McCain Seemingly Backtracks on No New Taxes

[strandinthewind]

Originally Posted by ajmccarrell

The mortgage crisis has everything to do with lenders and borrowers. The Bush administrations has little to nothing to do with it. The whole problem could be alleviated if we'd leave it alone and let prices fall back to normal levels. Figures suggest that average median income is $47,000 and the average home price is over $386K. If we stopped messing with it, raised interest rates back normal levels and let the market work, we'd have homes that normal people can afford again and cheaper imports because our higher interest rates would attract investors. The dollar would rise and gas prices would go down. What the Fed is doing is pure suicide that will cause much worse problems in the long run. The basic problem is that the shady lenders didn't let the market work. To put it in economic terms, they shifted the supply curve rightward to intersect with the indifference curves of consumers that had no business buying in the first place. The shady dealings were much more widespread than reported and people were buying too much house. All bailing the system out does is keep prices artificially high. If mortgages are harder to obtain, prices will drop and more regular people could afford to buy again.

The simple solution that would benefit everyone except for those who bit off more than they could afford, would be to do nothing. No bailouts. Nothing. It would seem draconian and bring me a lot of bad press if I were the one pulling the trigger and the whole country would call for my ouster, but the problem would be fixed in a couple of years, instead of dragging on and dragging the rest of the economy down. BTW I do have degrees in the subject. I went to SUNY for my BS in Management and Economics and Texas A & M for my MBA. No Liberty University or Bob Jones for me! Those places suck.

Well, I am unsure if a market based correction is necessary in that the complete misery it would cause (thousands of people likely would starve and die - colleges would empty -- etc. ) likely would outweigh the outcome, which IMO would take a decade or more. I also think the Bush administration will bail the banks out because it is way cheaper than living up to the FDIC guarantees.