Am I the only one who is more than a little bit tired of the end-of-the-world financial hand-wringing going on in the news these days? Every day, day after day, both the local and network news lead with stories about the 'fiscal crisis' or the 'financial meltdown' that is happening at all levels of government. Cutbacks, layoffs, budgets, spending, revenues, stocks, bonds...blah, blah, blah, blah, blah! Now anyone who knows me knows that I take these kinds of things seriously, so this is no sports or entertainment-starved and isolated individual talking here about being fed up. I have read books on economics on my own, not school related. That isn't to brag about any alleged intelligence, just to note that I do really have an interest in these matters. I like to understand what people are talking about, at least to a certain level. But what is happening today in this country is utter and complete doom-and-gloom defeatism. As always, I do have a political take on at least a part of the problem. But it might surprise some of you where I lay that political blame. I blame my own Republican Party and its leadership at the Presidential level and at the Congressional levels. You see, I fully expect Democrats to spend your hard-earned money and mine like a bunch of drunken sailors on shore leave. I fully expect the Dems, leaning more and more towards open socialism these days, to demand government intervention and control over as many facets of our day-to-day lives as they can get their grubby hands on. Those things are a given with me, and with most people who look at the political world with open eyes. But I expect more from my Republican Party, and I am not getting it. Much to the Dems chagrin, George W. Bush was in the White House for eight long years. He had a Republican-led Congress for a part of that time. But despite this advantage in political power, the nation took steps backwards in key areas where Republicans are supposed to move us forward as a part of our very fundamental structure. This was highlighted by their spending your money and mine at a pace that leaves only a one word description - Democrats. For the past eight years Republicans have been as much to blame if not more so for the fiscal problems in which we now find ourselves mired. Republicans are supposed to stand up for two major fiscal principles: lower spending, lower taxation. As we all know, when we lower spending federal money, and we lower the amount of money taken from the pockets of individuals and the accounts of business, we increase freedom. People and businesses have more of their hard earned money and are free to spend it on their own wishes, needs, desires, futures. We also need some solid controls to ensure that people don't go crazy and mortgage away their future on dreams that they cannot handle. Why give someone a mortgage for a $500,000 house when they cannot possibly afford it based on any reasonable estimate of their income and employment history when balanced against the likelihood of future market changes in things like interest rates? But that is just what we allowed to happen over the past decade or so. People were allowed to buy bigger homes than they could afford, or second/vacation homes, or rental properties that they could not afford. It was up to Republicans to be smart and pull in the reigns, or at least to publicly put out stern warnings. It didn't happen. Now another key Republican idea is that we are all big boys and girls. We know very well what we are getting into when we sign on the dotted line. If you signed up for a huge variable rate mortgage that you could only afford because that rate was so low at the time that you obtained it, and then could no longer afford the payments when the rates inevitably went up and were in danger of losing your home, that is absolutely on you. You knew without a shadow of a doubt when you signed those papers that this was a serious risk that you were taking. We all make decisions in life, from what we put in our bodies (food, cigarettes, other people) to what we put in our financial portfolios (properties, stocks, artwork) and we all take on the risks and consequences of those decisions. We love it when things are riding high, but we all know that the party is going to end some day, and we need to make sure that we are prepared for that day. In this case, very few people made the adult decision to let us know that the sky was going to fall, and likely fall hard and fast. Now everyone is running around like Chicken Little, and I am just a bit tired of it all. I want my Republican Party leadership to stand up for fiscal sanity and a return to their roots. They made a good start last week when every single Republican member of the House of Representatives voted against President Barack Obama's massive socialist spending boondoggle that he calls a "stimulus" package. They need to continue that very real and very Republican leadership, and inspire more and more Republican leaders to step forward and take those same positions as we move forward and try to regain both Congress and the Presidency. But even if we can win those elections it won't matter a hill of beans if there is no basic philosophical difference manifesting itself in the actions of Republicans over what their Democrat counterparts would have done. It's not rocket science, it's basic conservative Republican ideals at their best: lower spending, lower taxes, more freedom. Long live democracy and capitalism. Let's put an end to this socialism and defeatist hand-wringing right now.
Showing posts with label mortgage crisis. Show all posts
Showing posts with label mortgage crisis. Show all posts
Friday, February 6, 2009
Tired of All the Financial Hand-Wringing
Am I the only one who is more than a little bit tired of the end-of-the-world financial hand-wringing going on in the news these days? Every day, day after day, both the local and network news lead with stories about the 'fiscal crisis' or the 'financial meltdown' that is happening at all levels of government. Cutbacks, layoffs, budgets, spending, revenues, stocks, bonds...blah, blah, blah, blah, blah! Now anyone who knows me knows that I take these kinds of things seriously, so this is no sports or entertainment-starved and isolated individual talking here about being fed up. I have read books on economics on my own, not school related. That isn't to brag about any alleged intelligence, just to note that I do really have an interest in these matters. I like to understand what people are talking about, at least to a certain level. But what is happening today in this country is utter and complete doom-and-gloom defeatism. As always, I do have a political take on at least a part of the problem. But it might surprise some of you where I lay that political blame. I blame my own Republican Party and its leadership at the Presidential level and at the Congressional levels. You see, I fully expect Democrats to spend your hard-earned money and mine like a bunch of drunken sailors on shore leave. I fully expect the Dems, leaning more and more towards open socialism these days, to demand government intervention and control over as many facets of our day-to-day lives as they can get their grubby hands on. Those things are a given with me, and with most people who look at the political world with open eyes. But I expect more from my Republican Party, and I am not getting it. Much to the Dems chagrin, George W. Bush was in the White House for eight long years. He had a Republican-led Congress for a part of that time. But despite this advantage in political power, the nation took steps backwards in key areas where Republicans are supposed to move us forward as a part of our very fundamental structure. This was highlighted by their spending your money and mine at a pace that leaves only a one word description - Democrats. For the past eight years Republicans have been as much to blame if not more so for the fiscal problems in which we now find ourselves mired. Republicans are supposed to stand up for two major fiscal principles: lower spending, lower taxation. As we all know, when we lower spending federal money, and we lower the amount of money taken from the pockets of individuals and the accounts of business, we increase freedom. People and businesses have more of their hard earned money and are free to spend it on their own wishes, needs, desires, futures. We also need some solid controls to ensure that people don't go crazy and mortgage away their future on dreams that they cannot handle. Why give someone a mortgage for a $500,000 house when they cannot possibly afford it based on any reasonable estimate of their income and employment history when balanced against the likelihood of future market changes in things like interest rates? But that is just what we allowed to happen over the past decade or so. People were allowed to buy bigger homes than they could afford, or second/vacation homes, or rental properties that they could not afford. It was up to Republicans to be smart and pull in the reigns, or at least to publicly put out stern warnings. It didn't happen. Now another key Republican idea is that we are all big boys and girls. We know very well what we are getting into when we sign on the dotted line. If you signed up for a huge variable rate mortgage that you could only afford because that rate was so low at the time that you obtained it, and then could no longer afford the payments when the rates inevitably went up and were in danger of losing your home, that is absolutely on you. You knew without a shadow of a doubt when you signed those papers that this was a serious risk that you were taking. We all make decisions in life, from what we put in our bodies (food, cigarettes, other people) to what we put in our financial portfolios (properties, stocks, artwork) and we all take on the risks and consequences of those decisions. We love it when things are riding high, but we all know that the party is going to end some day, and we need to make sure that we are prepared for that day. In this case, very few people made the adult decision to let us know that the sky was going to fall, and likely fall hard and fast. Now everyone is running around like Chicken Little, and I am just a bit tired of it all. I want my Republican Party leadership to stand up for fiscal sanity and a return to their roots. They made a good start last week when every single Republican member of the House of Representatives voted against President Barack Obama's massive socialist spending boondoggle that he calls a "stimulus" package. They need to continue that very real and very Republican leadership, and inspire more and more Republican leaders to step forward and take those same positions as we move forward and try to regain both Congress and the Presidency. But even if we can win those elections it won't matter a hill of beans if there is no basic philosophical difference manifesting itself in the actions of Republicans over what their Democrat counterparts would have done. It's not rocket science, it's basic conservative Republican ideals at their best: lower spending, lower taxes, more freedom. Long live democracy and capitalism. Let's put an end to this socialism and defeatist hand-wringing right now.
Tuesday, September 23, 2008
$700 Billion Dollar Roller Coaster Quick-Fix
Our government is considering, is right at this moment negotiating, a $700 billion dollar package to 'rescue' the economy from what is being sold to us as certain ruin. This 'ruin', of course, was completely and totally self-inflicted. Interest rates at historic lows combined with a loosening of lending policies, especially by mortgage companies, resulted in a number of bad loans to poor credit risks that was inevitably going to come crashing down around many people and companies. Those who bet on an ever-expanding economy were right in the long run, because the fact is that over time the economy will likely expand, assets will increase in value, and investments will rise. But some people also forgot that the economy takes ups and downs, much like a roller coaster, on the way to the ultimate thrill of an ending. Some people are going to get caught in a 'down', they are going to lose in the market. That is the risk involved in the ride, that every once in awhile one is going to run off the tracks and crash. The ride is often a true thrill, because you have great highs where you soar, where your investments rise and you feel invincible as your account balances inflate. However, you also have to suffer the anxiety of the downturns. The economy will adjust from time to time, weed out the bad, and hit that roller coaster dropoff. Your stomach may rise into your throat at this point, and you may even scream out of sudden fear for your safety, the safety of your assets in this case. Thankfully on a real roller coaster, as on the roller coaster of life, we usually rise again. There are brakes and seat belts and safety bars to protect us, and there are also 'the odds', which say that the overwhelming majority of the time you will survive that dropoff and rise once again. Over time in the economic world, you will rise to a point higher than the point at which you started. However, like real roller coasters, every once in a blue moon one is going to go crashing off the rails. Often this will be as a result of poor maintenance, or a sudden brakedown in a normally reliable part. The same thing will happen with the economy. It will run off the rails, and those on the roller coaster are going to go down - hard - some to never get up again. It should never be the role of our government to bail out capitalist companies that live and die with their bottom lines. Individual investors, as well as companies big and small, take risks in order to experience rewards. Many will ultimately succeed. Some, and sometimes many, will fail and will collapse. It is these collapses and negative adjustments that the rest of us learn from, and that create opportunities for others to come in and build a better mousetrap. The government has no business bailing out this economy with our, you and me that is, tax dollars. The government does not have any money of it's own, it has only the funds collected by you and me in taxation, in taxing our businesses, our incomes, our investments, and in the interest they make on the investments they make with our money. Key words being 'our money.' Businesses, banks, mortgage companies, individuals were riding high on the upslope for years, and they also need to go through the downslope for the free market to naturally adjust at the bottom of its dropoff. It may be a long, hard, jaw-dropping, stomach in your brains drop, and some may not survive the scare. But the fact is that the real crash will occur by artificially propping up this economy with a bailout. It will have the ultimate effect of putting glue on a broken roller coaster rail. The force of the coaster will, sooner rather than later, overwhelm the glue. The rail may actually need to be taken up and replaced. The roller coaster may need to be taken off-line for a short period while true repairs are done. But in the long run, this will be best. The rail will be fixed, the rides will begin again, and the thrill will come back. The government needs to let the market do its work, and save us all the irresponsible $700 billion dollar quick-fix that it is trying to push on those of us who understand what riding a roller coaster is all about.
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