Menendez economic plan – more of the same tripe

Posted on 20 September 2008

Robert Menendex has put his hat in the ring for amateur economist today. He has a three part plan to fix our economic problems. From the AP via amNewYork:

Menendez said three steps can help right away:

_ Help prevent foreclosures by enabling bankruptcy judges to modify loan terms so homeowners’ primary residences are protected.

_ Create an emergency loan program to help jump-start small businesses having trouble finding credit.

_ Offer a second economic stimulus package to create jobs and prevent cuts in essential services by funding infrastructure projects and some form of unemployment insurance extension.

Let’s analyse the Senator’s plan. His first pillar is to extend foreclosures on bad loans. Does he not get the the toxic balance sheets caused by these loans is what is dragging down many firms? Did they not teach him any basics when he joined the Senate Banking Committee? Oh, that’s right. He learned how to get money from the firms that caused this problem-Fannie and Freddie ($31,250). These bad loans need to be purged from the system. I am sorry that some people will be hurt and if he wants to help them, he should provide transition funding to find a rental place to live.

His emergency loan program makes a bit more sense if money is completely dried up for small business. I am not sure that is the case. I have seen no evidence that money was not available for sound business loans. But at least this is a good example of anticipatory planning and worthy.

His third example is to stimulate the economy through make-work jobs and government handouts. It reminds me of a recent road project near my house. The State of New Jersey and the Federal government teamed up to spend close to 21.5 million dollars to create a road that makes life slightly easiers for truckers at a rest stop near the turnpike and created a traffic jam by adding a jug handle. The project was frankly unneeded and unneccesary.


Category: economics, menendez, mortgage crisis, wasted spending

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