Column: Al Arends, My Point of View

Recently, I read a book called “The Big Short.”

It was about the housing crisis and how our government encouraged the purchase of homes to people who had no means of paying for them. It explained the procedure of bundling the loans into a bond that was then sold to pension plans and to large investors. The purchasers of many of these homes had little or no income and poor credit ratings, but the lenders would make the loans because the loans would be packaged and sold as a high interest loan.

All the time that this was going on, Congress was warned by a number of people, even the president of the United States, that this was a very dangerous condition, but Congress did not listen. Quite often these loans were made with little or no interest required for a period of time. When the interest and payment was due, the interest rate was increased, making payment by the borrower impossible to pay. These loans were called adjustable rate mortgages, or ARMs.

A doctor who was not a professional money manager or analyst became interested in these bonds as a possible investor. After reading the prospectus, he knew these bonds were going to fail. He purchased insurance on these bonds from AIG and, of course, we now know what happened. He was smarter than the people who managed banks, insurance companies, pension plan managers and yes, even Congress. He made millions off the purchase of insurance on these bonds while our country lost billions.

While he was making millions, many of the people who had borrowed money to buy homes were now unable to pay the mortgage. Many borrowers adopted a procedure called the “silent second.” They would take a second mortgage on their house to help pay the first mortgage, which just put them further in the hole, making it impossible to pay off their total debt, which quite often led to foreclosure and bankruptcy.

Does this sound familiar to what Congress and the president are trying to do today? They, the government, owe more than $14 trillion, and they want to borrow more money to try to pay off some of the debt that previous presidents and sessions of Congress have promised to other countries and to its own citizens.

All of us are guilty of letting our elected officials get away with this. We scream when we don’t get a cost-of-living increase to our Social Security check. We scream when they threaten our Medicare plan or that we are going to have to pay a higher deductible. We scream when they take away grants and loans to college kids. We scream when we have rough highways and streets. Public employees scream when their pension plan is threatened and that they may have to have a 401(k) plan like employees in the private sector. There are screams when subsidies are threatened.

I am sure there are a lot more screams out there, and, yes, we all scream when we are threatened with having to pay more taxes. Let’s not all pitch in and help; let’s just pass the burden to the few rich who can pay for someone else’s problems.

Will our children and grandchildren scream when the bill comes due to pay for our generation’s overindulgence? How will they pay for it? Will they be able to borrow more and hand the debt to their children or will China and other countries come and tell them to pay up? How will it affect their Social Security, Medicare and their benefits? Will they be able to enjoy the same standard of living as our generation has?

Please, Mr. Politician, tell me the answers to these questions. Please tell me how we are going to get out of the mess that we have created for our children. Of course, you won’t have to answer to our children, you will have retired and be living off your nice pension that our kids will have to pay for.

Al Arends is a member of the Freeborn County Republican Party.