A conservative news and views blog.

Location: St. Louis, Missouri, United States

Friday, October 07, 2011

Malaise and the Problem of Pain

Timothy Birdnow

As everyone is aware, the mortgage crisis is at the core of the entire economic malaise. Without the collapse of the mortgage market there would have been no economic collapse, and we would still be humming along at 4% unemployment. But - thanks to pie-in-the-sky rules emanating from Washington and overt attempts by Democrats to use the nation's mortgage system as their personal piggybank and to manipulate the economy to bring Democrats to power - we now reside in an era that is as bad as the Jimmy Carter depression and not all that much better that the Great Depression. Franklin Roosevelt was one of Barack Obama's heroes, after all, and he has followed the same recipe with the same results; a recession that just won't quit.

The cornerstone of Roosevelt's New Deal was active government intervention in economic matters, particularly where demand is concerned. Roosevelt and his Brain Freeze, er, Trust were devotees of that school of thought advocated by men like John Maynard Keynes that emphasized consumption/demand as the driver of economic growth. Get money into the hands of consumers and the rest would take care of itself, according to the Keynsians. This philosophy went well into the 1980's; I had a professor tell me in my college days "we now know that what must be done to stimulate economic growth is to prime the pump, spend money to get the markets back up". This was around 1984 or so - halfway through Ronald Reagan's tenure of office!

But there are huge problems with Demand Side economics; they take money from the productive and give to the nonproductive. There is probably some very minor stimulative effects, but there are far more stimulative effects if you let people just keep their money and spend it themselves. Remember, the government doesn't create any wealth; it merely redistributes it. Yes, it may force a miserly rich guy to spend (via taxes going to somebody else) but it also stops him from investing, and the beneficiary simply spends the money on necessities. It is the ultimate prevent defense, to use a sports analogy. An economy in disarray does not need a prevent defense but a strong offense.

That offense never comes from government. There is no interest in making people less dependent on government, because a dependent class will maintain the power of the ruling elites. The more indebted the People the more they must kowtow to a big, intrusive government. The trick is to maintain massive social welfare policies to keep the public from revolting but not to emancipate them. Keep them in line, hat in hand, and they will vote your way every time. The black community is a prime example; poor, broken, and 100% Democrat - even though the Democrats have never once made anything better for them. But they took the bait early, when liberals offered them AFDC, Food Stamps, SSI, and a myriad of other programs to help them temporarily. That temporary help goes back to before FDR. Now, like drug addiction, these programs cannot be lived without. The black family has been destroyed, man black people cannot imagine what they would do without extensive government intervention. Many are simply wards of the state.

Not to be picking on blacks; the poorer white community is no better, and even the affluent white community suckles at the teat of Aunt Samantha. Student aid, corporate welfare, rent control, ATM fee regulations, now Obamacare, all are white forms of welfare. Oh, and let us not forget mortgages. The mortgage collapse featured as many white as black defaulters, and these were people who would not have gotten mortgages without Fannie Mae and Freddie Mac, or who would have had more skin in the game. There would have been less willingness to just walk away.

There's the kicker. Even now, with the economy stuck in quicksand, the government continues with programs designed solely to aid the borrowers, the consumers, at the expense of the suppliers.

We should have learned our lesson, really we should have; you can't hurt the supply side of the equation and expect a robust economy. There are two parts of any economic transaction. Liberals have always focused on the buyer/consumer and spit upon the seller/provider because of their utopian visions and sense of "justice" which says that the seller/provider somehow stole what he has from the poor benighted consumer. It is the same line of reasoning followed by men like Karl Marx; the bourgeoisie are evil exploiters who must be punished and their wealth given to the consumers. They believe you can have an economy without anyone standing to benefit for providing services and goods. They simply refuse to accept that human nature - indeed, animal nature and even plant nature - is not simply altruistic. (Let's face it; if plants wanted to be eaten there wouldn't be any poisonous ones.) Everybody expects something for their trouble. Even those plants that are eaten benefit by spreading their seed. Economics are an absolute ironclad rule of this particular universe. Denying this, as do the liberals, is the equivalent of denying gravity. And, as with gravity, if you step off a cliff you will break your neck.

Which is why I find this particular story interesting; Massachussetts is planning to go after mortgage lenders in court.

Now, these lenders were doing what they had to do to survive; they were foreclosing on people who were not paying. But the Left, ever eager to tilt at windmills and to create a moral enemy, an "Enchanter" as Quixote called him, had to make the lenders the villains and so punish those very people who drive economic growth at a time when they need to be encouraged. Did some borrowers get a raw deal? Maybe, but then they have probably been in default for at least six months with zero repercussions. Just because the banker hasn't come does not mean you have a right to keep the property. Adverse possession - the right to take a property that does not belong to you - is generally seven years.

But this plays well with the kook base, and with the perpetual freeloaders in our society, and with the generally thoughtless who do not understand that, yes, you have to pay back your loans. Granted, there are good people losing their property, but unfortunately that is the way of the world. Again, this is an attempt to buck what is a natural law.

And I speak from personal experience; I own two houses, and the first house I could barely give away. I never intended to be in this position; I figured I would have no trouble selling. But the drop in home value has left me stuck with an aging structure in need of repairs, and I'm eventually going to lose my shirt on it. I had gotten a great deal on it years ago, but now it's worth so little that I will lose at least half of what I paid for it. Am I unhappy about this? You bet. But that is what happens. Life is chancy, and I drew the deuce.

Since Barack Hussein Obama (Peace Be Upon Him) exists solely based on the Don Quixote fantasy world, on a suspension of reality, it should come as no surprise that the current ruling junta has instituted numerous programs to thwart that harsh reality. And, equally unsurprisingly, that those programs are abject failures.

Recent Congressional inquiries into these programs yielded the following insights:

"Members of Congress challenged witnesses with questions about the effectiveness of several programs, including the Emergency Homeowners Loan Program (EHLP), the Neighborhood Stabilization Program (NSP), the Home Affordable Modification Program (HAMP), and the FHA Short Refi program.

Congress members pointed out that EHLP helped 12,000 homeowners after an original goal to help 30,000. HAMP has achieved loan modifications for about 800,000 homeowners, despite a goal to help about 4 million borrowers. FHA’s Short Refi program set an original goal to help 1.5 million homeowners and reached about 300.

Looking to witnesses from HUD, the Treasury Department, and a representative for the NSP, Rep. Judy Biggert (R-Illinois) asked, “Is there any program that has met its expectations?”

Neil M. Barofsky reiterated Biggert’s implication later in the hearing stating, “It’s not just for me to say they’re failing. These numbers are unambiguous; they’re failing.”

End excerpts.

Yes, despite all of the wishing and clicking of heels we are still in Kansas. Only a liberal would believe that;

"We get up at twelve and start to work at one Take an hour for lunch and then at two we're done Jolly good fun."

It is a dream job, certainly, but someone else has to work harder to make up the difference. The Left believes that the capitalists - who produce most of the wealth in this country - are the ones who should work harder. But there are many people not working much, or working not at all. You cannot continue to squeeze the producers to benefit the unproductive. Loan motifications are just that. Note these are not refinancing, but simply forgiving parts of the debt by changing the terms. The lenders offered money based on certain agreements. They now do not have that money to lend to someone else. As a result, they can't or won't make loans. Government's response has been to reduce interest rates even further, making it unprofitable to lend and making money even tighter.

Any parent should recognize that avoidance of all pain is not only not good but detrimental to a child. All discipline is based on pain - generally emotional - and it ultimately serves the child's interest. A child who is NOT disciplined often has a bad end - prison or death. Pain simply cannot be taken out of life. Liberals are all about avoidance of pain, and cause much more in the process.

But then so many of them were coddled as children.

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