Reregulation?

"Regulations were gutted for the sake of a quick profit at the expense of a healthy market."

This was a quotation from the State of the Obama speech that experts say sheds no new light on what the president's plans are. An Associated Press analysis once again savages the accuracy of Obama's statements. You almost wonder if they forgot Bush wasn't the president anymore!

Regulation has become the name of the game. Obama blasts nameless predecessors for deregulating the housing market (when in fact, President Bush's calls for regulatory restraint of the mortgage industry were actually ignored.) We can expect proposals for regulations across the board from new environmental standards to just about everything else. Although sometimes necessary, sweeping implementation of regulation will stifle economic growth and restrict competition.

The intent is to roll back the Reagan Revolution in smaller government and make the federal government more intrusive in just about every field. Gary Howell in an earlier piece explained how proposed railroad regulations will hurt the industry and the economy.

Wait a second, how did deregulation get exclusively associated with Republicans?

Actually a Democrat helped to get the deregulation ball rolling in 1980. At that point railroads were so tightly regulated that profits were impossible and an entire industry hovered on the point of collapse. Congressman Harley Staggers Sr. (D) West Virginia crafted and got passed a the Staggers Rail Act of 1980 that significantly reduced federal burdens and allowed a small revival of the railroads. This did not come in time to save the local rail facilities, but it did prevent the passing of unprofitable lines into the hands of the federal government where they would simply waste taxpayer money instead of private capital.

Congressman Staggers was no conservative and his family are staunch and proud Democrats. However his deregulation act showed that lightening the load of government can help business survive and even thrive. This generation of Democrats could learn a lot from this predecessor.

The Perception Driven Recession

Watching the news last night was kind of stunning. NBC hauled out its financial reporter who basically admitted that she had no idea why the market was slipping or what might happen next. Over and over again we hear that people's fears have led them to stop buying, change their investment habits, and basically cocoon themselves. Part of the problem here lies in perception.

First of all, a significant number of Americans have no real living memory of "hard times." The last time we really endured those was during the 1970s. If you will remember, a Democratic president attempted to implement share the wealth programs that burst the budget, shredded the fabric of society, and led to economic problems that lasted until Ronald Reagan followed the ideas of Milton Friedman and led us to prosperity.

Since then the economy has done extremely well. Our standard of living has dramatically increased, even among much of the group considered poor. we talk less about the poor starving and more about the poor being unhealthily obese. Two minor hiccups aside, we have seen the most dramatic period of expansion in national history. However all economies are subject to cycles and apparently this period of prosperity is ending. But why?

For one thing, people have no context of economic difficulty. If you listened to the Bush hating media all you heard about was how hard the economy was. A period of unemployment under 6% would have been considered amazing in the Carter years, but during the presidency of George W. Bush it was the Great Depression all over again. Those that actually lived through the Depression probably laughed at such claims. Media driven perceptions made people believe that the economy was bad when it was not. we had expansion during wars, attacks on our soil, and Katrina. These shocks individually would devastate an unsound economy.

Then came real problems. The sub prime mortgage crisis, driven by Clinton era mandates, weakened the financial sector. Add to that the energy bubble (now thankfully deflating) and you get a double whammy. Still in and of themselves, these should not have wrecked the economic ship. Perception has caused near panic to take place in investing and major purchasing. This brought on the specter of a very tough recession, tougher than necessary. Certainly Bush and Congress have done a great deal to help restore confidence, but it has not been enough to offset the damage inflicted by the media.

Hard times are difficult and people will have problems for a time. The only positive that can come from this is that it will give the current generation an understanding of what economic trouble really is. We are certainly not headed for a Great Depression or even a 1970s type recession, unless Obama tries to tax us out of our problems. However we must remain confident and optimistic that in the long run we will endure and return to prosperity again.

The Mortgage Bailout...Again

http://finance.yahoo.com/loans/article/103997/What-the-Mortgage-Bailout-Means-for-You

What it means for most Americans, nothing good. I especially like the last paragraph where the negative effects are mentioned.

Who stands in the way of such an effort?
Investors in mortgages and mortgage-backed securities. If homeowners are going to pay less on their mortgages than originally planned, then somebody is going to lose money. These aren't just fat cats on Wall Street—although many such firms have invested in these securities—they're also pension funds for teachers, firemen, and police, as well as mutual funds whose clients include all sorts of individual investors. They probably even include homeowners who are facing the prospect of higher payments on their adjustable-rate mortgages.

So what is the answer? Not a seven year freeze on interest rates as some Democrats are calling for, the answer is a return to Conservative Politics and less government interference with the economy. No matter how you slice it, the people who are facing losing their houses, chose their mortgage plan. If they were mislead or lied to when they got their mortgage, the mortgage company has Errors and Omissions insurance and the mortgage company should be held liable for any problems their associates caused. But that's not the case, the problem is that the people bought too much house. There is no accountability with this plan. Next the government will have to address the complaints of investors (like pension plans, mutual fund holders, etc) who will be negatively affected by this plan, and so on and so forth.

Next, remember that the economy is a cycle. Ups and downs are a simple fact of life and help to balance everything; such as money, people, resources, etc. Home prices are ridiculously high in some areas, that's an OPPORTUNITY for young people and people looking for a fresh start to relocate to an area (like Mineral County) and build a life for themselves and their family. Isn't that how this country started? The poor and/or ambitious moved across the pond to start a life for themselves and their families? What happens to our area when our tax dollars are used to subsidize the lives of our urban counterparts? Without subsidies for housing and transportation, our area would look much more attractive than it does. We have a lower cost of living, you can buy a home with some land for less than it costs to rent a 1 bedroom apartment on the fourth floor of a building in DC. Without subsidies and programs like the mortgage bailout how many people might move to the lower cost areas, start businesses, use services, pay taxes, and boost our numbers? In a democracy, numbers count for a lot.

Perhaps Mineral County and for that matter WV, should change the slogan to "Build Your Life" and focus on passing the message to people 25-40 years old who are starting to have kids and looking for a place to raise their kids that they can call home. You know a nice house on a 1/2 acre or so, white picket fence, dog and a chance to be a pillar of the community and have an active role in their kids lives. There are plenty of those people out there. One problem is the "Math" problem. When I graduated from college and moved to WV, I made less from a dollar point than most if not all of my classmates. Within a year I owned a 3 BR home on a corner lot, a 4 unit apartment building (for sale in Shinnston, WV if anyone is interested), two cars, and a boat. I was also a board member for Big Brothers/Big Sisters attending black tie "Make A Wish" dinners. When I compared my lifestyle to that of my Columbus and New York counterparts, I greatly preferred my lifestyle and had more toys and financial freedom than many of my friends. But I made $10,000-$20,000 per year less than they did. If I had compared job offers from a pure dollar point of view, I would have never come to WV, but I saw the opportunity.

I feel that WV's greatest asset is that people can build their lives here, and build a place that their family can call home. When I need to get my fix for Big City living, I drive 2 1/2 hours to DC. Halfway through the first night when people are walking on the sidewalk 10 feet away from where I am sleeping, I remember why I love living in WV so much...there's room to grow.