He Got a Bailout, She Got a Bailout, I Want a Bailout, Tooby
Vin Suprynowicz The impact of tacking the generally common-sense Sarah Palin onto the bottom of the GOP ticket has clearly not been enough to rescue John McCain from himself. First, the Alaska governor has been muzzled when it comes to debunking the idiot contention that we need to cripple our industrial economy to prevent “man-made global warming” – which she knows is ridiculous but has clearly been forbidden to openly challenge. Then, she was encouraged to join Mr. McCain’s “I can be as big a statist as them” chorus, celebrating the fact that she, too has been willing to “punish greedy big oil” with extra, add-on taxes up in the Land of the Midnight Sun. Oil companies that already pay more in federal taxes than they do in dividends, using what’s retained to … you know … hunt for more oil and stuff. But Washington will soon put an end to that! If there was any remaining doubt that fans of free markets and limited government have no horse in this race save imperfect Libertarian Bob Barr, Sen. McCain settled the matter in Tuesday night’s not-very-“town-meeting” debate, announcing without noticeable prodding that he would order his Secretary of the Treasury “to buy up all those bad mortgages and re-negotiate them” … turning Uncle Sam into presumably the biggest and most generous “landlord” in history. The scheme is to allow those who contend they can’t afford their current mortgage payments to arrange new, lower payments at the current, depreciated, “market” value of the home. But how is a “market” value determined? Allison haunts the tag sales and flea markets, searching out vintage garments in as-new condition. Some still bear their $125 price tags from when they were bought at a fancy department store 40 years ago, back when that was real money. She aims to pay ten bucks per garment, hoping she can hang them in her resale booth in the antique mall (where she pays rent and other overhead, you understand), priced at $50. If they don’t sell at $50, she marks them down to $37.50. Which was the “market price” of the garment? The answer is that every price except the $50 was the “market price.” The original buyer happily paid $125 but then got sick or gained weight or changed her mind and never wore the thing. Allison settled on a mutually agreeable “market price” of $10 with the previous owner’s daughter at the garage sale. The last purchaser agreed $37.50 was the “market price,” happily paying Alison her markup so the final buyer could avoid haunting the thrift shops for a month seeking just the right accessory to complete her outfit for Friday’s gala. Only the $50 no one would pay turned out NOT to be a “market price.” You can only determine a “market price” by putting something on the market to see what a willing buyer will pay at that time and place. If all the houses whose occupants are currently having financial problems were dumped on the market tomorrow, those previously $250,000 houses, now asking $187,000, might quickly drop in “market value” to $160,000 or even $110,000, as the supply exceeded demand, creating a “buyer’s market.” But Mr. McCain and the rest of the Old Washington Hands – note neither Sen. Obama nor moderator Tom Brokaw nor anyone else raised any substantial objection to this plan, indicating it may be not merely “the McCain plan” so much as “the current Washington consensus plan” – don’t want to see home prices drop to a REAL “market level,” which could lead to the general price and credit contraction of the true economic correction they’re trying so desperately to avoid. Instead they’ll set the new “price” of the house at whatever level the occupant can afford, lie, and call it the “market price.” Is it? Let’s say Ernesto and Latisha, paying a $245,000 mortgage for a home on which they put $5,000 down, agree to “re-negotiate” their loan with Uncle Sam at $150,000. First come the local mayor and City Council, complaining their tax revenues will fall if all these houses have to be reassessed at a drop of 40 percent. No problem: Uncle Sam agrees to hand them the difference, out of your federal tax payment and mine – the same funding source that allowed Uncle Sam to buy the $245,000 mortgage and blithely throw away $95,000 of its nominal value, in the first place. Now Shawn and Allison, who have been living frugally in a apartment across the street, saving up a $35,000 down payment in hopes they could someday see median home prices drop to $175,000, find out what’s going on and offer Uncle Sam $175,000 for Ernesto and Latisha’s home. Nothing doing, Uncle Sam says. We’ve already determined $150,000 is the “market price” of a house that’s not “on the market” at all; our goal is to keep Ernesto and Latisha in the house they can’t afford, because it’s “good social policy” to “encourage home ownership” among racial minorities. Frustrated, previously hard-working and frugal Shawn and Allison put their $35,000 down on a $200,000 Italian sports car. After a few months, however, they find they can’t afford the payments, so they call their congresscritter: “That predatory car salesman didn’t tell us this little gas-guzzler was going to lose 30 percent of its value the minute we drove it off the lot because it’s now a ‘used car.’ We want Uncle Sam to buy the note and renegotiate our car loan to something we can afford.” Will Uncle Sam do it? Why not? What earthly principle can be stated to defend donating $95,000 on other people’s tax money to Ernesto and Latisha so they can keep the house that no one forced them to buy in the first place, while refusing to bail out – pardon me, “rescue” – Shawn and Allison from their car payment dilemma?
I also find it really upsetting when I get home from work and try to mow the lawn, but it gets dark before I finish. Can’t my Congressman order the setting sun to stay up just till I finish? Why not? Presidential candidates today promise to “fix the economy,” “switch us from fossil to renewables, creating millions of jobs in the process,” “make health care free” – all kinds of things that are neither constitutionally authorized nor physically possible. Just ask the sun how many billions it’ll cost. We own the printing presses, don’t we? October 17, 2008 Vin Suprynowicz [send him mail] is assistant editorial page editor of the daily Las Vegas Review-Journal and author of The Black Arrow. Copyright © 2008 Vin Suprynowicz
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