Bailouts Costing More than Money

Last week’s passage of the home mortgage bailout has received a fair amount of media attention. However, between the comic-book like characters involved – Fannie Mae and Freddie Mac – and the general complexity of banking and finance terms, it’s tempting to hear the news and think, “Oh good. That’s taken care of. Now … what am I making for dinner?”

The home mortgage crisis has irritated me since it first hit the news. I am no economist or finance expert but I do understand this much. The issue, at its core, is that people received loans who should not have from banks and credit agencies that should have known better.

Most of problems stemmed from the use of “ARM” (adjustable rate mortgages) loans. These tempting buggers start out with a “teaser” rate that’s typically lower than a fixed-rate loan. These low initial rates make a house seem more affordable, at first. After the initial period, however, the interest rate can fluctuate, sometimes significantly.

And that’s exactly what happened. Faced with much higher interest rates, many “subprime” borrowers (people who were not “prime” candidates for loans because of their low credit rating) can’t afford their home mortgages. The “what ifs” that these borrowers, their lenders and credit analysts should have considered before closing the sale, became not just an inconvenient detail but the cold, hard reality.

It’s an ugly situation – made worse by job losses and high prices for food, gas and other essentials.

The solution, although it promises to save up to 400,000 people from losing their homes, could be even uglier for our nation long term. Our leaders in Congress authorized the Federal Housing Administration, a.k.a. the U.S. government, a.k.a. you and me, to insure up to $300 billion in refinanced mortgages to help prevent foreclosures.

They also approved billions of future potential investments into the “quasi-private” mortgage giants Fannie Mae and Freddie Mac – entities that already receive preferential treatment from the government. Sounds like the federal government is taking another giant leap into the home loan business.

I’m not in favor of hundreds of thousands of people losing their homes. But allow me some anger and frustration when “we the people” have to spend potentially billions of dollars to compensate for lousy decisions made by financiers and borrowers who could have, should have, and I believe did, know better.

If a child had exercised such a poor decision, it would be a powerful learning opportunity. But apparently, the ramifications to our economy and our politicians in an election year are too devastating to allow anyone to seriously suffer from these bad choices.

A few in Congress issued warnings against these bold steps. Representative Jeff Flake of Arizona said during the House debate, “This bill has moral hazard written all over it. We are pretending to chain a monster here, and we are, instead, letting that monster loose.”

The monster looms in the question, if Congress, not the marketplace, is going to determine winners and losers, where do the bailouts end? Our system is based on profits and losses. The potential for loss keeps people from taking irresponsible risks.

If the government has our back, what’s stopping millions of Americans who took a more conservative (and expensive) loan from the more risky route next time?

The lopsided vote by which the measure passed in the Senate (72-13) sugarcoats the disturbing precedent this legislation creates.

Wait a minute. I guess it’s not really a new precedent. After the Bear and Stearns bail out a few months ago maybe it’s more like a trend.

Let’s hope not.

Putting Some "Farm" Into our Kids

Pulitzer Prize winning author Thomas Friedman has said when he was a child his parents told him to finish his vegetables because there were kids in China and India who were starving. Today, Friedman tells his own kids to finish their math and science homework because there are kids in China and India who are starving for their jobs.

America has lost millions of manufacturing jobs to emerging nations. Now our higher skilled jobs and professions -- computer programming, accounting, engineering and legal services – are subject to outsourcing.

These are unnerving trends, devastating to those who have lost their jobs. It remains to be seen what role American workers will play in the global economy. For me today, I worry about what my kids and grandkids will do to provide for themselves.

Part of securing a strong future for our kids is certainly what Friedman suggests – better education with more rigorous science and math skills.

But I believe there is another value at play here that’s just as important as academics, and is likely contributing to the sluggish academic performance of our youth. It’s what sends me searching for a way to get my kids on a farm, not really to learn how to mass-produce commodities.

I want them to learn how to work.

Really work -- not just unloading the dishwasher, collecting household trash or dusting a shelf -- but working from dawn to dusk, learning how to fix machines, haul manure and pitch in when all hands are needed for harvest or round up.

People who live on a farm learn how to solve problems, be resourceful and innovative, self-start and work hard without complaining. These are not the lessons you learn playing video games, watching TV or even engaging in many of the organized activities that dominate our children’s schedules.

The problem is, I haven’t met very many (or any) farmers who are real interested in employing my kids even when they are old enough. So, short of abandoning our professions and joining an Amish colony, how can we instill farm values in city kids? Can we foster a rural work ethic in our urban children?

Here are three ways to try:

Every family member helps: Children are valuable helpers on a farm, and should be in our homes too. Ditch the cleaning and lawn services and delegate these chores to the kids whenever possible. Who are we helping when an able bodied teenager is watching TV while a paid cleaning lady vacuums under their feet?

Do it yourself: Rather than throwing broken items away or calling a repair man, let your kids attempt to fix the busted chair, unclog the drain, or change the oil in your car. Consider the extra patience (and even money) it may cost an investment in the satisfaction your child will gain in trying and maybe even solving the problem.

Work first, play second: Our culture places high value on entertainment and fun. As parents we are the only ones who can provide the healthy and necessary balance our kids need through a reasonable dose of work and responsibility. Free time is the reward for a job well done.

We might not be able to raise our kids on a farm. But with some effort and firm resolve to ignore their inevitable complaints, we can instill some valuable farm-like work ethics and ingenuity in our kids. Businesses will always be starving for that.

Lessons Learned on Summer Vacation

The title of this story is, “How I drove 2,000 miles and learned to appreciate North Dakota wind.”

Last winter, my brother in Texas called and asked us to partake in a big family vacation at Lake of the Ozarks near Branson, Mo. With minimal consideration, my husband agreed, so I paid the deposit and happily left the arrangements to my brother.

We began to think about the trip, in earnest, about one week before we were scheduled depart. I logged onto Mapquest to plan our route and discovered how many miles exist between Bismarck and Branson: 1,007. That’s 16 ½ hours with stops.

I gingerly told my husband, sitting across from me with his computer, who promptly logged on to Mapquest himself to verify my facts. Next year, I suspect vacation planning will be a joint venture.

The next day, a friend said, “I hope you’re going to change your position on DVDs in the car. You can borrow ours.” Which is what I intended to do. We were just past Sterling when I realized I forgot to take her up on the offer. Oh well, only 1,989 miles to go.

The night before we left I searched for any possible excuse to get out of it. Not the trip really, but the two-page list of tasks leading up to it – completing work projects in advance, packing clothes and toys and food, preparing the car and the house and the yard, finding caretakers for the dogs and the plants.

Staying home is always an appealing prospect the day before a trip.

But as soon as we were on I-94 heading east I remembered something. I love road trips. And this one, it turns out, was to be our most successful venture yet.

Traveling is a learning experience. Here are a couple insights – new or reinforced –from our recent journey.

After dragging kids who can’t swim down water slides or toddlers who need a nap to museums I have finally learned that less is more when traveling with kids. They enjoy splashing in the pool or playing in the lake as much if not more than expensive, crowded, and all-too-often disappointing attractions.

I have multiple friends who have returned from Disneyworld to say their kids enjoyed the hotel pool as much as the theme parks. Maybe it’s all just too much?

On this trip we tried to resist paid attractions and leisurely hung out by the pool and the lake, played cards, read books, swam, walked and ate simple meals without looking at the clock.

My four year old, who was previously scared to go underwater, declared with gusto that his favorite part of the trip was, “Jumping in the pool.” That’ll be a sweet memory when he’s 14 and we’re paying $50 for his admission into an amusement park.

This trip also renewed my appreciation for the Midwest. We drove 2,000 miles across four plains states and I never got tired of the landscape – lush green fields, rolling hills, quaint farms with warm red barns, quiet little towns or friendly cities that aren’t too big or too busy.

We watched enormous thunderstorms and vivid rainbows form miles across the horizon. These sites aren’t just spectacular for their beauty but for the comfort and serenity they invoke in the beholder.

As I was roasting by the pool with my sister one afternoon, I raved about the Ozark’s hot, still, mosquito-free climate. She told me about a friend of hers who moved to Williston from Missouri. This woman’s favorite thing about North Dakota isn’t the friendly people, the good schools or affordable housing. She loves the wind.

This seems almost impossible after the spring we just endured. But I thought about it during our remaining days of vacation. Sitting by the pool was glorious, but as I imagined mowing the lawn in that heavy air I wanted to turn my head and feel a gust of fresh, crisp North Dakota wind.

Dorothy was right. There’s no place like home.