The last 4 economic/housing "fixes" under Bush ($1.7 tril) and the current one under Obama (0.8 tril +/-) all have made me cringe (best word I could come up with since I used the bile/urp image in my last blog, and I don't want to wear it out--you need to keep a good metaphor in reserve for when you really REALLY REALLLLY!!! need it so people don't think you are an alarmist...yes, I'm making fun of the "fixes" even in this parenthetical remark).
So, I have been asked confrontationally, "Mr. SmartyPants, what would you do?" Having no training in economics whatsoever (like most of those spending our tax money), I feel eminently qualified to opine on this. So here it is:
1. I wouldn't "fix" anything by throwing money at it. The current problem is the result of a total concert of greed and corruption by a major part of our fellow countrymen. The best "fix" for addicts is to let them experience the consequences of their behavior, and make amends as they work into the character and fabric of their lives what they learn from their moral failings.
2. The government should set an example of fiscal discipline rather than further speculation. The goal should be to immediately cut spending beneath revenue income, so that the surplus can be used to pay down the debt. This is exactly what most of citizens need to do with their mortgages (and other debts): cut expenses and pay down their principal so they are not "owned" by a house that is worth less than the mortgage.
3. This may be the only way to cure the White Collar Welfare Class we have created with the last 4, almost 5, "economic cures." Oh so many moneyed people waiting "in line" to get their housing fix...while the former "welfare class" (of the rhetoric, anyway) finally gets to buy some housing they can afford--a real upside in this iceberg stricken Titanic of an economy.
What would happen as a result of my "fix"? (1) The stock market would rise and fall continually like it always does. If it happened to rise on the day I announced my fix, I would claim, "Stock Market Rebounds on Dodd 12 Step Program for Addicted America." If it fell, then I would claim that it had no relation to my fix. :-) (2) We will persist in a muddle-through recession and recovery (and, as every "fix" has acknowledged, things will get worse before they get better). (3) Housing prices will stabilize once two things are absorbed: (a) existing and coming foreclosures; (b) the 3.5 million homes builders overbuilt between 2002 and 2007. (4) Perhaps--hope always springs eternal for me with this--just perhaps, we would wake up from our mammon-driven stupor and come to our collective senses. Or, at least, maybe many in our land would start looking Up for solutions instead of all around.
"Manifest Destiny," the land-grab doctrine that drove out the Native Americans and rationalized the Western push is written deep into American DNA. Like alcoholics, you could almost say we are genetically predisposed to the greedy-gonna-get-me-mine-no-matter-what-it-costs-someone-else. Until we "take the cure" for this, there is no fix for the mess we are in. We gotta start thinking about someone else for a change. (Yes, I'm entirely aware that this kind of talk could get me voted off the island).
"A wise man builds his house on the Rock," not on the sea of shifting sands of economic uncertainty.