Thursday, October 16, 2008

Just Wondering...

Today, I have a question. It is one I have been pondering for several weeks now. Maybe you have wondered it also.

Why is anyone surprised by our current economic situation?

Innumerable times over the past 4 years I have read newspaper articles saying that easy-to-get credit was overinflating the housing market, and at some point there would have to be a correction.

So why was our Treasury Secretary shocked, shocked, when that correction came? And Bernanke? I mean, don't they read the papers? Why should anyone have been surprised?






And, while I'm busy asking questions, tell me: why do people in the government lecture us on how we need to practice the thrifty spending/saving habits of our parents and grandparents? Why don't they admit that the main reason our forebears didn't use too much credit was because they couldn't get any?

Essentially, the government (which should be safeguarding our economy) unlocked the doors to a candy store, invited everyone in, and is now acting appalled that people ate themselves sick.

Of course people should exercise personal responsibility and not rely on credit. But, you know, if people always acted in a rational manner, we wouldn't need a government. Isn't government's job to set some boundaries, some rules, so that people (who do tend to act selfishly and with an eye to short-term gain) can't behave in ways that jeopardize our group welfare?

And isn't it ironic that the people in government who insisted on almost no regulation for the financial industry are now leading us into partly nationalizing our banks? Their fear of government interfering with the markets has led to government interference on a scale we've never seen before.

Wouldn't it be nice to have a government that doesn't swing to such extremes? A government that realizes that a totally free market leads to chaos, and chaos leads to the type of government over-involvement that we all would like to avoid?

Moderation, folks - it's the new black.

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34 comments:

  1. dear bernanke et al.,

    duh.

    sincerely,

    katy

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  2. The problem with thrift is it isn't living on the edge!!!!! Making lots of debt is more daring. Or Stupid!

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  3. Agreed! Totally agreed. I could not have said it better myself. No, they most likely do not read the papers...

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  4. I love how others screw up and the rest of us have to clean it up and pay for it. Now, if they want to make it a socialist government, then call a duck and duck and be done with it. But don't tout "democracy" when in fact it's everything BUT that.

    I guess all my beliefs that weren't so mainstream, are going to be way more mainstream and nouveau. Oh the money I could make instructing these people...

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  5. I would like to understand exactly WHY the solution to people spending money they don't have is having a government in debt pay for it with money they don't have either. Gee, that ought to fix it.

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  6. I couldn't have said it better either. But that didn't stop me from trying.

    (Let's just keep sending people back and forth, shall we?)

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  7. Good choice of video clip. My favorite is the one where Ilse's husband stands up and rouses the people out of their stupor, and they stand united against the common foe. [Nice bit of rabble-rousing, Ms. SC!]

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  8. Your reasoning is EXACTLY why I don't support giving Social Security money back to the people so they can invest them on their own. Duh. 90% of people will buy a new car or a big screen TV with their newfound money and when they hit retirement, there won't be a blessed thing invested to live on.

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  9. When we began looking for a house 8 years ago (before things got REALLY crazy), when we got our pre-approval we laughed and laughed. Really? Somebody thought we could borrow that much money? We bought a house we could afford. And it's that simple. Sorry, I don't like the government poking around in my business, and no, I don't think it's the government's job to babysit people. Main lesson of junior-year American history (when we covered Prohibition): You can't legislate morality. People will be stupid. They will drink, they will smoke, they will take illegal drugs, they will borrow more money than they ought to, no matter what the government says or does.

    Now explain to me why it's MY responsibility to bail out people who didn't live within their means? It's not. There's a difference between emergency help and bailing someone out of their own self-made mess borne of stupidity.

    I know, my Libertarian is showing again.

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  10. Okay, amy,let's see if I can explain myself better...

    I agree that people should not borrow more than they can afford to pay back. And I practice what I preach. But, as you point out, people will be stupid and greedy and unethical. Those of us who aren't need to be protected from the havoc these people can wreak. That is why we have laws, say, against speeding. Should those be abolished? We also have laws saying that food producers cannot put melamine in our food. Should that be left to the market instead?

    No matter how much we hate too much gov't, there is a certain amount of rules we need government to make in order for us to go about our daily lives with some assurance of personal safety. The problem with the far right is they trust the "market" to regulate everything. It doesn't. The problem with the far left is they want the government to regulate everything, which dampens personal initiative and responsibility. As we have seen, trusting the market completely has resulted in chaos. But asking for a moderate amount of regulation to rein in unethical doings (or just activities that harm the common good) is not socialism; it is what government is for.

    Without rules, the bad guys win. Always.

    It is not your responsibility to bail these people out. The question is whether or not it is in your economic self-interest to do some bailing in order to keep the credit markets from completely freezing up.

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  11. Don't forget another problem with the far left is that they also want everyone to own a house, whether they can afford it or not. Homelessness is a problem, yes. Houselessness is not a social ill that needs to be corrected by liberal reform. The liberals are just as much to blame as the conservatives for this mess, no matter what spin they're putting on it.

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  12. AMEN to everything you said.

    Here's my current understanding of the situation:

    THE LEFT pushed banks to give mortgages to uncreditworthy people in a nice but misguided attempt to boost minority home ownership. In the 1990's Countrywide was hailed as a friend and hero to the minority community. Today it's vilified as a "predatory lender."

    THE RIGHT allowed investment banks to sell bundles of these bad mortgages as securities . . . AND to sell insurance contracts on these securities to investors as protection against default. Only the banks didn't call the insurance contracts "insurance", because that would have subjected them to federal regulation. They called them something like credit-swap-derivatives instead. Because there was no regulation, the banks didn't get enough assets in place to cover these insurance contracts. They just bet on the housing market continuing to climb . . . and we all know how THAT panned out. (Anyone else see the 60 minutes report on this?)

    So too much govt tinkering doesn't work, and neither does a hands off the market approach. There has to be a regulatory sweet spot in the middle. Aristotle was right: moderation in all things.

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  13. Extremely well said!

    *applauds*

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  14. Love the clip! Love it!

    ~Luke

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  15. Wasn't there a war fought at some point in our history because of too much Government involvement...all that separation of Church and State...

    AND HELLO...Obama said that he won't raise taxes for 95% of the people...those are the ones who don't pay taxes NOW

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  16. Moderation? What's that? Never heard of it.

    I call myself a moderate and I mean it. Well said Suburban Correspondent.

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  17. I've been reading your blog for a few months now, and I find you to be the soul of rationality and good humor. Not to mention common sense. I wish I knew you in real life. I think we'd have fun together.

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  18. I love the candy store analogy--brilliant!

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  19. Well said.
    Why did the folks who wanted no regulation and let the system fall apart now want us to give them no regulation AGAIN so they can "fix" everything? The push for No Regulation got us here...and a No Regulation Bailout is supposed to FIX it?!?!?

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  20. *snickering at the final lines of the video clip*

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  21. Less is more when it comes to government control.

    I agree tho, everything in moderation...which is my husbands moto.

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  22. what? crisis? ohmygoshohmygoshohmygosh. must work into lather and dither.

    I hear stock's on sale, though.

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  23. The clip was the perfect way to describe what is going on here.

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  24. Amen. Tell it, sister.

    One point that doesn't seem to get mentioned a lot: California has I believe the largest number of foreclosed homes. California also has the most insane housing prices, which is probably why there's a feel-good law on the books saying that first-time homeowners whose homes' value goes underwater (and, one assumes, whose ARM goes up) can legally walk away and owe the bank nothing. There is no personal penalty other than your credit rating for buying above what you can realistically afford while hoping for home inflation to continue. That sense of caution at being on the hook helps tamp down prices normally, and with that out of the way...

    --AlisonH at spindyeknit.com

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  25. Well someone needed to say this. Thank you. I've been thinking the same thing for a while now.

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  26. We have finally gotten rid of(notice I did not say pay off) our credit cards. I hope NEVER to see those things again. And I am surviving!

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  27. What I wonder is how in the um, blazes, did nobody notice this mess until we were $700 billion in the hole? Like $650 bil wasn't worth noticing?

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  28. Ooh! Missed this one while I was off on my crazy road trip with the kids. Well said. It's about personal safety of the majority.

    Using the speed limit analogy again, we've set standards for decent behavior. Oh sure, you're going to have nice straight roads set at 35 mph for no apparent reason, but you'll also have recourse against people who go 60 in a 35 mph zone. And even if you don't bust people for breaking the rules, it does set expectations for decent behavior.

    I've been doing a bit of reading about the response in 1929, and back then the government's response was to let the idiots that made the problem live with the consequences: Wall Street. Within a few years, it had tricked down to Main Street, and the results were disastrous. No one wants to bail out these jerks, but if we want this country's economy to continue running, it looks like we have to.

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  29. Wait- what economic situation?









    :P

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  30. I could use a $700 Billion bailout myself. How do I get me one of those?

    Awesome use of Casablanca, by the way. You're my hero.

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  31. Now I'm craving me some Casablanca. I secretly hope for a MAJOR economy collapse where I can be all high and mighty with my amazing food storage, my ability to can, and all the stuff I've kept in my pack rat ways. But I'm sure it wouldn't be as glorious as my dreams.

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  32. Amen sister. Preach some more! Loved the casablanca clip - perfectly perfect for this subject.

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  33. Somehow skipped over this but I have to totally agree. If a housewife too absorbed in the laundry to even keep up with the news could have told you at least a decade ago that this was obviously going to be the outcome of our crazy ways, why the heck everyone is so surprised is beyond me. The other thing that just keeps puzzling me is that if we wanted to get more people into homes of their own, why didn't we come up with some affordable housing for low income people? You know, a modest, simple starter home thing. As for the government telling the people to save and get out of debt, I'm sure we'll do that as soon as they do. Yesterday, I was just listening to a comparison of the current situation as compared to the great depression. We would have a LONG WAY to go to get to that point. My thought? Just give us time, we'll manage to do it somehow! I have faith in America, we do everything big :)

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