Thursday, August 23, 2007
Gross: "Rescue the Homeowners..."
I think it is a noble thing indeed to rescue the home-owning people and so save America from errrr itself(?!?). But which home-owning people? Are two-home-owning people more deserving of a life-buoy than than one who owns but as single home? "Who" are we we saving "them" from? Faceless foreclosure? The bank? Chinese mortgage-backed paper-holders? Our pension funds who own mortgage-backed paper? Are the folk who bought stupid interest-only low-teaser-rate mortgages more deserving than the ones who simply paid too much and find themselves in negative equity? Should we save those that patriotically took out home equity loans following 9-11 in order to spend as they saw their patriotic duty? Or should we "save" those who continually withdrew equity from their homes to cruise the world or buy a plasma TV, such that, like Icarus, they simple consumed too close to the sun?!? What about the people, who deserved the good life, and in whose pursuit deservingly stretched to buy an extra 2000sq ft with pool, 3-car garage, and gallery ceilings, leaving no wiggle room for the inevitable "shit" that all-too-often happens in the course of life. Perhaps, the US gov't can recoup costs by having a 24-7 reality TV show that combined CourtTV with "Judge Judy" and "How to be a Millionaire " in a macabre publicized real-life drama showing precisely "how" they got there, and throwing themselves on teh mercy of the errr court/government/panel have you to see if they qualify for a "subsidized mortgage", "elimination of some principal off the loan", "temporary interest rate relief"," stay of execution in respect of foreclosure, or for the lucky few (and truly deserving) few, outright annulment of the mortgage loan, and award of the contested home free and clear.
But I will ask the question: Are not the savers deserving too? Perhaps the savers should unite and ask the government to provide them with some redemption for the lax fiscal policy and negative real interest rates that have spawned inflation in the real basket of goods and services one uses and consumes each day. It IS perverse justice that the prudent one's who save for a rainy day, and consider wisely, the possibility that something might upset the best laid of plans, and so do NOT borrow 6-times their income on absurd luxury that the less wise did, and who as a result were so stretched they could not afford to landscape in the first instance, nor now they can afford the energy to heat or cool the royal waste of space. Where is culpability or responsibility?
That there has been a large transfer of wealth from savers and the equally-weighted American to military contractors, leveraged asset-buyers and their intermediaries is undeniable. Perhaps, in similar fairness we should create a look-back tax that assesses the gains (some or many ill-gotten) made from the asset inflation and money illusion and redistributes it the ordinary savers and pensioners? We can call it the Sowood Tax in sympathy with Mr Larson's magnanimous gesture of returning previously-earned performance fees to investors following his Fund's recent debacle. America is not for wont of wealth, but is for wont of more disperse distribution of it. When however the distribution is sooo skewed, taxing the average to save the average citizen seem reasonably daft, given the enormous tax holidays and munificent gifts adorned upon the upper-most percentiles. Perhaps the time has come for more meaningful sacrifices that begins to tackle what almost every objective observer sees as a way of life that depends upon unsustainable consumption, encouraged by absent levies upon the many externalities this life spawns. The bubble, is perhaps in the American Way itself. And everyone sees it, but Americans themselves.