The R Word

It’s time! It looks like we’re headed for the Big R.

No one really wants to think about a recession, since recessions are inherently disruptive forces in the economy—people lose jobs, the purchase of popular large-ticket items are postponed, and people have gut-wrenching decisions to make as to which group of immigrants to blame for it.

Of course, recessions aren’t wholly bad things, either. They tend to stabilize prices and force companies to become more efficient. Unfortunately, these two specific things are just those things that are currently spiraling out of control: inflation is creeping up, and the mortgage industry has, to put it diplomatically, screwed the ugliest underage pooch bareback at the church picnic.

While there are plenty of reasons for the recession—not the least of which is that we have a recession approximately every eight to ten years or so since the beginning of the republic so it’s hardly an unmitigated surprise—the crystallizing factor is the mortgage situation. Mortgage companies have been offering deals that no one in their right mind would take, unless the person taking the terms of the loan 1) didn’t bother to read the terms of the loan, and 2) assumed that if anything bad happened they could just close their eyes and wish really really hard that maybe the mortgage company would let them off the hook and not have to pay them for a few years. These are otherwise known as subprime loans, or ARMs, or “adjustable rate mortgages,” or “loans for people who spend five bucks a day buying nasty breakfast sandwiches at the gas station but still bitch when their electric bill goes up twenty bucks a month” or “I can’t possibly imagine anyone thinking these are a great deal loans nor can I believe these are anything except borderline legal,” or would be if the acronym fit. Of course, lending companies aren’t exactly blameless, either.

Mortgage Lender: And here’s the paperwork. Sign here.
New House Owner: Wow. There’s a lot of stuff to read here.
Mortgage Lender: Don’t worry. You only need to read the part that says “If I Don’t Take This Amazing Offer And Sign Here, I Will Be Clinically Declared A Complete Idiot.”
New House Owner: Uh…is there anything I need to know? The rates won’t change if there is a shift in the interest rates or anything, right?
Mortgage Lender: I will pay you one thousand dollars cold if you just sign that damn paper.
New House Owner: Deal.

As should be a surprise to absolutely no one, the interest rate hikes were triggered and people started to default on their mortgages. The reason for the hike can be debated—the weak dollar, the moral hazard brought about by government regulations, the Freemasons and UFOs working together for once—the important thing to remember is that it isn’t anybody’s fault except the oil companies.

Of course, anyone expecting the government to do anything about it is going to be sorely disappointed. Of course, government intervention in the economy is kind of what got us here in the first place, so anyone expect the government to do nothing about it is going to be sorely disappointed.

The President, for his part, is going to great lengths assuring the American public that we are not, and never will be, in a recession. However, just in case, he and Congress have approved an economic stimulus plan which consists of 1) rewarding both the people who took loans they couldn’t repay and the lenders who foolishly gave it to them, and 2) bribed—I mean, gave a tax rebate—to anyone who files a tax return this year. Just like after 9/11 when George W. Bush advised people that the best way to stop terrorism was to make a trip to the mall to buy slutty clothes and wacky wall walkers and Simon Cowell Talking Dolls, he’s encouraging people to not pay down credit cards but to buy other pieces of junk they don’t need. Where on earth Bush got the idea that spending immense amounts of money you don’t have is a fiscally sound idea I’ll never know.

Of course, those looking to the Democrats for a workable plan to stimulate the economy will be disheartened. Though, really, anyone paying attention for the past two hundred years shouldn’t expect anything radically different. The Democrat’s plan has been, essentially, to send everyone in the lower-middle-class or less a check for a bajillion dollars. They will offset this by instituting a windfall tax on the rich, with the “rich” defined as “anything greater than the wage of the highest-paid union contract that contributed to our campaign” and “windfall” being defined as “pretty much anything you make this year.”

Economists seem to be mixed as to how bad the recession will get. For every report about massive layoffs, there is another report with an uptick in consumer spending. And many of the normal indicators of a recession—people spending less on luxury items, tightening of food budgets, decreasing our placidyl intake—aren’t indicating in the normal way that they should be. Most people seem content to take the recession in stride, so long as it means they don’t have to buy more efficient cars, buy less gas, change their spending habits, look closer at their household budget, or actually do anything at all that could make any difference whatsoever. Besides that, most consumers will be fine.

Anyway, with politicians unable to come up with a workable plan, companies holding their cards close to their chest, and consumers reluctant to alter their lifestyle, the best option seems to be to just close their eyes and wish really really hard that everything will be fine. It’s worked so well before, I can’t possibly imagine why it won’t work now.

Advertisements

One Response to The R Word

  1. eine Million says:

    Merely want to say your article is as tonishing. The lucidity in your post is simply striking and i can take for granted you are an expert on this subject. Well with your permission allow me to grab your rss feed to keep up to date with future post. Thanks a million and please keep up the ac complished work.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: