Thursday, December 23

"Wishful thinking will save us"

As the sidebar notes, in an earlier life I flew airplanes for a living.

Flying teaches lots of lessons, of a type one encounters only in a very few professions. For example, in most jobs people can cut corners with no bad effect. But if one tries to violate the laws of aerodynamics, most of the time the penalty is immediate and often career-ending if not literally fatal.

What this teaches is that while people can (and do) play fast and loose in some fields (politics being near the top of the list), other areas are governed by laws that are unbending, unforgiving.

And if you're in one of those "hard" fields and violate one of those laws, no amount of wishful thinking will fix things.

Problem is that unlike flying--where the reality-slap is almost always immediate--in a lot of these "soft" areas the slap can take a lot longer to happen. As in, decades.

The result is that people who blatantly violate natural laws can go for years blathering that everything's perfectly fine, and virtually no one calls them out for their malfeasance. With luck the incompetent or greedy corner-cutters can retire on a fat pension and die before the results of their bad acts are ever felt.

Moreover, because the time between the action and consequences is so long, few voters ever associate a terrible outcome with the person(s) who set us irrevocably on the path to that result years earlier. Thus there is no corrective feedback whatsoever.

We saw this just a couple of years ago in the mortgage meltdown: Years ago Congress passed a law that forced lenders to extend mortgage loans to people who almost certainly wouldn't be able to make the payments (or worse yet, would choose to spend what should have been their mortgage payments on flat-screen TVs and new cars).

Companies with decades of experience in the mortgage lending business pointed out the obvious stupidity of this mandate, and the result it was almost certain to produce. But stupid congresswhores--unconstrained by reality and looking for re-election--silenced most of the objectors by setting up two government agencies--Fannie and Freddie--to guarantee bad loans.

That is, if a borrower--known from the outset to be a lousy credit risk--failed to make their mortgage payments, the government would pay off the bank or lender with taxpayer funds.

Sweet deal, huh--at least for the pols and the deadbeat borrower. For taxpayers? Not so much.

But for the pols it was a resounding success, and they patted themselves on the back endlessly for "making it possible for all Americans to own their own home." But when it all crashed--as it had to, and as hundreds of analysts predicted--no pol ever admitted that his or her actions played the slightest part in setting up the disaster.

In fact, well into the meltdown, reps like the infamous Bawney Fwank were claiming there was no mortgage crisis. And that even if there was, it was the fault of banks and other lenders.

Sure thing, sparky.

This same script applies to the impending financial collapse of U.S. governments at both national and state levels: For decades politicians at both levels have voted to spend more than they received in taxes and fees, in effect fobbing the burden off on future citizens.

That would be your children and grandkids.

Power-hungry, unethical or merely inept politicians kept voting to spend more than their government took in because they knew spending like a drunken sailor would keep getting them re-elected.

It's likely that a lot of these pols were simply too dense to realize that you can't endlessly spend more than you make without incurring some consequence. If so, let's all feel better that they were merely stupid and not malicious. But of course this changes the eventual outcome not a bit.

Okay, if the bad choices have already been made--often decades ago--why am I telling you any of this? After all, the past... yes, I know.

Reason is that in the coming year we're likely to start seeing the first domino begin to fall, as one agency in a mismanaged state--probably Illinois or California--announces it will have to default on ...fill in the blank. The politicians running that state will wring their hands and whine that they don't have any money to avoid a default.

At that point the big investment firms holding the state's bonds will quietly pressure the Obama administration to "loan" the state the relatively small amount of money needed to avoid the looming default. Because the state will be heavily Democrat, the Obamites will agree, and a few dozen billion more taxpayer dollars will be transferred to keep overpaid state employees drawing a salary.

Ah, say the leech-boys in DC, problem solved! Great job, leech-boys.

Initially, at least.

Because once the precedent has been established, there'll be less and less resistance when the feds bail out another state, then another.

Journalists--the media arm of the Democratic party--will prepare the ground for this by running dozens of heart-wrenching stories about how one particular, average middle-class family will suffer if the state is forced into either default or bankruptcy.

And certainly it's true that people will be adversely affected if governments are forced to deal with reality instead of endlessly kicking the can down the road. Just as passengers suffer when an inattentive pilot flies a perfectly sound airliner into a mountain.

I reeeally hope I'm wrong about this. We'll see. Check back in a year.

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