Obviously some sort of assistance to financially strapped homeowners was coming down the pike, and today President Bush is outlining his proposals, Ded Riechmann writes. Bush will:
- Urge Congress to pass legislation that would give the Federal Housing Administration more flexibility in assisting mortgage holders with subprime mortgages.
- Pledge to work with Congress to reform the tax code to help troubled borrowers rework their loans.
- Call for rigorously enforcing predatory lending laws and strengthening lending practices.
That last item is the classic government ploy of shutting the barn door after the horse has escaped.
Fortunately Federal Reserve chief Ben Bernanke stands ready to prevent the mortgage crisis from spilling over into the rest of the economy, according to Jeannine Aversa:
The Fed "will act as needed to limit the adverse effects on the broader economy that may arise from the disruptions in financial markets," [he said.]
All I can think is the words of Ludwig von Mises. A recession, he wrote, is the period of liquidation of the mal-investments of the previous boom.
Actually, you could gussie this up a bit.
- A recession is the period of liquidation of other peoples’ mal-investments made in the previous boom.
- A depression is the period of liquidation of my mal-investments made in the previous boom.
This way of thinking says that neither Presidents nor Feds nor principalities nor powers can end the business cycle.
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