Wednesday, January 12, 2011

Stimulate Me

originally published in the New Britain Herald and Bristol Press, February 22, 2009

***

You know those history-book photos of 1920s German housewives shoveling banknotes into their stoves? The captions explain that runaway inflation in the Weimar Republic made burning money cheaper than buying coal.

This will never happen to the American dollar, because anyone who tries burning it will have 15 environmental agencies write him up for pollution violations. Financial writers might discuss how dollar bills make an economical substitute for toilet paper, but there won’t be iconic photos for the history books.

Interesting times ahead, now that President Barack Obama has signed the stimulus bill. I personally couldn’t feel more stimulated if I wore a wet bathing suit and threw myself against an electrified fence. But I’m not bashing Obama for this. The stimulus proposal predates his administration, and a President John McCain would’ve signed one too.

Here’s how it’s supposed to work: Humankind has known for centuries that the world is round. Therefore, if the economy tumbles down after falling into a deep debt hole, the solution is to dig even deeper until you tunnel completely through the Earth and climb out the hole again.

If a principle works in geography class, it applies to economics too. Right? The stimulus builds upon last autumn’s Wall Street/banker/big-company bailout, which said the way to fix a trashed economy is to hand your money over to the folks who trashed it.

I remember when then-President George W. Bush speechified the bailout. “It will help American consumers and businesses get credit to meet their daily needs,” he said.

“That’s how we got in trouble in the first place!” I shouted. “  ‘Get credit’ is a euphemism for ‘Go into debt,’ and consumers shouldn’t do that just to meet their daily needs!”

“Stop yelling at the television,” my roommate said. “The TV people aren’t listening to you.”

“I know,” I said. “If they did, we wouldn’t be in this mess.” Long before the terms “housing bubble” or “subprime mortgage” entered the zeitgeist, I smelled a problem when, as a recent college grad owing nearly a year’s salary in student-loan debt, I kept hearing from banks who wanted to lend me more money than I’d make in 10 years.

“Are you nuts?” I demanded. “I couldn’t pay down a mortgage that size unless I won Powerball.”

“Stop yelling at your junk mail,” said my roommate.

“Yelling at junk mail is healthier than taking its advice,” I pointed out. So I ignored those mortgage offers and stayed in my apartment while the bubble ballooned.

“Houses historically cost about three years’ salary for the buyer,” I thought. “I’ll buy when they drop back to that level.”

So I smiled when the bubble started deflating last summer. My debts are paid off, I thought. I’ve saved a big down payment. Soon I can buy a house of my own.

But I didn’t reckon on the stimulus bill. Its backers think affordable housing is bad for America, so they’re spending nearly a trillion dollars to prop up house prices, whereas I’ll get up to $13 in tax rebates per paycheck.

I’ll use the money to buy an enormous novelty lollipop. This symbolizes what a sucker I was, rejecting a mortgage just because I couldn’t afford it. Turns out the smart move would’ve been going over my head in debt, crying victim when the bills came due and waiting for that sweet stimulus money to bail me out.