Wednesday, February 27, 2008

Proof George W. Bush is brilliant: Will Veto Foreclosure Bill

History will no doubt judge George Bush as one of the worst Presidents that the United State of America has ever had. No other comes close. Not James Buchanan. Not Andrew Johnson. Not Calvin Coolidge. Not Herbert Hoover. Not Jimmy Carter. Bush has shut them all out in head-to-head competition for presiding over the most incompetent international and domestic policies the "Divided" States of America and the world may have ever seen.

But that fact DOES NOT MEAN that even the worst President ever cannot demonstrate certain moments of brilliance.

Today, the George W. Bush Administration warns that it will veto the Foreclosure Bill!

To utilize a phrase right out of Bush's favorite and only night time reading:


This foreclosure bill, supported by Democratic Congress leaders Pelosi and Reid, "would change American bankruptcy laws to allow judges to cut interest rates and reduce what's owed on troubled borrowers' mortgages, provide $4 billion to communities to purchase and rehabilitate foreclosed homes, and improve disclosure of subprime mortgage loans in hopes that borrowers won't be surprised by big payment increases".

If you think this kind of legislation is insane, you are right. It's freaking ridiculously insane beyond measure! What kind of idiocy show are Democrats running here?

Let me see, is there anything more that elected leaders can do to completely undermine the principles of contracts, laissez-faire capitalism and, dare I say, the American Way? No, I don't think it is any more possible.

Bush may not realize it, but he's abso-freaking-lutely brilliant for sticking to his guns and listening to those in the industry with a shred of common sense and some basic ECON 110 knowledge.

By passing such legislative measures, the Congress is prolonging a much needed correction in the housing market and inadvertantly rewarding those who do not fulfill their obligations under contract (mortgage contracts), not to mention poignantly punishing millions of taxpaying Americans (they are consitituents too!) who did not gamble, who did not spend beyond their means, who did not speculate, who used financial common sense and stuck to their sane household budgets. It does not interest me, as an American taxpayer, that certain individuals do not read the fine print of contracts, cannot perform basic math calculations, nor have an attorney review the mortgage contract to gain a better understanding prior to signature. In my view, a combination of greed, irrational exhuberance and financial ineptitude placed Americans in the position of foreclosure. The banks, realtors and mortgage lenders are not innocent, but homedebtors should not get a free pass for having, how should I put this, a complete lack of financial common sense.

No one is entitled to a market of rising home values. No one. These homedebtors should have signed a traditional 30 year fixed rate mortgage in the first place. Can't afford the monthly payments? Well, then rent until the housing market adjusts and cools, until the greedy, "if-it's-gonna-be, it's-gotta-be-me" idiots get shaken out of their $650,000 treehouses.

The U.S. Congress (led by Harry Reid and Nancy Pelosi) has lost the plot . George Bush is actually doing something right here for a change.

God help us all and Barack Obama when he gets sworn in. May he somehow obtain a similar inkling of common sense and sufficient forebearance too with respect the national American housing crash and massive correction that is now underway. It cannot be stopped. One way or another, the market will find it's equilibrium. This correction simply must be allowed to run it's course, no matter how painful and devastating that might be to some. All will be affected. Even renters who pay income taxes. Families, children, school districts, men, women, rich and poor, black, white, it does not matter. All will be impacted.

The markets are desperate for finding that bottom and to know that it is solid.

Laissez-faire. Let it be.


Anonymous said...

And the counterpoint is Dean Baker's article, here:

In it he points out that *existing* contracts were changed in the bank's favor by the 2005 bankruptcy reform act.

As he says, it's in whose favor things are decided whether it's considered laissez-faire or government intervention :)

Anonymous said...

I almost entirely agree with your observations. We have created a society where people feel that if something bad happens to them (usually as a result of their own actions) that "someone" (the government) should bail them out. No one seems to be paying any attention to those of us who came from modest backgrounds, worked hard, got an education, made investments that required not buying the latest gadgets, second homes, sending kids to private school, and so on--those of us who are constantly being asked to financially bail out one group or another (until the next one comes along).

I am not sure that Obama offers much substantive help. The "dream" will evaporate as soon as he and his followers realize that being President does not mean that you can simply make things happen. And if the societal underdogs are thinking that what he offers them is "40 acres and a mule" (no racism intended), they are asleep at the switch. You get those things by working for them and not by constantly waving the entitlement flag. (Whew)

Anonymous said...

the only major exception to cramdown is resitential mortgages. Major holders of billions of dollars commercial real estate have done commercial mortgage cramdowns during resturcturings and BK for years. The mortgage industry created this unique excepetion for their sole benefit - diadvantaging homeowners vs every other troubled borrower . Waht is so "free market" about that?

cramdowns should stabilize the markets and the neghborhsoods within markets, because you will have more work outs and fewer foreclosurses. That's why they can make sense for businsses and their lenders - orderly workouts preserve more value and stabilize markets during panics. Value loss gets spread over time - rather the piling on all a t once

you benefits becasue you dont wnat to buy into a foreclsure ghetto