The compromise bill to address the economic crisis that started in the mortgage markets failed in a House vote yesterday. The reactions have been – um… interesting. Some are sort of iffy about the idea of the bailout, and even think that the bill should not have been passed. They think it may not have even been constitutional.
First of all, Treasure Secretary Paulson should have been fired when he sent Congress a flagrantly unconstitutional bill that would make him tin-pot dictator with no judicial review for his actions. As if the constitution were toilet paper.
Then he should have been fired yesterday when it was revealed (on the front page of The Times) that he brought a fellow stooge from his old firm, Goldman, Sachs-the chief executive!-into an emergency meeting about the fate of A.I.G.-a fate in which Goldman had huge undisclosed (to the public) stake-and one from which all other corporate finance stooges were excluded.
This is breathtaking contempt for the rule of law (the no judicial review provision) and then an astonishing, shameless naked display of crony capitalism corruption. Where were the law school profs to protest no judicial review? An astonishing dereliction of civic duty.
Well, gee. I wish Ron Rosenbaum would stop holding back like that and tell us what he really thinks…
So is this – the failure of the bill to pass – a good thing?
From the Wall Street Journal Online:
Drop your cable package and TiVo. Say goodbye to Applebee’s and Starbucks. Cancel the ski trip.
Slash every single penny you possibly can from your household budgets and start building up cash.
Yes, I’m serious. The shocking collapse of the rescue package on Capitol Hill threatens a disaster on Main Street. Unless this gets reversed almost immediately, it could turn a slowdown into a slump, and a slump into a depression.
It’s hardly possible to make any sensible recommendations about investments or other financial matters until we get a better sense of what will happen next.
Panic! Hide under a bushel barrel! Run Away!
Or not. The Instapundit quotes Bob Krumm, who make you wonder if it’s not all illusory, when he does an experiment. Krumm decided to see what kind of offer he could get for his house using “Lending Tree”. He wanted to compare it to the mortgage he actually got in 1996, in the midst of a “great” economy.
So what kind of offer did I get today in the midst of this horrible financial crisis? I got four offers, the lowest of which was a 15-year fixed-rate VA mortgage of 6.0%, zero points and zero down, yielding a monthly payment of $948.20. Yes, that’s right, as bad as everyone says the economy is today, I can get the same mortgage as I had twelve years ago for about $250 a month less than I was paying 12 years ago in the midst of a “great”economy.
He also asked Realtor.com to find out what his old house might cost today. The price of the house has presumably increased, right? And that would mean that, even with the mortgage numbers looking about the same, he’d be paying much, much more. Right?
While that particular home isn’t currently on the market, another home with the same floorplan and in the same subdivision is listed at $139,000. Plugging that amount into the 6.485% effective annual percentage rate of the mortgage I was offered today and I could buy my old home again today for $1,209.69 a month-about a dollar less than what I was paying for the same home in 1996.
He ends by saying that a little perspective is in order.
There is something going on, and some people are really hurting. But I don’t think it’s the end of the world, yet. Gee. I wonder if maybe there’s an election sometime soon. Or something.