Obama's Rhetoric is the Real Catastrophe

[UGAalum94]

This is pretty far from anything related to the topic of the thread, but I occasionally fall into the "where's my bailout" line of thought. Not really sincerely, but simply because I feel like the government is creating incentives for bad or irresponsible behavior and penalties for people who, so far, have demonstrated they're more likely to pull their own weight.

AGDee, I think some of my differences with you on this point have to do with your having a fundamentally more positive view of human nature and human behavior. Most of the time, you seem to assume that people who want or need help honestly tried their best to meet their obligations but through limited fault of their own have now become unable to. That line of thought more supports the idea that it becomes the moral duty of others to try to help them, and the government's job to kind of provide guarantees of this help.

On the other hand I see some evidence that the current mess reflects a lot of behavior by people who approached things very selfishly and incautiously, who sought to get the most they could rather than what they could safely afford (or morally or ethically deserved, in the case of money managers who made a lot of money losing money for investors or CEOs who screwed their companies), government officials who were more than happy to personally profit from a failure to regulate and turned a blind eye when things were good, who all now turn to people who have been plugging away at steady jobs, living in modest houses, paying taxes, basically trying to carry their own weight, and ask for the second group to subsidize the bad outcomes because of the behavior of the people in the first group.

Oh, hell no.

[AGDee]

Originally Posted by UGAalum94

AGDee, I think some of my differences with you on this point have to do with your having a fundamentally more positive view of human nature and human behavior. Most of the time, you seem to assume that people who want or need help honestly tried their best to meet their obligations but through limited fault of their own have now become unable to. That line of thought more supports the idea that it becomes the moral duty of others to try to help them, and the government's job to kind of provide guarantees of this help.

On the other hand I see some evidence that the current mess reflects a lot of behavior by people who approached things very selfishly and incautiously, who sought to get the most they could rather than what they could safely afford (or morally or ethically deserved, in the case of money managers who made a lot of money losing money for investors or CEOs who screwed their companies), government officials who were more than happy to personally profit from a failure to regulate and turned a blind eye when things were good, who all now turn to people who have been plugging away at steady jobs, living in modest houses, paying taxes, basically trying to carry their own weight, and ask for the second group to subsidize the bad outcomes because of the behavior of the people in the first group.

Oh, hell no.

I did say that I think the root of the whole problem is greed, so I'm not sure I'm saying that we're basically good and all tried to do the right thing. I see three groups of people in foreclosure. The first group don't have jobs or have had extenuating circumstances (like my neighbor who had breast cancer and then lost her husband) and therefore, can't pay their mortgage. Some of them have paid hundreds of thousands on their mortgages over the years but can't pay it now. So, even if they only owe $20K on their original $150K mortgage, they can't make the payment and the bank gets the house. The second group got into bad mortgages ... interest only or low interest to begin with, with the plan to refinance as the low interest terms of that mortgage came to an end. However, since their housing value has dropped more than 30%, they can't get a new mortgage so they are stuck paying exorbitant interest. I don't know who should "shoulder" the blame for those. I don't think people intentionally said "I'm going to buy a bigger house than I can afford". I think they thought they'd afford it, that property values would continue to rise, etc. The third group are people who have found jobs in other states, have had their homes on the market for over a year and can't sell it. The result of all this is that home values continue to drop at an alarming rate. So even if you had 20% down when you bought your home, you now owe more than it's worth. Whose responsibility was it to predict that home values would drop this much and you should have put at least 50% down on your house 5 years ago if you wanted to have 80% equity today? I don't know. I hear experts say we were in a housing bubble and it was bound to burst, but I don't know how we were supposed to know that. I guess I think some of that stuff should've been regulated.

Do I think we should be bailing out the CEOs of corporations who were making 7 or 8 figures? No. However, shit rolls downhill and it's seriously affecting the people who were paying everything and staying on top of things because they don't have jobs now. The vast majority of these companies that are failing are the middle class working folks, not the CEOs. The actions of the first group are seriously affecting the people in your second group. You think the guys who were making 8 figures are losing their homes? No. They've made more in a couple years than the rest of will make in our lifetimes. I don't see the bailouts as bailing out those individuals. I see it as bailing out society as a whole. I think that's our major difference.

[UGAalum94]

Housing: I think we all just have to live with the consequences of how our decisions pay out without expecting to be somehow delivered from them. I think the word on the housing bubble was out there before the bubble burst; most of us just ignored it and did what we wanted to do. All of us may owe more on our homes than they are worth if you bought in the last five years. There's no government fix for this really. On some level, what a lot of people seem to want is a restoration of the bubble.

The "where's my bailout" thinking comes in when you see that if you quit paying your mortgage you might get something: adjustment of the loan value, new terms, something. At some point, you feel like a sucker for just plugging away at life while people who made dumb decisions or decisions with unfortunate consequences, depending on how gracious you want to be about it, end up doing as well or better in terms of material possessions. I think it was AKAMonet who first mentioned the Grasshopper and the Ant fable.

I have a whole lot less faith that we can bail society out because human nature won't fundamentally have changed a lot with a couple of months of economic downturn, particularly if the ants have to share with the grasshoppers.

(Personally, I think I have some Grasshopper traits too, so I'm not trying to present myself as all dedicated and financially cautious, but I would expect there to be individual consequences and resolutions to my own mistakes, rather than that everyone else was obligated to pitch in.)

[DrPhil]

Originally Posted by UGAalum94

Housing: I think we all just have to live with the consequences of how our decisions pay out without expecting to be somehow delivered from them. I think the word on the housing bubble was out there before the bubble burst; most of us just ignored it and did what we wanted to do. All of us may owe more on our homes than they are worth if you bought in the last five years. There's no government fix for this really. On some level, what a lot of people seem to want is a restoration of the bubble.

The "where's my bailout" thinking comes in when you see that if you quit paying your mortgage you might get something: adjustment of the loan value, new terms, something. At some point, you feel like a sucker for just plugging away at life while people who made dumb decisions or decisions with unfortunate consequences, depending on how gracious you want to be about it, end up doing as well or better in terms of material possessions.

I have a whole lot less faith that we can bail society out because human nature won't fundamentally have changed a lot with a couple of months of economic downturn, particularly if the ants have to share with the grasshoppers.

(Personally, I think I have some Grasshopper traits too, so I'm not trying to present myself as all dedicated and financially cautious, but I would expect there to be individual consequences and resolutions to my own mistakes, rather than that everyone else was obligated to pitch in.)

This all makes sense at the individual level. However, the government is here for a reason and platforms differ on why the government exists/what its role is. So who has the "right" to make such subjective determinations of the consequences of people's actions and where does the government step in?

This country is no stranger to social programs and safety nets. There are ways that the government determines who is eligible for these programs. We have given the government the power to make such determinations so it really shouldn't change now. America and global capitalism have always had contradictions and hypocrisies. It is extremely contradictory and hypocritical for this country to ignore the monster that it/we created and say "well many of you chose to be consumers in this consumer economy. So just live with the consequences of your actions that coincidentally helped build up the most powerful industrialized nation in this global market."

[UGAalum94]

Originally Posted by DrPhil

This all makes sense at the individual level. However, the government is here for a reason and platforms differ on why the government exists/what its role is. So who has the "right" to make such subjective determinations of the consequences of people's actions and where does the government step in?

This country is no stranger to social programs and safety nets. There are ways that the government determines who is eligible for these programs. We have given the government the power to make such determinations so it really shouldn't change now. America and global capitalism have always had contradictions and hypocrisies.
It is extremely contradictory and hypocritical for this country to ignore the monster that it/we created and say "well many of you chose to be consumers in this consumer economy. So just live with the consequences of your actions that coincidentally helped build up the most powerful industrialized nation in this global market."

I disagree. When the government has demonstrated it's unwillingness or inability to govern or regulate effectively, and depending on who you ask actually institutes programs that led to some of the problems, I think we have to decrease the government's power to make those decisions, rather than increase their role. ETA: actually, I'm all over the place on this. I really don't know. I feel mutual contradictory impulses that lenders needed more or different regulation previously, but at the same time I don't trust the government to know what regulation they need now.

And most of our view of government in the US is based on the idea that we are individuals capable of making decisions in our own welfare. The idea that most of us are simply passive witnesses to the creation of some monster is kind of odd. Purchasing a house is not a passive process really.

ETA: If we were talking about a federal package strictly to temporarily strengthen what we usually think of as safety net type programs: food stamps, housing vouchers/public housing, health services for the poor, I don't know that I'd feel as resistant to that. But what we're seeing doesn't seem to have any kind of focus.

[DrPhil]

Originally Posted by UGAalum94

I disagree. When the government has demonstrated it's unwillingness or inability to govern or regulate effectively, and depending on who you ask actually institutes programs that led to some of the problems, I think we have to decrease the government's power to make those decisions, rather than increase their role.

This sounds good in theory. How does it work in practice? Whose opinions/frame of reference and what evidence will these steps be based on?

Originally Posted by UGAalum94

And most of our view of government in the US is based on the idea that we are individuals capable of making decisions in our own welfare. The idea that most of us are simply passive witnesses to the creation of some monster is kind of odd. Purchasing a house is not a passive process really.

Americans are both active participants and semipassive witnesses, depending on the process. We purchase homes and accumulate wealth (and inform ourselves and vote) but don't have complete control over every outcome. For instance, the unemployed people I know had accumulated a great deal of wealth such that they could be unemployed and pay high mortgages (among other costs of life) for 1-2 years if need be. However, even they can't withstand but so much economic downturn. Still, they aren't the average Americans in terms of education, income level, or wealth building. So I wouldn't base my opinion of the economy primarily on them and people like them.

I'm a Giddens' Structuration person. That applies here in that as far as I and many are concerned, America enables individual freedoms and also constrains individual freedoms. In choosing to be responsible or irresponsible, we are recreating the structure as we know it. However, I believe that there are still some structural processes that are beyond our control. When things begin to crumble and personal and/or social safety nets are ineffective, what next?

Those who were irresponsible and lack basic life skills will not benefit too much from this approach, unless people are saying that the average American fits into this category.

[UGAalum94]

I don't think individuals have control over everything that happens to them certainly; I just think we have to be careful about what the the government does to "solve" problems. The government can create incentives and disincentives to shape individual behavior. I want to make sure we have carefully thought out any unintended consequences.

I'm not seeing that with current government spending.

ETA: I'd have to brush up to make a list of things that I don't think belong in it. Would you like me to do that?

Or would just suffice to say that my conception of safety nets have to do with temporary measure to carry people though especially hard times in terms of absolute necessities. And that my conception of stimulus spending would be specifically targeted spending with almost guaranteed outcomes (especially when it comes to job creation), rather than just throwing money at projects. My general impression of current spending in just getting anything that ever seem like it might be something a legislator wanted to see funded the funding required.

ETA: Looking at recovery.com, I'll immediately say that the category of broadband internet access shouldn't be there. Nor does clean water and flood control seem like it has anything to do with the economic downturn. Local school district spending is complicated. Sure the economic down turn has hurt local districts, but I don't think it's a federal issue, and I think only extremely poor districts ought to qualify for these funds, but that's not how it's shaking out in Georgia. Higher education and Pell grants don't belong here. Transforming energy systems should be funded someplace else. I can accept that in certain industries, depending on exactly where the money is being spent, it could be economically stimulating, but I think it's being done in a sloppy way which guarantees nothing. Certain aspects might even belong in homeland security.

Looking at Wikipedia, there's 50 million to the NEA to support artists, and I'm not sure about census preparation as economic recovery.

While some of these thing can be regarded as legitimate government funding, they shouldn't be sold to the public as part of the economic, fending off complete catastrophe, stimulus.

[DrPhil]

Originally Posted by UGAalum94

ETA: actually, I'm all over the place on this. I really don't know. I feel mutual contradictory impulses that lenders needed more or difference regulation previously but at the same time I don't trust the government to know what regulation they need now.

It's a big topic that I feel all over the place about, as well. I definitely see both sides of the coin.

Originally Posted by UGAalum94

ETA: If we were talking about a federal package strictly to temporarily strengthen what we usually think of as safety net type programs: food stamps, housing vouchers/public housing, health services for the poor, I don't know that I'd feel as resistant to that. But what we're seeing doesn't seem to have any kind of focus.

I agree.

Why do you think this plan lacks focus, even for those who have read the documentation beyond the graph breakdown on recovery.org? I have not looked at recovery.org in a while.

I think that maybe the safety nets were deemed dead ends by the powers that be. Then again, we have many Americans who are totally against any kind of social safety net (usually based on class and race stereotypes, etc.).

[AGDee]

Originally Posted by UGAalum94

Housing: I think we all just have to live with the consequences of how our decisions pay out without expecting to be somehow delivered from them. I think the word on the housing bubble was out there before the bubble burst; most of us just ignored it and did what we wanted to do. All of us may owe more on our homes than they are worth if you bought in the last five years. There's no government fix for this really. On some level, what a lot of people seem to want is a restoration of the bubble.

The "where's my bailout" thinking comes in when you see that if you quit paying your mortgage you might get something: adjustment of the loan value, new terms, something. At some point, you feel like a sucker for just plugging away at life while people who made dumb decisions or decisions with unfortunate consequences, depending on how gracious you want to be about it, end up doing as well or better in terms of material possessions. I think it was AKAMonet who first mentioned the Grasshopper and the Ant fable.

I have a whole lot less faith that we can bail society out because human nature won't fundamentally have changed a lot with a couple of months of economic downturn, particularly if the ants have to share with the grasshoppers.

(Personally, I think I have some Grasshopper traits too, so I'm not trying to present myself as all dedicated and financially cautious, but I would expect there to be individual consequences and resolutions to my own mistakes, rather than that everyone else was obligated to pitch in.)

My point about bailing out society is the repercussions on the rest of us when all these houses end up abandoned. Blight is not a good thing for a neighborhood and only makes your own home value continue to decrease at an alarming rate. If my neighbor's house is auctioned off for $20,000, that completely kills my own property value. The more people who lose their houses, the worse it's going to be. It seems like a neverending downward spiral. I'm concerned about where "bottom" is. As I've said, I don't know what the answer is. Maybe a depression is inevitable.

[UGAalum94]

Originally Posted by AGDee

My point about bailing out society is the repercussions on the rest of us when all these houses end up abandoned. Blight is not a good thing for a neighborhood and only makes your own home value continue to decrease at an alarming rate. If my neighbor's house is auctioned off for $20,000, that completely kills my own property value. The more people who lose their houses, the worse it's going to be. It seems like a neverending downward spiral. I'm concerned about where "bottom" is. As I've said, I don't know what the answer is. Maybe a depression is inevitable.

But how do you restore or maintain property values if they were based on a bubble created by bad lending practices, as well as short-sighted self-interested behavior by buyers?

I'm worried about where the bottom is too, but I'm not sure that trying to cushion the bottom with tax money is where it's at.