The Chicago Tea Party

I'm bummed, I can't make it to Chicago for the Party. Happening to soon for me to get there.

Santelli's criticism of the mortgage bailout plan is dead on: The plan treats borrowers who sacrificed to pay their mortgages on time the same as those who used their equity for a boat and stopped paying their loans. This moral hazard sends a clear message to our children that they can avoid the consequences of their actions. But this is only one reason the plan is bad policy. Others include:

The plan's mortgage cram down provision would only worsen the housing crisis in two ways: First it would increase the risk to lenders and lead to higher interest rates for people trying to buy homes today. Second, the policy would open the door to achieving mortgage reductions for tens of millions of homeowners who can afford their mortgage pay­ments and whose homes are not at risk.

The plan will fail because too few people will qualify and many of those that do will default anyway. The housing bubble was caused in large part by speculators who bought homes planning to flip them for quick profit and other who out-right lied on their loan applications. The mortgage bailout will do nothing to stop these foreclosures. Furthermore, the re-default rates for people that have already participated in mortgage modifications show that as many as 50% of them go on to default again.

The plan risks another $275 billion in taxpayer funds. The Obama Administration claims their plan will only cost $75 billion, but that is only true if it works out perfectly. If the plan fails to stem the inevitable correction in housing prices taxpayers will lose a full $275 billion.

Closing his interview with National Review, Santelli also connected the mortgage bailout to the Obama Administration's stimulus plan:

Here's a little commentary from The Heritage Foundation.

At the end of the day, it’s simple. A lot of the president’s advisers are saying that there’s a multiplier effect to the government money, and it’s over one. Now if that’s true, then the government should spend non-stop for the rest of our lives, because we’ll get a positive return. And it makes no sense. ... I guess in the end, I believe in the founding fathers, and I believe that in America... the pursuit of happiness and to work hard and keep the fruits of your labor is something I believe in. And I’m not saying we should forget people who need help. But at the end of the day, Americans are strong and they’re charitable. I think what they have a problem with is that it’s force-fed via the government.

In the words of CSN, won't you all come to Chicaog, we can change the world...