Obama's Gonna Fix It!

Statement

Yay, the subprime mortgage crisis is officially over! See here, it's in the Financial Times!

Looks like Obama has as much experience in economics as he does in foreign policy. Regardless of his experience, though, he's following the "bubble script" perfectly. We've identified a scapegoat and figured out a way to bailout (at least symbolically) those affected. Now all that remains are a few criminal prosecutions and a wave of legislation and regulations to eliminate home ownership through private financing. That's definitely something the government should do — it's about time we went back to our roots and started to view home ownership as a right. Not just with taxpayer-guaranteed mortgages by Mac and Mae, but just imagine a Department of Housing and Urban Development that actually provides housing!

In all fairness, though, Obama is halfway right. Here's a quote: "Washington needs to stop acting like an industry advocate and start acting like a public advocate". It's clear that corporate and special interests own our government. But what Obama doesn't realize is that the root cause for this subprime mess is actually the easy money made easier by our own government and Federal Reserve.

Finally, I do understand his frustration. I once dealt with a particularly dangerous mortgage broker (from a major bank, no less) who was routinely counseling folks to take more equity out of their homes so they could "put it to work". I should have questioned his logic to his face, but was too polite at the time. Why would you recommend that people take more money out of their homes? It's not like they're coming to you, Mr. Mortgage Broker, with a rational plan to use the funds as investment capital.

Oh, but I forgot. He's compensated based upon how much business he does. And his interest in the client is purely short-term. I haven't checked, but hopefully that guy has found a job where his short-term, instant-gratification mindset is better rewarded.

When an economic and monetary system rewards such self-destructive behavior, it's time to question the foundation of the system.

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