Watching from the sidelines this meltdown, this monument to bureaucracy, this wolf in sheep’s clothing and, perhaps vice-versa, is disheartening. I don’t know whether I’m for or against what is referred to as “the bailout.” I’m convinced most people don’t know either.
It’s a short term fix for a long term problem, that’s true. But, it may just firm up credit markets and allow people a chance to make some investment decisions that would ultimately bring the markets back up. Tomorrow is a new day. But how many of you reading this actually know what is happening?
Both of my brothers are smart guys. They are against the “bailout” which, again, isn’t really a bailout. Their reasons are sound and they make a lot of sense. The short version is this: The markets that were created by lending everybody and his brother money to buy a house were artificial and therefore not valid. That has proved true. Whatever your opinion, the simple fact is that there was a push around 1999 to allow everyone in the U.S. the opportunity to buy a house. Now that wasn’t the Republicans pushing that, but face it—many of them signed on to it and agreed with it.
But Hugh Hewitt, Michael Medved--they’re for it. They’re smart guys, too. Steve Forbes is for it. He’s a smart guy. The old left-right continuum is giving way. Rush Limbaugh is against it. So are many Democrats–so are a majority of the American people.
The result is, the housing market went through its very normal curve where prices go down–but when they went down this time, people who’d purchased a home since around 2003 had no money. Interest rates changed, prices went through the floor and there was nothing left. What next? Well–the mortgages were priced into securities and sold and that paper was no longer good because a lot of “average Americans” making 60-80K a year were purchasing half million dollar homes and higher. Well, do the math, OK?
So….the piper came calling and now, we’re all in the crapper. So–what’s left, eh? I hate to be a downer, but if only to read this 20 years from now and point it out: I’m no economist, I don’t get the entire perspective of what’s going to happen economically. I really don’t. I think depression is possible. I also think it’s possible that we’ll turn it around in the next couple of years and the ingenuity of the American people will pick us back up. I don’t know.
I am, though, a student of history. While I make no expert claims and and swear to no absolute outcomes, I do know this: History records that in times of economic uncertainty, the world goes through radical, uncomfortable and frightening change. This is the way it is. It’s why I lose patience with my conservative bretheren on their condemnation of FDR. Yes, the depression of the 30’s did result in more govt. interference that may have done some harm–it doesn’t matter, that’s missing the point. The point is that no matter what FDR did domestically, it would not have stopped Adolf Hitler. Time was on Hitler’s side. If FDR had left the economy to recover itself, Hitler would still have been on the march. Maybe our economic engine would have been stronger–but even Amity Shlaes admits that it wouldn’t have righted itself by 1939.
My point, gentles, is this. If our do-nothing Congress and our spoiled population do nothing at all to right this situation and the world slips into a recession or even a depression, money will be the last of our problems. Tyrants, terrorists and tactics will be our bane–and it will probably end any kind of depression, provided that we are able to move our forces in a timely manner.
Recession, depression–economic uncertainty…mean one thing: War. And that’s what history teaches us. I hope I’m wrong.