Is It Any Wonder the Markets Continue to Sink?
From MRW Water Cooler:
Q: “A $75 billion bailout for 9 million Americans who face foreclosure, regardless of how they got into financial trouble, is the government’s answer to the housing crunch. Many Americans who have scrupulously kept up with payments are steaming at the thought of subsidizing those who’ve been profligate or irresponsible.
With recent data showing that as much as 55% of those who get foreclosure aid end up defaulting anyway, a signal has been sent that America has gone from being “Land of the Free” to “Bailout Nation.”
Energy solutions ranging from the expansion of offshore drilling and the development of Alaska’s bountiful arctic oil reserves to developing shale oil in America’s Big Sky country, tar-sands crude in Canada and coal that provides half the nation’s electric power, are taken off the table.
The market knows full well what drives the economy and that restraining energy supply will make us all poorer and investing less profitable. Taking domestic energy sources off the table makes us more reliant on sources from hostile and unstable regimes, breeding uncertainty in a capital system in which participants seek stability.”
“Business leaders are demonized. Yes, there are bad eggs out there like the Madoffs and Stanfords. But most CEOs are hugely talented, driven, highly intelligent people who make our corporations the most productive in the world and add trillions of dollars of value to our economy.
They don’t deserve to be dragged before Congress, as they have been dozens of times in the past two years, for a ritual heaping of verbal abuse from the very people most responsible for our ills — our tragically inept, Democrat-led Congress.”
“Words like “catastrophe,” “crisis” and “depression” are coming from the mouth of the newly elected president, rather than words of hope and optimism.”
A $75 billion bailout for 9 million Americans who face foreclosure, regardless of how they got into financial trouble, is the government’s answer to the housing crunch. Many Americans who have scrupulously kept up with payments are steaming at the thought of subsidizing those who’ve been profligate or irresponsible.
As Warren Buffet said, “When the tide goes out, we all get to see who has been swimming naked.” Well, the tide is most certainly out, and there appears to be a shortage of towels. We are, as Tina Brown wrote earlier this week, living in a nudist colony.
It seems to me that we are preoccupied with “explaining” the many circumstances that lead certain individuals to bankruptcy, foreclosure, and financial ruin. Why? Obviously, because we are all affected by their poor decisions and/or unfortunate circumstances. But how is that relevant today? History indicates that understanding those circumstances has nothing whatsoever to do with preventing them from occurring. People do stupid things. It’s written in the sky, and understanding why just doesn’t matter nearly as much as we’d like it to. What matters, in a free market anyway, is our collective willingness to accept the consequences of taking risk.
I’m no economist, but here’s my analysis.
Buying a home is risky.
Adjustable rate mortgages are really risky.
Buying an expensive home with an adjustable rate mortgage is really, really risky.
Lending money is risky.
Lending money to unqualified applicants is really risky.
Lending money with little or no down-payment to unqualified applicants is really, really risky.
If we don’t accept – no, make that embrace – the consequences of risky behavior, we will also lose the rewards – namely, the freedom to make individual decisions and choices.
I realize that the fallout of 9 million foreclosures would affect us all, for a long, long time, in a variety of unsettling and serious ways. But what are the consequences of not letting it happen? What are the consequences of spending 75 billion dollars to keep people that should have been renting, living in a house they could never really afford?
I don’t know. But I do understand dirt, and the process of sweeping it under the rug.