Thursday, January 24, 2008

What are we paying for?

More than once, I have claimed that bad things happen when members of our government start getting along.  My position has been that we're better off when the government is at a full stalemate.  Need proof?  Get it from CNN: http://www.cnn.com/2008/POLITICS/01/24/economic.stimulus/index.html

Now, don't get me wrong...I really like the idea of paying $1200-$1500 less in taxes.  Unfortunately, our government really needs that money, and I'm pretty sure that by this time next year...all the recently unemployed people are going to wish that their government benefits could last just a little bit longer.

The idea of forestalling a recession via an economic stimulus package is curious, at best.  If we examine how long our interest rates have been at rock bottom, we might get the impression that perhaps this problem has been brewing for quite a while.  In fact, I seem to remember a movement toward "patriotic spending" just after 9/11. 

The problem is that we've been living on funny money.  People cashed out the "equity" in their homes, and spent it.  In the post 9/11 days, housing seemed like a safe investment, so people dumped money into it.  That inflated prices, thus creating phantom equity that people cashed in for real money that they wasted (for the most part).  The major problem is that those same people expected to sell their homes for a profit later on and "upgrade", but of course that can't happen now that prices have adjusted.

So, please explain to me how a one time payment of $1200 per couple is supposed to fix the last 7 years of rampant spending?  That wont even make a single mortgage payment for most of our overextended home owners.  I'm quite certain that I would appreciate that money much more if it were financing my soup kitchen in say, 11 months.

No comments: