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The President signed the New Housing Plan this morning in the oval office, which should bring relief to the ailing housing market in the US. Though I do not agree with some parts of the bill, neither did the President but he was forced to sign the bill.
After reading comments and posting a long comment on cleveland.com this evening, it amazes me that everybody wants to put all of the blame on the President, which leads me to my blog this evening.
As I stated the President signed the housing bill this morning surrounded by his Treasury Secretary Henry Paulson and a few other high ranking treasury officials. The President did not like aspects of the bill (namely the $3.9 billion that will go to 'neighborhood grants') but he had to sign it.
Why did he have to sign it, you ask?
Let us make a few simple precursory facts:
-Congress Makes Laws (Legislative Branch)
-The President Enforces Laws (Executive Branch)
-The Supreme Court Interprets Laws (Judicial Branch)
These basic principles seem to elude us as citizens of this country, perhaps because we learn it so young. I remember learning it in 1st grade with the ever popular "I'm Just a Bill" Schoolhouse Rocks in Mrs. Black's class (which I recently purchased again and watched). In any event, I digress.
The 110th Congress (our current congress) made the housing law. This congress, which switches every two years in the house and 6 in the senate, has been run by the democrats since 2006. The term that is frequently used is that the democrats are in the majority while the republicans are in the minority of Congress.
So Congress passed the law and sent it up to the President who did not like some of the parts, so put yourself in the President's shoes. He can either veto the bill and the congress can override his veto (with a 2/3 vote, I sound like a social studies tacher) or he can just sign it and be done with it. I mean at this point, either way he is going to look bad.
If he doesn't sign it the media will say he is a stubborn 'lame duck' President who does not want to help the people. If he does sign it, he is pro-corporation 'scratching the back's of the rich' so he can get a good consulting position after his presidency.
The good thing he did by signing the bill is that he did not play the political game with Congress because we, the American People, need relief in the housing sector to help our stumbling economy. He saved a few days (though he still looks bad...of course) by just signing the bill.
In any event, moving along to the bill. Though it is an imperfect bill it will help people get out of this mess of foreclosures. The underlying problem, as I told Jack Gladden today, is that banks need to be more prudent in making loans. The bottom line is we are bailing out banks who made stupid loans that they should never have made.
That is the whole problem.
Yea, it gets complicated when you hear terms like 'GSE' or Freddie and Fannie and this and that and the other thing. Keep in mind, the basic fact is that banks made loans they should not have... (or people signed off on loans they shouldn't have). Either way you look at it, it was wrong.
Mix that with the fact that the Chinese pegged their foreign exchange rate on the dollar which led to below market rate value of the dollar and low interest rates here and we have a mess.
(Keep in mind I have not even touched on gas and energy prices).
In any event, if anybody thinks that a new President can come in and instantly our problems are gone, they are crazy. In fact, I would argue it is not a good idea to have one party in control of both sides of Pennsylvania Avenue (Congress and the White House).
Our most prominent years in the 1990s with the ever popular Clinton Admnistration (Between the Bushes... which can take on several different meanings, haha) were with a republican majority of Congress. This is very underrated but I think it's crucial to have some checks and balances apparent between lawmakers and the president.
In other news, it is 11pm and I have not begun packing for my trip to NYC this weekend to see cousin Danny and the rest of the Gadd's. I better get on that. I ran 5 miles today and swam for 25 minutes, less than a month to go to til Chicago.
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Thanks for that informative update!
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Posted by jwyckoff
on 2008-07-30 23:37:12
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Dear Robert,
While this post contained many facts of current issues, you did not make a point about how you feel about this.
In any event this bill will do little to stabilize the economy we are now facing.
As long as capitolism is allowed to function without any guidelines or regulations, then recession is inevitable.
Exxon posted a 9 billiopn dollar profit this quater and spent over 170 million on lobbying the legislators.
All made possible by selling a product that has a limited supply left.
If nine billion was spent on electrifying our vehicles there would be no reason for $4.00 plus gas prices as we would be no-longer dependant upon oil for transportation.
In the mean time Ford Motor Corporation paid their number one man $27,000,000 in salary and bonuses at a time when they posted a 7 billion dollar loss.
They have eliminated over 245,000 middle income jobs in the last five years and have plans to eliminate another 60,000 plus jobs in 2009.
People can't affors to buy 30,000 dollar cars when they are earning less than seven dollars an hour.
Even my own union signed contracts with Chrysler which takes care of the employees that are already retired, but cuts the wages in half for the new guy coming to work.
It is no different than the problem of the pollution the world is now facing.
It goes kinda like this :
I got mine and the hell with the kid who is coming up behind me.
I drive a couple of fifty thousand dollar cars that have 400hp and goes from 0 to 60 in under six seconds, and I own a thousand acres of undeveloped property outside Yellow Stone where I plan to build a five million dollar home for myself.
I've got millions in stocks and bonds and I have over a million in cash on hand so I eat steaks as kids go to bed hungry all over the states.
But what the hell, I'll be dead in another ten or fifteen years so let those starving kids deal with the problems after'm dead, I won't be needing clean air six feet under.
I can write laws that I don't even have to follow because I'm priviledged and rich.
( it's against the law to smoke in a factory or building or any public resturant in Washington D.C. but our senators and representatives are exempt from that law and can smoke in their offices on capitol hill)EQUAL RIGHTS MY ASS!
And as for me I have always been able to see just how dumb our president is, and how he is only a president for the rich.
All of our leaders are completely out of touch with the common man on the street and has no-idea of what hard work really is.
Even the small business man got it
stuck to him by the new small business tax.
Even a married couple makes above a preset yearly income can now be taxed under this new small business tax law.
Yeah let me buy a building in any town where I might be able to employee a couple hundred people, and I can get a ten year tax abatement, and with a little of indecision by me and I can have five or six states willing to build my building at the tax payers expense.
Yup that housing bill is going to do nothing for the average Joe just trying to make his house paynments after his company sent his job to Mexico, China, or India and now has to work for $10.00 an hour with a $150,000 mortgage.
Even if I worked hard my whole life and have been able to buy a house in the neighbor hood I grew up in, and I finally paid the mortgage off, but the Hilton Corp. decided that they want to build a new hotel in our neighborhood.
The city can force me out of my home under the imminent domain laws, and I have no legal way to stop it from happening.
( this very thing happened this year in a suburb of Boston and three hundred people had to give up their homes.)
To top off all this political B.S not even electing a new and fresh president is going to change the real powers that be. They are those who have unheard of wealth and control the purstrings of this nation and all nations and governments are nothing more than a puppet show for the masses.
Hell president Bush took eight different companies into bankruptcy before being elected. And by golly that is just the kind of guy I want running this country.
An idiot puppet that follows all the directions I give him to protect my interests!
Yep keep the little ignorant masses doped up, drunk, and in jail so I can do as I please as they march to their deaths like good little sheep!
So Robert what was your point?
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Posted by jwcj
on 2008-07-31 03:24:38
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JWCJ,
First of all thank you for reading my post and taking the time to respond to it. The whole reason I started this blog was so that I could work through entire arguments and hear the other side of the issue, which is undoubtedly important in this country.
There is no doubt truth to a lot of the points that you made in your post.
Regulation is probably needed in the financial markets but unfortunately the only way to fix these markets was to have people take advantage of the free markets. As new financial innovations came about in the past 20 years there was simply no way to regulate these things until after it happened. At the time, securitizing loans was beneficial because the companies could not make money off of the investments that were put into making mortgages. If securitizing did not take place, then nobody would own a house because it would have been unprofitable for banks to make mortgage loans.
Having said that...
So the banks were given some headway to securitize and resell mortgages but unfortunately some banks were not smart and eased up on their standards for making loans.
The new housing bill, in my opinion, does not much to help the normal person who made sound decisions over the past 10 years regarding buying a house. The bill allows up to 400k people who will not be able to pay their mortgage the opportunity to renegotiate new terms so they can make the payments. There are many other things present in the bill and you can see those things at http://www.cnbc.com/id/25945775
It does help the government regulate Fannie and Freddie a little better, which is good. The government now explicitly backs Fannie and Freddie to ensure that these quasi government entities do not fail.
Where the problems in my mind come about is that the government (inevitably the taxpayers) will spend $300 billion to make the whole thing happen.
To make this more clear, people who did not splurge and buy a house in which they didnt have the means to pay for it will be paying to help those who were not as smart to own a house.
If I went and bought a house I couldn't afford with a variable interest rate mortgage 10 years ago and one of my friends didn't, then right now my friend would be paying for me to refinance my loan so I can stay in my house while he still doesn't live in a house.
This is unfair, but unfortunately this tends to happen when government steps in. It needed to happen because if it didn't, Fannie and Freddie would fail and the whole economy would go to crap.
Unemployment would happen and we would be worse off, it was a tough spot to be in.
We need to learn from this blunder of policy that occurred in the past, which is all we can do at this point.
As far as your other points, Exxon Mobil recorded record profits today (beating its old record). I agree this is bad, but what can we do about it?
Well, if Exxon is making so much money then why doesn't somebody else come into the market and take away some of these profits with cost cutting?
This would cut the cost while encouraging competition and bringing more jobs into the market, but why doesn't it happen?
There has not been an oil refinery built in the US since the 1970s because there is too much regulation as to building a new refinery (lobbying probably helps in this regard). And on top of it we cannot increase supply in the US with current laws.
If you want to hurt Exxon, which can be done by increasing competition, then allow refineries to be built so we can increase supply of oil and have price wars between the companies.
This alone will not get us out of the problem, we need to decrease demand while increasing domestic supply.
By encouragaing a policy that gives incentives to companies to be energy effficient as well as produce energy efficent products (computers, automobiles, buildings and other ifnrastructure) we can dramatically cut our foreign dependence on oil.
As far as the other arguments, there is nothing that can be done to stop emminent domain. Ford Motor Company will continue to struggle until they get their costs under control and adapt to changing consumer tastes.
Building a hybrid suv is great, but I think they are somewhat missing the point. People want the small hybrid vehicles like the prius which get much better gas mileage. It is a start but Ford will continue to hurt, which is a problem that goes all the way back to the 1970s and some would argue to the Wagner Act in 1937, which allowed workers to collectively bargain for wages.
As we have seen, those dumb compensation policies like the on you mentioned in your post are continuing to kill Ford and it will be hard to dig their way out.
Politics will always be around, there is really no point in complaining about it. If you were a doctor and somebody was going to pay you $4 million to give them a rare medicine, would you help him or somebody willing to pay you $100? It is just hwo the system works, fair or unfair.
My point, as you asked for, is that nothing is going to be perfect. Every type of government/economy has its advantages and disadvantages.
Those who think China is going to overtake the US in the next few years may not realize China is going through a period of very high inflation and the correction for it is to raise interest rates, which will slow down their economy. Will they do it?
If they do, then it will benefit our exports as they will become cheaper. If they don't, they are going to be in for a huge recession that could be reminiscent of our depression.
Give me freedom and let me make my future. I am a first generation college student in my family, not wealthy by any means and I enjoy the fact that I can make of my life whatever I will. I will take that over communism or a dictatorship any day of the week.
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Posted by RobertLVillwock
on 2008-07-31 10:30:41
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| Views: 58
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