I still don't know fully what to make of the Seven Hundred Billion Dollar financial bailout. (Remember: $700 billion is a huge amount of money, enough to seven million houses just like mine... and there are only 124,000 chronically homeless people in the U.S.) My gut tells me we should sock it to the meatheads, borrowers and lenders alike, who caused this mess. But then I think back to Prof. Blanchard's sensible words on fires and fat, stupid brothers-in-law, and I feel inclined to put my anger aside and fix the problem now and the blame later.
And when Republican Joel Dykstra criticizes Democrat Tim Johnson for siding with constituents and not supporting a massive government intervention in the free market, well, I can hardly tell what planet I'm on any more.
But to today's vote: with the Senate's aye vote Wednesday, the bailout ball is now back in the House's court. Representative Herseth Sandlin voted no on Monday (along with Dennis Kucinich and Mike Pence, another mind-bending political convergence). Will she flip her vote to grease the economy and let her and her colleagues get back home to campaign (not that Herseth Sandlin has to work too hard, even if Chris Lien does slide his whole face into his campaign banner)?
If I were in her shoes, I think I could come up with a justification for turning my Nay on the bailout into an Aye. Let's speculate... literally. Let's speculate in the best investment the world has ever known: real estate.
O.K., I know, the housing market stinks, that's the problem. But as Donald Trump said on KELO last week, that's also the opportunity. The market wants cash, liquid assets, not boring old solid assets like houses. We, the American taxpayers, have cash... or at least a reasonable facsimile thereof in the form of an apparently infinite federal debt capacity. Fine. Let's buy. The banks will kiss our feet for it, and they'll get back to floating the loans we need to meet payrolls, buy cars and equipment.
Plus, we will be the proud owners of a whole bunch of houses, or at least mortgages. Think that's a worthless investment? Right now, maybe. We aren't going to flip those houses on the market in 2009. But we don't have to be like the bankers and brokers and constantly move our money around. We can sit on this investment for five, ten years. Straighten out Wall Street, ride out the current turbulence, get five million veterans and other Americans to work in President Obama's new "Green-collar" jobs, and let the real estate market do what all investments except for horse-and-buggy stocks do over the long term: grow.
The population is growing, and land isn't. Folks will always need places to live. Investment in real estate may not be a plus on the FY2008 balance sheet, but long-term, it will always pan out.
The banks don't want to delay their gratification, hold onto their mortgage investments, and enjoy the profits ten years from now? Fine. We'll take those profits, thank you, and pour them right into balancing the federal budget in 2018.
Is that economic analysis sound? I really have no idea. But it seems to make as much sense as anything else I've heard from Wall Street and the politicians over the past two weeks (two weeks, and no meltdown yet!).
Congresswoman Herseth Sandlin, your comments (and everyone else's!) are welcome. We look forward to your vote today....
Update 14:41 CDT: The Kucinich-Herseth Sandlin-Pence axis stayed strong, but enough others wavered: on a 263–171 vote, the House of Representatives approved the bailout, and President Bush has fixed his signature to the biggest single federal intervention in the economy ever. Hold onto your hats, kids: we're going into the real estate business!
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