3 cheers for Bush mortgage bail-out!
I know that many bubble-sitters are lamenting the growing efforts of policy makers to bail out the real-estate market, but the reality is that assisting the struggling market is an imperative of our governments.
http://www.bloomberg.com/apps/news?pid=20601087&sid=azFpDTT1pbN4&refer=home
Sure, bail-outs (in whatever form they may be) can create moral hazard that could lead to some future problems, but it is unthinkable to just allow the decimation of a large portion of the economy, and almost certain severe depresson, to unfold. If it is in the power of governments to prevent economic catastrophe, then they must take action to do so, no matter how ugly the means.
At the very least, policy makers have a duty to try and reduce the pain.
Bill Gross made this same point recently, and it has merit.
Should a doctor refuse to treat people with an infectious disease who also have other serious ailments because to do so would slowly erode the eficacy of existing anti-biotics (as the pathogen evolves to be immune)? No. You don't let someone die on the table if a cure is available just because the use of that cure right now might hurt a greater number of people in the future.
Even if this person might die from some other pre-existing disease anyway, a doctor will give them the best treatment that is available. You then deal with treating the people who contract this disease in the future, once the anti-biotics no longer function, as best you can at that time. You can't let yourself worry about the long-term conseqences when treating someone today.
There is a low probability that the various real-estate/finance industry bail-outs being engineered will succeed (we are in a DEEP hole). The cures being administered will likely have minimal impact. Nevertheless, just as the doctor is obglicated to ATTEMPT treating the terminally ill, our governments have a similar obligation.
If nothing else, voters will never forgiven a leader who stands by saying that there is nothing they can do as the economy slides off the face of a cliff. Just look at the derision with which Hoover is viewed to this day, whereas an activist President like Roosevelt (who likely made the depression worse) is a saintly hero. Rightly or wrongly, people want to think their leaders "care", and are doing whatever it takes to make things right.
Or to put it back in medical terms, people will prefer doctors who humour them, and provide medicines for their ailments, even if the treatments don't work. By contrast, doctors who just tell you that there isn't any good treatment and you should just stay in bed are shunned.
http://www.bloomberg.com/apps/news?pid=20601087&sid=azFpDTT1pbN4&refer=home
Sure, bail-outs (in whatever form they may be) can create moral hazard that could lead to some future problems, but it is unthinkable to just allow the decimation of a large portion of the economy, and almost certain severe depresson, to unfold. If it is in the power of governments to prevent economic catastrophe, then they must take action to do so, no matter how ugly the means.
At the very least, policy makers have a duty to try and reduce the pain.
Bill Gross made this same point recently, and it has merit.
Should a doctor refuse to treat people with an infectious disease who also have other serious ailments because to do so would slowly erode the eficacy of existing anti-biotics (as the pathogen evolves to be immune)? No. You don't let someone die on the table if a cure is available just because the use of that cure right now might hurt a greater number of people in the future.
Even if this person might die from some other pre-existing disease anyway, a doctor will give them the best treatment that is available. You then deal with treating the people who contract this disease in the future, once the anti-biotics no longer function, as best you can at that time. You can't let yourself worry about the long-term conseqences when treating someone today.
There is a low probability that the various real-estate/finance industry bail-outs being engineered will succeed (we are in a DEEP hole). The cures being administered will likely have minimal impact. Nevertheless, just as the doctor is obglicated to ATTEMPT treating the terminally ill, our governments have a similar obligation.
If nothing else, voters will never forgiven a leader who stands by saying that there is nothing they can do as the economy slides off the face of a cliff. Just look at the derision with which Hoover is viewed to this day, whereas an activist President like Roosevelt (who likely made the depression worse) is a saintly hero. Rightly or wrongly, people want to think their leaders "care", and are doing whatever it takes to make things right.
Or to put it back in medical terms, people will prefer doctors who humour them, and provide medicines for their ailments, even if the treatments don't work. By contrast, doctors who just tell you that there isn't any good treatment and you should just stay in bed are shunned.
Comments
What sticks out in my mind is this quote.
So guess what, everything Bush outlined is hardly a bailout at all. Has anyone looked at the list? Essentially, they are reducing tax hits that people get from going into foreclosure or short sales. Other than that, they will help provide reasonable loans to people.
So if you are going from teaser rate 3% 2/28 ARM to a 6% 30 year, that still will be a huge shocker for many people. The primary difference I see is that now those people who are shocked will foreclose and walk away with no problems but the credit hit. This bailout sounds like it is essentially sticking it to the lenders.
Seems to me like this is a bailout in name alone...good enough for a stock bump though. :roll:
That's the most idiotic perspective I've ever heard.....
If the gov't really cares and wants to prevent problems, a good place to start is at the beginning before things got out of hand.....
What the gov't is doing now is wiping the ass of these sub-prime idiots after they've had a diarrhea with our money.
The funny thing is there are bleeding-hearts who is getting screwed in the ass with the bail-out tab and still like it. They buy into these catastrophic scenario theory that if we don't save the sub-prime idiots we all gonna suffer like in 1929.
Let me ask you this, throughout all the volatility in the past month which asset class has suffered a correction? Stocks? No, they are still up for the year. Housing? They might be down, but overall from a few years ago they are still up.
The Bill Gross analogy is a stupid one. Again, a good doctor would tell the patient to refrain from going to places where they could contract infectious disease in the first place. But you don't need a doctor to tell you that screwing with hookers could get you AIDS because you'd have a brain with some common sense. Similarly, if you're flipping burgers or cleaning toilets then don't get a f**k'en mortgage you can't payoff or get yourself into a contract you don't understand!!
What the f**k is wrong with people these days?? Sheesh...
This would reward the gambling mentality that has taken over this country.
What this country needs is pain...and lots of it.
We have become a country of get rich quick scammers who want to retire by 30 without breaking a sweat.
There is only one cure for such moral/ethical decay.....the pain of reality.
1) You can't afford to live above your means
2) You gamble you pay the piper if you lose
3) You want everything NOW instead of saving for it
4) You must be ACCOUNTABLE for you bad actions
Yep, bring on the pain, we need it....BADLY.
BTW...this is no bailout. It is bailout rhetoric and window dressing.
And in order for the doctor to cure this patient that brought the disease upon himself, he would have to forcibly harvest a kidney from another person that didn't go out and get the disease.
Yes, you and Moose are right. This seems to be the entire thrust of the media stories and their spin on it.
I've read some idiotic dreck in my lifetime, but that makes the top 10.
What you are advocating is that someone needs to keep drinking in order to avoid a hangover.
Bailouts ARE the problem. Prescribing more will only make the eventual bust more dramatic. We should have ended this back in the '95 Orange County bailout.
Gee...what has happened to the speculative equity and housing markets since then?
Think.
Hey, I am not saying I think a bail-out will really help. Further, I even admit any bail-out will likely make things worse eventually. But this is beside the point. I am merely saying that our leaders have a duty to try and help, even if what they do might be futile and harmful. This is no different than doctors who have a duty to try and help a patient they know is already terminal, even if the medicine they give might even make the patient die sooner.
It's all about making people "feel" better. FDR's government expansion and largesse certainly didn't end the depression (it likely deepened and lengthened it). However, the government programs FDR implemented during the great depression were CRITICAL in helping people accept things, and feel like someone cared. If some other President had been in power at the time who took a hands-off approach, and just told everyone that the best policy was to let things work themselves out, there would have been a revolution.
I would submit that our government's attmept to keep us from feeling bad about mindless speculation is what put us in this horrible position.
When you find yourself in a hole, drop the shovel.
I definitely disagree with this. Our leaders have the duty to uphold the constitution, and our leaders have the duty to create laws which will encourage the future to more closely resemble our wishes for the present. That is how a democratic republic based on a constitution is supposed to work. Nowhere in the constitution does it say 'elected officials must make it look like they are doing something so that the citizens will be placated.' What we do have is dedication to life, liberty and the pursuit of happiness, which is very different even than life, liberty and happiness.
This whole medical analogy has been flawed from the start, but this statement in particular is definitely flawed. We have numerous cases where a patient is ill and we do not give them medical care that could save their life. Sometimes the care is too controversial: taking stem cells out of aborted fetuses to research cures to Parkinson's Disease. Sometimes the care is not completely accepted: experimental medication not yet approved by the FDA. Sometimes, the care is just plain illegal: medical marijuana. And sometimes the care is just too costly: Terri Shavo.
I mean, even Dr. House has to watch a patient die sometimes. Right?