Obama's remarks on the mortgage crisis the other day probably mollified the restive crowd somewhat, but there is still a disconnect here that neither he nor his Clintonista finance buddies seem to get. Or maybe they get it perfectly well, but are still missing the long- (or even short-) term ramifications of the worsening crisis.
The plan I'm announcing focuses on rescuing families who've played by the rules and acted responsibly, by refinancing loans for millions of families in traditional mortgages who are underwater or close to it, by modifying loans for families stuck in sub-prime mortgages they can't afford as a result of skyrocketing interest rates or personal misfortune, and by taking broader steps to keep mortgage rates low so that families can secure loans with affordable monthly payments.
At the same time, this plan must be viewed in a larger context. A lost home often begins with a lost job. Many businesses have laid off workers for a lack of revenue and available capital. Credit has become scarce as markets have been overwhelmed by the collapse of security backed -- securities backed by failing mortgages. In the end, the home mortgage crisis, the financial crisis, and this broader economic crisis are all interconnected, and we can't successfully address any one of them without addressing them all.
The economic crisis begins with debt, of course, both actual debt incurred by actual people who had actual jobs, and the phantom debt created by spreadsheet monkeys armed with nothing but the secure knowledge that they'd recoup the cost of their fuck-ups on the backs of the now-jobless taxpayers. So sure, creating jobs is a major part of it, but the kinds of jobs created, and some commitment to correcting the banana-republic levels of income disparity are also critical. Repairing the highway system is a nice thought, but only helps those who can still afford to drive, whose happy new jobs aren't simply being shoveled into paying down their underwater mortgages.
The real root of the crisis began with overvaluation, and overbuilding, and bundling those doomed-to-fail figures into bad bets. Simply propping up that system and pretending to close a few of the worst loopholes, perp-walking a handful of the worst offenders, won't do shit. Did California get any of the money back that Kenny Boy Lay fleeced us out of at the dawn of this benighted decade/century/millennium? Fuck no. It's small consolation to suppose that Jeff Skilling might have to look over his shoulder in the prison shower, but it's more likely that he's playing tennis with a bunch of other disgraced suits, waiting for his next conjugal visit, planning his rehabilitative speaking tour. Ten bucks says Bernie Madoff flips on a half-dozen smaller fish, and doesn't do a day's hard time.
Anyway. So it's not quite enough to make happy promises about new jobs for anyone who wants one, we have to talk about what that income will be and where it's expected to go, and whether people will be willing to indenture themselves to overvalued McHouses that they'll never recoup. Housing value losses are almost certainly not coming back; this is a correction, not a trough in a returning cycle. We'll be lucky if values finally restabilize halfway between where they are now and where they were at the peak, and even then, it would likely be temporary, because all the old temptations are still there.
And while I'm not ready to write the guy off after a single month, Obama had two months to prepare for jumping into this mess, and so far seems either unwilling or unable to confront the core issues, which means a perpetuation of the disease. Letting the assholes who created the problem in the first place have another crack at it is not a solution, not even a viable plan. So far it's been an unmitigated fiasco.
And that's if all these super-cool money-burning plans work, and for whom, and how the interdependent communities and entities people rely on weather these things. For many people, it's not going to work -- it'll be too late, or not enough, or they're just in an area that's dead or dying and have no way to leave. In those instances, the prospects appear to be dire, to say the least. Having a choice between economic stasis and a full-on worldwide depression is going to leave a lot of people out, many with interesting skills that would be useful in an economy of systemic disempowerment and stagnation.
If we read these stories merely as accounts of the spread of a technology, IEDs, we read them too narrowly. American and other foreign troops in places such as Iraq and Afghanistan are learning more than how to make IEDs and how effective they can be. They are learning by direct observation how a place works when the state disappears.
To the large majority of American and European soldiers, this is a lesson in horror. They return home thankful they live in a place where the state endures. The last thing they want is to see their native country turn into another Iraq or Afghanistan.
But a minority will learn a different lesson. They will see statelessness as a field of opportunity where people who are clever and ruthless can rise fast and far. They look upon themselves as that kind of people. They will also have learned it is possible to fight the state, and how to do so. The effectiveness of IEDs is part of that lesson; so are the power and rewards that come to members of militias and gangs. In their own minds, and perhaps in reality, they will have found a new world in which they can hope to thrive.
If there's going to be another "tea party", it'll be to drag under-the-desk corporate pole-smokers like this clown to the guillotine erected in Times Square. I do not think the Masters of the Universe have thought this one through sufficiently, unless they all think they're going to milk the government for their own walking away money and buy their own island (other than Manhattan). Given how they've done their jobs, that must be exactly what they're thinking.
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