The Obligatory Economic Outlook
Sep 25th, 2008 by Alex
I usually don’t watch the news, but while at the car dealership yesterday I had some time in the waiting room. On the one hand I don’t feel that the taxpayers ought to be bailing out either individuals or corporations that made poor financial decisions. Like a friend helping out your friend because they made a bad wager at the track, it sends the wrong message. The wrong message isn’t that we won’t be there to support you if you fail. I’m fine in that, everyone needs support during tough times. The wrong message is that people don’t need to care about what they’re doing because if they choose poorly someone else will clean up the mess at their expense.
About the housing “crisis” that got us here. You don’t need to be a rocket scientist to understand mortgage products. If it can’t be explained in a few sentences, it’s probably too complicated a scheme. That goes for most schemes. As for a lot of other people, they got greedy. Homeowners and mortgage brokers alike, thinking with regard for their wallets without regard for the consequences. I don’t feel like this is a time for pity.
I watched the Presidential address last night. As far as the delivery, it was straightforward and delivered without much of the bumbling that we’ve seen in the past. The content was straightforward too, though more dire and stark that I’d like. The whole “if we don’t do this, we’re doomed to a long and horrible recession” is crap wording. It’s like saying “or else,” without making the threats appear as if they’re coming from the speaker. Not to argue that a recession wouldn’t be difficult for a lot of people, but this country has recovered from worse.
The proposed bail out package offered by President Bush gives me pause. Not that he sent it forward. He’s got to do something. I’m not skeptical whether executives will get their golden parachutes; I think the public and representation on the Hill is fed up with these “gentlemen” in monkey suits and not likely to give them much if anything. I am skeptical about how the government will reclaim that money. I am skeptical whether the same thing will happen again and the taxpayers — many of whom weren’t involved in this mortgage lunacy — will have to foot another trillion dollars. The interest alone on these monies is beyond staggering.
“However much we may like Secretary Paulson or you, Mr. Chairman, no sane person would put 700 [billion dollars] in your hands on trust alone.” — Sen. Charles Schumer
The only good thing about the situation is that our elected officials in Washington seem to be just as confused and skeptical as we are, as evidenced by Senator Charles Schumer’s remark above. I try to be realistic when it comes to thinking about our leaders. I know that many of them aren’t economists and may not be any smarter than me. I doubt that there’s a single person in House or the Senate that has a completely thought out and vetted solution to a problem of this magnitude. And that’s okay. I appreciate that these people appear like they’re going to look at this one instead of just pushing it through blindly, though I think the only reason they’re doing it is because of the dollar figure involved.
Yes, I’m concerned. No, I’m not selling stocks. No, I’m not pulling money out of by savings account to shove under the mattress. It frustrates me, but unlike the upcoming election this is one issue where I’m not going to get a say. We’re all along for the ride on this one, whether we like it or not.
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“I appreciate that these people appear like they’re going to look at this one instead of just pushing it through blindly, though I think the only reason they’re doing it is because of the dollar figure involved.”
This reminds me of one of my favorite phenomena: http://www.bikeshed.com. I haven’t been following the proposal in enough detail to know if they are actually making significant changes to it or just pretending to look at it, but it would not surprise me if this went through unchanged simply because it’s a complicated mess and congress is trusting that it’s going to work.
Thank you.
Well said. I’ve been raging about this mess for the last week or so in my own blog, but I think you’ve managed to say what I’m thinking with a lot less anger.