Four Years Late and Billions of Dollars Short

Mass re-financing is in the news lately, a program where the federal government will guarantee the loans of homeowners who have established credit worthiness but have homes so far underwater no mortgage company will touch them. This is a radical concept for some, as it could put the government at risk for billions of dollars if people start defaulting. That alone will probably kill the bill, as the government is currently afraid to buy three-ply toilet paper if it will increase the debt.

The real problem is the whole idea is too late. This idea should have been crammed down the banks’ throats as a condition of TARP, with the banks accepting most of the risk. It’s not like the banks haven’t extended themselves in a similar manner before.

Remember when Donald Trump was bankrupt? The Donald certainly doesn’t. Trump has claimed various levels of bankruptcy four times and come out ahead each time. Why is that? It’s not because he’s smarter than everyone else; one look at his hair tells you that. No, The Donald got so far into the banks they couldn’t afford for him to go tits up, so he pretty much got to dictate terms. (Sound familiar?)

What the banks and government fail to recognize—or just don’t care about—is that we’ve been in the same situation for the past four years, with one exception: it’s not one guy who owes a massive amount of money, it’s a lot of people who owe a little. True, loans in the $100,000 to $300,000 range seem like a lot of money to us, but to these guys $100,000 is an office decorating expense. They’d rather throw thousands of people into the street than say, “Let’s find a win-win here. We won’t make quite as much, but we won’t have to sell a $250,000 home for $100,000, either.”

But they won’t. And no one will bring it up to them now, because government has no place telling banks how to run themselves. All government does is make sure they stay afloat when their Ponzi schemes fall apart on them.

Going Postal

The United States Postal Service is a favorite whipping boy for opponents of government. FedEx and UPS deliver faster, more reliably, and cheaper. USPS needs to close post offices, suspend Saturday delivery, and, for God’s sake, get rid of those Cliff Claven, Newman-esque employees. (Full disclosure: my brother is a letter carrier.)

Here’s a suggestion: maybe USPS could emulate some of FedEx’s and UPS’s business practices. How about letting them cherry pick where things get delivered. Today, you need something delivered to Grandma’s farm in South Bumfuck, NE, it costs you the same as sending it across town. UPS and FedEx may not even deliver it.

It’s true a lot of things are wrong with the Postal Service, but what they routinely accomplish is amazing. Last Sunday I placed an order online and took the cheapest shipping option available: USPS Parcel Post. The package arrived Tuesday morning. It was shipped on Monday, and arrived Tuesday. No fee for special overnight. Granted, it wasn’t guaranteed, but try sending something FedEx Ground and have it get there overnight, even though it only went a hundred miles or so. “FedEx doesn’t isn’t set up to do that kind of thing?” Right. USPS is, and it costs.

This is a prime example of how those who continue to advocate for ever smaller government don’t know what the hell they’re talking about. There are some things government is uniquely suited to do, because they have to be done and can’t really be done profitably. Mail delivery is a good example. The next time someone bitches about it, ask them if they’d prefer to have to shop around to make sure a letter can even be delivered to the address they’re requesting before they mail it.

Oh, wait. No one else will even deal with a plain old envelope. Too cost-inefficient. Maybe we should just bite the bullet and subsidize USPS after all.

False Security

[Agency name redacted] is in the process of issuing new identification badges to all employees and contractors. New photographs, new fingerprints (in case they changed from last time),and the usual descriptive information. Date of Birth. Eye color. Hair color.

(Interesting side note: Two documents are required to prove your identity. Among the acceptable options are a U.S. state-issued drivers license and your current [agency name redacted] badge. No one seems to have recognized I used the former to obtain the latter in first place, so it’s not really two forms of ID, is it?)

My current hair color can safely be described as “mongrel.” When the pleasant young woman taking my information asked, I said, “Take your pick.” She gave me a closer look and laughed. When I was asked to proofread the data for accuracy, I saw “Gray” in the “Hair Color” line.

Bitch.

Can You Spare Some Change?

Barack Obama campaigned for president on the slogan, “Change You Can Believe In.” No one suspected he was referring to people who believed in tax fraud.

Timothy Geithner was named Treasury Secretary despite his failure to pay $43,000 in taxes. The World Bank even gave him the money and said, “This is for your taxes.” Now he’s tasked with solving the baking crisis, allegedly because he’s the only person who fully understands it. How good do you feel about that?

Tom Daschle’s first speed bump on the road to being Secretary of Health and Human Services came when word got out he owed $140,000 in back taxes. Tom didn’t think a free car and driver counted as income. His former peers in the Senate rallied to his defense, said it was an honest mistake: the tax code is complicated on such matters. Tom was only about to be tasked with guiding universal health care through the rapids and eddies of becoming law.

Hilda Solis’s nomination to be Secretary of Labor has been delayed because her husband’s business has outstanding tax liens totaling $6400. A small sum for a business, to be sure, but some have been outstanding for sixteen years. Hubby claims this is the first he’s heard about them. Mail delivery must be pretty bad in their neck of the woods.

Nancy Killefer, nominated to essentially be head of quality control for the government, bailed when her tax lapses came to light, though they were the most easily understandable of the lot, failing to file Social Security tax for domestic help. Not excusable for someone looking for the job she was about to hold, but no great benefit to herself.

These episodes tell us several things, all of which will be explored in more detail as time goes on and I get more pissed off.

1. The Obama Administration’s promises of running a more competent government shouldn’t be taken too seriously. Someone hasn’t been doing their homework if all of the above were nominated for important and sensitive posts despite tax situations that might be considered felonies for you or me.
2. The change we can believe in will not extend so far as to disrupt the society of privilege. Americans claim to be a classless society because we have no official royalty or nobles, yet wealth and power decide who does, or does not, obey the law or ethical standards. Miss payments on a billion dollars of commercial real estate and the banks will come to you with refinancing plans. Miss payments on a $200,000 home mortgage and your ass is in the street.

All of the above make it a good bet the stimulus bill under consideration in Congress won’t be enough. The Democrats ladled in too much pork and too many pet projects that should have been discussed on their own merits. Republicans demanded too many tax cuts, which don’t stimulate as well as spending, can’t be targeted (since we can’t control what people spend the money on), and won’t help the people who need it most: the unemployed don’t pay much in taxes because they’re not making any goddamn money.

Bailing out the banks kept them afloat, and might have kept the rest of us from going under with them; that’s what we keep hearing. If you’re looking for positive results from the first $350 billion we took from our children to give to the banks, keep looking; John Thain’s office might be a good place to start.

This is about the sixth time I’ve begun this topic. I never posted because I never found a satisfying way to end it. I still haven’t.

The System's Broke, Now So Are You

Yesterday Lehman Brothers went underwater faster than Galveston. Merrill Lynch was helicoptered to safety at the last minute. AIG is stalled on the railroad tracks, hoping the engineer of the oncoming train isn’t text messaging anyone. All of us are riding the tiger, and we might as well wait until he gets tired; he’ll eat us if we jump off at the wrong time. (Thus ends the strained metaphor section of today’s essay.)

Free market, laissez-faire capitalism is at the heart of the American economic myth, and the country has profited from it We’re in the process of being reminded the free market ain’t free, and it’s not just those who reach for the brass ring and miss who get ground up in the wheels of its machinery.

Unfettered capitalism is based largely on the premise of self-regulating markets, and the idea of balancing risk against rewards. Theoretically, it works. We’re seeing it work now, as bubbles in housing and credit positions have burst more or less simultaneously, creating havoc across the economy. In theory, those who made mistakes are being punished financially, and those who were prudent will be rewarded. That’s not how it works in practice.

This is not the place to debate just desserts for those whose greed brought us to this place, nor to argue who should, or should not, get bailed out by the government. All we can do is to make the best of an increasingly bad situation and devise workable plans to see to it such events don’t happen again.

Which means regulation. Public policy has stripped away layers of regulation since Ronald Reagan’s inauguration in 1981. Much of this was necessary. Government regulations created a culture of featherbedding, where no business in selected sectors—commercial airlines, telecommunications, interstate shipping—could go broke, thanks to what amounted to government price fixing. Everyone paid for that, except the shareholders of the protected industries.

The freewheeling, devil-take-the-hindmost attitude that replaced it has swung the pendulum of business too far the other way. It’s never good to see a business go bust, though some deserve to. Our current situation has evolved into a caricature of laissez-faire, where those with the most to gain had little to lose, and those who stood to benefit least may lose most.

Tax laws were made more lenient for brokers of certain investments, because their income depended to a large extent on commissions, never mind they were building their fortunes with other people’s money. Their risk was they wouldn’t get rich; their reward could be to become obscenely rich. Exorbitant bonuses were paid to executives who built short-term profits on dubious strategies, such as buying securities based on mortgages unlikely to be paid. These, and others, have been swept up in the debris of the bursting bubble, but they’ve already cashed in. Their investments will suffer, but a $10 million (or more) nest egg can take a substantial hit before its owner becomes middle class, even by John McCain’s definition.

Those who will be hurt most are those who had the least to gain. People who were in the market hoping for no more than a relaxing retirement, or to send a child to college are seeing those possibilities move farther away every time they open a newspaper. Adding insult to injury, the tightening of credit makes it harder for their kids to get student loans; the potential of getting money out of their houses diminishes with the value of the house.

These are the people who never stood to become millionaires, but who are paying the greatest real price. The nebulous “market” true capitalists reflexively genuflect before has no mechanism of concern for these people; they don’t matter. The excessive regulation of an overlarge government can be blamed for a lot of things, but we forget the uses and benefits of government at our peril. It seems America has to learn the dangers of capitalism run amuck every eighty years or so. Let’s do what we can to make it a little easier on our grandchildren.

Timing Is Everything

The Home Office has been hard on the federal government over the past few years. In the interests of fair play, it's time to point out one thing the Feds got right: Monday holidays.

I used to make fun of the official federal holidays, especially the ones they made up just so they always fall on a Monday: Martin Luther King Day, Presidents' Day, (the moving of) Memorial Day and Columbus Day. (Labor Day was always on a Monday, so it didn't count.) "Let the holiday be on the day it commemorates," I used to think. "January 15, May 31, October 12, whatever."

This year my favorite federal holiday, Independence Day, fell on a Friday and showed me the error of my ways. "A three-day weekend is a three-day weekend," I used to think. "It doesn't matter whether the short work week falls before or after the holiday."

Dumb ass.

Mondays are much better. It was nice to have last Friday off, plopped into my schedule much like the rain that fell off and on throughout the day. Saturday was Saturday, and the Sunday routine stayed the same. Translated: back to work tomorrow.

If the holiday fell on Monday, the weekend would go on as usual, except when I got ready for bed on Sunday night, there would be no need to set the alarm; a bonus extension of the weekend was at hand. Sweet. Even better, the upcoming workweek was only four days. With the Friday holiday, we're staring at coming right back into a regular week. (True, last week was short, but that was last week; what have you done for me lately?)

So here's a big thank you to Congress for promoting the idea of Monday holidays. Yes, it was quite a few Congresses ago, and the current Congress has done little to recommend itself to anyone other than narcoleptics. Still, it's only fair to show appreciation where it's due. Granted, Monday holidays don’t quite tip the scales when balanced against the Iraq war, torture, the erosion of civil liberties, no energy policy, an unfair tax structure, faulty levees, and the failure to provide any meaningful oversight to banks and lenders that prompted the current economic downturn, but that's me: Mr. Glass Is Half Full, the eternal optimist.

Is There a Doctor in the House?

Psychiatrists would do well to investigate a strange malady best described as Americanitis. It resembles bipolar disorder in many ways, with traces of messianic complex. It appears to occur uniquely in North Americans living in the United States.

Where else can you find people who spend so much time railing against government intervention in their lives, such as taxes, mileage standards for automobiles, affordable health care, keeping guns out of the hands of those likely to use them to harm others, to name a few. All of these are said to be improper uses of governmental authority, as the government cannot be trusted to keep the people’s best interests and privacy in mind.

Yet these same people have no trouble allowing that same government to listen to their phone calls, open their emails, and keep them under increasing photographic and video surveillance everywhere they go.

Maybe Americanitis isn’t quite the right term. Paranoia Republicania has a nice ring to it, and hits closer to the mark.