Someone old and something new

We all know the debate wasn't earth shattering; far from it. One original notion was voiced throughout the sea of talking points and it came up in the first response. From CNN's transcript, Sen. McCain:

As president of the United States, Alan, I would order the secretary of the treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes - at the diminished value of those homes and let people be able to make those payments and stay in their homes.

Now this certainly seems to me like a substantive proposal and, please correct me if I'm wrong, I haven't heard or read any pundit discussion on this shift. I've made my feelings known, and though I'm not a rabid fan, I don't understand why Sen. Obama is the "socialist" when Sen. McCain wants the government to buy every bad loan. Would you rather the government own your home loan or equity in a institution that holds your debt? Personally I wouldn't mind that extra buffer between Mr. Paulson and my home. I'm sure some of our readers disagree with me...let me know in the comments.

Trains, planes, and homes?

Every morning it seems oil hits a new record high. The economic and political results are reverberating throughout the world: corporations are restructuring their supply chains, car sales are shifting, subsidies are being slashed and politicians are posturing about "gas tax" holidays and suing OPEC governments. The stakes of this oil spike are as high as prices.

Much verbiage has been spewed about our addiction to oil and its coming end. Americans don't seem to realize that while this will most certainly be painful, proper policy may ensure the economy can gain some benefits from the necessary and unavoidable restructuring. The obvious changes will be in the energy industry, manufacturing and shipping. But the words oil, housing, and unemployment are rarely mentioned together.

Whether or not this is "peak oil", the American government must act swiftly and drastically to buoy the economy. As the housing market slumps with no indication of quick resurgence, unemployment is also on the rise. Proper policy would encourage restructuring that promotes long term growth while limiting short term losses. There is no doubt moving our country away from oil dependence will be expensive and painful. But there is no reason the end result has to leave us worse off. So what to do?

Tax, tax, tax. The sooner gasoline reflects the true price of oil (or ideally, more) we will begin to see the housing and labor markets, which are imperative to proper reconstruction, bottom out as workers move from "exurbs" and more homes are foreclosed. The spike will be a painful, short term symptom with a more efficient and fluid housing and labor market as the end result.

The process will most certainly hurt but knowing the true extent of the housing crisis quicker will help the financial industry glean their sheets honestly and encourage labor mobility - benchmarks for a "new economy".