Bad Medicine
Our economy is sick. George Bush and his team of economic advisors has been working all weekend trying to figure out what is wrong with the patient. Let’s set aside the fact that George Bush and his team of military and intelligence advisors got virtually everything wrong in Iraq. Let’s just look at this issue with clear eyes.
The patient is suffering from malaise, panic and weakness in the limbs. There have certainly been mistakes in the treatment in the past. The patient has become bloated due to a lack of self-control and is now feeling the effects of mistreatment.
We have found the underlying cause of the issue, a broken system without the necessary checks on the banks and other financial institutions. Surely there are a bunch of people walking around with loans that they aren’t going to be able to pay, but lets face it, those people are less sophisticated than the Phd financial analysts that build risk profiles to determine who can afford a loan.
Instead of attacking the underlying cause here, the Bush administration has decided to address the symptoms. But not all of the symptoms. Only the well-heeled symptoms. The banks (the ones that shoulda known better) are going to get treatment. Unfortunately, homeowners are not going to get any support here.
So if you live in a nice 5 bedroom apartment on Park Ave. (overlooking the park) with a doorman and a driver, you are going to have to work a few late nights to make sure that your people can get the right loans transfered over to the government as fast as you can.
If you are a homeowner that makes $30,000 a year and your wife just had a baby (so she cannot work for a few months), well, that really nice 3 bedroom home in Brookside is going to be hard to keep up on, so I hope your car isn’t too cramped with all three of you in it.
Oh, and we don’t actually know if this is going to work. So I hope the guy in Brookside doesn’t work in some business affected by a bad economy.
I was really sick once. I had a fever of 107 for 3 days. It was caused by an infection just under the skin on my right leg. The hospital really wanted my fever to break (as did I), but the solution to my issue wasn’t putting me in a cold shower or giving me Tylenol, they had to treat the infection. It wasn’t easy, fun or quick, but I got better once they had addressed the underlying cause. I feel like the Bush team is kicking this damned issue down the road for 4 months. I hope someone has the guts to stop them from giving us Tylenol.
It seems every one who crticizes the situation now was silent months and years ago when lending institutions stretched every rule possible to increase home ownership.
If there had been one single restriction on lending like the efforts to get Fannie Mae and Freddie Mac under control you would have heard screams every where.
Risk, liquidity and solvency are the issues being addressed now by President Bush and Mr. Paulson. The process will be difficult but it has to be done or you will have the nightmares the doomsday group says is happening now but isn’t.
The illness is simple. Too many people were given loans they should not have had and lending institutions were careless and those unsound loans were bundled and sold to create opportunity for more bad loans.
The hard truth is this- if you were properly qualified for a loan and your personal economic picture has not drastically changed you are going to be fine. Also, new loans will be harder to come by until the financial system is made more sound.
Mike, I call bullshit. You and I both know that there are reasons that these people were given loans. They were speculating and so were the mortgage companies. Your financial standing doesn’t have to change if you ARM starts to move up. Your wages have been declining for the past 7 years. If your boss offers you an annual raise of 2%, you are getting a pay cut.
I am not saying that we shouldn’t address the symptoms, but if there isn’t a corresponding regulatory change, we are putting a bandaid on a gunshot wound. We are not seeing that, despite the $500B-$1T headed out the door without so much of a whimper.
People like Mike Castle & Tom Carper will be making the call. What do you think they’ll say?
My money is on Tylenol.
preferably with codeine.
This is bullshit, Mike. He isn’t even close to understanding the contours of the problem, much less being able to recommend any solutions to it — except that we should all take our Big Government and Higher Debt obligations and threat to our own well-being just because George Bush says so.
The banks gave loans because they were making money hand over fist by bundling them into various securities and selling them off. They got greedier and greedier and started loosening the standards to get loans. Greed was the cause of this. The issue is that greed by Wall St. can do much, much more damage than greed by one individual. I find it interesting the Republicans always, always blame citizens for problems and never address the powerful who got us there
I am not a fan of “just do something, anything.” Let us do the right thing. I can not believe that Bush and Paulson just want us to suck it up and send our money to those banks.
Pelosi has come out against the Paulson plan and Obama has a 7-point plan out.
You know, Mikes faith in Bush and Paulson is really quite touching. Nothing has ever gone wrong in the past when Bush told us to trust him.
I am concerned that the “cure” is being rammed through the approval process with less possibility of any debate than we had with the Patriot Act. No one wants a Great Depression reprise, but the mad rush, combined with the political suicide involved in even an informed protest, make for the likelihood that we will get a half-assed fix that only protects the already wealthy.
I am concerned that the “cure” is being rammed through the approval process with less possibility of any debate than we had with the Patriot Act.
*
Oh God, that is a perfect parallel.
yikes.
yikes.
yikes.
Yep, yep Nancy. It’s the Patriot Act all over again. I guess Bush-Cheney can’t resist using a crisis to increase their power and remove oversight.
I anxiously await any alternative to Secretary Paulson’s plan because I am not blindly supporting Pres. Bush or Mr. Paulson but we need determined action and not political talking points.
Regulatory changes are also needed but to think a concerted quick action by the Federal Government is not needed you are kidding yourself.
I also know if Pres Bush and Mr. Paulson had no plan they would be roundly criticized as being in the pocket of Wall Street. No matter what Pres. Bush does he will get bashed.
Perhaps Rep. Frank and Sen. Dodd who blocked Fannie Mae and Freddie Mac reform can offer something which will work?