Housing bill to bail out the banks

Last week, the House democrats pushed to pass the "housing bill", aimed at providing financial "help" for the "distressed homeowners". The bill also provides guarantee for Fannie and Freddie's $5 trillion mortgage debt.

As I have mentioned before, there are two major problems that the nation is confronted with: subprime mortgage crisis, and runaway inflation fueled by rising prices of commodities. You might be amazed by the fixation of the politicians on the former one, and scant attention that they pay to the latter. You should not be surprised, because the first problem is the problem of the banks, and the second one is the problem of ordinary folks. Do you really expect politicians to care much about the problem of ordinary people?

While all the media circus is focusing on mortgage crisis, the mortgage delinquency rate (defined as 30 days payment overdue) for the first quarter of the year (latest data available) was only a little bit above 6%. The actual foreclosure rate is less than 1%. Vast majority of the homeowners are paying their bills on time. What the housing bill will do is to reward a tiny minority of those who engaged in irresponsible speculation on the housing market or bought homes they cannot afford, while punishing the vast majority of us who are financially responsible. The true objective of the housing bill is to bail out those banks that have engaged in reckless, fraudulent, or even predatory lending, and the investors who were gambling on the subprime housing market.

If the politicians truly want to help people and the nation's economy, they should do something about the inflation. The bloody fact about inflation is that, it is created by the government's excessive printing of money. As Milton Friedman has pointed out, inflation problem everywhere and every time is a monetary problem. When inflation occurs in Zimbabwe, Sudan, and many African countries, we all know that was caused by the government excessive printing of paper money. But when inflation occurs in US, why all of sudden we are at a loss about what has caused it?

The housing bill essentially will put the $50 trillion mortgage debt Fannie and Freddie owes, on the books of the Treasury department, virtually tripled the amount of debt US government owes. That will put further pressure on the value of US dollar, leading to even higher rate of inflation. If you think the gas price is high now, wait until the housing bill becomes law.

Politicians, democrats or republicans, are crooks. They are fed by big business interests, and do whatever it takes to advance those interests. Sad thing is that the public is so ignorant and gullible. I tell you, I really doubt the so-called 'democratic system". What good doe it to do to ordinary people? You might as well go back to the "benevolent authoritarian" system that China has.

I admit that I am confused.