Everyone is not qualified to own a home, and therefore should not own one. The Federal Reserve’s mandate to promote home ownership does not qualified mortgage borrowers make. The Wall Street Journal published a sobering piece on Monday, October 6, suggesting that the American desire for home ownership has become a national and a policy obsession. And now it is become the next big American entitlement?from both the Democratic/socialist side and from the Republican/Keynesian/idiots side, as the ongoing televised debate now reminds me with a vengeance. There are a whole lot of people who, for reasons that have nothing to do with alleged corporate greed or Wall Street mismanagement, should not and cannot manage the financial and personal discipline necessary to be responsible mortgage holders and home owners. They should make other plans for shelter, and leave the rest of us off their co-signers list.
First of all, nobody wastes or otherwise absconds with more ill-gotten gains than the U.S. Congress. They take monies by force, and waste or use them for purposes that many of their ‘beneficiaries’ do not approve. And they do this every year. The shameful and unashamedly self-acknowledged self-serving members of Congress (pick any administration) have no moral or fiscal high ground from which to pronounce moral judgment on virtually anything. As explained in the WSJ article cited above, Australia’s bad debtors have to deal with the consequences of their poor judgement, and cannot legally demand nor expect to receive a taxpayer rescue. Hooray for Australia! No ill-conceived bailout, no misplaced compassion at the expense of others.
The U.S. has now virtually institutionalized home ownership rights, through the Federal Reserve System. Now your irresponsibility and mismanagement are my cost and tax problem. What began as a charge to ‘promote’ home ownership by the Fed has become a policy to preserve home ownership at any cost. Ultimately that cost falls on the responsible and qualified borrower, because lenders will no longer be able to price credit according to the relative riskiness of the borrower. Will an otherwise responsible home buyer or credit card user, virtually promised that they cannot lose their home or credit rating once they make an initial purchase, stress unduly over keeping up payments? It’s more moral hazard, possibly bigger, better, and easier for the debtor. No real worries about bad debt, mate.
And here’s one for J.M. Keynes in his more extreme socialist moments: the dangerous and idiotic idea (proposed by one of our illustrious presidential candidates this evening) of the federal government nationalizing, after pretty much “marking to market,” distressed home mortgages to ‘stabilize home values.”‘
Hello. ‘Stabilizing’ prices means setting floor or ceiling prices, which really means refusing to allow individuals to change their minds about the value of a good or service. To forbid home or any other prices from moving by setting legal ‘floor’ prices, or to prosecute vendors (or threaten to prosecute them, which has the same effect–thank you for no gas in large parts of NC at the pumps) for raising price when goods are more scarce, guarantees that every consumer, especially the least well off, will be unable to obtain critically needed goods at any price, including a bargain price.
Finally, those who would jealously and frivolously whisk all those alleged villains of Wall Street away? as though Wall Street and ‘Main Street’ are entirely separate entities in the American economy, one evil, one good? should carefully look to the perks, the pork, the greed, the self-interest and self-serving actions of the other really big economic players, their government representatives, who could not and have not produced even a cup of coffee except by the work of Wall Street and Main Street combined. But via legislation and regulation, Wall Street and Main Street can both be compelled to serve it to them anyway. And pay them for taking it. Oy!
It doesn’t matter who won the presidential debate tonight. The true fundamentals of the American economy, which are private property rights, capitalism, a fair and impartial judicial system, and the Lockean prime directive “solus populi suprema lex,” “the highest law is the good of the people,” are clearly being set up to be the losers.
