According to the Washington Post:

“Congress has approved a six-month extension of emergency jobless benefits for the long-term unemployed. On a vote of 272 to 152, the House gave the measure final approval and sent it on to the White House, where aides said President Obama plans to sign it immediately.”

At a cursory look this seems like a great thing – it really does – however if one delves further you start to see how this is an issue. A few things were recently reported that are disconcerting :

1. Last year the USA banks withheld 560 Billion in Loans that they usually give out.
2. USA Companies are holding 2 Trillion in cash.
3. At the present growth rate it will take 5 years to get unemployment back down to the levels it was at 2 years ago.
4. This bill is $34 Billion more into the national deficit.
5. Many Banks are showing record net gains.
6. Many Companies are showing record net gains.
7. The Housing Market is still dead.
8. The Commercial Market is still expected by many to die and is reported as such seemingly on a daily basis.

All of these things add up to FEAR. People are afraid, constantly, and since the government has not solved any actual problems, only having delayed some of their impact, and since most business leaders are intelligent people who recognize this problem, or really collection of problems, things are not moving, at all. Everyone is holding their breath, more each day, and frankly things are turning an ugly shade of purple.

What should have happened? The answer, having been posed in many shades by many people in the past, and dismissed by many more, borders on Socialism. The actuality is that it is not Socialism, but many will have you believe that it is. The answer was three years ago, and was not implemented for the Socialist Stigma that it incurred. The government should have created a real bank that it back with the money that was instead handed to private banks for propping up purposes. Why make this bank? Instead of purchasing toxic assets and propping up big banks to make their biggest balance sheet gains in history the government bank could have given standing low interest loans to people who were losing their houses due to high interest loans.

How does that work?

1. Bob Johnson took out a veritable interest loan to buy a house for 100k. When he got the loan it was at 4.5%, and was interest only for 10 years. Bob could afford the house because at that rate the house payments were small and well within his budget.
2. 1.5 years later Bob’s interest only loan jumped to 12.5% and now he could not afford half the payment. Same amount of money is owed as principle, more is owed in interest.
3. The market begins to fold because many people begin to default on loans.
4. Housing values drop at a record rate.
5. If the government started to loan the Bobs of the USA money at the value they had first agreed upon with a 30 years fixed rate of 4.5% the Bobs would have continued on a rather massive scale to pay for their home, that they want.
6. How does this benefit anyone? The government loans out the money at 4.5% locked that it borrowed for 1.5% locked at the same time – gaining effectively 3% locked over 30 years.
7. The market slows but does not free fall. Everyone is safer, not saved, just safer.

Instead of all that what has happened is a free fall of epic proportion that has had no saving grace. Politicians will argue that they have saved the world from a Depression, perhaps, but they have not fixed the actual problems that caused it and they have definitely cowed to pressures by big banks to not make an American Financial Institution such as a governmental realty bank – which could yes create competition for private bank – gosh darn.

Maybe one day Congress will try to solve the real problems instead of just patching what damage those problems caused.