Monday, September 29, 2008

Spin vs. Logic

Today the worst house speaker in history did it again. Like a dog returning to her vomit Speaker Nancy Pelosi could not resist attempting a partisan spin when statespersonship might have carried the day. [Scroll down to read her entire speech for confirmation].

The facts of the situation are so well-known - accept possibly to the folk who rely on what used to be called the "media" and are now simply "in-the-tankers" - any honest person with a basic understand of high school level mathematics should instinctively know the root cause of our economic crisis is years of unrestrained and unsupervised preferential mortgage lending to under-qualified home buyers. [Please see notes* below].

For whatever reason, this entire thing began under Jimmy Carter and has been fostered over the years by many, many democrats and too many like-minded republicans. There is enough blame to go around for both parties, imo. But any reasonable person should understand that on a national level unregulated government mandated low-cost mortgages issued to folks unable to pay for them was eventually a disaster waiting to happen. However, excepting for a few responsible folk, knowing and reacting to that bit of common sense was not conducive to re-election campaigns, apparently.

Furthermore, following the reasonable person logic chain establish above, financial institutions heavily invested in holding and reinvesting said mortgages should foreseeably be at a higher level of risk than those holding more conservative portfolies. Ergo, almost a decade ago federal laws were established to force institutions to undertake more risk. All without ringing alarm bells. There are none so blind as those who will not see, goes the olde English idiom.

So home builders overbuild, home sellers oversell, home buyers overbuy, home loan institutions overlend, and in a few years we have a "housing bubble". Who woulda thought?

The [again] foreseeable result of the ensueing policy is that we are now reaping what our politicians have [for over 20 years] been sewing. For speaker Pelosi to lay the mess at the feet of the current adminstration is dishonest and partisan. But from her what can one expect? She knows nothing else, and in my view her "in-the-tankers" will never point these things out. To the public, the emperor must always appear to be clothed.

How embarrassing for ethical democrats.

[Note: As a conservative, btw, I agree it would be good public policy to have a mechanism in place encouraging home ownership among those unable to qualify for standard loans. But it should be a controlled and regulated mechanism, not the current program that has grown into the terrible monster we've been enduring for the past two years - and one that will probably impact us even more so in the year(s) to come].

[Note two*: Any such program, in my view, should require a certain level of financial commitment on the part of the under-qualified purchaser. Human nature tells us something attained for a cost is prized and cared for much better than an item received as a gift. We should use this behavioral quirk for the public's benefit].

As always, learned and thoughtful comments, whether I agree with them or not, are encouraged.

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