Moral Hazard and All That

Congress made an unintentional funny with the title of a new mortgage relief bill: the Helping Responsible Homeowners Act.

Remember, responsibility, accountability, justice - those high-minded ideals are just for the common folk but do not apply to our elites. If you're a bankster, a high-ranking politician, or a corporation, you get to do whatever the fuck you want. And in the case of the banksters, when you blow up the global economy, you are rewarded with piles of capital wrested from the public coffers without a single proviso or stipulation. And as we are now finding out, those freebies for the good old boys were way larger than previously known:

The Federal Reserve lent Wall Street firms a staggering $1.2 trillion in a previously unrevealed bank bailout that dwarfs the size of TARP, reports Bloomberg News. 

The $1.2 trillion — which Federal Reserve Chairman Ben Bernanke lent to banks and other firms to prevent the economy from collapsing is roughly equivalent to the amount that U.S. homeowners currently owe on 6.5 million underwater mortgages, Bloomberg said.

Bloomberg News received the information through Freedom of Information Act requests, litigation and an act of Congress. The $1.2 trillion figure is the compilation of the balance for seven programs instituted by the Fed.

I'll be interested to see if this bill manages to pass and make its way to Obama's desk, because I would love to hear another vomit-inducing signing speech from him about how we aren't throwing good money after bad and that we're not helping out unscrupulous folks that borrowed more than they could afford.

I know this is crazy, but you would see a much more sustained and profound stimulative effect from just helping out homeowner's and average citizens wind down their enormous levels of household debt, or principal reductions for underwater mortgages. Refinances are nice, but all they will accomplish is scrape a few hundred bucks off people's mortgage payments while still leaving them shackled to an "asset" that isn't worth shit, can't be sold, and will never again be worth what it was valued at during the manic housing casino days of the 2000s. 

But giving direct help to the freeloading masses would be socialism and stuff, and we have to worry about moral hazard. Don't want those goddamn moochers taking advantage of the system. That's their game. We'll just wait for the magic of the free market and the confidence fairy to return and restore these housing values to their former glory.

What was it again that Einstein said about doing the same stupid shit over and over and expecting different results?