from July 2012, Economics
U.S. Senator Jeff Merkley from Oregon has decided he knows best when it comes to financing houses — especially those properties that are underwater (the value of the home on the open market is worth less than what remains on the mortgage). His vast experiencing in the banking industry has led him to propose a fantastic plan requiring lending institutions to refinance any underwater mortgage at 4%. Apparently Senator Merkely's compassion from running Habitat for Humanity in Portland is now the principle value he is using to craft legislation.
However, once again, a liberal legislator is attacking the problem from the wrong end. Instead of finding ways to help businesses become more profitable (like lending institutions), therefore increase job opportunities and therefore increasing demand for housing, Senator Merkley is proposing even more burdens and further regulation on the banking industry.
Doesn't the Senator think that if mortgage companies found it in their best interest to offer current underwater home owners a 4% mortgage that would already be happening? But therein lies the rub: who is more important — the private industry or the collective (the banks or the State)? In Senator Merkley's view the State knows far better than the banking industry how to issue loans and stay in business, even though the Senator is void of any real world banking experience.
We were called "crazy right-wing conspiracy theorists" for even suggesting the idea that someday local, state and federal institutions could go bankrupt. That will never happen. It never could happen. Who would be so irresponsible to let it happen?
Well, it's happening. And we knew it was possible. It didn't take a rocket scientist to see the signs of organizations out of control. Any business person worth their weight in salt (or gold for that matter) could tell you when costs continue to increase year over year faster than the rate of inflation and at a rate that revenue could only hope to see, doom was a certain future.
The U.S. Postal Service looks to default on a $5 billion payment due in just 11 days — August 1, 2012. To make matters worse, there is another $5 billion payment due around September 1st. And guess what? The Post Office doesn't have this cash available to make either. That is what is called default and without a fix, then it becomes bankruptcy — unable to pay creditors. But what in the world costs so much and is due on these dates?