The Road to Recovery

When I built my home here in Lewis County I viewed it not as an investment, but as a place to live and raise a family. I’ve paid my mortgage faithfully now for nearly ten years and when interest rates declined recently, I refinanced. In brief, I have done what responsible adults should.

           During that same time many banking and insurance executives made investments that, any reasonably intelligent individual should have known, were extremely risky. All the while these executives touted their managerial brilliance and took millions in bonuses. I don’t care if they call themselves brilliant and pay themselves millions as long as they use their own money. But, when their investments went bad, they asked for my money and our elected representatives handed them hundreds of billions of dollars.

           Recently the CEOs of General Motors and Chrysler flew in their corporate jets to Congress to ask for our money—and Congress gave it to them. The executives of both of these companies tout their MBAs from exclusive schools while they sell cars for less than it costs to make them. Every high school graduate in Lewis County knows that you can’t sell something for less than it cost to make it and stay in business, but GM and Chrysler having been trying that business model for years. And now they have nearly 40 billion of our dollars to play with.

           Chrysler, a privately held company, has taken on so much debt recently that it is near collapse, but middle class American taxpayers are being required to insure the foolishness of millionaire speculators.

How many trillions have we been told we must spend? Who has been fired? How many have gone to jail?

I say fire the bankers, executives and speculators who made a mockery of financial statements and accounting rules and who now tell us they must have our tax money. Arrest those who told investors that their companies were sound until the market forced them to reveal the corporate rot that they knew of for months, if not years. Stocks and bonds in companies such as GM and Bank of America will probably fall to zero, but anyone who now holds these equities knows the risks they are taking. But when companies fail others will see opportunity and rise to fill the void. That is, or at least was, part of the greatness of America.

Finally, we are being required by our elected officials to bail out millions of people who viewed their homes not as a place to live but as a short term financial investment. Let me be clear, my complaint is not that they attempted to gain financially through their investment—that is their business. My complaint is that our senators, Patty Murray and Maria Cantwell, and Representative Brian Baird, have voted to require us to assist them through mounting public debt that all of us and our children and grandchildren will be required to pay.

I have been told that foreclosure hurts housing prices in general. I speak only for myself in this matter, but since I intend to live in my home for many years the only thing falling home prices do to me is lower my property taxes.

The speculative housing bubble needs to deflate. The mechanisms for that are bankruptcy and foreclosure. They are painful, but recovery often is.