Surly Curmudgeon

   The human race divides politically into those who want people to be controlled and those who have no such desire. The former are idealists acting from highest motives for the greatest good of the greatest number. The latter are surly curmudgeons, suspicious and lacking in altruism. But they are more comfortable neighbors than the other sort.
-- Robert A. Heinlein
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    Friday, September 7, 2007

    Just don't call it a bailout

    Reason has a nice article on the government's response to the shakeout in the mortgage industry. As any student of Austrian economics knows, this is the result of government's own policies. Government decided at some point that it was just downright un-American for some people to not be able to afford to own their own homes, so rather than encourage those people to get better jobs and learn to handle their money, government opened the spigot of easy credit and made sure they could get loans that the market would have rightly denied them.

    Now those chickens are coming home to roost, and of course the government just has to do something. The only problem is that the American public really really really hates the word "bailout", and gets extremely angry whenever the government does it. So the solution is simple: have a bailout. Just don't call it a bailout.

    You the can tell feds are bailing out mortgage lenders by the way no one wants to call it a bailout.

    President George Bush made that clear last week when he announced his plan to rescue broke borrowers. "A federal bailout of lenders would only encourage a recurrence of the problem," Bush explained.

    So this is not a bailout, you see, because it is for the borrowers, not the lenders. And if you believe that, then you'll also believe that the Federal Reserve has been shoving money at the banks by the billions in recent weeks in order to help borrowers, too.

    Attention taxpayers: that pain you feel in your rectal region is only Uncle Sam helping out your fellow mortgage borrowers. It's not as if we're letting Senator Craig have his way with you, so this is OK. You can trust us.

    Oh yeah, in case you were wondering: this is only foreplay.

    The correct federal response to this should be, "Too bad. You broke it, you bought it." Let the realtors, bankers, Wall Street sharpies, and—yes—the borrowers fight it out amongst themselves. Somewhere there is a market-clearing price for these assets.

    Of course, the uber-nannies in the Bush Administration can't allow that. Instead they have opted to compound the problem by using federal assets to move in on the private mortgage insurance market and otherwise encouraging banks to forgive bad loans.

    Worse, the White House intends to make the Federal Housing Administration the
    Federal Housing Administration by directly assuming responsibility for 80,000 underwater loans. Look for that number to double once Democrats in Congress are finished bidding it up.

    Yes, that's merely conjecture, but based on the way Democrats like to throw money any time "the poor" come into the conversation, it's probably pretty accurate. Two things we can count on in American politics: Democrats throwing money at "the poor" and Republicans throwing money at "American businesses". That's what makes this particular money-throwing party a win-win for politicians of both stripes.

    Whose money? Yours, of course.

    Posted by Tom, 9/7/2007 6:47:06 PM (Permalink). 2 Comments. Leave a comment...

    What. A. Rip.

    -- Catch22

    So I SHOULD have bought that quarter million dollar home with a NINJA Loan. NINJA = No Income, No Job, no Assets