Why Things Are the Way They Are

I just finished reading a book called the Defining Moment:The Great Depression and the American Economy in the 20th Century, by Micheal D. Bordo, Claudia Goldin and Eugene N. White. It is a interesting theory that they put forward, that the changes that were brought about by the Great Depression would have happened with or with out it. The Depression just spend things up a little bit. The government prior to the Depression was small and did not have things like social security and never considered things like standardized health care. But people were growing to the idea that it is the governments job to look out for the welfare of it's people. While at this time that would have simply meant that the government should be able to help keep unemployment rates down, help stop price hikes and unfair labor practices. All of those things were not even expected of the government it was just something it would be nice if they could do. Then the Great Depression came. People who had worked and saved their whole lives, who had never gotten into debt or risked their money in investments, suddenly found themselves with out a job and their savings gone. Who could they turn to for help? No one. So they turned to the government and said "if you had been doing your job none of this would have happened" not realizing that they had voted Coolidge and Harding and Hoover into office because they had promised a small government that would run on the basis of laissez-faire. When the crash hit, Hoover's policies were that through volunteer efforts the people should be able to pull themselves out of this mess. He believed that getting the government involved was a bad idea and would only make the people dependent upon the government every time there was a need. In many ways he was right. When FDR took office he immediately began pushing new acts and committees to take care of those acts. For every problem that a American group faced FDR had another committee to help that group out. Also he believed that by giving the business's money it would help to employ those off the streets hence putting money in their pockets to go spend. That did not work (funny how history repeats itself). However out of all of FDR's committees, only one is still active and that is Social Security, but the idea that it is the governments responsibility to be taking an active part in the lives of all its citizens is still planted and growing steadily. The problem is that to go back to the days of small government, where the government only intervened after it was clear that the people could not fix it themselves, we would have to have a candidate that would say to the people "We are going to take away..." and as soon as people hear that they turn to the other guy, the guy who is offering more money for school, free health care (nothing is free), better living quality.  And nobody stops to think about the consequences of these decisions, all that they see is what is in it for them.

One Step Closer

So now that the Obama admin has finished socializing health care (I am holding out on bashing it just yet, I will explain why in my next blog) it seems that they now feel that it is their part to step in and take over housing loans from private investors. The reason behind this is to offer home owners who are struggling, a loan which is protected from default, has lower payments and lower interest rates. Now this is great and all except for a couple things, first I am of the opinion that our Govt. can not take care of their own loans. We are currently at 12 trillion and climbing at a rate of 4.03 billion a day. Now if I remember correctly there is a debt limit that was voted into place at I believe, 9.6 trillion dollars. So instead of finding a way to stay below that limit our govt. voted to just raise it. Now I work at a bank and one of the policies that we have is, when someone is having a tough time paying their lines of credit we lower those lines of credit, then they slowly pay back what they owe till it is below their limit then they can begin borrowing again. Now that is just where I work but it sure seems like that is the right idea. So our govt. is acting as the blind leading the blind, while they are swamped in debt and not really looking for a way out, they offer others, who are drowning in debt too, a hand... That is not how it works.
My other problem with the govt. taking over loans on housing, is that is coming way to close to home (no pun intended). It is not the govt. job to own private sectors, in this bill that they are passing they are looking to help three to four million home owners. That is a whole lot of people who are essentially at the govt's. whim. Should the govt. suddenly decide that they want to house soldiers in civilians homes, I wonder who's door they would go knocking on first? These are just far fetched theories but they have happened under similar circumstances before. Say a president knows that he is going to lose the coming election, a simple brochure or television or radio ad implying that should he leave office those mortgages go down too. I have a feeling that a lot of people's votes would suddenly change in order to keep the security of housing above them. Sure the president does not have the power to do that, does he really need it? All it takes is the idea to put fear of having to find a home for one's family. This coupled with the control that is now on the health factor is too much power even for a democracy to have. Power corrupts most everyone.