • our presidents have been standing up, promoting affordable housing, pleading for home ownership for those that cannot currently afford it. (Yes, presidents. Plural. Bush II and Clinton both loved this issue.)
  • we set aside a huge sack of cash for Freddie Mac and Fannie Mae to make sure we backed up bad loans -- basically PROMOTING them -- urging the banks to give out risky loans
  • Oh, and we've had some serious bank problems recently. I think basically because banks were urged to have some skin in the game of providing risky loans.

So, listen up politicians. Listen really closely. I'll use verbs. I'll type slowly. And I will use multiple examples:

  • if you want to lose weight, you do not eat more. You must change your behaviour.
  • You do not cure the DTs with a good stiff drink
  • You do not cure lung cancer with cigarettes
  • And for god's sake: if you promote bad loans, the economy crashes, you don't fix it by promoting bad loans.

Nobody wants to see a bunch of people get kicked out of their house. It's painful. But, sadly, foreclosure is the cure. It might take a little time, but writing off the bad loans, dusting ourselves off and getting back to business is the only way to fix this. Recreating the problem is not just a non-cure. It's a means to make the problem bigger.

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