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When Barack Obama was running for President one of his favorite sound bites was that any financial bailout should not just involve Wall Street, but Main Street, too – that the government’s responsibility was to help both bankers and homeowners. But now that the election is won and Obama is in office, the two streets are still being treated very differently, with Main Street getting a lot less help from Washington.

This is a HOUSING crisis, not a BANKING crisis, yet $700+ billion has gone to help bankers and only $75 billion to “help” homeowners. The banker’s money has mainly been spent and the homeowner money has hardly been touched. If this is a HOUSING crisis, why aren’t more resources being devoted to housing?

It comes down to an issue of morality, believe it or not, with homeowners expected to be moral and bankers not. Everybody blew it, but the homeowners are being disproportionately punished for their actions.

There is no morality issue in the bank bailout. Banks are having their capital boosted based not on whether they are well run or in some way “deserving,” but purely on the basis of whether they are viewed as being in three groups: 1) doomed; 2) capable of being saved through injecting government funds, or; 3) too big to be allowed to fail no matter how poorly run. This means the least-deserving banks tend to get the most help.

But the Obama Administration’s attempt to help mortgage holders is different. If you hope for government help in restructuring your mortgage you’d better not be behind in your payments. If you missed a mortgage payment months into this crisis, you are out of luck. If your mortgage isn’t guaranteed by Fannie Mae or Freddie Mac, you are out of luck. If your mortgage is jumbo you are out of luck. And if you owe more than 105 percent of the value of your home you are out of luck.”

Wrong, as usual, Bob. These people ARE THE LUCKY ONES. Anybody “helped” to stay in an under water mortgage is being turned into a debt slave for the rest of their lives. Think about it.

1) Screw homeowners! They get what they deserve!
2) Hang Wall Street! They’re corrupt!
3) Socialism! Socialism! Live Free Market or Die!
4) Obama’s fault! Minority loans! Rush says so!
5) Bush’s fault! But Obama’s the same!
6) Gold Standard! Fractional reserve banking is evil! Ron Paul 2012!
7) My mortgage is ok, so you’re all losers!
I am writing this from an underground bunker wearing a tin-foil hat and holding a shotgun, sitting atop a pile of silver barter coins and a decade’s worth of Hustler magazines!

Call me nostalgic, but I much prefer the days when engineers argued over the effects of barometric pressure on a wireless router signal and the maximum thickness of drywall it could penetrate. You know, arguments where I could learn useful things.

The one solution that will not work is spending more money. One of the major catalysts now is debt – at all levels, from Federal gov’t to personal; and the only way to resolve it is to lower it – pay it down.

Hoover’s problem was not deflation due to paying down debt.

So, no – you can’t really even begin to compare what I saying to what has been done in the past. Why? Because no one has every really done it – and no one has even bothered to try since the rise of Keynesian economics – especially since most now believe that debt is infinitely expandable (at least for the Federal gov’t – it is not for anyone).

Ultimately we have the choice – pay down the debt (which we have to do regardless) and lift the burden on future generations for paying it back or suffering a fully collapsed economy (which will happen if it doesn’t get paid back or we start/continue to take debt to pay back debt – something we’re probably already doing) OR let it ride out until the Federal Gov’t has to declare bankruptcy and the USD is worthless. If you thought the Great Depression was bad, look at what will happen if the US Federal Gov’t has to declare bankruptcy. (And yes, it CAN happen.)