Posted by
Bert Chapman on Monday, September 15, 2008 8:17:47 PM
Today we hear of the collapse of Lehman Brothers and the absorption of Merrill Lynch by the Bank of America. Recently, we've heard of the federal government's de facto takeover of Freddie Mac and Ginnie Mae. It's another sign of the economic troubles facing the domestic and the global economy. Self-righteous liberals are strutting that these calamities are reflective of a conservative rush to deregulate and alleged Bush Administration mismanagement. That's not quite the case.
Federal agencies draft regulations and industries such as the investment banking industry follow regulations based upon laws passed by Congress and signed by the President. These laws and regulations have been approved by Republican and Democratic administrations and congresses. No one party can take all the blame for these problems.
Our society has become to infatuated by the seductive allure of easy money. We need to learn to adhere to the old Puritan maxim to not spend what you don't have. We need to restrict the use of credit cards and easy credit schemes which seductively entice people into the illusion that they can spend more than they can pay. The mortgage industry needs to reform by only allowing fixed rate mortgages where people will have a realistic understanding of what they will pay for their homes each month. Laws and regulations allowing uncreditworthy individuals to purchase homes without a down payment and with fraudulent gimmicks like bubble mortgages must be ended. Instead of bailing out Ginnie Mae and Freddie Mac, these entities should be broken up into several smaller companies that will be able to offer mortgage holders more competitive choice and more accountability for their actions. It amazes me that businesses or government agencies expect the federal treasury to bail them out for their economic incompetence and criminal stupidity! As a taxpayer, I don't want to pay for the incompetence and stupidity of a reckless bank loan officer!
Fellow conservatives, we also need to take a long hard look in the mirror! For to long, we have glorified the reckless speculator and the excessively risk taking entrepreneur as arbiters of virtous economic practice and holders of esoteric economic knowledge. We need to rediscover the virtues of true economic conservatism which include prudence, saving our resources, not spending money we don't have, planning for a rainy day, understanding that there will be economic bad times, recognizing that prudent saving and planning can mitigate the effects of economic downturns, and, most of all, recognizing that business and economic leaders must adhere to the same high ethical standards that we expect other political leaders and all individuals to adhere to. We also need to teach ourselves and others that reckless economic behavior, as has occurred in the mortgage industry, is the road to increased governmental regulation of the economy which history and experience teach us to abhor. We need to understand what government institutions can and cannot do to alleviate economic misfortune.
There's no telling how long our economy will live with the consequences of this fiscal recklessness. We've felt it in our household when my wife was laid off several months ago from a support staff position she had with a local real estate firm. This firm is competently run but the economic malaise we are in has kept her from being able to find full-time work again. We can find solutions to our economic problems but they must be based on fiscal and moral prudence instead of looking for quick fixes from the federal government or naively expecting the market to work things out on its own.