Inspired by Mike Jones of Arizona who writes about Uncle Sam and the free market, a few observations about the so called "stimulus" the government have cut and pasted together to cure our economic ills.
THE AMERICAN PROMISE - life, liberty and the pursuit of happiness. Happiness is extremely difficult without financial security and the struggle for that financial security is caught up in our present financial quagmire caused by "the mortgage mess". The perfidy of a few money managers and speculators has caused a significant number of home owners to lose their homes, lose their credit and, in many cases, lose their financial security.
AMERICANS BELIEVE WE HAVE A MARKET ECONOMY. Many have always sought free market solutions to economic problems. For most folks, if you want or need more money, you get a second job, get a better paying job or sell one asset to pay for another. Many believe that the market works and the best solution is to "let the market work". That system isn't always pretty. Speculators who bet wrong lose. However, they do so freely.
INCORRECT PRICING OF PRODUCTS CAN PUT YOU OUT OF BUSINESS. Banks and mortgage companies that relied on lower than profitable mortgage loans to "beat the competition" found that they couldn't make a profit. The market solution is to let these mortgage companies find their own solution, get investment money, remodel their product to one that is profitable OR go out of business. Stock holders in these companies would lose money, but it was money that was speculated. When a mortgage company expands exponentially through a system of offering the lowest price whether or not that price provides any profit, they are simply growing fat, they're not growing healthy. A market economy would demand that any company suffer the consequences of 
poor management that sold defective goods or made loans to consumers with no feasibility of repayment, loans that the mortgage company knew or should have known couldn't be repaid. The further perfidy of a mortgage company growing fat by making bad loans is that the borrowers were often financing homes. They were not financing automobiles or sofas or sail boats or vacations. They were financing homes and the multitude of human experiences, jobs, schools, playgrounds, family and friends that is represented by "home".
THE WAL-MART OF MORTGAGE COMPANIES? Wal-Mart offers low prices to consumers and is the dominant retailer in the U.S. However, Wal-Mart also manages it's purchasing and distribution in a way that is profitable. The key to dominating market share through low prices is offering goods and services efficiently based on low margins, not no margins. If Wal-Mart sold goods at prices lower than they paid, they wouldn't be the marketing machine they are today. If a mortgage company gains market share through the distribution of bad loans that are not repaid, sooner or later, that mortgage company will run out of investment money to cover the short-fall. In the case of making bad loans, selling the bad loans, packaging the bad loans and selling the bad parts, once the money stream is interrupted by defaults, foreclosures and short sales, it's game over. Those parts aren't worth what the investors paid for them.
But wait, that mortgage company is just one of many that are on the cusp of bankruptcy caused by greedy and incompetent management. There are many and the institutions that supported their financial structure has callapsed like the Ponzi scheme that it resembled. Make loan, sell loan, collect loans, cut them up in little pieces and sell off the parts. The financial markets resembled a meat market selling chicken parts.
GET YOUR PARTS HERE
The securitization of home mortgages has proved to be one of the contributors to the mortgage mess.
Investors around the world, hedge market managers, etc. sold off mortgages like so many chicken parts.
The issuers of the bad loans do not deserve to be saved. Their greed has caused the collapse of the home loan mortgage market on which Americans rely for mortgage financing. Today, even prospective home buyers with good credit and down payments are finding mortgage money as scarce as hen's teeth.
Where did all the money go??
Image originally posted in June 2007. "The more things change, the more they remain the same."
ENTER THE FINANCIAL STIMULUS. SOUNDS LIKE A MANAGED ECONOMY SOLUTION TO A MARKET 
PROBLEM. The stimulus is proposed by the managers of the economy as the solution to the mortgage mess. That leads to the question of "Who are the managers?" The managers are the same persons and institutions who abused the American public by neglecting their duty of oversight in exchange for money contributions from the very entities that were perpetrating the Ponzi scheme of selling mortgages to investors like so many chicken parts. The managers are the same persons who permitted the banking institutions to chop up the mortgages and package them to be sold as "parts". The managers are the same persons that are using their position of privilege to borrow about $150,000,000,000 from the budgets of one group of Americans and give it away in small "parts" to another group of Americans. They haven't explained to the satisfaction of many just how giving money away in small parts is going to solve "the mortgage mess". The individual gifts are not sufficient to make more than one mortgage payment. But, as we know, Americans aren't expected to pay a mortgage payment with the gift, they are expected to go to the Mall and spend the money on clothes, toys, shoes, electronics and other consumer goods. Wal-Mart will sell a lot of goods and realize small profits. The consumer's house will go to foreclosure.
So, the question is, who is the stimulus supposed to help? I'll be back when I can figure that one out.
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.
Map of area showing homes for
sale in Maryland and Virginia
covered by the Homefinders.com
search service.
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We don't want a managed anything...no managed markets, no managed healthcare, etc.
I think we all know by now that money (credit) doesn't buy people happiness, it just lets people suffer in a better neighborhood.