Seems like this week everyone running for president had something to say about the credit crisis. Billions here, billions there, re-write mortgages, forgive debt... I never thought I would say it, but I think I'm with John McCain. It isn't the responsibility of the government to step in and save the fortunes of people that made bad investments.
Once again businessmen made bad decisions in an effort to enrich themselves, they failed rather catastrophically and at that moment they get religion, turning to a government they loudly protest ought not be involved in their business and taking all the money they can get telling us the best thing for them is in this particular case also the best thing for us.
I think not.
McCain made his position public this year: they made their bed, now they should have to sleep in it. You'd think the Republicans would be ecstatic, if it weren't so many of their friends who made the bad choices to begin with.
And maybe I don't agree completely either. But if we're forgiving mortgages don't think there's a single homeowner that wouldn't be saying "hey, line forms here!" So if there is going to be some kind of bailout we ought to keep our collective eyes on the ball.
I buy the idea that we can't let the financial institutions collapse. With the interconnected nature of all the world's finances and the lemming nature of today's markets it makes sense to help the companies stay intact. But... There's no reason why anyone involved in the inking of the deals, or in the conceptualization of the troubled financial instruments ought to keep their jobs. These people made crappy decisions that effect everyone. They should be fired. And really, not only should they be fired, but if they have anything substantive in the way of assets they should be seized and used to finance the bailout. No job, and no parachute. We can save the companies, but you greedy jerks who got us here, you need a new line of work, in a new place.
So, ok, bail out Bear Stearns. Just make sure you do everything possible to protect us from "next time."
And I buy the idea of helping homeowners with their ridiculous mortgages, I guess. When we were buying our house (amidst this hoopla) I did at one point find myself talking to a broker with a no money down, 1.5%, 3 year adjustable rate, 30 year mortgage. And we were like "too good to be true?" And after a little, really a tiny little bit of reading I discovered that the mortgage could adjust quarterly and that there was no cap, and that the payments didn't increase but if you didn't pay the full computed payment the balance would be added onto the principal - you'd owe your soul to the company store. These are the loans that many people are trapped under now. I've got sympathy, but not much sympathy.
Still a blizzard of mortgage defaults are good for anyone so I guess a bailout is in order here too. But again, we need to stay focused. So people with one of these crazy mortgages on their primary residence, they can have a publicly funded mortgage refinance. Developers, brokers, investors, flippers - they all should have known better. These greedy jerks also ought to lose their gigs, and any substantive assets they have should also be seized to help finance the bailout.
We can help homeowners from winding up on the street or losing their nest eggs, we can keep banks and markets from going down and dragging all of us with them, but our money doesn't need to find its way into the pockets of anyone that helped create the problem in the first place. So I guess I have a little Obama, or a little Clinton strategy in my head, but there's quite a bit of Mr. McCain's "you're on your own" in there too.
Oh, and one other thing, for our present administration who just the other day woke up and decided that the regulatory structure needs restructuring: please, please do nothing. It was your regulatory posture that lead to this fiasco - markets followed toys, food, water, air; why would we be surprised. People know there's a problem now, and thankfully the financial world will not implode if we wait until next January, and a new outlook to fix the problem. We don't need any of your repairs.
Sunday, March 30, 2008
I'm With McCain?
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3 comments:
David,
When my mother worked for NY state education, if the state had to take over a school, something like 2/3 the staff had to be replaced before the school could re-open. It sounds like we should put the same condition on companies that get bailed out.
Of course, it has to include the top levels.
Walt
McCain's contention that the federal gov't has no responsibility to bail out those who made 'bad investments' simply illuminates the bald fact that this fool doesn't know diddly squat about the economy and doesn't intend to change anything at all, because then he'd have to learn about it, and from everything I've read on his policies from his campaign, he just doesn't think that's really necessary. He subscribes to the idea that the market will regulate itself, and there it is. Plus, you know, tax cuts. The country's fighting two wars, but let's hand out some tax cuts. Like Bush, he's never seen an economic problem we can't shop our way out of.
Also? Two words: KEATING FIVE.
Who the hell would EVER entrust the stewardship and steering of our nation's economic fortunes to a man who, in exchange for campaign contributions, sought to influence the outcome of an investigation in to lending and investment practices bearing no small relation or resemblance to our present difficulties? Yeah, he's all trying to be Mr. Reform and Mr. Straight Talk, but when your straight talk is pretty much "I don't know and also, I don't really care to find out", that should send shivers up and down our national spine.
I absolutely agree that we don't need Bush & Co implementing any sort of 'fix-it' here. And part of me agrees with you a little--these jerks got themselves into this mess, let them get themselves out of it or go down with their respective ships.
Unfortunately, that's not possible without the rest of us sinking along with them. We already ARE sinking with them, and I'm not sure I want to sink any deeper.
Bill Maher said on his show a week or two ago that the people behind Bear Stearns, et al, believe in the free market when it comes to profits, but they seem to find their inner socialists when it comes to losses. Suddenly, they never met a gov't regulation they didn't like (see: Enron, Sarbannes-Oxley).
I really hope that we can take a more considered approach--a long-sighted and more comprehensive approach--to gov't intervention and regulation in the markets. The oft-repeated clarion call of the right has long been that the market regulates itself--capitalism is the ultimate and most perfect system. I think that once again, we have proved that capitalism unregulated and unchecked, has a very dark side. I am absolutely confounded by the right's ability to convince people that this dark side is somehow not dark, not bad, and in fact, really super good for us.
As far as this whole subprime mortgage mess goes--when somebody offers you a house in exchange for basically a bus pass and your signature on the dotted line, you have no excuse for not looking behind the curtain. Too good to be true? Hell yes. I'm sure there were people who were truly ensnared--who asked the questions they thought would reveal the truth, and were flat out lied to. I'm sure there were any number of unscrupulous lenders and brokers roaming the land.
I don't know that the solution is to just bail out a bunch of folks by forgiving their mortgages. There is a middle way here that doesn't result in the unjust enrichment of some at the expense of others. It's just not very easy, and it requires everyone to take on some of the burden. Even if you didn't do anything wrong on the front end.
I don't even own a home, and I'm pretty sure the question isn't whether I'm going to get dinged for this mess--the question is how much I'm going to be dinged for.
My parents bought a large Bear Sterns investment bond on Monday when it had an A+ rating. By Thursday they were supposed to be bankrupt. My dad did his homework, he didn't just do something stupid...
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