The numbers of those reported to benefit from this wonderful program, is about as accurate as Bernanke and Greenspan’s statements that housing is not capable of dragging down the economy. While few will actually be helped, it’s a nice gesture to save even some of those who were purposely thrown under the bus by those who purposely threw them under the bus.
The housing crash was as predictable as December snow in the Rockies. The government remains thankful that American’s recollection of history is somewhere around two weeks ago. Otherwise, it would be evident to all of those not presently in a comma, that government wrote, produced, and directed this stage play.
But, not to worry, the spin is in. It’s not the governments fault, it’s the mortgage companies (but nor Fannie Mae or Freddie Mac because they are quasi government backed), the speculators, the banks, the homebuilders, the developers, the buyers and a host of other seedy suspect characters.
Let’s take a very short stroll down history lane, shall we? After the dot-com or tech bubble burst in 2000, the U.S. economy was listing heavily to the starboard side. Along came 9-11-01 and rolled it over on its back.
My opinion? We had been living in a make believe economy and should have voluntarily climbed in the barber chair, took our haircut and set out with a brand new, but nearly unthinkable concept; we would face reality.
As it turns out, reality is far too ugly to face for most politicians. It makes them sick just thinking about the possibilities of gainful employment. That is reality you know?
But then we don’t live in reality we live in America and drastic times call for drastic measures. (The possibility of not being re-elected is the drastic event that I refer to).
The good Dr. Greenspan was called in to administer the medication. The prescription called for slashing interest rates like department store prices on Black Friday. The patient was overdosing and would die from the treatment program, but hopefully not until after November of 2008.
By June of 2003, the FED had cut the lending rate to 1%, a number not seen since 1958. The results? Not much; with the exception that inflation was up and running like a Cheetah on steroids.
As the limbo man says, “How low can you go.” At 1%, not much lower. But then there is residential housing; why not?
I can give you about 1000 reasons why not, the first being that it is unsustainable. The second being that an inordinate percentage of ones gross income going to a house payment creates a few voids in other sectors. Ah, but that was also covered, “For everything else, there’s Master Card.”
After all, with real inflation running higher than a cat’s back, wages will soon follow and life will be “all better.” Not.
Ya see, that’s the part of the equation that didn’t work. That’s the part that isn’t reported (along with the fact that government created the monster). It’s supposed to be impossible in economics for prices to rise, inflation to rise, and wages to remain stagnant. After all, a rising tide raises all boats. Not this time, this time we had China. Uh-oh.
This economic thing that is supposed to be impossible is called Stagflation. It’s also called devaluation of the dollar. If you don’t believe its possible, ask Jimmy Carter.
So here we are, all dressed up for the parade and the election remains some 10 months away. Housing not only failed in the 3rd quarter, it seems to have drained all the expendable income out of our economy; for 30 long years of mortgage payments.
As my old dad used to say, “A fast horse don’t run long.” At least not long enough to dash in for a win on election day.
So is there one more skinny old rabbit in this Administrations magic hat? You can bet your last stagflated dollar on it.
