30th October 2008

I am a soulless curmudgeon

posted in Economy, Politics |

I watched Obama’s half-hour TV ad.

Then I bop online, and find people who were moved to tears.

I wasn’t.

I was irritated.

We saw families “down on their luck”…but not really down.  I’ve got to say, if my husband’s job were cut to one week out of every two, and I were laid off, why on earth would we be going out to eat?  Equally to the point:  why on earth would Obama’s campaign film a family in such straits doing such a thing??

Then there’s the fact that…um…look, I know they were playing to the moderate white vote, but my overwhelming feeling in this ad was…it was very white.  I suppose it wasn’t PC enough for me, har.

Then Obama says he voted for the bailout and is hoping to Do More.  Aaarrgghhh!  Right now I feel like the financial gurus are busy pulling cards out from under one side of a tottering house of cards to shore up a different side.  What we need is for the U.S.–and all the other countries who joined us on the drunken binge of borrowing and spending over the past ten years (dear lord, I am using Dubya’s very own phrase, just shoot me now)–should stop trying to get banks to loan and people to borrow, and start encouraging savings and investment in real goods.

Over the past six months, at an increasing tempo, the U.S. has flung fictional money this way and that, to the tune of:

  • $700 Billion – The bailout bill; U.S. Treasury to purchase toxic mortgages and other non-performing assets from financial institutions.
  • $50 Billion – To guarantee principal in money market mutual funds.
  • $10 Billion+ – Treasury purchases of mortgage-backed securities (MBS) in September.
  • $144 Billion – In additional MBS purchases by Fannie Mae and Freddy Mac.  (With a limit of $850 billion…whoop-de-do).
  • $85 Billion – AIG bridge loan giving the Fed a 79.9% controlling stake in the firm.
  • $87 Billion – Repayments to JP Morgan for providing financing to underpin trades with the now bankrupt Lehman Brothers.
  • $200 Billion – $100 billion capital infusion for Fannie Mae and Freddie Mac by the Treasury.
  • $300 Billion – Provided to the FHA to refinance failing mortgages into new, reduced principal loans with a federal guarantee as part of the housing bill.
  • $4 Billion – Provided to local communities to purchase and repair abandoned homes due to foreclosure.
  • $29 Billion – Financing for JPM’s takeover of Bear Sterns. The Fed takes $30 billion in non-performing assets as collateral.  (Goodness only knows how much those “assets” are worth now.)
  • $200 Billion – Currently outstanding loans to banks through the Fed’s Term Auction Facility.
  • $150 Billion - Stimulus checks.  Remember those?
  • Not to mention a whole slew of additional multi-billion-dollar chunks o’ change being handed out to GM and foreign countries…

Just where is all this money going to come from??  A hundred billion here, a hundred billion there…That’s almost two trillion dollars.  And now they’re talking about another $50 billion to guarantee up to 3 million mortgages where the mortgage-holders are underwater (more than a month late).

Look.  My husband and I aren’t poor, but we’re not rich.  We’re not the best money managers around, but we managed to put a fair amount down on this house, pay off debt, purchase two cars outright, and keep up with our mortgage payments.  We won’t see that help.  And that makes me angry.  Yes, there are people who were bamboozled into bad mortgages at the last minute, but the majority of the folks who are in foreclosure used funky mortgages to buy more house than they could really afford based on teaser rates and the assumption that their houses could only appreciate in value.  They get help; my husband and I, who deliberately looked at houses where we could afford the payments on a plain vanilla fixed-rate 30-year mortgage (even though we’d have loved to get more house) won’t.

I think I was looking for more of a “Fireside Chat” approach.  Something with more substance, and something that came straight out and said “The next few years are not going to be easy.  We’re all going to have to tighten our belts.”  What we got was fluff, violins playing, and warm-hearted shots of Obama shaking hands, giving and getting hugs, and holding babies.

It didn’t move me to tears.  Or at least, not in the way that the ad writers wanted.  And I’m voting for the man.

This entry was posted on Thursday, October 30th, 2008 at 12:37 am and is filed under Economy, Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

There are currently 5 responses to “I am a soulless curmudgeon”

  1. 1 On October 30th, 2008, gh1f said:

    Some of those ‘bailout numbers’ are a bit inflated: many of the payments are loans that hopefully will be paid back, and we got equity for the first TARP payments. But the government is probably going to spend lots more money, so who really knows what the cost will be.

    But all that being said, I agree with your main point, with one caveat. We need the financial system (ie, the banks) to turn people’s savings into real investments. So if too many banks don’t make business loans for good real investments, then all the savings are not helping the economy. If banks just sit on the money, then the savings are in effect, being wasted.

    One reading of the excesses of the past is simply that peoples’ savings turned into real investments in new housing stock, rather than investment in things like new businesses with positive real returns. Now we need to turn that housing capital into factories, investments in businesses, etc, but that is going to be costly.

    In the end, the big question is going to be this: which way does the causality run–the credit crises caused future poor economic growth, or is it expectations of poor future economic growth that caused the credit crises.

    As far as I can tell, we have no real way to know which way the causality is going. At least not in real time.

    In any case, all the current uncertainty about what the government is going to do, and all the doom and gloom about how bad things will be, is actually making things much worse, since people start to pull back in times of increased economic uncertainty. (How can you not panic when you read in the Wall Street Journal that the Chairman of the Fed and the Secretary of the Treasury went to Congress and said that unless they get $700 B to give to the banks that the economy will melt down?) Much of the current uncertainty is now being fueled by the government’s actions and uncertainty about the government’s future actions. Hopefully all this will settle down once we have a new President and Congress.

    /ramble

  2. 2 On October 30th, 2008, Johnny said:

    I admit I like the commercial, but could see the very distinct targeting going on there.

    I saw that 3 of the 4 families are in swing states. Let’s be frank, he’s got a large majority of the African American vote locked up - he needs to convince white America that he’s not the Devil.

    I was listening to a person from IndyMac say, “Yes, it’s not fair” about potential mortgage term re-writes. I’m not happy either, but that’ life.

    What goes around comes around, I think.

    Or was it, I hope?

  3. 3 On October 30th, 2008, Lisa said:

    You know, I thought the same thing about the family going out to dinner! I was far more moved by the Oprah show a few years back where a family had to do their grocery shopping for a week on about $12. I remember how much the dinner came to — $24 — which is not really cheap when only one parent is working, and only half time. I’d rather have seen someone open their cupboards and say “Hey look we’ve got no food. That is what our life has come to.”

    Overall, I liked the Obama ad, but I felt icky about the idea of it from the beginning. Even though he is my candidate, I didn’t like the idea of buying ad time on multiple networks so people would be forced to watch. Seemed a little authoritarian to me.

    And in terms of the bailout, I hear your frustration. I am 30, have a lot of student loan debt, and even though we desperately want to buy a home, my fiance and I didn’t buy anything while a lot of people were buying more house than they could afford. Now we are still renting, and those irresponsible people might get help from the govt (and by extension, us) to keep the homes they couldn’t afford in the first place? It’s not fair when those who play by the rules end up picking up the tab for the excess of others.

  4. 4 On October 31st, 2008, GrannyJ said:

    The worldwide financial crisis is a far, far more important issue than Bush’s stupid Middle Eastern adventure which is trivial in its impact on people around the world in comparison. Given that the great housing bubble that burst is largely a creature of the Democratic party, I can’t bring myself to vote for a Democrat in yet another branch of government, giving the Barney Franks of Congress a free hand for still more creative innovation. So I am advising everybody I know to hold their noses and, yes, vote for McCain. I think that tension between the White House and the Congress is a good brake on wide ideological swings in our governance. Don’t forget that FDR tried all manner of new experiments — but what it took to get us out of the Depression was a major war. I’d love to cast a protest vote for Bob Barr or any other libertarian, but feel this election is too important to indulge my own ideology.

  5. 5 On October 31st, 2008, Journeywoman said:

    Re: the family going out to eat.

    If I’m not mistaken (and my friend isn’t mistaken) that is the family with the special needs child.

    I said exactly what you did about the family. “Why are they going out to eat?” To my friend. Her brother is special needs. I got a whole education on how VITAL routine is for a child who is special needs. If they have always gone out to dinner on Thursday, then they will (and should) go out to dinner on Thursday so that the child’s world doesn’t come crashing in on her head. Yes if things get worse then perhaps they shouldn’t, but I’m not in their heads–and I don’t have a special needs child.

    That also being said I thought the most touching visual was the elderly black woman trying to massage her fingers.

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