Blink and you may miss another government bail-out, loan guarantee, federal plan to alleviate a bad or unwise mortgage, a suggestion for more government funds for a more aggrieved constituency, or credit-card relief proposal, etc.
All this is said to be smart and necessary, given that we are told that the problem right now is an absence of liquidity. As I understand it, we wish to borrow or print trillions more in money to prime the system and get people active and at work again. That is altogether good and noble, inasmuch as our problems are driven by panic and now psychosocial as much as material (after all, we have not experienced a massive earthquake, plague or foreign attack that destroyed people and things.) But a few cautionary worries:
Unemployment is still below 7%. Inflation is low. So are interest rates. GDP did not go negative by much in the last quarter. The point is that we are not yet in an era of 1929-39 by any means.
There are enormous natural stimuli underway: in 2009 over a trillion dollars in national fuel savings will occur if energy prices stay below $50 a barrel. Indeed, they may drop even further, given slack world demand and enormous efforts at new discoveries the last five years. The price of housing is approaching, or indeed in some places below, the actual cost of replacement; so we may see millions of first-time buyers find their initial homes affordable in a way that had not been true in a quarter-century.
Have we made failure obsolete? Almost every bank, company, or financial house blames their troubles on “them”. Defaulters blame “them.” Politicians blame “them.” Who exactly is this “them”?
No one took out an unwise mortgage, paid too much for a house, had too little capital to be buying a home, or invested his company’s assets in unwise portfolios? To suggest there is no culpability is to suggest likewise there is no prudence, no wisdom—that there were no Americans who chose to rent until they could pay a suitable sum as a down payment, or bought homes smaller than they wished and more in attuned with their budgets, or corporations who simply thought bundled subprime mortgages were a bad idea.
I have little capital, but still wonder if having any is becoming problematic. If one can’t get much interest on savings, if real estate goes south, if stocks are iffy, if bonds hardly pay—while debt is forgiven—then it seems wiser to incur debt than savings? And what is the moral lesson of that? (Keep moving and ensure an active income and never retire?). This all reminds me of the agenda of a typical Catilinarian of first-century B.C Rome (“redistribution of property” and “cancellation of debts”).
Don’t Tread on Me?
Much was written about the folk hero status accorded the Iraqi journalist who threw two shoes at President Bush. The Arab Street and the American Left point to the incident as proof of the real feelings of the Middle East toward Bush the colonialist; his supporters countering that only in a free Iraq would he dare do such a thing—impossible presently in any other Arab country. My only take is that it shows very little courage. Real courage would have been to throw shoes at Saddam; or even to return to Cairo and throw something at a Mubarak during a public event. That would take singular courage and establish the integrity of the journalist as a consistent critic of authoritarianism—and might additionally earn you a noose rather than accolades on Arab websites.
I was amused as the next person about the Big Three flying in corporate jets for their mini-trips to Washington. That said, I was equally amused that Speaker Pelosi flies in an amply-sized jet herself, and many of the nation’s governors as well fly in state-owned private craft. Of course, we all think that Goldman Sachs, Lehman Brothers, AIG, and the rest were terribly managed. That said, the inquisitors in the Senate and House were themselves a sorry bunch. The Congress has in aggregate run up thirteen trillion dollars in debt. Barney Frank and Chris Dodd as overseers of Freddie/Fannie proved to be instead enablers under the cloak of political-correctness and generous campaign donations.