When and How Will the Pendulum Swing Back?

[samclem]

As more people get energized about the negative impact of increased government spending and government usurpation of individual decisionmaking, it is likely the pendulum will swing back. It will be interesting to see which individual and/or group can effectively harness the sentiment Rick Santelli expressed in his famous rant. There's no obvious leader of such a counter-movement: Many Republican Senators and Congressmen are compromised by their own participation in the spending orgy of the last 8 years. There also doesn't yet seem to be a grassroots organization that is doing fundraising and effectively puting pressure on vulnerable congressmen. There's a growing tide of dissent out there, and an organization that can use the net to harness it is going to be very powerful in 2010.
Anyone seen signs yet of an organized backlash?

 

[Texarkandy]

......
Anyone seen signs yet of an organized backlash?

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[dex]

I was thinking about this today. I don't know of a Repub. candidate that can lead the counter movement. But, there was Ross Perot - he got 19% of the vote which gave Clinton the election. We could have a repeat of that - a third party that splits the vote in favor of the Dems.

I sense that people are getting energized and will be interesting to see how it will play out.
Rick Santelli hit upon the government re inforcing bad behavior.
There are others.

 

[lightwaves]

Rick Santelli does not propose a solution , he rants about the obvious. We all understand how uncomfortable it is to bail out folks that may have bought more than they can afford. But that is water under the bridge. Now all of our houses are dropping in value at an increasing clip. If helping those who made mistakes or those who got layoffs will save our country from a deep depression, I am willing to make the sacrifice. What would you folks on this thread do? I have not seen an answer on this thread though I suspect I might hear things like "cut taxes" and "get the government off our backs". Well....we tried that and look where it has gotten us.

 

[headingout]

I tend to be conservative, especially in financial matters, but I agree. This debate seems to be about new ideas vs. tired old slogans. I don't know if all the new ideas will work, and sure the government spending makes me nervous. But one thing I see clearly is that the last few decades have only served to concentrate wealth in private hands and politically-connected industries in this country, where it has not been used wisely. I no longer believe that all our problems can be solved by even more capitalism and less government.

 

[REWahoo]

... We all understand how uncomfortable it is to bail out folks that may have bought more than they can afford. But that is water under the bridge. Now all of our houses are dropping in value at an increasing clip....

Be careful of painting with too broad a brush. "All" is a very encompassing word.

Take a look at this website and click on cities such as Albuquerque, Dallas, Denver, Indianapolis, Louisville and Oklahoma City. Looks to me like the median price of homes in those cities are holding reasonably firm. Why should those homeowners be asked to bail out declining home prices in other cities?

I'm not arguing the govt. shouldn't get involved in some way, just saying we "all" didn't participate in the housing bubble. It is a bitter pill for those who weren't on the roller coaster to have to pay the medical bills of those who suffered injuries when it went off the rails.

 

[ziggy29]

I'm not arguing the govt. shouldn't get involved in some way, just saying we "all" didn't participate in the housing bubble. It is a bitter pill for those who weren't on the roller coaster to have to pay the medical bills of those who suffered injuries when it went off the rails.

Especially when the roller coaster operators removed the warning signs telling you to stay seated and buckled up and encouraged everyone to ride regardless of their willingness to do that...

Anecdotally, housing prices seem to be holding their own here. Not surprisingly, the markets that the bubble left behind are doing much better in general.

 

[lightwaves]

ReWahoo. I get your point. But if you look at the averages for the country as a whole...home prices are falling (link). That is what I was implying. It is a bitter pill but we have paid for the misfortunes of others for a long time through private insurance, charities and public welfare. Now it has become more necessary and more obvious.

 

[ziggy29]

ReWahoo. I get your point. But if you look at the averages for the country as a whole...home prices are falling (link). That is what I was implying. It is a bitter pill but we have paid for the misfortunes of others for a long time through private insurance, charities and public welfare. Now it has become more necessary and more obvious.

I don't know where he got the information, but there was a guy on the radio here yesterday claiming that it's likely that Fannie Mae will start converting a lot of existing mortgages to 40 year loans at 4% later in the year, buying the loans from the banks at par and holding possibly trillions in paper -- automatically, without a need to refi or requalify.

And he also said it would be set up to encourage investors to jump in too, not just primary residences, to help kickstart demand for housing.

This is some guy on the radio talking, not me, but this is what he said. I have no clue as to his credibility...

 

[samclem]

If helping those who made mistakes or those who got layoffs will save our country from a deep depression, I am willing to make the sacrifice.

I keep hearing this. Go ahead and make the sacrifice, but please don't talk about it if you aren't going to do it. Send your "extra" money to the government. Maybe write a check to a family in foreclosure. You don't need anyone's permission to make your sacrifice. But, if what you are saying is "I don't mind getting wet" and what you really mean is "Lets all tie ourselves together and jump in the ocean, and I'm not going in without everyone else", that is a little disingenuous.

What would you folks on this thread do?

For decades the government has been pushing for "affordable housing." Okay--if they will just get out of the way, it will soon be much more affordable. I'm living here in the unsophisticated flyover country, and (as REWahoo points out) it is extremely unlikey that those folks in FL or CA planned to write me a check to share their good fortune when they sold their McMansion for 5 million dollars. Nor did I expect them to. Now that the gamble has turned against them, I'm not too eager to bail them out. Nor shoud they expect it. You want to see real economc devastation--take a ook a Cleveland or Detroit. It's been going on for decades, and has affected a lot more people than this little burp in the economy. But we didn't go on a wild spending spree, we didn't use it as an excuse to institute European-style socialism, and we somehow survived. This is probably human nature: If a process happens over decades and to someone else, it's not a big deal, but if it happens quickly and to you, it is a national crisis.

This whole system will work much better when the risks and rewards are well aligned. I just want government to let that happen. No social engineering, no class warfare politics, no redistribution of the property of some people to others.

 

[ziggy29]

This whole system will work much better when the risks and rewards are well aligned. I just want government to let that happen.

As the saying goes, capitalism without failure and bankruptcy is like religion without hell.

 

[REWahoo]

It is a bitter pill but we have paid for the misfortunes of others for a long time through private insurance, charities and public welfare.

Yes we have and I have no issue with helping out others in trouble. My concern is the "help" we are giving is not insurance, it is not through a charity. It is public welfare - on a scale beyond the comprehension of most of us reading this forum. It may not work. It may do more harm than good. It will almost certainly encumber future generations with the bill for helping those who bought into the tulip madness.

 

[ziggy29]

Yes we have and I have no issue with helping out others in trouble. My concern is the "help" we are giving is not insurance, it is not through a charity. It is public welfare - on a scale beyond the comprehension of most of us reading this forum. It may not work. It may do more harm than good. It will almost certainly encumber future generations with the bill for helping those who bought into the tulip madness.

Another problem is that temporary stopgaps and safety net programs are almost impossible to kill even after the most dire need for them have passed.

If I felt confident that an increased "safety net" would be phased out once the worst was passed and the economy was settling into a new "normality" (whatever that will be), I'd be less concerned. But frankly, the federal government has a terrible track record when it comes to killing "temporary" programs.

 

[lightwaves]

samclem...My funds a have dropped liking most others. What I am saying is that I am willling to pay the higher taxes that Obama proposes by those most fortunate in this society (I am one of them per his definition) if it will right the ship of state. We can look back and complain all we want. I, like many on this board, am a miser and live way below my means. I hate the fact that I have to bail out all of these companies and individuals. But if we want to have a country going forward we need to "reboot" and essentially start from scratch. Hopefully this increasingly dire experience will teach those who have violated common sense to be more responsible at least within their lifetimes. Yes...we can let this whole financial system crash and do nothing. We will get to a bottom quickly that way but it will be a bottom that few would want to see.

 

[samclem]

But if we want to have a country going forward we need to "reboot" and essentially start from scratch.

You are painting this in very stark terms. Look at what our nation has been through--we are truly a fragile people and society if our country will cease to exist because we don't prop up Citigroup and reduce people's mortgage payments by 20%. And, I'd not characterize what we are doing as a "reboot." Instead, we are trying to continue to run all the software by applying patches randomly.

Hopefully this increasingly dire experience will teach those who have violated common sense to be more responsible at least within their lifetimes.

I'm interested in letting the real world do the teaching. The more "dire" the experience, the more penetrating is the lesson.

 

[Texarkandy]

...... Hopefully this increasingly dire experience will teach those who have violated common sense to be more responsible at least within their lifetimes. .....

If they are bailed out - the lesson will not be that they need to be more responsible - the lesson is that they can gamble irresponsibly in hopes of great individual gain (financial, housing, etc) & if they lose their losses will be covered by everybody else.

(BTW - do you have kids?)

 

[lightwaves]

Tex...Yes I have a kid. Going to college in the fall. What you say about the lesson being muddled is a risk no doubt. But like everything else, there are risks and rewards. I believe the risk of that muddling is less than the reward of gettting our country righted at this point in time.

 

[newporttony]

I saw a brief segment on the news about a St Louis Tea Party that took place yesterday. I belief there is a strong grass roots effort developing to try to control a government run amuck.

 

[RAE]

For decades the government has been pushing for "affordable housing." Okay--if they will just get out of the way, it will soon be much more affordable. I'm living here in the unsophisticated flyover country, and (as REWahoo points out) it is extremely unlikey that those folks in FL or CA planned to write me a check to share their good fortune when they sold their McMansion for 5 million dollars. Nor did I expect them to. Now that the gamble has turned against them, I'm not too eager to bail them out. Nor shoud they expect it. You want to see real economc devastation--take a ook a Cleveland or Detroit. It's been going on for decades, and has affected a lot more people than this little burp in the economy. But we didn't go on a wild spending spree, we didn't use it as an excuse to institute European-style socialism, and we somehow survived. This is probably human nature: If a process happens over decades and to someone else, it's not a big deal, but if it happens quickly and to you, it is a national crisis.

This whole system will work much better when the risks and rewards are well aligned. I just want government to let that happen. No social engineering, no class warfare politics, no redistribution of the property of some people to others.

This is your solution to the problems that are facing us? Just let this "little burp in the economy" play out on its own, and all will be well in the end, huh. You guys may feel like you are pretty well insulated from what goes on in the world around you, but most of us are not. I have a feeling that if the decision is to just let this play out, we will all feel a lot more pain before it's all over. The decline of Detroit and Cleveland was regional in nature, and happened over several decades, as you said. This decline is happening over most of the country (world, actually), and at a much, much faster pace. Believe me, I'm not thrilled with the idea of bailing out folks who spent too much for housing, either. But ignoring the problem and just letting it run its course may end up hurting us all much more in the long run. I still have not heard a viable alternative solution to the problem. Your "solution" is simply to have govt. get out of the way, unless I misunderstood you.

 

[samclem]

This is your solution to the problems that are facing us? Just let this "little burp in the economy" play out on its own, and all will be well in the end, huh.

Yep, pretty much. I'd put it differently: "Rely on the same market forces that have proven to be the best system for allocating capital, labor, and other resources." We definitely need to modify some regulations and improve oversight to assure risks and reward are transparent and alligned, but that's a far cry from nationalizing the economy and throwing money at the very actors, big and small, who have proven least adept at using money responsibly.

You guys may feel like you are pretty well insulated from what goes on in the world around you, but most of us are not.

I doubt anyone here feels insulated against the current tumult. Who has lost more--a retired person depending on income from assets in the market or the person who is still working? 95%+ of those who had a job 6 months ago still have it. I can assure you that the portion of those who have lost assets in the stock market is far higher.

I still have not heard a viable alternative solution to the problem.

There is no "solution" to the problem. There are various approaches to addressing it. None of them are guaranteed to succeed. The approach I offer has the benefit of keeping the economic engine and social contract of our society intact (respect for individual property rights, alignment of work/risk with reward, and minimization of debt to be passed on to future generations). We've tried the redistribution approach, as have other nations. The record is terrible. Thinking it will be different this time because we will it to be, or because our leaders speak more eloquently, is putting hope before common sense.

 

[newporttony]

Your "solution" is simply to have govt. get out of the way, unless I misunderstood you.

Now your talking.

 

[samclem]

I saw a brief segment on the news about a St Louis Tea Party that took place yesterday. I belief there is a strong grass roots effort developing to try to control a government run amuck.

Thanks for the lead. Here's a short page with pictures from some of the small protests around the country. The signs they carry are interesting--most appear to be handmade, not printed by the thousands and handed out by a central organization.

I hope this catches fire. It will eventually need some type of core element, but this is a good start.

 

[lightwaves]

RAE....I agree with what you said. I think some on this thread represent what is increasingly becoming a fringe "Herbert Hoover" movement who believe "let the chips fall where they may". It is one alternative to the current situation but I can't buy it. Luckily I don't think the country is with them on that.

 

[samclem]

RAE....I agree with what you said. Luckily I don't think the country is with them on that.

Well, if you are right that this is the majority opinion, then "luckily" there should be enough do-gooders to make this redistribution plan a reality without needing to make it law. Now, if all the generous people who think redistribution is great will just send in their money, this could happen today. We won't need to wait for Congress to act, we won't need to wait while new regulations are written, and we won't need to worry about fomenting a revolt from those who believe their property belongs to them. In addition to being faster, this voluntary approach comes with a huge Karma benefit--you'll have done the "right" thing voluntarily. It's a win-win, don't let the government take it from you by making a law.

 

[newporttony]

RAE....I agree with what you said. I think some on this thread represent what is increasingly becoming a fringe "Herbert Hoover" movement who believe "let the chips fall where they may". It is one alternative to the current situation but I can't buy it. Luckily I don't think the country is with them on that.

Actually, the country is with us on this.

Rasmussen Reports™: The Most Comprehensive Public Opinion Site.

Wednesday, February 04, 2009

Support for the economic recovery plan working its way through Congress has fallen again this week. For the first time, a plurality of voters nationwide oppose the $800-billion-plus plan.

The latest Rasmussen Reports national telephone survey found that 37% favor the legislation, 43% are opposed, and 20% are not sure.