$700 billion bailout

Pres. Bush quickly signed the $700 billion bailout today. Everyone said it was critical, it was an emergency. Also that it won't solve the problem but without it there will be disaster. I am glad that my congressman was among those that voted against it. So if this amount of money won't solve it, what will? More money?

I can only hope that more responsible legislation will follow that will limit the influence of government on the market. It is government involvement that made the mess in the first place. The reports about meddling that started at least as far back as 1999 are becoming more clear that the GSE's Fannie and Freddie and other large mortgage holders were purposefully giving loans to those that could not pay them. Without going too much into conspiracy theories I think it was done intentionally to crash the market in order to gain control. But even in more sensible terms it was a terribly ignorant thing to do.

It is also racist. Martin Luther King dreamed of a day when his children would be judged by their character and not by the color of their skin. I think this should apply to home loans as well as all other aspects of life. Some people were approved for loans because of the color of their skin rather than on their credit score. That is not helpful. It is demeaning and racist. I am in engineer and so I think of this in terms of process control. If you don't measure something then you can't control the outcome of the process. You can't improve something without measure and understanding it. Worse than that is too ignore the data you get and make random judgements. Credit rating (not just scores BTW) have been used to control the mortgage loans. To ignore that data is to ruin the process. Like trying to control the water level in the tank while ignoring the level sensor. Just throw the valve wide open, fill it quick and ignore all else.

A measurement only has value if you are going to use it. Something ignored obviously has no value. Ignoring character and judging by race is wrong. Ignoring someones history of payments or credit score in place of demographics is wrong.

Another reason this interference is a bad idea is because it interferes with the free market which should not be violated. Even smart people are not smarter than "the market". Why is that? Because many people making many decisions in their own best interest is better than one person making decisions for everyone else.

I don't know if that is what caused the housing bubble. That may have been a big contributor. That sort of things happen when people mess with the market. If you take the average house appreciation to be 7% then we're just returning to normal marketplace. If you bought a home eight years ago at $150,000, then it would be worth $256,000. And that it's exactly what a house like that is going for these days. So there hasn't been a huge market crash. It only looks bad compared to the price of that same house two years ago when it sold for $400,000. But of course, everyone knew that that wasn't real. The bubble has burst, but the market hasn't crashed. It looks like things returned to normal.