McBamaNomics

Yep, well, I've been busy lately, and I don't have a ton of time to write right now, but just want to opine about the state of the economy and how our two wonderful candidates proposed to deal with economic issues, and how, if either one institutes their ideas, what a disasterous mess it will cause. Pardon me as I go through this, it will have a bit of a CW feel to it (check the sidebar for the definition).

Anyway, the first question was basically, "What do you think we should do about the crisis?" If either one thought that their answer was the right one, then God help us should either of them get into the White House. Actually, in a way I hope that Obama does, because it will (in my mind) mean the ultimate repudiation of his economic school of thought. Of course, no one else may actually be paying enough attention to what actually happens for this to matter, because his ideas are nice and help out the little guy (insert mewling voice here). Never mind the fact that they ultimately screw the little guy worse harder than Ned Beatty got screwed in Deliverance, harder than Jodie Foster got screwed in The Accused, harder than any contemporary porn actress gets screwed in any of the modern mysogynistic miasma of pornography, harder even than Greedo got screwed when Lucas editted Star Wars so that he shot first (now that should get you an idea how strongly I feel about Obama's plan - I don't want to live in a universe where Greedo shoots first!!!!!!)

But I digress... Obama's plan was basically this: spend money on public works, create government jobs, bailout any person who got in over their ignorant head, and tax the hell out of the evil corporations who got us here in the first place. If this sounds familiar, it should - it is a page out of FDR's playbook, and unfortunately, anyone with any historical savvy can tell you it did not work. It mired us in a worldwide depression for over a decade, and only a World War got us out of it. Not that even a world war would do that, now; we have switched from a manufacturing based economy to a service based economy, so a war would not really help gear up economic growth (and even that growth was government spurred, but not in the same way - that's for another time, kiddies). Anyway, if you want a decade of malaise, go with the Obama plan.

The McCain plan was just as bad, perhaps worse. His idea was to have the Treasury purchase and renegotiate loans so that the loan would not exceed the value of the home. This would supposedly stabilize home prices. Unfortunately, it wouldn't work. Lots of lessons in the past have showed us that government price and wage fixing don't work at all. Whether they were put forth as part of a disastrous domestic plan of Richard Nixon or of Jimmy Carter, they f---ed up the economy royally the last time. Trying to "stabilize" home prices is ludicrous. Some people are going to lose their homes, and lose their investments. Sorry, there are no rewards without risks, and that was the risk that some people took. If these cycles never happened, no young buyers would ever be able to get into homes.

I bought my home in 1996, at the bottom of a market slump that started around 1994 (which Clinton tried to reverse by freeing up capital by mandating Freddie and Fannie make more risky loans). I bought my house for $202,500. I only mention that because the guy I bought it from had purchased at the height of the previous craze for $330,000 and he got screwed in the deal. he couldn't afford to live in the area and was moving to the East Bay, and he lost all of his down payment, and actually owed more on his loan than we paid. Did that suck for him? Yes, but were it not for his bad judgement, I would not have been able to buy a home. There are many reasonable people who can now (or soon) afford homes in the area, and the prices will stabilize themselves. If that means that some people have to pay unreasonable amounts for a home that is worth less than the loan, then they had better keep doing it.

They have a couple of options: keep paying on a loan that is higher than the value of the home and wait for prices to rise again (as they will), or sell it at a loss because they cannot afford the payments because they got themselves into a stupid loan in the first place. That is it. End of story - just like owning a car, you make loan payments for quite a while when you owe more than the car is worth (instant depreciation) and no one has a problem with that unless they overextended to buy that car. Not too different, and it isn't rocket science.

But back to the plans - long story short, they both suck, but I take solace in the fact that, in all likelihood, neither will be instituted; debates are all about who sounds like they care more, and seldom actually have anything to do with what people are going to do in office.

Obama is not going to cut taxes on 95% of Americans (even his proposed plan doesn't work out to this number). He ran on a similar line for the Senate and always voted against any tax cut, whether for rich or poor. McCain will not get rid of earmarks, too many people love them - it is their principle method of getting re-elected.

I will have to labor these points more later, right now I am going to tutor someone in Honors Chemistry.