Southern California Real Estate Bubble Crash Blog

Now that the housing bailout bill has been approved by congress and signed into law by the political pandering president, we have all agreed to accept the cold hard reality of covering someone else’s bad decisions and poor choices with our own hard work, sweat, and good choices. Indeed, it seems that excelling or even being of a marginally higher intellect than say, a brain slug is fit to be yoked and saddled with someone else’s mediocrity in this new era of America. It is the future of “no child left behind”, or as Brett Arends of the Wall Street Journal puts it, the Condo Flippers Do Over Act.

I remember a story that I read in grade school, Anthem by Ayn Rand. It was the first Ayn Rand book I ever read, and the only one I enjoyed. But, even in my youth, the message was chilling. The story was one of a man with extraordinary talent and physical prowess who lived in a society that believed in equality to an extreme. This society would place handicaps on those who could could see well, think better, or even walk better to the point that noone was better than anyone else in any way. Ironically, the main character I never in my life imagined that this kind of society would exist, much less under a republican president. However, it seems we have become this society:

Our name is Equality 7-2521, as it is written on the iron bracelet which all men wear on their left wrists with their names upon it. We are twenty-one years old. We are six feet tall, and this is a burden, for there are not many men who are six feet tall. Ever have the Teachers and the Leaders pointed to us and frowned and said: “There is evil in your bones, Equality 7-2521, for your body has grown beyond the bodies of your brothers.” But we cannot change our bones nor our body.

I have no flair for the dramatic, but I fear that we as a nation have allowed ourselves to become enslaved by our own political masters. We are therefore, destined for failure much more than if we had celebrated success AND failure as a means of building again something better. In our society, failure is only to include everyone, and everyone fails or succeeds together. It seems like only a little time ago that we were introducing “participation awards”, and now we are covering everyone’s losses. Except it seems that there is a conspiracy afoot.

I’m a died in the wool libertarian, but there is only so much nepotism that I can stand. I am disgusted beyond belief at what I see. What I see is that the only time that people are bailed out is when it affects big business. When the banks collectively went and did the stupidest stuff in the history of the world in the name of “financial innovation”, they get bailed out. When little investors went and did stupid stuff by buying dot coms… not a chance.

I’m mad as hell, but I don’t know what to do. In elections, I get to choose between a giant douche and a shit sandwich. Equally, everyone around me is too busy getting raped by the government to give a rat’s ass. The only thoughts that come to mind are treasonous and illegal, so I won’t write them down, but, I have to ask, at what point do politicians become responsible for their actions? Is it only when we get invaded and conquered do crimes against humanity get punished?

Unfortunately, with all of the absolutely stupid shite that happens in this country, I can’t think of a country where even more stupid shite happens, so there’s no escape. Maybe this is just what being middle class is all about. I’m too lucky to have the government wipe my butt for me, and I’m not lucky enough to not give a rip or find a way around paying for it. So, I’m stuck working for the government 50% of my income going to taxes and no say in the political process. Makes me want to stop paying taxes altogether. If I thought I could get away with it, I would.

I have to say, this housing bill, what a crock of absolute rubbish, and I’m ashamed to live in a country where politicians pander to everyone but their constituency. Everyone would be much better off if housing were cheap. Everyone complains when the prices of things rise… we call that inflation, but when it’s houses, it’s call an ownership society.

From the WSJ:

Anyone who invests in housing already gets a number of political subsidies. Your mortgage interest can be deducted from your income tax. Your capital gains, up to certain limits, can also be tax free. Taxpayers maintain the roads to and from your home. The new rescue package is just one more subsidy for the asset class of housing.

There was no rescue package for all those honest people who lost their savings in the dotcom crash. And there was no suggestion of any rescue package.

Meanwhile the majority Democratic party is agitating, with plenty of popular support, for a “windfall profits tax” on energy companies.

Such a tax, if it should pass, would by definition lower the returns from investment in oil and gas exploration. Inevitable consequence: Less investment in oil and gas exploration. But this is apparently an acceptable price to pay to ensure that…well, that investors in big energy companies don’t make too much money.

So, where does this all leave us?

Among the many ironies: The current economic crisis is largely the result of too much investment in housing, which led to a bubble and then a collapse, and too little investment in energy, leading to fuel shortages and skyrocketing prices. Yet the political class is acting, as far as I can see, to increase investment still further in housing and reduce investment in energy.

Where do our douche and shit sandwich stand on this?