Tuesday, September 30, 2008

Bailout: the people won round 1...

Congratulations, we did it!

I was surprised when the bailout of financial institutions was voted down yesterday; I feared the fix was in.

But stay tuned...they are gearing up for round 2, and it'll be a battle.

Something amazing is happening, openly, right before our eyes: our elites have joined hands and are making common cause, against us, the people. You saw it today, if you watched the news: both candidates for president are almost shoulder-to-shoulder on this. The crowd in Washington were sure they could muscle this through Congress, and they were stunned when it was voted down. But be clear what's happening right now--they are figuring out how to muscle the 12 or so members of the House they need to switch. They realize they didn't bring big enough guns the last time; they are preparing to hit them hard, with whatever threats and or blandishments they think it will take to peel off enough votes.

There is another lesson here: did you notice that those who voted this down are Congressmen facing competitive races this fall? I.e., it matters to them that the people are so strongly against this. They fear being defeated! But who was happy to go along? Those Congressmen who either have secure districts--or who aren't running again.

Now consider this: what if we had term limits? A certain chunk of these folks would be term-limited, and thus free from fear of their constituents wrath. How do you think they'd have voted then? This is why I am oppose to term limits.

Meanwhile, keep steady. I realize folks are worried about the markets, and the economy, and I am as well. There are steps Congress can take that would help that doesn't need to involve buying up vast amounts of mortgages that we're told (please note this): aren't valued by anyone else, so they can't be sold, but the taxpayers have to do it; and, we're told, this transaction will end up making us money! Now, this can be true--but it makes me, and it should make you, very concerned. Above all, it's the stampede: now, now, don't think, don't question, just give us the money and the power, NOW!

Yes, the Dow went down a lot of points yesterday--that's scary. "The worst drop ever"--in raw numbers; but nowhere near as a percentage of the total. Remember the Depression of 1987? The Market dropped 25% in one day! The economy did fine, the markets recovered. And, note, today, the Dow picked up a third of that, which surprised many, but not me.

No, I'm not saying there's nothing to worry about. I think there are real problems. But if you go to the doctor because you're sick, you need him to find the real problem and treat that--and the worse your illness, the more you need him to get it right. Congress is not, in my judgment, getting at the source of the sickness, and therefore I have no confidence in the so-called solution.

What is the source of this problem? It's very plain: the government made it policy, starting many years ago, to push banks to offer loans to high-risk borrowers, to the point that they would be punished by the government if they didn't. This is what they call "sub prime" loans. Why did the government do this? Because it wanted to encourage lots more people to become homeowners, who for various reasons hadn't become homeowners. Now, some of those was because of racism and discrimination. But a lot of it was because, well, they had bad credit--they were bad risks. This started in the 1970s, and the years go by, the more this push continued, it only stands to reason the next group to be brought in would be more and more high-risk.

This is what the government-created corporations, Fannie Mae and Freddie Mac, were created to help do; and they took these mortgages and packaged them as "securities" and remarketed them; and as long as the prices of real estate kept rising, you could keep it going. If a bank lends you the entire amount to buy a house (remember those "no money down" deals being promoted in TV infomercials?), and you have lousy credit, you can pull it off pretty easily, if you can count on selling that house a year or two later--or even less--for 10% more.

But what happens when real estate prices stop rising--and worse--start dropping? It only takes a little slippage to cause a real problem. And that's where we are.

So here's the question: when did Congress propose doing anything about this government policy of pushing loans to uncreditworthy people? When did they rein in Freddie Mac and Fannie Mae? None of that was in the bailout.

There's more to be said, but others are saying it better than I am. I just want to renew my insistence that you be heard by your representatives and senators, and do it now!


Anonymous said...

It bugs me that we, little people, seem to only be heard IF the reps term is ending.

Fr Martin Fox said...


I am not sure you got my point: it was the members of Congress who were facing re-election, in competitive races, who were most responsive. Those who had nothing to worry about in November, either because their districts are overwhelmingly one-party (their own), or because they aren't running again, were the ones who provided "yes" votes for the bailout.

My point is simple: term limits would mean more of such members of Congress (especially Senators) whose votes could be counted on for such things. Meaning, if we had term limits, this thing would have passed...

Anonymous said...

I thought I understood...but maybe you are right.

You are against term limits, meaning that you do not want a specified time for the person to serve? (2yrs for House/6yrs for Senate both being able to be re-elected unlimited times)
So, what would the alternative be? They are in office till natural death?

We have one Rep that is trying to be re-elected and he voted NO, which I am happy.

It is very discouraging that this might actually have a chance in the Senate. I mean, we get strapped with the debt from the reckless spending/lending of these corporations!

And to top it off, we have had our house on the market for over a year and it is TEMPTING to push this and get it passed just so things are unfrozen so maybe we can get settled, but it just ain't right. I agree with you whole heartedly on that.

Fr Martin Fox said...


I think they should be in Congress until voted out by the voters. If a district is gerrymandered, as many are, you have a remedy in the primary; and even if not, term limits isn't much help.

Anonymous said...

I think I see what you are saying now. If they knew they could be voted out yearly, then they would be more likely to stick with representing the people, instead of the particular party.
One the downside, that could mean campaigning yearly and I HATE the stupid commercials!

Anonymous said...

None of this matters in the end, what really matters are the souls saved..........why not leave politics to the other vocations and spend time focused on the reason for a priestly vocation.

Anonymous said...

I wonder if the previous anonymous comment was a blast on the blogmaster for being interested or involved in the political process. As another Ohio priest, I resent the implication that I am not supposed to be engaged in the national discourse. Frankly, it's extremely difficult for anyone to fully comprehend what the long range effect of this plan will be. I can't help but believe that today's (10/03/08) vote will advance the process in this countryy of the poor getting poorer, the rich getting richer, and the middle class being squeezed out. I know that our parish is growing in numbers but our Sunday offertory is taking a major hit, particuarly last weekend. And we have an unscale, affluent membership base. If the number of people in the pew is growing and the Sunday offertory is declining, that is a strong indicator that people are scared. It's not just prices, they've been up for quite a while . . . I think it's fear over the recession. Ohio Priest.

Anonymous said...

= country
= upscale

Anonymous said...

Comments made regarding leaving politics to politicians and priests using their vocations for the real purpose of the vocation were not directed to a specific blogmaster but to all to whom it applies. Let's face it, if that was really the case, one would not have to be concerned about the diminishing support, in fact quite the opposite........money, bailouts, politics........is this really what is the most important for salvation? Blogs that teach us about the wonderful history of our Catholic Faith and about growing our faith are indispensable and a blessing along with their blogmasters! What we do not need are more opinions on politics, bailouts etc.. my leave..... +Pax Christi+

Fr Martin Fox said...

Pax, et al.:

I post here and offer comments on other blogs about topics that interest me, including political topics.

A cursory glance at my page will show that most of my posts are homilies, or about life in the parish.

Certainly you or anyone who isn't interested in a post about economic or political matters is free to skip over it.

matt said...

I actually think it's nice reading about some of the other opinions and interests that my Pastor holds. I've actually been keeping up with your blog for quite awhile, so I hope you continue to do post other things other than just your homilies. I actually love reading your homilies when you post them and of course the other commentaries about the Catholic faith.

However, I'm of the opinion that it's not necessarily a bad thing (but rather, a great thing!) if parishioners and others are able to connect with their priest on other topics as well, such as the political ones you've been posting. This upcoming presidential election and other topics that you've been posting about (i.e. the "Bailout") is something that I feel strongly about and have been following everyday, and having a priest offer up his advice and opinions is actually really important to me so that I can connect with him on another level other than just listening to homilies during Mass. So keep up the good work, Father, and keep posting! :)