A blog about living, hunting, and whatever else I want.

Just Another Right Wing Extremist
Founding Member of The Party of NO
This Blog is a Cybersecurity Emergency

Friday, July 24, 2009

Commercial Real Estate Bailout - OUCH

The United States just doesn't have enough debt. We need more.

From the article:
It “may be appropriate” for the government and Congress to consider “fiscal” steps to support the industry, Bernanke said today. Ideas for fresh support for the market could include government guarantees for commercial mortgages, Bernanke also said today, while noting no proposal on the subject has emerged.
In other words BOHICA.

Here is another part:
Bernanke, testifying before the Senate Banking Committee today, urged lenders to modify “problem” mortgages to avert defaults.
Urging lenders to voluntarily offer changes to the terms of a contract sounds ok, except when the urging comes from the fed and from the federal government.

Forcing entities to change contracts is one of the worst things the government can do as far as hurting the economy. If I don't feel I have solid ground to stand on in terms of a contract then I won't risk the money.

I'll put it another way. When I sign a contract with someone then both of us know the risks and both of us know our obligations. We can both weigh the risks and possible rewards and make a reasonable decision to sign or not sign. When an outside party (the government) can come in later and change the terms of the contract then neither party can reasonably weigh the risks and rewards because nobody knows what the government will do to the contract.

Usually the government will make changes that favor the group with the best lawyers and the most votes for those in power. Look at what happened at Government Motors.

Ultimately to survive as a nation we will either have to get the government completely out of business transactions except in cases where force or fraud are used to gain competitive advantage which will be painful in the short term but healthy in the long run or we will have to accept the government owning all banks and businesses which will be somewhat less painful now but will ruin us in the end.

No comments:

Followers

Blog Archive

My Blog List

counter