Bush Pushed Mortgage Meltdown

While Ken and I try to figure out who's trying to balance whom, the New York Times jumps on a point I made—well, actually, that a right-wing blogger made and I simply Googled: if the push for increased minority home ownership had anything to do with the mortgage meltdown, you can't pin the blame "mostly with liberals in the Press and their conjoined twins in Congress," unless you count George W. Bush as a liberal:

There are plenty of culprits, like lenders who peddled easy credit, consumers who took on mortgages they could not afford and Wall Street chieftains who loaded up on mortgage-backed securities without regard to the risk.

But the story of how we got here is partly one of Mr. Bush’s own making, according to a review of his tenure that included interviews with dozens of current and former administration officials.

From his earliest days in office, Mr. Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone.

He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent — and with the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards [Jo Becker, Sheryl Gay Stolberg, and Stephen Labaton, "White House Philosophy Stoked Mortgage Bonfire," New York Times, 2008.12.20].

Now let me be clear:

1. Expanding home ownership, for minorities and everyone else, is darn good idea.
2. Home ownership promotes economic security (Bush said that).
3. Real economic security comes from increasing income (your money), not from loosening credit (the bank's money).

The President's chief economic advisor Keith Hennessey is thinking along a similar line:

Today, administration officials say it is fair to ask whether Mr. Bush’s ownership push backfired. [Treasury Secretary] Paulson said the administration, like others before it, “over-incented housing.” Mr. Hennessey put it this way: “I would not say too much emphasis on expanding homeownership. I would say not enough early focus on easy lending practices” [Becker et al.]

Becker et al. find blame to be laid at everyone's doorstep: Congress, corporate lenders, lobbyists, and the current and past administrations (don't forget dumb borrowers!). They note that a Bush administration official, Armando Falcon, Jr., then head of the Office of Federal Housing Enterprise Oversight, was ready in February 2003 to sound the alarm on Fannie Mae and Freddie Mac:

Mr. Falcon’s report outlined a worst-case situation in which Fannie and Freddie could default on debt, setting off “contagious illiquidity in the market” — in other words, a financial meltdown. He also raised red flags about the companies’ soaring use of derivatives, the complex financial instruments that economic experts now blame for spreading the housing collapse.

...[A]s Mr. Falcon was in New York preparing to deliver a speech about his findings, his cellphone rang. It was the White House personnel office, he said, telling him he was about to be unemployed.

His warnings were buried in the next day’s news coverage, trumped by the White House announcement that Mr. Bush would replace Mr. Falcon, a Democrat appointed by Bill Clinton, with Mark C. Brickell, a leader in the derivatives industry that Mr. Falcon’s report had flagged [Becker et al.].

Tonight's dinner
table question:
~ ~ ~
Which has done more damage to your personal security: al-Qaeda or the mortgage meltdown?
~ ~ ~

February 2003. Five years before the stimulus checks, the Bear Stearns buyout, and every other crisis maneuver this year that hasn't worked. One month before the president (with, yes, the approval of a majority of Congress and, at the time, even me) marched our troops into Iraq, where Bush now admits al-Qaeda was not.

My point is not that President Bush deserves all the blame. My point is that if you are going to play the blame game, you'll have a hard time pinning it on just one side of the aisle. A lot of us had our eyes on the wrong ball.

The Mortgage Meltdown -- One More Reason for More Local Economy

My expertise on finance and economics doesn't extend much further than my mortgage payment. The mortgage meltdown doesn't seem to affect our fortunes, since we got a nice, traditional, fixed-rate mortgage with no surprises from East River Federal Credit Union. (Well, our payment is going up about $120 a month, but that's the taxes catching up with the fact there's a house on this old pasture.) We keep paying, we keep the house. Simple.

Given that very simple interaction with the financial world, I'm not even going to try to explain how risky home loans in the U.S. could cost the world financial markets 430 billion to 600 billion dollars. Until otherwise instructed, I'm content to ascribe it to a combination of colossal greed and stupidity on everyone's part, borrowers and lenders alike.

Professor Peter Dreier, a smarter guy than I, offers more insight than I can muster on the mortgage mess and what we should learn from it. He agrees that borrowers made uninformed decisions, but that they were often cajoled and often flat-out tricked by lenders into taking out bad mortgages. But he also traces part of the problem to the end of local banks and the involvement in the mortgage industry of investors far removed from the homes and communities those mortgages are supposed to build:

At the other end of the financial services industry are the investors -- people and institutions that borrowers never see, but who made the explosion of subprime and predatory lending possible. Subprime lenders didn't hold onto these loans. Instead, they collecting fees for making the transactions and sold the loans -- and the risk-- to investment banks and investors who considered these high-interest-rate loans a goldmine. By 2007, the subprime business had become a $1.5 trillion global market for investors seeking high returns. Because lenders didn't have to keep the loans on their books, they didn't worry about the risk of losses [Peter Dreier, "The Mortgage Mess and the Economic Meltdown: What McCain (and the rest of us) Should Learn from the Keating Scandal," The Huffington Post, 2008.03.25].

Dreier points to an important market disconnect. Investors and entrepreneurs always need to be tied to the risk of their ventures. When your local bank or credit union can issue a mortgage and then sell it off to some faceless global institution, what motive does the bank have to make sure that you're going to be able to make your payments over the lifetime of the loan?

Turning mortgages into just another chit in the international speculators' game gets us what we've got right now. Keeping mortgages and banking in general local, where bankers and borrowers alike live with the consequences of their transactions, might have kept us out of the financial worries that have the federal government handing out money to the wealthy folks who helped bring us this mess.

More Blame for Mortgage Meltdown: Unchecked Greed

The New York Times continues its weighty series "The Reckoning" explaining the mortgage meltdown with an in-depth article on Washington Mutual, one of the big lenders who reaped the whirlwind of subprime loans this year.

Now remember: the point of studying the causes of the mortgage meltdown is not just to assign blame (again, there's plenty to go around), but primarily to understand what happened so we can keep it from happening again.

Read Goodman and Morgenson carefully, all four pages. You will not find a word about the Community Reinvestment Act or President Bush's push for easier credit for immigrant homebuyers. The cause of disaster at Washington Mutual? Unchecked greed:

The ultimate supervisor at WaMu was [Kerry] Killinger, who joined the company in 1983 and became chief executive in 1990. He inherited a bank that had been founded in 1889 and had survived the Depression and the savings and loan scandal of the 1980s.

An investment analyst by training, he was attuned to Wall Street's hunger for growth. Between late 1996 and early 2002, he transformed WaMu into the sixth-largest U.S. bank through a series of acquisitions [emphasis mine; Peter S. Goodman and Gretchen Morgenson, "At Washington Mutual, a Relentless Urge to Approve Any Loan," New York Times, 2008.12.27].

Cancer also has a hunger for growth. Growth is not inherently good.

According to these accounts [from former employees], pressure to keep lending emanated from the top, where executives profited from the swift expansion - not least, Kerry Killinger, who was WaMu's chief executive from 1990 until he was forced out in September.

Between 2001 and 2007, Killinger received compensation of $88 million, according to the Corporate Library, a research firm. He declined to respond to a list of questions, and his spokesman said he was unavailable for an interview.

Boy, those limits on executive pay are looking better every minute. Salary caps aren't not just class warfare; it's a sensible check on reckless business practices.

During Killinger's tenure, WaMu pressed sales agents to pump out loans while disregarding borrowers' incomes and assets, according to former employees. The bank set up what insiders described as a system of dubious legality that enabled real estate agents to collect fees of more than $10,000 for bringing in borrowers, sometimes making the agents more beholden to WaMu than they were to their clients.

WaMu gave mortgage brokers handsome commissions for selling the riskiest loans, which carried higher fees, bolstering profits and ultimately the compensation of the bank's executives. WaMu pressed appraisers to provide inflated property values that made loans appear less risky, enabling Wall Street to bundle them more easily for sale to investors.

I'm still waiting for the line that says, "Executives felt pressured to put satisfy social engineering objectives from Washington to put more low-income workers and minorities in homes."

For WaMu, variable-rate loans - option adjustable-rate mortgages, in particular - were especially attractive because they carried higher fees than other loans and allowed WaMu to book profits on interest payments that borrowers deferred. Because WaMu was selling many of its loans to investors, it did not worry about defaults: by the time loans went bad, they were often in other hands.

What did I say about keeping loans local and lenders tied to risk?

Goodman and Morgenson cite many instances of rank-and-file employees questioning sketchy loan applications. Good people at Washington Mutual tried to stop the madness, but managers and money shut them up. Don't tell me deregulation will solve that problem. Banks need rules, big scary rules. Heavy regulation will indeed curb prospects for outlandish growth and enormous executive salaries. It will also support workers who try to do the right thing and provide a more secure basis for slow, steady economic growth.

Community Reinvestment Act Not to Blame for Mortgage Collapse

For being big supporters of the little guy, some conservatives love to blame to the poor...

I've heard occasional blips of conservative commentary blaming something called the Community Reinvestment Act for the mortgage meltdown. The 30-year-old federal program gave loans to poor people who shouldn't have gotten loans, goes the argument, and that's why housing prices are tanking, Wall Street is collapsing, and America is turning into Sweden (not there's anything wrong with Sweden... now where's my universal health care?).

Hmm, conservatives blaming low-income folks for the country's problems while ignoring the role of wealthy speculators... why didn't this set off my B.S. alarm sooner?

The Community Reinvestment Act is a scapegoat, and a pretty thin one at that. The program was around for 30 years, well before subprime lending came along to indulge irresponsible buyers and crash the economy. It was enacted to address discrimination in low-income and minority neighborhoods, where "banks were happy to take depositors' money but weren't willing to lend the money back into those neighborhoods" [Shannon Buggs, "Crisis Has Nothing to Do with Reinvestment Act," Houston Chronicle, 2008.10.11]. It did on a small scale exactly what Paulson, Bernanke, et al. now feel obliged to do for the giant corporate banks: make credit available to those who can't get it.

And the funny thing is, the Community Reinvestment Act worked:

"Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans, and studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households," said Janet Yellen, president and CEO of the Federal Reserve Bank of San Francisco, in a March speech [Buggs, 2008.10.11].

And it had almost nothing to do with the subprime implosion. The federal government wasn't making risky loans; the deregulated private sector was:

Federal Reserve Board data show that:

• More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
• Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
• Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that the critics lambaste.

The “turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007,” the President’s Working Group on Financial Markets reported Friday [David Goldstein and Kevin G. Hall, "Data Show Federal Incentives Not to Blame for Subprime Mortgage Mess," Kansas City Star, 2008.10.12].

Darned data, always getting in the way of some good old conservative scapegoating.

Read more from the Kansas City Star, Aaron Pressman at BusinessWeek, the Center for Responsible Lending (PDF alert!), Media Matters, and Professor Mark Thoma at U. of Oregon.

And stop blaming poor people for a problem caused by rich people trying to get richer.

Minorities Root of Mortgage Collapse? Blame Bush

That crashing sound you heard in the middle of the night was the good Professor Blanchard going off the rails again. He begins with a reasonable bemoaning of our economic peril and the absence of trust. He rightly cites as an example the greed of Bernard Madoff and the negligence of President Bush and his federal watchdogs.

But then Blanchard sails right past that real problem and decides to blame those darn minorities and their enablers in the Democratic Party and the liberal press for originating the subprime lending crisis.

Feel free to review why minority lenders and the Community Reinvestment Act are not to blame. That should be enough to put your attention back on the real problem: deregulation, free-market fundamentalism, and gambling on Wall Street. As Bernard Madoff proves, one bad rich guy can do much more damage to your life savings and the economy as a whole than a couple dozen lazy Mexican families (though the Mexican fellas I see are all busting their humps building our houses and roads for us).

But just in case you can't resist dabbling in the Rush-Limbaugh infused multiculturalismophobia that drives victims to blame all of the country's woes on poor non-white people, try out this argument from a raging anti-immigrationist who pins the blame for minority subprime lending on the political machinations of Geroge W. Bush and Karl Rove:

And the primary political goal of President George W. Bush's political strategist: to bring Hispanics into the Republican Party.

As you'll recall, Rove's best-known tactic to appeal to Latino voters was repeatedly pushing "comprehensive immigration reform" (i.e., an amnesty for illegal immigrants).

Rove, though, had other arrows in his quiver. One was a plan to turn Hispanics into Republicans by providing them with loose credit so they could become homeowners.

... As part of this plan, George W. Bush made several speeches rallying enthusiasm for his October 15, 2002 White House Conference on Increasing Minority Homeownership. For instance, there was his classic Bushian effort on June 18, 2002:

"The goal is, everybody who wants to own a home has got a shot at doing so. The problem is we have what we call a homeownership gap in America. Three-quarters of Anglos own their homes, and yet less than 50 percent of African Americans and Hispanics own homes. … So I've set this goal for the country. We want 5.5 million more homeowners by 2010—million more minority homeowners by 2010. (Applause.) … "

...Bush and Rove didn't have a plan for helping minorities earn more. Instead, they had a plan for helping minorities borrow more.

Bush went on in his June 18th speech:

"Well, probably the single barrier to first-time homeownership is high down payments. "

... CNN reported after Bush's June 17 speech at the St. Paul African Methodist Episcopal Church in Atlanta:

"Fannie Mae, Freddie Mac and the federal Home Loan Banks—the government-sponsored corporations that handle home mortgages—will increase their commitment to minority markets by more than $440 billion, Bush said."

[Steve Sailer, "Karl Rove—Architect of the Minority Mortgage Meltdown," VDare.com, 2008.09.28]

I by no means endorse this foul-tasting stuff, this raving anti-immigrant baloney. My point is simply that even scaping that bogus goat doesn't clear the Republicans.

Y'all have fun blaming minorities for your problems. It doesn't seem very Sarah Palin/Main Street/Real America to blame the small-potatoes working man for the economic mess.... but that's exactly what the rich white guys behind the Wall Street curtain want you to do.

Readers Speak Up III: Top Stories of 2008 -- U.S. Edition

Catch all of the Most-Commented Stories of 2008:
***South Dakota stories
***Madison stories

I caught heck from a reader or two for talking about Sarah Palin all the time this fall. But it wasn't just me: John McCain's running mate was comment gold. You all wanted to talk about her, too, so much so that five of the ten most-commented posts on the Madville Times this year had "Palin" in the headline.

So, Palin or not, here they come: the national posts you, faithful readers, wanted to talk about the most in 2008.

10

Palin Reveals Psychic Powers [9/13]: I take it back: if Gov. Palin really could read Barack Obama's mind, she would have known he knew exactly what he was doing every step of the way.

8tie

McCain Acts with Honor, Defends Obama Against Racists and Fearmongers [10/12]: Even John McCain had enough decency left to publicly reject the lies some of his supporters spewed.

8tie

Obama Caves to Bush; Clinton Stands for 4th Amendment [7/9]: Don't say the Madville Times was an unmitigated love fest for Obama. He torqued off many of us freedom-loving bloggers by siding with President Bush on FISA and the continued violation of the Fourth Amendment.

6tie

Sarah Palin, Omniscient [10/1]: What papers do you read, Governor Palin? "All of them." Unbelievable.

6tie

France Not Perfect, But Universal Health Coverage Still Great! [7/14]: We'd have heard a lot more about universal health care if my man Dennis Kucinich had been the nominee. But sit tight: Secretary Daschle may move us toward the kind of health care that France, Canada, and most of the rest of the industrialized world have realized produces better health outcomes for less money than our broken system.

5

The Selfishness of Joe Wurzelbacher: The Plumber Is Plumb Wrong [10/16]: My first post on Joe the Plumber dectupled my daily hits, as everyone spent the 24 hours after the last Presidential debate playing Google-P.I. trying to find out who Joe the Plumber really was. Shady as he seemed, no one ever produced evidence that Wurzelbacher was a McCain plant (or an in-law of Charles Keating). This post addressed what really mattered: that Samuel Joseph Wurzelbacher symbolized a thoughtless selfishness that could hardly be called patriotic.

3tie

Palin Installs Tanning Bed in Governor's Mansion [9/16]: Why did the silliest posts spark so much conversation?

3tie

Palin Comparison: McCain Takes Youth and Inexperience off the Table [8/29]: I put this analysis up the day McCain announced his VP choice. No rumors, no distortion, just the facts about Palin's basic qualifications and how they erased one of the best arguments McCain could have made against Obama: experience.

2

Palin Misquotes Albright, Condemns Self [10/7]: Short post, long and vigorous disputes in the comments section.

1

Obama Respects Second Amendment; NRA Keeps Lying [9/24]: The 2008 champ! 43 comments! The conversation wasn't always pretty, but I can take it... especially if it exposes the paucity of true civic spirit behind some political movements.

Obviously, the Presidential election dominated the most-commented stories. I find it interesting (and a little disappointing) that more conversation didn't spring up around some of the other big national stories of the year, like the mortgage meltdown, the stimulus checks, and the big bank bailouts. With the election over, we'll see if the 2009 conversation turns more toward those heady economic topics.

But you never know what the new year will bring. Whatever happens in 2009, if it affects Lake Herman and South Dakota, I'm eager to blog about it. I hope you'll keep reading and commenting... and tell your friends to do the same!

Thanks for an exciting and intellectually challenging 2008. Here's to nothing but good news and good conversation in 2009!

Irish Housing Prices May Drop 80%

And you thought America's housing bubble was bad...

While Madison has to resort to quasi-socialism to get houses built in the Silver Creek development, at least we're building something. Over in Ireland, one economist predicts that house prices may drop 80%. Economist Morgan Kelly also contends that after a decade of financial risk-taking, Ireland will see more house demolition that construction.

Uff da—so much for the luck of the Irish.

--------------
Another housing note: The Mitchell Republic's Seth Tupper argues the mortgage meltdown may be hitting South Dakota harder than some popular yet incomplete data suggests. Is reality about to take another whack at the smiley "everything is fine" boosterism of the Mike Rounds/Russ Olson wing of the SDGOP?

Study Hard, Serve Your Country, Shoot for the Stars

In Friday's debate at Ole Miss, Senator Barack Obama mentioned the Chinese space program as one reason we need to invest more in science, technology, and education. Said Obama, "We've got to make sure that our children are keeping pace in math and in science. And one of the things I think we have to do is make sure that college is affordable for every young person in America."

So what's the big deal about a couple of Chinese guys poking their heads out of a space capsule, waving a plastic flag, and doing a couple Mr. Wizard experiments? Well, same thing that was a big deal about two American guys planting an American flag on the Moon. It's an adventure, an expression of human courage and dreams.

But for a more specific answer, watch this video of Chinese television coverage of the first Chinese spacewalk. Forward to timemark 7:30 and listen to the American commentator (he sounds like one of our veteran astronauts, but I can't place him yet):

Chinese commentator: This project... actually can inspire many youth to join in science and math. As I just watched the presidential debate... Obama said that China is catching up... the United States should educate, should inspire its children to be joining in math and science education more.

American commentator: This is a real problem in the United States right now. Many young people are reluctant to work hard enough to become scientists or engineers—

Chinese commentator: Because science is hard—

American commentator: —because science is hard and because getting a job in a service industry is easy. A lot of brainpower is being wasted because of that and because of the fixation simply on making money rather than contributing to the betterment of mankind.

Science is hard. It takes time. But I'm not quite ready to blame my generation and the one coming up for laziness. When you come out of college already $20K in the hole and need to buy your own health insurance, you don't feel like you have a lot of time to explore career options that might not pay off as quickly as a job in insurance or banking (although maybe the mortgage meltdown will change that).

Math, science, and engineering are hard (well, not for regular commenter Tony, but he's a mental machine! ;-) ). As a nation, we can encourage young people to pursue careers in those fields by supporting great endeavors like returning to the Moon (returning? heck—try colonizing!). We need to build respect and enthusiasm for science and learning to face the challenges of the future.

Gee, maybe having a President who sounds "professorial" is exactly what we need in the 21^st century.

Bring on the professors, the eggheads, and the dreamers: they're the ones who'll get us to the stars.

Madville Times Voters Guide: The Amendments!

Jon Hunter beats me to the punch, posting his recommendations on the constitutional amendments on our ballot before I do. Nuts!

One little quirk before we get to business: the Madison Daily Leader publisher writes that there are three constitutional amendments on the November 4 ballot.

What? I flip through my voters guide: Amendments G, H, I, J: that's four! Ah, Jon Hunter must be using Firefox: I discovered a glitch the other day on the Secretary of State's website that causes a Amendments I and J (as well as IM9) not to display. This glitch only happens in Firefox, not IE. (Don't worry—Chris Nelson's people are working on it!)

But anyway, our man Hunter weighs in on Amendments G and H, characterizing them as "housekeeping" amendments that we should pass.

On Amendment G, the measure to increase the mileage reimbursement for legislators, Hunter and I agree. A quirk of our Constitution limits the reimbursement for a legislator's trip out to Pierre at the beginning of the session and a legislator's trip home at the end to five cents a mile. Legislators get the state rate (32 cents per mile, says Hunter) for every other trip. We're not talking a massive expenditure here: 105 legislators × $0.28 more per mile × 400 miles (one trip out, one trip back) = $11,340 a year. Heck, we could fund that by cutting the Governor's press secretary's pay 10%.

Legislators are state employees; they deserve a fair rate of reimbursement for all of their travel expenses, just like every other state employee. Vote yes on G.

Hunter and I disagree on Amendment H (and thank goodness—what fun would it be if we agreed on everything?). Where Hunter sees housekeeping, I see more power for corporations. Perhaps some business types can better explain to me the practical ramifications of South Dakota's apparently old-fashioned and more restrictive rules on corporations, but in my ignorance, I'm adhering to principle (have fun with that one, commenters!). Corporations have too much power already. We recognize them as persons, for Pete's sake! Amendment H would limit shareholder power and make it easier for corporations to incur debt (mortgage meltdown, anyone?). Vote No on H.

Hunter does not address Amendments I or J in yesterday's editorial. Amendment I gives the Legislature the option to extend even-year sessions from the current 35 days to 40 days, the same length as odd-year sessions. I can sympathize with Senator Jerry Apa's argument on the ballot question pamphlet that a longer session just gives legislators more time to procrastinate. (I can also laugh at Apa's argument that a longer session means cities, counties, and schools will have to pay lobbyists overtime to stay in Pierre another week "defending these groups from proposed legislation"...an amusing reflection of Apa's apparent view that legislation is always a monster coming to gobble us up.) Still, Mitch Fargen has told me that one problem in the even-year sessions is that revenue estimates don't come out until later in February, leaving legislators scrambling to craft a working budget. Five more days isn't much, but in the crucible of late February, it could do a lot of good. And the legislation doesn't mandate 40 days; it simply gives the legislators the option if they feel they need it. I'm a choice guy, so that helps me lean just slightly in favor of the proposal. Neither I nor the Republic will be crushed if Amendment I fails, but I'll mark Yes on I.

Finally, Amendment J: repealing term limits. This one's easy: you betcha! We've got term limits: they're called elections. If you like your legislator, keep her (or him). If your legislator is a meathead, you get a chance to oust her every two years. Again, as a choice guy, I'm all about this one. Don't just vote yes—vote Heck Yes! on Amendment J.

Coming up, the Madville Times Voters Guide gets personal and recommends candidates... stay tuned!

Update 2008.10.29 17:25: Our man Hunter comes out against Amendment I. Still waiting for Amendment J....

Update 2008.10.31 06:55: There it is! Hunter editorializes in favor of Amendment J. Hunter confuses the State Legislature with the U.S. Senate, saying that "one-third of the legislature could change in a single election," when in fact the entire Legislature could change in one year (consider District 8 itself: we will have new people in all three of our seats). But Hunter gets the big point: "The South Dakota legislature has plenty of turnover even without term limits, and we lose valuable experience when we force out legislators unnecessarily." Let the voters rule: Vote Yes on J!

Herseth, Flip Your Vote: Let's Flip Houses!

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....

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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!