Since passage of the nearly $1 trillion bail-out of globalization Friday, I’ve been struggling to come up with something clever and insightful to say. It shouldn’t be this hard. Finally, I think I understand why. This whole thing has just made me sad. It’s sad to see our country run so stupidly by people so lacking in principle and backbone and, apparently, color-blind as well – unable to see red on a balance sheet.
Henry Paulson, Ben Bernanke and their ilk protest that no one could see this thing coming. What a crock! A blind man could see this coming – literally. All you had to do was listen to the radio. For the past several years (at least, up until about a year ago), the airwaves in southeast Michigan were inundated with commercials for low cost mortgages. Two in particular stood out. The first was a company named “Patriot Financial.” In this commercial, a young woman is overheard remarking to a young male friend, “Wow! Cool boat! How could you afford that?” “It was easy,” he replied. “I refinanced with Patriot Financial, took out some equity, and bought this boat!” She answered, “I wish I could do that but I just went through bankruptcy.” He replied, “Who cares?” “I had just gone through and bankruptcy too, but Patriot Financial didn’t care about any of that. Give them a call! It’s easy!”
The second commercial was for Rock Financial, a big finance company in the southeast Michigan area. The president of the company did all their commercials. I forget his name but my wife and I called him “Doogie Howser,” because he looked like the boy-wonder doctor of the TV show of the same name a few years ago. “Doogie” was constantly pushing their adjustable rate mortgage loans which they cleverly called the “Smart ARM.” Nothing down and a super, super low interest rate. Yeah, real smart.
Upon hearing one of these commercials, my wife and I would look at each other in disbelief. “This just can’t go on for long,” we’d say. “These companies and the people being suckered by them are crazy. This whole thing is going to come crashing down.” And so it did. And what is our government’s answer? Fleece the taxpayer and take care of Doogie. Poor Doogie. It’d be such a shame if he had to give up his sky-box at the Pistons games. We can’t let that happen.
What really frosts me is that this could have been a real turning point in putting our economy back on a sound footing. A three-year-old could have done a better job than our nation’s leaders when it came to rooting out the cause of this crisis. When told that the crisis was caused by the subprime mortgage mess, at least a three-year-old would ask “why.” Why was it necessary to lower lending standards so much just to sell a house? Because incomes haven’t kept pace with inflation. Why? Because the demand for labor isn’t there. Why? Because the trade deficit has robbed us of five million manufacturing jobs. Ah, now we’re getting somewhere!
Nope. Didn’t happen. Instead of demanding real answers, Congress bit on the first one served up by the very same people who led us into this mess in the first place. We just need to restore confidence and restart the debt machine. We just need to re-inflate the housing bubble.
It isn’t going to work. It can’t work. It doesn’t fix the arterial bleed of our economy – the gushing of $700 billion each year through the trade deficit. The $150 billion “economic stimulus” package in the spring, put directly into the hands of taxpayers, barely helped for maybe a quarter. How long will $700 billion help? Maybe a year? Just long enough to counteract the loss of another $700 billion to parasitic trade “partners?” Then we’ll be right back in the same boat. Mark my words, within two years we’ll be back in the same place, headed for a depression. Then what? Will that finally be the turning point in our economy or will Congress punt the ball again?
For now, it just makes me sad. An opportunity lost. Our only hope is that the next president has the wisdom and guts to take on our idiotic trade policy and restore some black to that balance sheet.