Thinking about the lastest Wall Street hysteria

I’ll be blunt: I’m not at all impressed with the way either candidate is handling the news from Wall Street. They are both championing they will solve this “crisis.” By now you know I don’t think the “crisis” is needing to be solved. Markets change – and that’s about the only constant. Intervention stands in the way of market forces.

What I’ve noticed is that no one is blaming George Bush, and that makes me a little suspicious that this isn’t really much more than opportunistic posturing by either candidate. Think about it. Everything from gas prices to Russian aggression has been blamed on Bush if you’re a Democrat (the Democratically controlled Congress if your a Republican), but not this drop in Wall Street value. I suspect it’s because we’re all to blame, and we know it.

America, when something sounds too good to be true – like $300,000 housing loans without proving your income – it usually is. The latest “crisis” is not so new at all. Wall Street is simply dropping the other shoe on the housing bubble. We ran up housing prices and therefore the value of housing loans without letting common sense stand in our way at all. Now everyone is bellyaching because it all fell apart. A girlfriend and I walked through developing Brookfield neighborhoods ten years ago and knew it would come to a painful end. Why didn’t anyone else? Fortunately, we both manage our family incomes in a way that protects us from this kind of fallout. Neither of us are very sympathetic to the impacts being felt by some now.

A $300,000 loan is not a right, no matter how much my government wants to champion the benefits of home ownership. Whole cities thrive without ownership being an issue. It’s greed, pure and simple, that created this problem. Find a mirror, though, if you want to point a finger. We let it happen under the false promise that consuming makes us happier.

As I said a couple of days ago, I will wait and see. I sure wish our presidential candidates had the common sense to do the same.

By the way, I fully expect the current credit crunch to hit Brookfield’s Mayor Jeff Speaker pretty hard as he tries to find money for the improvements demanded by Milwaukee’s housing department on his little investment property he manages from his corner office. I suspect the investment isn’t even worth his loan balance now, even though he bought the property in foreclosure. It will be interesting to see if the building drags his personal financial situation under. Elected officials certainly are not immune to personal financial crisis.

Comments

  1. Let the irresponsible go under. That’s how the market system needs to work. Increasing the money supply for bailouts causing further inflation and devaluing of the dollar is insidious and disastrous. I feel sorry for the peon employees of the firms that get crushed but those at the top should face lose of their assets and jail time.

  2. Hard to feel sorry for Speaker. Brookfield and Elmbrook is putting an ever increasing tax and fee burden on working families.

  3. @Leapin’. The irresponsible are busy bailing with their golden parachutes.

    My wife and I knew better than to sign up for an ARM. We didn’t dabble in derivatives. The Phil Gramm-led charge to deregulation laid the groundwork for this debacle and Bush money policy formed the foundation.

    That sound you hear is the beating wings of the chickens coming home to roost on VooDoo Economics. It was a dismal failure under Reagan. It’s a dismal failure under Bush the Younger. It will be tragedy under McCain.

    Don’t tell me that it’s hard to know who to blame. Some of us have been predicting this for a long time.

  4. Oh, I am loving this one… Check out this article.

    http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=print

    “The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac — which together have issued more than $1.5 trillion in outstanding debt — is broken”

    The proposal went nowhere, voted down by the Democrats in Congress. Now, here was real ‘change’ proposed by Bush back in 2003, funny how they want it now.