A Not-So-Childish Game
This post was supposed to appear at Blogcritics,
but they passed on it
for technical and style policy reasons.
A recent commenter at Blogcritics didn’t like my recent post concerning the economy, saying, “These kinds of articles make me think of children that want to change the rules of a game in midstream.”
Funny he should have brought this concept up. Columnist Andrew Cassel of the Philadelphia Inquirer was in the same playlot when he stated, “When my siblings and I were small, playtimes could get rowdy. … my mother would always say … ‘This will end in tears.’ ”
Just what “this” is he discussing with this memory? I’ll let Canada’s Vive Le Canada explain it for you: “In the odd logic of the real estate bubble, debt has come to equal wealth.”
In an ill-fated attempt to keep the gravy flowing in such a fool’s paradise, Businesses Prepare to Mount a Concerted Attack on Regulation, claiming that “Burdensome rules, costly litigation and hard-nosed prosecutors are killing U.S. companies.”
I submit that they are doing it to themselves, and that governmental regulation is the only thing that keeps them from wrecking the economy. Don’t take my word for it, for I have already been deemed incompetent in economics by the commeters of this blog. Listen instead to Linda Chatman Thomsen, the SEC’s enforcement chief, who asserted in a speech last week: “There is substantial evidence that financial markets succeed because of strong enforcement and regulation, not in spite of it.”
Had there been sufficient enforcement in place, a Bear Stearns analyst could not have written a March 1 “upbeat report” about how well New Century Financial was doing in the subprime mortgage market whenthey had already revealed a growing number of borrowers were defaulting on their loans and the stock had lost half its value in three weeks. As of March 11, 2007, New Century stock was down to $3.21.
New Century’s investors were hammered because the experts that were supposed to watch out for their interests were instead watching out for their own. But as bad as it is for investors, who are in the game expecting that they could lose money they can (usually) afford to lose, it’s worse for New Century’s customers. They are caught up in a housing “bloodbath”. This characterization isn’t something that I came up with, it’s the observation of Renae Gorney, director of loss mitigation at Freedom Foreclosure Prevention Services in Mesa, Arizona, who holds little truck with those who claim “the worst of the housing market downturn is over.” She would know - her firm handles more than 300 applications a month from people facing foreclosure due to the irresponsibility of “the experts” who don’t want anyone looking over their shoulders as they steal the public’s hard earned savings.
How childish is such thievery? It is costing many of these “experts” their livelihoods! Those Marxist-Leninists at Business Week report that more than two dozen lenders have been wiped out by the downturn in the housing loan industry which began late last year. Those Kiddie Commies over at Bloomberg have to be lying when they say that “as many as 1.5 million more Americans may lose their homes, another 100,000 people in housing-related industries could be fired, and an estimated 100 additional subprime mortgage companies could go under”. They must have made this up out of thin air, right?
Sure - just like the applications used by brokers who qualified people for loans they really couldn’t afford. Subprime loans make up 20 per cent of the mortgages issued in the past several years, and the next higher category makes up another 20. Both categories have seen their default rates double. But that doesn’t deter those who “denied” the housing bubble, then denied the housing bust, and then insisted that the housing downturn had bottomed out.
That childish falseity was performed by the greedy to avoid losing out on the goodies of making a home sale. That childish dishonesty will cause major distress across the economy. As mortgage defaults increase, lending standards tighten and drive down home values. Homeowners feel less secure and reduce their spending. Less consumer spending weakens the economy, employers layoff workers due to reduced sales revenue, and the vicious cycle that causes households to become even more frugal is off and running.
There won’t be any “refinancing bailout” as in the past, for that “line” of credit renewal is tapped out. Those socialists at Goldman Sachs predict that tighter lending standards in the subprime market alone will reduce demand for new homes by 200,000 units this year while collectivist bond research firm CreditSights sees as many as 500,000 borrowers defaulting their homes back onto the market, further reducing property values due to the Law of Supply and Demand. those who were counting on the next refinance to pay off all their consumer credit debt and the matched set of $3/gal. gas-guzzling SUVs are going to be sadly wisened when they discover that the new bankruptcy laws no longer allow them to walk away from their foolishness.
But they won’t be alone! New Century itself is facing bankruptcy just weeks after that rosy Bear Sterns analysis which indicated bullish times ahead. For New Century, that prediction may well come about if the company can reorganize.
Under the new bankruptcy laws, they can still walk away from their debts. They already got too much of that “burdensome” regulation eliminated. Is that what my detractor meant when he said I was “so confused about the roles of government and business”?
But I do understand! How else are businesses going to be able to buy up indentured servants seeking to work off their loans if government doesn’t atruistically provide them with the map to the path to profit?
So simple, even a caveman can do it!