of having my first blog submission recognized as worthy of "elevation" to The Front Page of The Agonist, I submitted this piece about the state of the economy prior to the upcoming election in 2008. It didn't make The Front Page.
The Crash is Coming…,
with or without this Bail Out. The Bail Out is just that…, a Bail Out of the fat cat investors that run this country. It will accomplish one thing and one thing only. It will “buy” them time to reposition their portfolios and make money from this coming crash.
The US economy is run on housing starts. Housing starts ripple throughout the economy like a life blood. The effort to keep that life blood flowing is what brought us to this brink of disaster…, and this Bail Out will only build a temporary dam to keep that blood from spilling out into the streets…, I repeat…,temporarily.
Housing starts keep everyone from concrete workers, loggers, saw mills, lumberyards, carpenters, plumbers, electricians, heating and cooling contractors, window and door manufacturers, carpet layers and appliance makers and sellers employed. Not to mention the huge profits from the mortgages on those houses for the banks and investment firms. This Bail Out isn’t going to help any of the working men and women of this country. And those banks it does help…, they aren’t going to be making loans for any housing starts for a good long time.
There is a glut of houses on the market “clogging up the system” right now. The proposal to buy up all that “bad paper” isn’t going to make all those empty houses disappear so new ones can be built. Who is going to snap up those houses at bargain basement prices and hold them until better times arrive? Are those Bailed Out bankers going to sell them to former foreclosed owners who are in worse financial shape now than they were when they took out the original loan? A rhetorical question if ever there was one. A majority of these foreclosures are on second homes of rich retirees that have moved from California thinking that the bungalow valued at $500,000 in the Hollywood suburbs would sell and allow them to move to northern Idaho where they could build a $250,000 mansion on five acres of former farm ground…, then live off the profit and their investment portfolio that was growing an average of 20% in the stock market. They have driven up the property values in rural America to the point where lifetime locals can barely afford to live in there generations old family home.
We have a tough choice here. Say no to the Bail Out and suffer once…, or accept this Bail Out and suffer twice? Not that tough a choice if you ask me. I will gladly suffer now to watch the fat fry while all the fat cats go down in flames. And that is what will happen if we “just say no” to this Bail Out. Us little guys are going to suffer some…, but the fat cats who are leveraged to the limits are going to be badly burned. Which is what they deserve. If we bail them out now you can be damn sure that they will be allowed to de-leverage and be in a lot better shape to withstand this coming crash.
This Ship of State we are on is in rough seas now…, and headed for rougher. For those who are screaming, “Bail Out”…, I say, “Go ahead, bail out”. I am ready to cast them adrift in the lifeboats. But I will keep the $700 billion on board and ride this storm out. There is no room in the lifeboats for it and we are going to need it. We need it so Don can plant us some wheat, we need it for the unemployed, the uninsured, and the people who need a roof over their heads. Not for guys like John McCain so they can hold on to their seven houses and investment properties.
This Bail Out makes no economic sense. I have already heard little Georgie Bush and his cadre scream, “Mushroom clouds on the horizon!!!!!” I didn’t believe it then…, and sure as hell don’t believe it now. All of us Agonists will feel the pain…, but it will be much less and much shorter than predicted by Georgie. And we will emerge much stronger and sooner without this Bail Out. With it…, I fear for all our survivals.
Scott R. September 25, 2008 - 12:59pm
I wrote that piece on 9/25/08..., the Dow was still above 11,000. Shortly after that Bush, Bernake & Paulson convinced our Congress Critters to throw nearly a Trillion dollars at the nations biggest banks.
ReplyDeleteWhen Obama took office his first priority was to throw another Trillion dollars at a "stimulus" program.
On 3/9/09 the Dow closed in the 6,600 range. Was that the "crash" I predicted?
Since then the Dow has made a rebound of historic proportions..., nearly reaching the 11,000 range again. But the real economy still has historic high unemployment and home forclosures. Historic lows in housing starts and tax revenue on the state and federal level.
Who got Bailed Out?
I stand by my story..., The Crash is Coming...,