What About the Exit Strategy?

If Congress and the President put together some new government unit to buy up some number of Mortgage Backed Securities, when will that unit get out of the MBS business? Or will they continue buying up bad paper, in perpetuity, becoming the modern equivalent of the Tennessee Valley Authority?

I don't like this bailout plan at all. I think a bonfire is exactly what is needed to clean the dead wood out of the financial market forest. I won't shed a tear for people who go down in flames.

Do not buy the argument that these MBS will be a good investment for the government. The bad paper in question is a collection of collections of loans made on property that was never worth what people thought it was worth, to people who only had equity if the value of the overly inflated property got even more inflated that it already was. Both the people who made the loans and the people who got them now recognize their mistake. Now the government is going to make the same mistake they made, with full benefit of hindsight.

Both lenders and borrowers have been trying to get out of these loans. This deal gets the loan makers out of their end of the bargain. What about the loan takers?

They'll still be stuck in houses they can't afford. Pardon me if I don't cry for them, either.

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No Bailouts. None!

We've been presented with a choice: either we allow the Federal Government to borrow $700,000,000,000.00 to buy some bad investments from people who should have known better, or our economy will fail.

I say: it fails either way.

Either it fails in the obvious way, with businesses closing and lots of pain, or our system is shown to be a failed design, unable to carry on without socialist action.

But it was socialism which got us into the mess we're in, not capitalism.

Eric at Classical Values quotes Ace and delivers his own analysis:

The problem is the relentless push for socialism (a word few will use), which has done enormous damage to the economy by the simple misuse of a two word phrase:

"Disparate impact."

This is the legal doctrine behind much of the abandonment of standards in the name of "fair lending," but it is not limited to banking. It has come to permeate almost every aspect of business culture ....

It's gone too far already. This fear we have of racism and being called racist is driving our economy into the ground, and may even cause us to elect a man purely on the color of his skin, when the content of his character is, to the extent we can see it, odious beyond measure.

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Voting For Economic Self-Interest

Benjamin Franklin said"When the people find they can vote themselves money,
that will herald the end of the republic."

Commentators are astonished that middle-class conservatives seem to vote against their economic self-interest by voting for Republicans. Let's break it down.

First, we believe that, as the cliche goes, a rising tide lifts all boats. The economy is not, as Marxists believe, a zero-sum game, in which some get rich only when others get poor. More often, either everyone prospers or no one does.

Suppose two people acquire wealth at different rates, one becoming only a little better off while another becomes filthy rich. The social justice crowd would have us believe that the people who are only a little better off are actually worse off, because their envy blinds them to reality. The gap has widened, which they take as conclusive evidence of injustice.

If you have no car, and someone sells you his clunker at a bargain price, you are happy. Then, when the former owner of your clunker drives up in a Certified Pre-owned Lexus, you're envious: you have a clunker, and he has a Certified Pre-owned Lexus. When is your car going to break down? Yet before you had to walk to work in the snow and rain, and now you can drive. You're not driving a Certified Pre-Owned Lexus, but you're not driving Certified Pre-Owned Nikes, either. You're better off, not worse off, and the circumstances of that other fellow are irrelevant except to your own envy.

And thus is it in general.

But back to voting: a person's vote indicates his mindset: is he voting for what's best for him, or is she voting for what's best for her country? To the extent that a single vote matters, a person ought to cast it in favor of something larger than his own petty interests, if that is defined as what the government is going to give him.

We have public schools. They should be teaching that Franklin quote, and from it the principle it conveys, which is as old as democracy. Perhaps then the people would know that their vote is an important choice between the health of the Republic the satisfaction of their own envy.

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Islamabad Marriott Owner: "I am not scared."

When terrorists bombed the Marriott Hotel in Islamabad, Pakistan, they probably thought they were striking a blow for Islam or some such crap. What they actually did was to alienate their customer base.

The idiot terrorists are going to turn the rest of Pakistan against their cause. What little sympathy they had will evaporate.

Pakistan is angry.

I am not scared. I have seen death very closely, this doesn't bother me. If I had been here I would have run after the bombers and caught them.

-- Sadruddin Hashwani, owner of bombed Marriott in Islamabad, Pakistan

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A Dark Fortnight for Moneychangers

To save the financial system, the government took it over.

Ironically, the financial crisis was caused by the government. Banks were forced (by liberal banking regulations) to sell mortgages to people who could not pay their bills. Oddly enough, many of those loans resulted in foreclosure.

The argument for forcing the banks to provide the loans is simple: get more people in houses, since homeowners are more stable economically. And it's politically popular to encourage home ownership, a symbol of success in America.

The first trouble with that is the usual liberal sloppy logic: just because owners of homes are more responsible and successful economically doesn't mean that making someone a homeowner will make them more responsible or successful. The part that makes a person responsible is having skin in the game: if you work hard to get something, you're more likely to work hard to keep it. Working hard means, among other things, living within your means. People who save for a down payment have shown they have what it takes to continue that lifestyle.

The second, and equally big trouble with forcing banks to make unsafe loans is that it artificially increases housing values, both for houses and for apartments. It's simple economics: more buyers means higher prices. In seeking to make loans easily available to marginal buyers, Congressional liberals ensured that everyone would be paying more for housing.

Loan availability should be based on the ability to repay, not simply on possession of a heartbeat.

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It Can't Happen Here

The seven years with no successful terrorist attacks on U.S. soil are giving us that old feeling that we're safe from attack.

We're not.

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McCain Lead Mystifies HuffPo Blogger

Writing at the Huffington Post, Adam McCay is perplexed at why the addition of Sarah Palin has given John McCain such a huge polling bump.

I was going to go through all of the points he makes and deal with them individually, but I decided to do a shorter me: if your logic is valid and leads to a false conclusion, then at least one of your premises is incorrect.

The details are left as an exercise for the reader.

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