As lawmakers, Treasury Secretary Henry Paulson, Housing and Urban Development Secretary Alphonso Jackson, a slew of presidential hopefuls, and many others weigh in on a solution to the subprime mess it is clear that President Bush is in a jam. While some realists say the recession of 2001 never ended, others claim the manufactured wealth needed for U.S. economic growth was sure to fall apart. That it did, but during the build-up President Bush protected businesses, predatory lenders, banks, and investors with new legislation such as the 2005 revision of bankruptcy laws.
Now many pro-consumer ideas are on the table. Admissions that this is not a ’subprime’ problem takes the focus off of people with less than stellar credit. But where is the focus now? Like a child’s game of dodgeball or musical chairs the music may stop playing on 6 December. For once Bush may not be able to protect those who got us into this problem to begin with. The Bush administration expects to make an announcement Dec. 6th. Paulson said “I am optimistic that we are going to have something to announce by the end of the week.’
When the announcement is made investors are sure to scream. Contracts are in place, and the delicate job of balancing future U.S. growth against legal issues will be interesting. Without a solution U.S. growth is sure to stall. I am writing this on the evening of December 3rd, but I guarantee if history is correct the Bush administration will throw money at the problem. That is money we do not have.
The fact that Bush is in a jam between business interests and real people – like consumers and home owners – reminds some of post-Katrina. Some alleged that Bush did not like black people. Others said Bush didn’t like poor people. Now that the mortgage industry has imploded, we can look back at financial legislation since hurricane Katrina to see that, given a choice between business and real people, Bush just doesn’t like people.
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