It’s About Making Babies!

Frank W. James writes Corn, Beans, Spent Brass, An Empty Page, and a Deadline. He summarizes the CRA/Jimmy Carter/Bill Clinton path to the bad loans crisis (he overlooked some of the reports that Freddie Mac and Fannie Mae funds trickled into a few Democratic Presidential hopeful pockets).

Sharon Astyk writes Casaubon’s Book, possibly the most contrary perspective from conservative, gun rights advocate, agribusiness farmer Frank W. James. Sharon’s premise is that the crisis today has been coming, and is part of the slide into an era of expensive energy - Peak Oil. Peak Oil predicts that by 2012, world demand will be consuming more oil than can be produced - the end of cheap energy, probably a dramatic shortfall of needed oil from what can be available. By 2012, many families will be unable to pay the utility bill, and will be living ‘off the grid’.

Sharon’s take is that economies grow as subsistence workers, farmers and others, begin working the entry level factory work force. Only now, rising cost of oil is raising food prices, and the entry level workers that had been driving economic growth are now starving, and what wages they earn go solely to food, instead of fueling the local economy. And the shrinkage is rising to the top.

It seems both summaries explain a lot. Does Sharon’s view of global food prices vs. rising oil prices happen to support her explanation, or is her explanation what it is, *because* of her premise? I don’t think it matters, both explanations are very worthwhile to consider.

But Frank may have started a bit late in his timeline. I recall President Lyndon B. Johnson announcing his ‘war on poverty’. And I think the CRA that Jimmy Carter signed was a followup to the Democrat’s favored child, the war on poverty. I also recall, during that era, when NASA funds were threatened, that an engineer showed how many people you could feed with $1,000,000 spend on NASA - with no tangible product, you fed a bunch of families - who spend their money and kept businesses going, feeding those workers and retailers, etc. $1,000,000 spend on welfare fed fewer people, the cost of getting that money to the people ate up a bunch of the money, and the low income of the recipients meant the money was spent on food and shelter, with very little contributed to either the economy or tax revenue. Since that time I have always know the need to care for those in need, but that government programs are disabling to the recipients, and a poor value for the nation.

But do check out these well thought out summaries.

I am confused.

First, the ‘bail out’ isn’t about mortgages and foreclosures - it is mostly about how much money the really wealthy will lose.

I thought Obama was supposed to be one of those ‘hate the rich, tax their greedy profits, sell votes - um - give the money to the poor’ guys wanting to ‘redistribute the wealth’. I though Hilary and Barack and their ilk believed that buying votes from, um, helping the poor was more ‘fair’.

But now we *have to* save the money the rich few are in danger of losing - that invested in the funds and the companies that made so very many bad loans.

And we do have to save the mortgage companies, because we need to not disrupt the millions of mortgaged homeowners. This debacle could easily destroy the US economy - could lead to deaths by stress, by starvation, by exposure. Could deplete community resources, cause collapse of businesses - loss of jobs - the end of modern medicine as insurance and government revenue streams go away. As least, this will take down all but some of the very rich, who will be most likely to weather the storm with diminished funds and assets.

But isn’t that the point, to deprive the rich people of all that ill-gotten, unfair money?

Oops! I forgot - the point was *never* about whether wealthy people had money - Obama, Clinton, et al were always concerned that they couldn’t *spend* that money to buy votes from, er, help the deserving poor. Voters, that is, newly grateful for the Democratic assistance that locks them into a lifestyle of poverty in order to keep the shackles of assistance intact.

And the reality is that we *do* have to preserve the wealth of the wealthy. Because that is where the money comes to build stores, to create jobs. Wealthy people, especially those that live ostentatious lives, that invest to make more money - they are the ones creating livelihoods for echelons of people about them, about the businesses and craftsmen that supply the ostentatious goods and services, the people that these craftsmen frequent, that provide housing, and transportation, and accounting, etc. Etc. Etc. (apologies to Rogers & Hammerstein).

And that is the blind spot of ‘tax the rich’ schemes. The rich need to be rich - the wealthy, as much as the craftsman, is the wealth of the United States. Anything that reduces ‘wealth’ - more assets than are required to survive - depletes the ability to grow.

The currently proposed bailout plan - a Democratic proposal, no wonder the Democratic congress threatens to ambush the thing if Bush and McCain don’t sing it’s praises - is about buying votes, not preserving wealth. Not a bail-out, but discipline, can ’solve’ the problems.

One thing I don’t understand. If I am late on a credit card bill, they raise the interest rate. In fact, when I lost my job, Chase Bank raised my interest rate.

Why are we agonizing over bad mortgages? Why not punish with fines and public service those still engaged in sweet-talking loans to borderline buyers? Why not take those ‘guaranteed’ loans and bump the mortgage rate to current market rates? Those that can make the payments get to keep trying. Those that can’t - let them, as Sharon Astyk recommended - let them adopt their home for $150 outright (or $10 or $500) and put a lien on the home for market value, to be resolved by the homeowner or at sale of the home, or let the lien expire in ten years of occupancy. Once. And jail the hell out of anyone making ‘bad’ mortgages in the future.

Dissolving the mortgages stops rewarding the bozos that counted on federal money to make up their losses - losses that they schemed to produce. Dissolving bad mortgages avoids the costs of foreclosure, avoids the current problem of angry residents trashing the building and destroying it’s value.

The scary plan

The current bailout would allow anything - anything at all - that the Secretary of the Treasury wants to do. No review, no regulations, nothing. One for instance: Recall Bradbury’s Farhenheit 451? That house had been shielded against fire - but books had been banned, so fire departments were used to soak everything and torch houses and buildings where books were found. The Secretary of the Treasury could begin torching late or foreclosed mortgaged property. Or claim foreclosed property for Section 8 housing. Or for Affirmative Action against racial bias, or to reward campaign contributors (probably the most likely).

And still the country’s economy would falter, and fail most Americans. Because, like Barack Obama’s ‘Tax The Rich’ mantra, it would destroy the fuel of the economy - the wealth of the wealthy few.