Rebels are we…Born to be Free…

I am more pessimistic than ever about Obamanomics.

I just saw Jared Bernstein on CNBC. He’s Biden’s economic wonder boy. There were four pundits interviewing him about the stimulus package.

Just for background purposes, Paul Krugman endorses Bernstein, and Bernstein writes for The Daily Kos. Or did before he was appointed. This should tell you all you need to know about his leanings.

It was horrible to watch. The pundits kept asking him why we should take money away from responsible people and give it to people who took on debt they could not handle. And he refused to answer. He smiled, and he kept saying, “That’s a great question,” but he weaseled and sidestepped and refused to answer. This wasn’t Fox, mind you. This was CNBC, home of openly belligerent liberals like Erin Burnett and Mark Haines. But this panel was hostile.

He said the handouts would not go to “speculators.” Okay, first of all, many professional speculators are productive people. They may have screwed up in the housing boom, but many of them are excellent businessmen, and I would rather see them get the money than give it to hopeless perennial deadbeats. Second, as the hosts fairly screeched at Bernstein, an impoverished individual who signs a note with an adjustable rate IS a speculator. He’s just not a sophisticated and rational speculator who has a chance of succeeding. He’s speculating that he’ll have enough income to pay the note, and that the interest rate will remain low. And the basis for his speculation? HOPE that his basic nature will CHANGE. Suddenly he’ll become capable of handling money, in spite of a lifetime of poverty.

Bernstein kept saying, “through no fault of their own.” But as the hosts pointed out, when you sign a note you can’t pay, it’s definitely your fault.

Rick Santelli, who may well become a cult figure, asked how subprime-borrower losses differed from stock losses. Why shouldn’t stock losses be covered? Millions of responsible people put their retirement money in carefully chosen stocks, and now it’s gone. And come to think about it, it’s gone because of the irresponsibility of the people Bernstein wants to continue subsidizing. With money taken from the responsible, who are already eating major investment losses!

The injustice is mind-boggling.

Bernstein whined about foreclosures. Look, if the banks don’t want to foreclose, they don’t have to. They can write off principal and eat big losses. They can lower interest rates. They don’t have to adjust rates based on the prime rate. They can go as low as they want, voluntarily. The banks took this risk. Responsible people didn’t. Why shouldn’t the banks take the hit? After all, they made the bad loans, and they made the voluntary choice to raise interest rates above a sustainable level for their subprime borrowers.

And if we have foreclosures, so what? Sure, people who had no business buying homes will lose their houses. What will happen then? Responsible people–the class of people who sold them the homes to begin with–will snap up the homes. They’ll rent them to the subprimers, and life will go on as it was before the boom, when all of these people were renting, anyway.

Here’s a nasty little secret nobody wants to discuss. As a class, these people are going to lose their homes regardless of whether we help them. No one wants to talk about that. The reason? They’re not the kind of people who can hold onto wealth. If they were, they wouldn’t have needed subprime loans. Sure, there are exceptions, but the fact is, people who can’t qualify for loans are rejected for good reason. They fail to make the payments. Save them this year, and they’ll be in default two years from now. Why is no one talking about this? Many, many of these loans are going to fail regardless of what we do. They would have failed even if the economy hadn’t tanked. Sooner or later.

Even if we gave them the homes outright, many of them would mortgage them, blow the money, and end up on the street. You cannot make people prosperous. It is impossible. All you can do is provide opportunity. History proves that when you give poor people enough money to live well, without requiring them to be responsible, you do not get affluent people. You get more poor people.

I’ll tell you what I always say about “the rich,” and by that, I mean people who do reasonably well. Democrats call them rich; so will I. If you took everyone’s money and possessions away and started over from nothing, and you let people scratch their way into the best economic positions they could manage, in six months, the people who were rich before would be rich again, and the poor would still be poor.

Come to Miami, if you don’t believe me. This town is full of rich Cubans who were rich in Cuba, then poor in Miami, and then rich again in Miami. It’s also full of Cubans who were poor in Cuba and have gotten rich here, but that’s because the US has a better economy and is considerably less corrupt.

Fidel and his minions enjoyed cutting the Cuban rich down to size. But a lot of the people the communists stole from came to the US and had the last laugh.

Bernstein and Obama want equality of outcome, regardless of how we get there. That’s a mirage. You can’t reach it. It’s the wax carrot of socialism. The carrot is phony. The stick is all too real.

The Democrats are going to get their way. I think a lot of people who used to see themselves as liberal now realize they’re more conservative than they thought; many people are furious about what’s happening. But Obama will win. We are in deep, deep trouble. It has to be the hand of God. We are not this stupid. We didn’t walk into this obvious trap; we charged. Like we were getting free admission to Disneyland.

It’s Cuba all over again, and this is 1958.