The Bailout
In considering the wisdom of the federal bank bailout scheme, remember this: the same fools who created the problem are now proposing the radical solution – on the fly – without changing the underlying philosophies and organizations that spawned the problem in the first place. In other words, the incompetent doctor who cut your spinal cord during surgery now wants you to “trust him” to perform remedial surgery.
Many in Washington, D.C., (including the Queen of Fools, Pelosi) want to cast partisan blame. I think Americans know where blame sits – with the Washington, D.C. political establishment, as an incompetent whole. A pox on both their houses. Some actors might have been worse than others, but it is silly to talk in relative terms when referring to cockroaches or congressmen.
Our current economic crisis is not difficult to understand. The fools in Washington, D.C. enacted social-engineering policies to encourage lenders to give money to anybody walking through the door. No credit or bad credit? No down payment? No job? No problem! Does Uncle Sam have a deal for you!
Now, surprise of surprises, when the economic cycle turned downward, we were shocked to learn that lots of those uncredit-worthy borrowers couldn’t pay their mortgages. Congress manipulated markets, and the markets delivered a reckoning. The housing market that was floated to ridiculous heights, because of the ease of credit, returned to earth, as defaults flooded the market and lenders were forced to retreat. Lenders’ portfolios capsized – as collateral-backed indebtedness was revealed to lack sufficient real backing.
Why did this happen? Simple. Congress long ago stopped governing and, instead, chose to focus solely on pandering. It is incapable of doing anything else. As Alexander Tytler is purported to have said centuries ago:
A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.
Here, loose fiscal policy – the result of pandering – seems to be leading to unprecedented federal aggregation of power.
Last week, the Republican and Democratic members of the Utah Legislature went into special session to work together to get our budget in balance. It was hard, but we did it. Though it is hard every year, we do it. We are elected to do hard things.
The fools in D.C. are elected to do hard things. Only, they never actually do. If it is hard – think immigration and unfunded entitlements, for example – they take a pass. Instead, they busy themselves with the work of the states – education, welfare, and transportation, for example.
In this instance, they cashed check after check after check from Fannie Mae. But, they did not bother – any of them – to truly dig into the practices (or even scratch into the practices) of this government-sponsored political behemoth that kept the game afloat by supposedly backing trillions of dollars of mortgages while operating with the discipline of Delta House. Now that the house of cards has crashed, the feds are on the job with a proposed fix – details to be provided sometime in the future.
I don’t trust those people at all. They don’t have a clue about fixing this mess, because they don’t understand the root cause of it: that is, that they caused it. They are the problem. Rather than give them another $700,000,000,000 to fritter away, I’d like to get bids for a good bug sprayer who promises to rid us of them, the vermin that now run our nation – run it straight into the ground, that is. Government assistance might or might not help matters, in theory. But, in our present reality, those fools can’t fix a thing. Let them leave town and explain to their constituents why they should be returned to their posts.
UPDATE (later): Jeffrey Miron observes, "The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government."
He continues, "The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer."
Many in Washington, D.C., (including the Queen of Fools, Pelosi) want to cast partisan blame. I think Americans know where blame sits – with the Washington, D.C. political establishment, as an incompetent whole. A pox on both their houses. Some actors might have been worse than others, but it is silly to talk in relative terms when referring to cockroaches or congressmen.
Our current economic crisis is not difficult to understand. The fools in Washington, D.C. enacted social-engineering policies to encourage lenders to give money to anybody walking through the door. No credit or bad credit? No down payment? No job? No problem! Does Uncle Sam have a deal for you!
Now, surprise of surprises, when the economic cycle turned downward, we were shocked to learn that lots of those uncredit-worthy borrowers couldn’t pay their mortgages. Congress manipulated markets, and the markets delivered a reckoning. The housing market that was floated to ridiculous heights, because of the ease of credit, returned to earth, as defaults flooded the market and lenders were forced to retreat. Lenders’ portfolios capsized – as collateral-backed indebtedness was revealed to lack sufficient real backing.
Why did this happen? Simple. Congress long ago stopped governing and, instead, chose to focus solely on pandering. It is incapable of doing anything else. As Alexander Tytler is purported to have said centuries ago:
A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.
Here, loose fiscal policy – the result of pandering – seems to be leading to unprecedented federal aggregation of power.
Last week, the Republican and Democratic members of the Utah Legislature went into special session to work together to get our budget in balance. It was hard, but we did it. Though it is hard every year, we do it. We are elected to do hard things.
The fools in D.C. are elected to do hard things. Only, they never actually do. If it is hard – think immigration and unfunded entitlements, for example – they take a pass. Instead, they busy themselves with the work of the states – education, welfare, and transportation, for example.
In this instance, they cashed check after check after check from Fannie Mae. But, they did not bother – any of them – to truly dig into the practices (or even scratch into the practices) of this government-sponsored political behemoth that kept the game afloat by supposedly backing trillions of dollars of mortgages while operating with the discipline of Delta House. Now that the house of cards has crashed, the feds are on the job with a proposed fix – details to be provided sometime in the future.
I don’t trust those people at all. They don’t have a clue about fixing this mess, because they don’t understand the root cause of it: that is, that they caused it. They are the problem. Rather than give them another $700,000,000,000 to fritter away, I’d like to get bids for a good bug sprayer who promises to rid us of them, the vermin that now run our nation – run it straight into the ground, that is. Government assistance might or might not help matters, in theory. But, in our present reality, those fools can’t fix a thing. Let them leave town and explain to their constituents why they should be returned to their posts.
UPDATE (later): Jeffrey Miron observes, "The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government."
He continues, "The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer."
posted by steve u. at 9/30/2008
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7 Comments:
The most galling part of it all is that with an approval rating the teens, Congress is still unlikely to see much in the way of incumbent turnover. Apparently the problem is someone else's congresscritter, not our own.
For once, I kind of, from a different direction, agree with you. But some food for Thought on the "social engineering," before we even go there.
Living in the 3rd district you have it easy here Steve. You can choose between Chaffetz or Spencer, but either way you will have a new Rep next year. On the other hand, if it were Cannon vs Spencer, would you vote for Cannon or would you vote for someone new?
An interesting viewpoint from one that not too long ago assayed to become one of the number of those that are now likened to cockroaches.
Jesse is right. A saying was coined long ago that everyone hates Congress but loves their own senators and reps. "My guy isn't the problem, but yours is," goes this line of thinking.
Steve is right that the aggregation of centralized power is at the root of this problem. Heck, it's at the root of a great number of other problems as well.
Just a note on Tytler's commentary. A dictatorship does not have to be one person. It can just as easily be a group.
David,
I'm actually in the 2nd district. I'm not sure yet what I think of Chaffetz; we'll see if his walk matches his talk. But seeing Chris vote for the bailout makes me glad that we'll have change in the 3rd. Against his constituents to the bitter end.
I'm very glad that Bishop and Matheson had the courage to vote against the bailout. The only people I respect in our Legislature are people who know how to get things done and routinely get things done but who can look anyone in the eye and say "no."
Scott (RU),
I do like our Senators and Reps, as people. All 5 are fine people. But, if they can't be part of a team to truly change things, I don't have any problem changing them for people who will make that effort.
I obviously was wrong about many things when I thought I might run for U.S. Senate, but I sure wasn't considering it just to kick the can down the road. Granted, the job those folks have is different than mine. But, it still boils down to leadership, courage, and skill, and I'm just not seeing it at the federal level.
How about an investigation or committee hearing into Utahns who profited from the excesses spawned by the Community Reinvestment Act, Fannie Mae and Freddie Mac?
Might the names Peter Corroon, Ralph Becker, and Bruce Baird pop up?
Or are there too many Republicans beholden to the Utah Association of Realtors, the Homebuilders Association, and the Bankers Association to see what's under that rock?
Sorry about that. I got the location of the 2nd and 3rd districts mixed up in my mind (3rd was south in my brain).
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