Congress’ Love Affair with Convenient Solutions

Anyone ever get the impression that Congress is only interested in providing “convenient solutions to convenient problems”, instead of addressing the underlying causes in a way that actually resolves the situation?

Where was Congress when speculators, cheap money and weak lending standards were driving up housing prices and creating a future economic crisis? They were all out celebrating the housing as evidence of their ability to manage the economy of course, because pointing out the obvious wouldn’t have been that popular with voters. Now they’re trying to use a housing bill to solve the problem that they could’ve prevented in the first place. I wonder what they’ll do when the housing bill only extends the housing downturn, since it doesn’t address the issue of people in houses they can’t afford, negative equity, etc, etc. 

Now gas prices are shooting up and everyone is looking for an easy culprit to blame, an easy solution that will make everything okay. So now Congress is suddenly very interested in speculators and credit standards (margin requirements for futures trading), and are now claiming to be able to fix the problem by ridding the market of speculators. Because telling voters the truth about energy demand, stagnant oil production and domestic and international consumption gaps wouldn’t be very popular with voters either.

Until Congress decides to wake-up and start working on the real causes of economic problems, we as voters shouldn’t expect very much from them in terms of effective solutions. You can’t solve a problem by ignoring reality and focusing on what’s convenient and appetizing.

Comments

[jjason]

Lee,

Congress CAN do something about speculators driving up the prices of commodities.

And Congress could have done something about the speculators in the housing market.

You should read this:

www.star-telegram.com/...

and this:

www.commerce.senate.go...

Then ask your congressman to require 100% margin in commodity futures contracts an make delivery of the commodity mandatory.

[rm]

[I wonder what they’ll do when the housing bill only extends the housing downturn, since it doesn’t address the issue of people in houses they can’t afford, negative equity, etc, etc. ]

The housing bill, as well as continued FHA DPA activity will certainly extend the downturn, but the bill DOES address negative equity, as well as affordability.

Potentially, a high-risk borrower could get out from under a high-start-rate adjustable into a lower rate AND that loan would be based on a smaller principal amount.

The real question is

[Mmarrkk]

Don't you just love our nanny gov't?? Idiots go out and buy a house that they can't afford and get a mortgage they can't afford. Then when they can't pay the bills, the waaaaa waaaa to the government and WE, the taxpayers, the ones who actually pay their bills, have to go in and help them out. This is sickening. The overwhelming majority of people who are "in trouble" shouldn't be in the homes they are close to losing. They shouldn't have been allowed to buy the house as they couldn't afford it. And they've only been in the house a year or two. So, losing their home isn't that big of a deal. Next time, they will listen when someone tells them that an "ADJUSTABLE RATE LOAN" adjusts!! wow...what a concept! And these people are allowed to reproduce, too! So now, I guess I'll have to get my checkbook out and write checks to cover other people's mortgages...here IRS...take all my money. Thanks Nancy Puhhhllleeeasss-OSI. You make me sick.

[Ronmac]

If our government regulates the speculators, they will trade on other exchanges. Dubai etc. So get over the US-centric views of the world. We don't control the world oil market.
Cut demand and the prices will drop, strengthen the dollar and prices will drop.

[Mmarrkk]

Ronmac: you forgot one more - drill more, produce more and prices will drop! Third leg of the stool. We need to do all 3 in the short term, even though the first 2 will have more immediate impact. Over time our ability to come up with alternative fuels will reduce demand as well. For now, the high prices are putting a dent in demand, but not enough to bring prices down to where everyone wants them. But at $140/barrel and $4/gallon, lots of alternative fuels will be attractive IF we can get them to a market (cars to burn it, stations to distribute, etc.)

[john s. gordon]

mmarrkk - you should blame the predatory lenders (fees being the motivation) & the predatory brokers (fees being the motivation) & the federal dept of housing (emperor george w & his 'ownership society') which encouraged the whole fiasco. subprime loans have been around for a long time (ask anyone in the real estate business) but were never a problem until 2001 & later.
> jack

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[paulk8756]

Yes, solar and corn ethanol (...and maybe wind) are the only forms of alternative energy in favor with the Greens and their Congress right now, despite their limited economic practicality and potential. Add electric cars and you have the perfect "triple play" as to why conventional energy prices are soaring.

So long as this doesn't change, they're going to keep on soaring, too. As I like to say, it's not "speculating"... when you're betting on a SURE THING.

[paulk8756]

70% of Americans recently polled want us to explore for more oil and gas domestically, and end our self-imposed offshore and onshore energy moratoria. This only goes to prove once again that people are alot smarter than the politicans they elect to Congress.

[Mmarrkk]

Jack: yeah, I guess you're right. Blame everyone BUT THE PERSON WHO SIGNED ON THE DOTTED LINE FOR THE LOAN!! What a joke. Why can't anyone take responsibility for their own action?? Predatory lending??? Did that involve a gun to the head? Or did it just involve stupid people?? Maybe there should be an IQ test before allowing someone to enter into debt???? No matter what you say, in the end it comes down to the person making the loan and buying the house. How you work GW into this, I'm not sure other than you guys find a way to blame everything on him.

When signing for a loan, there is a nice little form that lines out what your payments will be for the worse case scenario. Its mandatory for all ARM's. Why can't the stupid people look at that form and say, "Gosh, my payments can go from $400/month to $1000 per month in 3 years and you know, I can't afford that!". Is it too difficult to understand? Is that the problem? Are you telling me that the average American is just too stupid to be trusted to make financial decisions on their own??????? I'm not sure what worries/sickens me more: having to pay for this crap or you and your like's overall disbelief in American's basic ability to think.

[Boubou]

Government is not interested 'solving' problems and even less so in preventing future problems.
1) They need to propose action, wether or not they believe it will work. Inaction is the worst option.
2) The proposal needs to sound good on the news and align with party predispositions, contibuting to short term approval.
The horizon is the next election after which implementing the proposal can be swept away, which in most cases is the best thing to do with it.

[Mmarrkk]

Further to your logic Jack, should we outlaw all credit cards? Because some "dunce" might apply for a card, spend $10,000 on the card and then not have the money to pay off the card or the 18% interest charged. Even though when they signed up for the card, they were told they would have to pay 18% interest. Really no different from the home loan debacle. But wait, I guess we should have to help these mental giants pay off their credit cards too because George Bush made them charge on the card.

Based on this bail out, I think I'm going to buy a $2,000,000 home and then realize in a few months that damn, I can't make the payments. Then I'll let the government come in and bail me out. Get to live in a mansion for a few months rent free. Yee haw. What next? A Cadillac for free? Free handouts for all. Free healthcare, free college, free food!!!! I'm starting to feel like a Democrat again!!

[paulk8756]

You're exactly right guys, the impetus behind the whacky mortage craze was people figured they could get, "Something for nothing!" That's what's fueling our desire for "free" national health insurance, as well. No wonder our kids love it... they've been trying to pull these kinds of things off for years themselves.

[Mmarrkk]

Paulk8756: glad to see someone thinking straight!! In the meantime, watch out for those predatory car salesmen! They may force you to buy a car you can't afford! They are always advertising on the TV and newpaper about how cheap the deals are. And then whammo! The monthly payment comes due! Man, they are predatory and there ought to be a government group to bail us out of that too! If not, all of our cars will go down in value and the inner cities will collapse and it will be Bush's fault!! At least that's the "logic" I'm hearing from the nannies!!

[Peter Sterling]

Its really simple; replace foreign overpriced oil by find and producing American oil.

The concept would require Congressmen to be at least capable of conscious thought!

See; www.strategicnine.com/...

[Jerbear]

Our two party system has created a Congress that is unaccountable, lazy and only interested in staying in office.

They blame each other for not getting anything done and eveyone buys that arguement. Both parties love this system because it allows them to work very few hours, collect big paychecks and pensions. They live like rockstars, always trying to keep the camera on them and get votes.

The American people are loyal to their party like their sports teams. Even when they stink they still support them. That has to change

Until this two party system collapses it will be more of the same. I believe we should vote out every incumbent. We need a revolt in the Congress not a resolution.

[Still Laughing]

So the housing crisis was caused by idiots buying things they couldn't afford and NOT by banks lending to people they knew couldn't afford it? I'm not a consumer advocate by any stretch, but wouldn't it be more logical to blame the MORE educated and MORE informed person who STILL did something stupid rather than the idiot who probably wouldn't know any better? And then blame the investors who were stupid enough to accept the collaterilized loans in their portfolio and made the idiocy profitable. Don't blame the Democrats for bailing out the consumers. Blame the Democrats for bailing out the banks because THAT's who's ass is getting saved.