The Economy and responsibility

I have an ingenious plan to fix the mortgage mess. For everyone who benefited during the boom, bankers, investors, mortgage brokers, real estate agents, homeowners, etc. - they should be on the hook to help out all the troubled people and institutions now.

How can that be fair? You ask? Well, here is the reasoning. Right now, all of us taxpayers are footing the bill with the bailouts to help corporations through the troubled times, and somehow, this might help beleaguered homeowners also by encouraging banks to modify loans. Kind of a trickle down way of managing the crisis.

So, why is it fair that all of us hard working Americans (or the people who actually pay taxes that is) bail out corporations and indirectly, homeowners?

So, under my plan, a list can be developed of all those who benefited with wild profits from the run up in prices. The gov can use that list to start sending notices to them that they need to share those profits with the less fortunate caught after the boom with upside down mortgages and mortgages they can't afford.

Does that make any more sense than what is being done?

No.

In a market, you have peaks and valleys, and sometimes mountains and gorges as we have now. If you want to make this all "fair", then a fund should be set up and when the boom is on, everyone has to contribute to the fund to support the inevitable bust. It would be like a boom/bust insurance socialization program. Share the wealth so to speak.

Or, we could do it the way it makes the most sense. Let the chips fall where they may. If you profited during the boom, great. (that is status quo) If you are losing now, you lose. Losing is always easier than winning. How else will the bankers and homeowners learn their lesson of not loaning or borrowing more than you can afford?

If we try to soften the blow, we are essentially saying that your bad behavior is going to be rewarded. But, how is it fair that they take all the profits but share none of the losses?

Sure there are innocent people who bought at the height of the boom with mortgages exceeding their current home value. There are innocent people caught up in the downturn who have lost their jobs and can't pay their mortgage now. This is the unfortunate cyclical nature of things, coupled with the unbridled greed and loosening of standards that contributed to the mess we find ourselves in.

IF we let the chips fall where they may, a lot of people are going to lose out and things could get very ugly. (As if they aren't already, for many anyway.) And banks are paying the price of their misguided behavior dearly. And there are innocent banks that "had" to be in the mortgage market during the peak and are caught up in it by association. But still, if a bank never lessened their standards, and did not go hog wild during the boom, they should be fine.

The government bailing out the likes of Citigroup really burns me though. Citigroup along with many others are the worst of the worst. They peddle their credit cards relentlessly and increase people's credit limits to ridiculous amounts, then are demons to deal with when people can't pay them back, and they charge outrageous fees when you fall behind. And now, we all bail them out? Let them fail or figure out themselves how to get out of the mess of their own making.

Then there are the three big automakers at the teet of congress this week. So, due to legacy costs and not being nimble in a competitive market, we are going to reward them for their bad behavior? Sure, many fine people work for these companies, but are we a socialist country or a free market country? I don't want these people to suffer any more than anyone else, but who else would be bailed out if their was a downturn in their industry? If you study to be a auto tool maker and your job is not needed where you live anymore, then you have two choices: Retrain yourself for something in your area or move to where there is a job in your field. That isn't easy, I know. But, do you hang on for years and years to an old school way of doing things and never change? American spirit is about seeking out a new challenge, a new way to do things, not about babying those who have become complacent and thought that nothing will ever change.

Bailout or let the chips fall. Either way there will be pain. The question is do we learn what we need to learn if we don't suffer through the pain of our mistakes?

Spending and consumerism

I have been on hiatus with the blog - wow, since April 2008! Unbelievable.

I got to thinking about all the consumerism and how my morning paper is chock full of ads for all the retail places luring us into their "Black Friday" sales events, all the while we blissfully go along with the whole ritual. Not me. Am I special, certainly not. A lot of people probably ignore/avoid the madness and stay home. But, those deals are irresistible, aren't they? Perhaps, but are they really worth the wait and hassle of dealing with Black Friday crowds and lines? I think my time is also valuable.

More importantly, since when did we all lose our dignity to worship this annual ritual? And how could we as a people succumb to such a materialistic and empty existence, to base our shopping on the whims of retailers and their gimmicks to get us in with the promise of great deals, all the while they know that if we get out there we will also buy the normal priced items along with those terrific deals. And to think that the whole economy is based on our robust purchasing during this materialistic holiday hijacked by consumerism and retailers and the "I gotta have the latest gadget" generations of people.

I know I am rambling and probably not making much coherent sense in making my argument against all this madness. Am I immune? Certainly not! I want the latest and greatest items as much as the next person. I want that 40" 1080P HDTV. But, the price isn't quite low enough, and now that I switched to an all cash basis of doing my purchases, I can buy nothing without saving for it first. And I just don't have $1,000-$1,500 laying around right now. So, it will have to wait. But, then again, do I really need that HDTV? Is it really necessary? Probably not. My old Sony WEGA 27" SDTV from 2001 is perfectly fine. And I don't have to pay $10-15/month for the HD programming from my cable company either. So, think about it - when you commit to HDTV, then the DVD won't look as good, the standard def 4/3 shows won't look as good and you buy into a $120-$180 more each year going to the cable co., and a new Blu-Ray disk player, and now you have to start buying all those DVD's again in Blu-Ray format - which is more expensive than DVD format. So, add it up - it isn't a simple TV purchase. It lures you into more and more expense to do what? Watch TV. Plain and simple. Oh, did I mention that you will need the HD camcorder, because even with Mini-DV recordings being a little better than the old VHS-C, they still suck when viewed on an HDTV, right?

Okay - enough rambling about the HDTV lust I feel, and all the pitfalls - but how do we avoid it - the hyper technology based consumerism to keep up with the jones' syndrome. Do we really need a phone that will play music, search the web and whatever else they do? Do we really need 8GB flash drives? (They sure beat the old floppies, remember them?)

So, gone are all those cassette tapes, vinyl records, laser disks, VHS tapes, and now DVD's (soon enough), and in February, our old TV's won't even do what they were made to do - pick up FREE TV! not without that converter box. (Did you get your rebate coupon from the Gov yet?)

So, budgeting and frugality - will they win out this year? Well, we shall see.