Hernando Today
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Let The Blame Games Begin
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Published: October 5, 2008
Much of the financial mess we are in, whether perceived or real, could have been avoided if the Clinton Administration and Massachusetts Congressman Barney Frank hadn't leaned on our banks a decade ago to make more easy money available so we could all fulfill the American dream and buy our own homes.
Nice thought, but maybe a bit too idealistic. Call it social engineering gone sour. Too many people bought too much house at a higher mortgage rate than they could ever afford. As a result, we have seen more foreclosures than our private banking system could keep pace with.
We're overlooking the fact that not everyone is capable of assuming a homeowner's responsibilities. The lesson drawn from civilized as well as socialized European countries is that home ownership is far less of a priority.
Some U.S. borrowers may have also inflated the size of their annual income to smooth the way to bigger loans. American lenders have been overanxious to seal shaky deals they should never have considered in the first place. Both parties were not only in a hurry to sign on the bottom line, but extra greedy, too. Human nature, I suppose.
If one house on a block forecloses, it drags down the value of all neighboring properties. That, in turn, means less local tax revenue and fewer funds for all kinds of public spending, from schools to potholes. And fewer jobs.
Once their vaults were drained, the banks turned to the feds to bail them out of a theoretically impossible situation. Impossible? There's still food on the table at most houses.
Bush's Republican Administration should actually hang its collective head in shame for even suggesting a federal financial rescue. Fed-sponsored solutions smack of socialism, which we learned back in high school civics class was a no-no reserved for those poor souls behind the Iron Curtain.
I took for granted that Bush was a pillar of totally-unregulated free-market capitalism. Turns out we can't handle "anything goes" capitalism, so Bush was forced to call in the government to clean up crumbling markets. That's socialism.
A true capitalist's approach would have been to let the market sort itself out. But government got us into this mess, so I guess, begrudgingly, that government should get us out of it, too. There's some precedent, at least theoretically. Even the late Sen. Robert Taft, the Barry Goldwater of the 1940s, argued for some regulation of our free capital markets.
Bush probably overdid it at first. He sought a $700 billion rescue package within a week, or we'd see the end of the world. Here we are; the world is still standing. No Doomsday, no matter how hard we may try to foul things up.
Neither side of the Congressional aisle was eager to give any lame-duck Bushies a blank check. Much of the early bailout talk focused on "oversight." That's pure grandstanding. Congress itself is the biggest oversight agency we have. Do we really need still another bureaucracy?
One thing we don't need more of is partisan politics when we're trying to resolve what the mainstream media termed "financial chaos." House Republicans blamed part of the early bailout hiccup on loose-lipped Speaker Nancy Pelosi, a Democrat from California.
I don't know whether Pelosi was on something or just another flakey California Valley Girl, but she allegedly turned off potential Republican backers in a House speech fingering the Bushies for creating the financial panic. Too convenient an excuse, perhaps, but credible enough. Dysfunctional Congress' approval rating of just 9 percent, after all, is even lower than the president's.
One Republican big-wig saw right through Pelosi, commenting disdainfully that "she doesn't know the difference between a punch bowl and a toilet bowl."
Voters weren't buying into bailout plans for any, what they termed, private enterprise's "fat cats." Congressional phone lines were jammed by protesters for several days last week.
The day of the initial bailout veto, 3,500 balky Hernando County constituents phoned or e-mailed their ire to our congressional representative, Ginny Brown-Waite. Only 35 of them (just 1 percent) supported the idea of "business as usual in Washington," as Rep. Brown-Waite bluntly summed up the proposed bailout.
The big questions, as of today, are: What do we do now; will any kind of rescue attempt work; and what will it really cost the taxpayer?
Both parties have pushed for at least a doubling the size of federally-insured bank accounts. But even that solution has its price. If you double your insurance, your premiums (taxes) are sure to increase.
A regular columnist for Hernando Today, John Herbert lives in Spring Hill.
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