Monday, September 08, 2008

Are Fannie & Freddie "Fundamentally Strong", John?

As dismaying as it may be to see the pattern of Federal bailouts continue, the reason that both Barack Obama and John McCain agree on the actions of the Shrub Administration in the housing market is because we have little choice in the matter unless we are willing to endure a repeat of 1930 to 1935. Even the hint of that kind of an economic downturn is disastrous, and being willing to risk it will not win votes.

The same is true of the Bear-Stearns bailout from earlier this year, and the same will be true if it happens with Detroit, as some feel that it will.

Indeed, Obama is already using the idea of providing Federal assistance to help automakers retool as a part of his campaign. An idea that I support not because I believe in the government helping save a foolish private entity from a financial disaster of it's own making but because it will help bring greater fuel efficiency to the American automobile market quicker than almost any other approach. The result of that will be directly beneficial to all of us, and since I will be in the market for a hybrid vehicle in the next few years (my beloved Pathfinder is starting to enter that "constant investment" part of it's lifecycle) it will be good for me personally.

Remember basic Econ 101... if the supply of a commodity remains constant and the demand for it lessens, price will drop. Of course, that's assuming supply remains constant. Knowing how wonderfully socially conscious and mindful of the public good our beloved oil companies are, I worry about whether it will actually happen. But it is worth trying.

But back to where I was originally headed. The housing crisis is now reaching proportions of magnitude where comparisons to the Great Depression are no longer ridiculous. That is not a good thing, obviously. Some estimates I've seen this weekend were that by years end, nine percent of homes could be in foreclosure.

Let me repeat that. In capital letters. NINE PERCENT. Go down your street and start counting. Every time you reach ten, imagine the next home has a "For Sale, Bank Owned" sign in front of it.

This is an immense danger to the economic well-being of the United States. And since money affects everything, it is also a threat to national security and employment, etc. The government stepped in to save the mortgage underwriting apparatus of our nation because if those feet of clay crumble, the statue that falls will not only shatter but the resulting debris will crush apparently unrelated industries. (Witness the results of the bailout in the Stock Market for evidence that I am not the only one believing this.)

And yet, two of the people running for the nations highest offices show zero understanding of the dangers. G.I. John and Caribou Barbie don't get it, even now.

John McCain has not recanted his statement that the fundamentals of the economy are strong and even Jay Leno couldn't get an actual answer from him related to housing. And the fact that John owns multiple homes that could only be called "investment properties" makes that even more glaring. I realize the McCain wants to avoid any and all discussion of the issue because every mention of it reminds voters of his most serious malaprop comment yet.

But a time of crisis is not a time to avoid questions because you're afraid of speaking up again. This is not grade school, John. You are running for President. You can't afford to sit there in class, refusing to raise your hand and trying to hide behind the pigtails of the little girl sitting in front of you. I don't care if the kids laughed at you last time. Show me some of that courage you supposedly have in such great supply. This is not a time for you to enter your second childhood, or your second shot at second grade.

As for the girl he is hiding behind? Her response was that Fannie Mae and Freddie Mac had gotten "too big and too expensive to the taxpayers" (from a speech in Colorado Springs.) Governor Palin needs someone to tell her that these are private companies and that the implicit backing of the federal government has never before been realized. How can Caribou Barbie be expected to govern if she doesn't even know whether or not a company is part of the government? It's like she was saying that Hummer had become a liability to the Army, not knowing that Hummer was a part of General Motors.

It's scary to me how little actual knowledge either of these candidates show. Yet, there they are in the polls, actually in striking distance of Obama/Biden. Why is that America?

I wish that the average voter would do a little bit of research... something besides watching TV commercials. Here's a hint, sheeple. If the message includes someone saying their name and that they approved it, it's biased!

(a tip of the hat to a comment on Americablog by Asphyxia8, from which I "stole" the phrase Caribou Barbie. It made me smile so much I had to use it.)

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