DESIRING MCCONNELL'S STIMULUS PLAN

SENATE REPUBLICAN LEADER Mitch McConnell on Monday demanded an amendment to the mammoth economic stimulus package to give government-backed, low-interest loans to homeowners—a revision that he says will both increase the demand for houses and boost the average household income.

"We believe that a stimulus bill must fix the main problem first and that's housing," McConnell told reporters Monday in introducing a plan to offer fixed mortgages of 4 percent to "any credit-worthy borrower."

According to McConnell, his plan would allow the average family to see its monthly mortgage payment drop by $466 a month, or $5,600 a year. He said in a radio address Saturday that over the life of a 30-year loan, that's a savings of $167,760.

The House passed an $819 billion version of Obama's stimulus proposal last week and the Senate version being debated this week is even larger—$900 billion. But most troubling to Republicans—and even some Democrats—is that no money is allocated in the proposal to go directly toward foreclosure relief and the housing crisis, aside from a $7,500 tax credit for first-time home buyers.

Lowered-mortgage payments would put more disposable income into the hands of recession-battered households, McConnell said on the same day a staggering report showed consumer spending fell for a record sixth straight month in December.

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Yes, we want the same sweetheart deal that Chris Dodd got. It's only fair. And it bristles of poetic justice! I want a 4% mortgage, and then I'll shut up about this treacherous bailout. Because let's look at this another way. Although US bankers are wailing hysterically that this kind of financial meltdown has never been seen before, the truth is that Japan went through something almost exactly like it back in the 90’s when their own real estate bubble burst.

The crash for them took place in ‘90-91 and didn’t really affect the Japanese until 1992. That was when things got feisty. But unlike our own leadership, the Japanese government left the economy to sort itself out, and some say that it originally made the situation worse by planning to adopt austerity measures and they announced these measures, like tax increases, 18 months in advance.

Eventually, there were some changes in government and some kind of Keynesian economics wizard who started to hold banks accountable for what is called adverse selection. As I understand it, adverse selection occurs when bankers hold onto their bad assets, like bad mortgage tranches, for example, in the hopes that they will be worth something someday, while they sell off all of their good assets for cash they need in order to do regular backing business like lending and borrowing. When Japanese banks were finally forced to eat their bad stuff, the economy turned around.

ARREST THE MEDIA FOR FRAUD

From Orson Scott Card's scathing essay—Would the Last Honest Reporter Please Turn On the Lights? The essay is rather long and thoroughly comprehensive, so please don't neglect to hit the link.

An open letter to the local daily paper—almost every local daily paper in America:

I remember reading All the President's Men and thinking: That's journalism. You do what it takes to get the truth and you lay it before the public, because the public has a right to know.

This housing crisis didn't come out of nowhere. It was not a vague emanation of the evil Bush administration. It was a direct result of the political decision, back in the late 1990s, to loosen the rules of lending so that home loans would be more accessible to poor people. Fannie Mae and Freddie Mac were authorized to approve risky loans.

What is a risky loan? It's a loan that the recipient is likely not to be able to repay.

The goal of this rule change was to help the poor—which especially would help members of minority groups. But how does it help these people to give them a loan that they can't repay? They get into a house, yes, but when they can't make the payments, they lose the house—along with their credit rating.

They end up worse off than before.

This was completely foreseeable and in fact many people did foresee it. One political party, in Congress and in the executive branch, tried repeatedly to tighten up the rules. The other party blocked every such attempt and tried to loosen them.

Furthermore, Freddie Mac and Fannie Mae were making political contributions to the very members of Congress who were allowing them to make irresponsible loans. (Though why quasi-federal agencies were allowed to do so baffles me. It's as if the Pentagon were allowed to contribute to the political campaigns of Congressmen who support increasing their budget.)

Isn't there a story here? Doesn't journalism require that you who produce our daily paper tell the truth about who brought us to a position where the only way to keep confidence in our economy was a $700 billion bailout? Aren't you supposed to follow the money and see which politicians were benefitting personally from the deregulation of mortgage lending?

Read it all.