“The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.” – New York Times, January 2, 2010
“The Treasury Department publicly maintains that its program is on track. “The program is meeting its intended goal of providing immediate relief to homeowners across the country,” a department spokeswoman, Meg Reilly, wrote in an e-mail message.” — same article, NYT
Hot on the heels of Janet Napolitano’s performance at the Department of Homeland Security, that things worked just swell and then, er, no it was a catastrophic failure, we have another example of this administration’s ineptitude. Let’s not let the marketplace work by flushing out the bad loans, have banks face up to the reality of their bad lending decisions, allow housing prices to reach a market level, all in a reasonably short time, no, let’s get another massive, taxpayer funded program in place to gum up the works and drag this out for years.
A Habit of Ignoring History
In 1929 Hoover mishandled the economy in a similar way bringing in the leaders of major industries and jawboning them to keep up production even in the face of falling demand so that jobs would not be lost. The businesses went along until that policy hit their financial statements in the form of plunging profitability. Stock prices fell sharply and more disastrous policies followed, first by Hoover and more by Roosevelt.
In 1920-21 there was a very steep and serious recession. However, companies cut wages and government didn’t interfere.
“The annual unemployment rate peaked at 11.7 percent in 1921, but it had fallen to 6.7 percent by the following year, and was down to an incredible 2.4 percent by 1923,” Murphy writes. “That is how a market with flexible wages and prices quickly corrects itself after a Fed-induced inflationary boom.”
Roosevelt’s policies followed Hoovers’ with more and more government interference. Throughout the Great Depression the programs didn’t work, government grew tremendously leaving us saddled with that legacy. On the other hand Reagan in the 1980s pursued a policy of cutting taxes and shrinking government. Roosevelt needed World War II to end the Great Depression, Reagan ushered in 25 years of unprecedented economic growth. Which one does Obama choose to follow? That’s right, Roosevelt. Brilliant!
Inexperience on Full Display
President Obama rides into town with no executive experience, but with wondrous rhetorical skills and a hard left agenda. He jams through a stimulus package that doesn’t stimulate. His security policy is to undo everything that worked under Bush to keep us safe. One of the first things Janet Napolitano does is release a report saying that the real threat is from our returning military that might become right wing zealots, Meanwhile Islamic terrorists, correct that, isolated extremists, continue to plot to kill us. Now the New York Times points out that the Emperor’s mortgage program, Making Home Affordable, has no clothes.
“Whatever the merits of its plans, the administration has clearly failed to reverse the foreclosure crisis.” — NYT
When asked by a Congressional Oversight Panel what the administration was going to do in the face of this lasting not a year or two but for many years into the future, Treasury Secretary Tim Geithner said:
“What to do about it,” he said. “That’s a hard thing.” — NYT
Sounds like the seeds of another government program to fix the other government program. Just like FDR did all through the 1930s. Trying to stop the market with government programs is like trying to stop the tides. You may divert it and you may end up with water in places you didn’t want it, but you are not going to stop it.
