Here we go again!
- Posted by Chris on December 9th, 2008 filed in General, Politics, Pop Culture, WTF
The federal reserve just allocated another 600 billion to buy more mortgages from fanny and freddie. We used to bundle these bad mortgages up and sell them to foreign investors on the derivatives market but not anymore. Once bitten, twice shy. Now no one will buy them. They won’t touch them. So, take a wild guess at who gets to buy those derivatives now? That’s right we do. That’s bad, but what is worse is we are STILL MAKING THESE MORTGAGES! The exact thing that caused this problem is still going on. We are still giving mortgages to people who don’t pay their bills. Nowhere in any legislation has there been anything that stops it since this crisis started. The Community Reinvestment Act, which was the catalyst of all of this, is still the law and official policy.
Basically this is welfare with mortgages. A way to redistribute income. There is a reason people have bad credit and that is they suck at balancing their finances. Some are in a bad position or have bad things hit out of the blue but the vast majority are irresponsible and just don’t pay their bills. They have this sense of entitlement. They know that they can’t afford the credit card but still get it and max it out. This is what caused the credit market and banking meltdown problem. That is why it is the SUBPRIME meltdown and not the rich people skipping their bills meltdown. It’s not the middle classed responsible people who are walking out on their payments either. It’s the subprime meltdown. We made mortgages to people who, whether rich or poor, won’t pay them back. In the beginning, banks were forced into this by the feds and community groups or face court proceedings. Obama himself made a pretty penny suing banks for not lending to people who won’t pay their bills. Later it became a money making pyramid for them. Now it is blowing up in our face.
I want to be clear here. It didn’t cause our recession. We were heading that way already. Gas prices and energy policies started the problems but this is making it deeper. It is causing future damage that will be nearly impossible to recover from.
Right now, our national debt is 10 trillion. The cost of this program is already over a trillion dollars and now we’re tossing auto bailouts, newspaper bailouts, state bailouts and more onto it. How the heck are we going to pay for that? We’re not. Taxes will have to go up dramatically and even then, they won’t even cover the interest increases.
Our current budget is 2.7 trillion per year. In 2009 it is projected at 3.1 trillion and this does not include the 700 billion. This is just the forecasts from W’s proposed 2009 budget. Add another 500 billion and another 50 billion of interest. That makes it 3.65 trillion. Add the upcoming healthcare socialization and our upcoming nationalized preschool and the upcoming free college proposals of Obama and you can add around another trillion. Totaling over 4.5 trillion dollars.
Remember that top 5% of earners Obama wants to tax more for his programs? They made a total of 3.1 trillion dollars last year. You would have to have a 100% tax rate for them just to cover W’s budget. The federal government would have to take 100% of every AGI dollar from everyone who makes over 108000 and 100% of every AGI dollar from most people between 65k and 108k to cover the additional stuff. Now this is based on the latest tax figures that I found. The 2006 breakdown.
So what do we do? Interest on the debt has accounted for more federal dollars than both wars in the middle east since 2001. Social Security (608 bln), Medicare (386 bln), medicaid and SCHIP (209 bln) and other mandatory entitlements cost (welfare, unemployment, etc 324 bln) and interest on the debt (261 bln) are the top social spending items. Defense is another 481 billion. War on terror spending is 145 billion. Where do we cut? How high do we raise taxes? None of this was ever discussed in the election. Nor was it discussed while these bailouts were being created.
We need real change. A social revolution. We need to stop rewarding irresponsibility and start making people be accountable for their lives and decisions. Getting welfare or food stamps and have another baby? Lose everything. Living to 85 now? Retirement starts at 70. If you can run for president at 70, you can work somewhere. No social security/medicare before age 70. Harsh, yeah. But we have to start somewhere. It is time to stop burying our heads in the sand and time to start attacking this problem head on. So what say you? Where do you start? You’re president for a day. How do you fix the problem?
Lord Bitememan says:
I’m with you on the notion that the financial markets shouldn’t receive additional bailouts. It’s time for them to adjust policy and make due with what they’ve been given. As it relates to industrial bailouts, it’s one thing to be against them, another altogether to threaten a filibuster as McConnell has. Republicans aren’t doing too well in the north right now. In 2010 there’s going to be at least 3 industrial states of some northernish latitude with Republican Senators up for re-election (PA with Arlen Specter who already has a major challenger lined up, OH with Voinovich, and MO with Kit Bond). We only have to lose two of those without a net gain somewhere else (and there really aren’t any openings on the map for pickups, and allow me to remind you Vitter will possibly offset any net pickup) and all the effort towards getting Chambliss re-elected will more or less have been a waste of time. Can we really afford, at this point, to take the blame for the Big 3 tanking? Better to stand back, vote no, let the Dems have their bailouts, and go to the voters in 2 years and say “Told you so.” The other option is Obama with what could well be 6 years of filibuster-proof majority.
oli says:
“Retirement starts at 70. If you can run for
president at 70, you can work somewhere.”
As we say in France: Touché.
I live in France were the taxes and benefits are enough to make me cry. And many of my friends’ parents are all retired at 60, living the good life that I’m paying for.
However, there is hardly any subprime crisis over here (the stock market is another story). Perhaps, this difference hints at the root cause of the crisis that you are explaining. That the policy of the government must change i.e. by enacting stringent lending rules.
I will subscribe to your blog. Keep up the interesting reports.
The BoBo says:
Great post. I don’t think any private business should ever receive a bailout. Let them fail. But, at the same time, we need to get back to our roots. Get the government interference out of the way to allow the businesses to do what they need to do to succeed instead of placing these bogus regulations on them.
Also - just a little thing..our national debt is actually $57 trillion. The $10 trillion is just the public debt. It doesn’t include the federal commitments like medicare, medicaid, social security, etc. When you add it all together we’re really at that much larger number. Just a little secret the liberal media doesn’t like to point out. Government is too huge and they like it that way. Why alarm the public with the real numbers.
http://en.wikipedia.org/wiki/United_States_public_debt
Lanzman says:
Fixing this wouldn’t really be hard. Don’t have to cut anything, actually. Simply hold spending flat for a few years (at least two presidential terms, probably) while also cleaning up and simplifying the tax code. Then leave it alone. Predictable, sane taxes plus zero spending growth equals balanced budget. It might take a while, but it would get there.
raz0r says:
And don’t forget that on the off-chance that some of these sell for a profit, a portion goes to groups like ACORN (unless that’s changed).
So who’s up for taking over my mortgage?
Don’t remember how many folks with more insight on how the gears turn, but most mention that a bailout wasn’t necessary. Most mention Lanzman what said. A few others mention suspending capital gains for a couple of years.
I like those ideas better, but alas, not to be.
Gunny G says:
WELL SAID!
It’s all about personal responsibility and government STAYING OUT of our business!
Lord Bitememan says:
I’m used to hearing people say they wish somebody would shoot some random Republican. What I’m not used to is when it’s from fellow Republicans, and it’s about Richard Shelby. I am having trouble believing that the Republican party would do anything so suicidal as to filibuster a lifeline to Big Three, but rest assured, if the Republican party does so and the Big Three go under the Republican party will never win an election in the industrial midwest again. I’ve got five words that should be striking fear in to all your hearts right now (except maybe Talmadge); Two Thirds Democratic National Majority. 2010 isn’t exactly looking great for the Republican party. Tanking the Big Three is likely to be the last straw before the Democrats capture a two thirds Congressional majority, and two thirds of the state houses. Forget about the filibuster, this would allow the Democrats to amend the Constitution at will. Let that sink in, then tell me how horrible a mere 14 billion would be for the auto industry.
Ron says:
There is an old saying “if you don”t stand for something you’ll fall for anything”. Making decisions based on abject fear is what contributed to this mess. I say don’t bail, let them fail. The courage and clear thinking of the ones left standing will rebuild things better than what they ever were. Republicans have to stand and fight this mass bailout histeria once and for all, lets face it the Republican’s fears of the Democrats taking over has been the Democrats best ally, and contributed greatly to the irrationl passages of throwing good money - if there is any left - after bad. Confidence in doing whats right wins. Trying to catch up by throwing up three pointers - for example bailouts - will lose everytime. If those responsible were prosecuted before “BAAAILLOOUT” became the dominating fear factor, the line of beggers would never have gotten around the corner, much less accross the country.
What’s next? Headline: PRAVDA morning addition 2/22/2009: President of Russia calls for American bailout of struggling Nuclear facilities. Don’t laugh, it ain’t funny. But when the boneheads who got us into this, now say they have the solution to the problem, anything is possible.
I keep hearing people say we are buying the mortgages no one else wants, some politicians are even saying the American people will get there money back. No one I talk to can calculate what my dividend off these bad mortgages might be, but if I could take a wild guess, I would say “ZERO”. Who is we anyway. When President elect Obama says “we” will have to sacrifice he means you and me, not he.
President Bush said Thursday 12/11/08 (paraphrasing)that the Auto Industry would have to take some cuts in pay and benefits before he would approve a bailout. A sound point no doubt, but when did Congress ever consider a cut in pay or benefits for themselves when the defecit was a swamp full of Alligators? So when you hear any politician say “we”, rest asuured he or she is not talking about they. They are talking about us.
The BoBo says:
Lord Biteman - see - and that’s where you got it wrong. The Republicans may actually start getting their seats back at the table if they continue as they did today and not support the bailouts. This is still a center-right country and the vast majority of this country don’t want the big 3 to be bailed out. This is the right step in the right direction in a very long time for them. But, that idiot of a President will screw things up if he decides to override the wish of the people and bail them out anyway.
Lord Bitememan says:
BoBo: Where are you seeing these pickups? It won’t be in Michigan, I can assure you of that. You’re looking at at least 4 House losses if the big 3 tank at the Republican whim. Where are you picking up the slack, Massachusetts? Or is this another “we can win elections by just winning the south” mentality? Look at what’s up in the 2010 map: Ohio, Pennsylvania, Missouri, Kentucky, New Hampshire. All of these are likely to be tight fights, all are north of the Mason-Dixon, and all are held by Republicans. You knock out the auto industry, say goodbye to Voinovich, Specter, and Bond. New Hampshire is going to be a tough fight out of the gates. This isn’t even delving into states where there were close races in 2004, like South Dakota and Florida. Don’t forget that Vitter, with his inveterate whoring, is up in 2010. Pile on to this the fact that Democrats have few vulnerabilities in 2010 and yeah, you’ve got a real recipe for disaster. So, where are you seeing these pickups being made?
Harry says:
Situation is bad, getting worse these days. The Fed dropped it’s prime rate next to ‘0′. World economy too far in debt. It’ll be a long time before it climbs out. I heard reports that things will hit bottom next year, and then begin a recover 2 years after that. But given the conditions, perhaps it’s longer than that. It’s grim news for job hunters, families where the breadwinner has lost his/her job. Can’t say where the light at the end of the tunnel begins, and what it’ll take to solve this mess.