Posted by
Andrews on Thursday, February 12, 2009 8:46:30 AM
What exactly does centralized health care record keeping have to do with economic stimulus? Or funding for ACORN?
Actually, what wasn't covered in Bush's original (and still oversized) bill?
Let us look at the facts, not every mortgage in the nation, not even every subprime mortgage, is not performing. However all have suddenly become non-negotiable due to the panic and so many institutions face a liquidity crisis, as they relied on mortgages and mortgage bundles being negotiable instruments.
So, why not do
what I suggested before and set up a Resolution Trust for mortgages? With assurances non-performing mortgages will be of some value, the bundles will suddenly become valuable again, people will be able to trade them, the liquidity crisis will pass, and things will begin to work once more. Granted, the economy will still take a hit, as the loss of fictional paper value in real estate from a few months ago still has to shake out, but if companies can trade mortgages, most of our big problems will be resolved.
Now I know Obama has suggested something similar, and this was also supposedly the purpose of Bush's bill, but somehow both seem to get tied to all sorts of other mess like
CEO salary caps and government's mafia-like "partnership" with financial institutions. Which is just absurd. All we need is for the instruments to become negotiable again and we dodge the bullet for the moment. And since that seems to be what government cares about, this is the cheapest way to do it.
Obviously, the best solution, as I said before, is to
do nothing and
let the economy straighten out the
mess that government has made of it. Well,
the best is actually to return to
gold money and get the government
out of the economy entirely, but that isn't happening. Then again, given
our public belief that the government should
save us from all pain, I doubt the "
do nothing" solution will happen either.
So, given the realistic possibilities, why aren't the Republicans pushing for an RTC type solution, to cut the legs out from under the bloated Obama power grab?
POSTSCRIPT
By the way, even if the government does buy loans, I would not favor any sort of forgiveness or rate break for borrowers who took loans they cannot afford. Why? Because rewarding irresponsibility simply encourages more irresponsible behavior. After all, if Obama will cap defaulting loans at X% of your income, as I have heard proposed, why not default on purpose if X% of your income is less than your current payments? No, if the government buys non-performing loans, they still have to collect and foreclose just like a bank. Any borrower assistance only encourages bad behavior and creates an even bigger burden for the already overburdened tax payer. But that may be a matter for another post.