The Magic Show

Election years have the quality of exacerbating whatever conditions catch the attention of the politicians. Recession is now freely discussed, so to rid ourselves of this problem we're going to redistribute some wealth. Watching the legislators signing bills into life with their almost hysterically giddy happiness is like watching the hostess at a child's birthday party, gleefully handing out prizes to children who didn't work for them, and in which the hostess had no financial interest. Politicians know and understand at some level I'm sure, that they didn't produce anything or create anything to earn the money they are moving from one set of hands to another, but they simply don't care. It warms the heart of the voting public to witness their apparent concern. Good luck with this one.
The next magic act is a real sleight of hand exercise. Somehow we are being persuaded that the mighty efforts to have lenders come up with forgiveness and bailout programs to help the helpless avoid foreclosures is to benefit those same helpless homeowners. More likely, wouldn't you think, to benefit the lenders who would otherwise have to swallow the terrific losses resulting from trying to resell those foreclosed properties. Lenders clearly would rather have a little something than a certain loss. Besides, even an underperforming loan doesn't tear up the balance sheet like a sale at a loss. Much of the press attention is geared to talk about the plight of the poor borrowers, people who have essentially been renting their homes, and now find they can't afford the rent. At the outset they knew the rent was going up, (at least in some cases) so some preparation for that day was called for. For the others where the rent simply proved unsustainable and hasn't gone up, why is that someone else's problem. 94% of people are paying their mortgages on time, and they don't deserve to have the burden of subsidizing those who made bad financial decisions, for whatever reason. Despite the notion that home ownership is for everyone and all should strive for it, it simply is not true. Not everyone enjoys the social, financial, and psychological level of maturity and responsibility that home ownership requires, and the cities of the country are littered with slums resulting from the nonsensical notion that giving people the benefits of material advantages without first developing the maturity required to appreciate them is a good idea. The granting of credit for home purchases where such credit was not warranted has resulted in some dislocation for some, but they aren't really losing a home since they never really had an equitable interest. The real tragedy in the home mortgage debacle is the loss of confidence in credit markets. Credit rating agencies employed by the people who are selling the rated instruments to an unsuspecting audience have perhaps done irreparable harm to a global financial community which has always relied on trust for the valuation of underlying securities. Granted that the suffering of a few is touching, and offers a great opportunity for political campaigners to demonstrate the compassion they feel for all of us, but a situation which if left alone could probably right itself in a few months or perhaps just over a year is now destined to drag on for a much longer period. Whatever the business of government, it is certainly not business.