Friday, September 26, 2008

Some People are Losing Their Minds........

....... in the midst of the current challenges facing Wall Street and the Banking Industry. I hear about people pulling all their money out of the market and dumping it into Gold, or plastic bags in the freezer. That's nuts. For one thing, it only makes things worse. Panic is a remarkable thing.

Today I read a couple of articles on liberal news sites that made blood spew out of my eyes. One suggested that the Government should force lenders to refinance their defaulted loans. That sounds noble, but many, maybe most, of the homes in foreclosure will just end up there again. Home ownership is not a right. Irresponsible borrowing (and lending) should be frowned upon and discouraged. There was a trickle up effect that has hurt several income brackets. Many poor people, excited about the opportunity brought about by 'creative financing', bought homes they couldn't really afford. The former owners of those houses, bought bigger homes and the ones who had owned those houses, built even bigger ones. At least three socio economic levels were suckered or suckered themselves into borrowing more than they could afford. Heck, thousands of people borrowed 125% of the house value. What's the good in that deal. No one should be bailed out. We should all learn to manage money and live within our means. The Government should stay out of our business.

The second article was suggesting that we should reconsider the 401k and should look again and Government backed retirement plans. The writer even laughed at Bush's "plan to privatize Social Security". Anytime I hear that I know the author is smokin' something. The President never attempted to do any such thing. He proposed that individuals could opt to put a small portion of their SS contributions into private plans. Nothing more. But the media rarely lets facts get in the way of a good rant.

The market goes through cycles. It's in a down cycle. It will come back, for heaven's sake. And why in the world would I want Government to control any more of my money. They can't manage what they have. It was Govt interference that cause this mess in the first place. Back in the early to mid 90s, the Govt. threatened lenders with lawsuits if they refused to lend money to lower income individuals with poor credit ratings. They were accused of being racist. Most lenders caved and the subprime industry was born. The entire housing market boomed for almost 15 years. But it was smoke and mirrors. When the dollar fell and oil prices rose at the same time a large percentage of ARMs were adjusting up, the dominoes began to fall. Houses were defaulted, credit card debt rose, the housing market crashed, subprime notes became worthless and so on.

The Government needs to get out of the way of business and let the market right itself. They need to stay out of the CEO compensation packages (will they try and control baseball salaries next?). They need to repeal Sarbanes Oxley. They need to lower tax rates for individuals and small business. They need to lift the restrictions on oil exploration. Government should look to their own house and stop ear marks and cut, cut, cut. Govt. should be dramatically reduced immediately. Let them manage their own budget, let business manage theirs and let me manage mine.

Ok, I'm done ranting for a few hours. It's just that I so badly want to help Americans beat debt and live free, but our elected officials and their cronies keep getting in the way.