Saturday, August 11, 2007

America Spanks Itself

I guess this is stepping back into the political fray, but it is an important issue to bring up: the immanent crackdown on illegal hires at businesses in the US. Homeland Insecurity leader Chertoff announced that these rules could cause some problems in industries such as agriculture, retail, apparel, and construction but said he had no intention of punishing Congress for not reforming the immigration laws – if you believe that, I have a second bridge to sell you in Death Valley, or maybe an island off Alaska with nobody living on it.

It is coincidental that this is happening just as the housing equity market ended up in the toilet, causing central banks all over the world to have to inject hundreds of billions of dollars into reserves so as to keep the market liquid – this liquidity is needed because like oil in an engine; if you don’t have it then entire engine would seize up. Gosh I hate it when I predict these calamities and they prove more than half true.

The funny part about all this is that many of the same folks who voted against Bush’s immigration proposals have huge holdings in agriculture, construction, hotel services, and in a round-about way are employers of illegal aliens! Obviously, the need to placate voters was much stronger than their personal bottom line, for which we I suppose should be very grateful. The word “altruistic” seems a little awkward, however.

So right when Congress votes to expand farm subsidies for vegetables and fruits (most goes to cotton, corn, and soy beans) there’s nobody left to pick the stuff. Immigrants are either vanishing into the underground cash economy or are headed back home. If remittances such as wire transfer money back to Mexico are any indication, they are at an all-time low. Things don’t bode well in Mexico, which has a double-whammy of rising corn costs for tortillas (thanks to our subsidies and ethanol policies), more people sneaking BACK into Mexico, with resulting gang warfare – I mean, what jobs really are left down there? Even modern, “safe” Monterrey is sprayed by gangland bullets every day.

In a perfect storm, of course, proposals to erect a wall along the Rio Grand could have the effect of keeping illegal immigrants inside the US. I don’t get it. Housing is tanking, agriculture is taking a tremendous hit, and once again we have that sinking feeling that we got it all wrong.


MLeahy said...

Hey Sam, I hope all is well... I read everything that transpired on the forum before they were deleted. It's starting to look more like a police action than an open dialog over there.

Anyway, all these loan defaults are more on the conventional side and not as much Freddie Mac or Fanny Mae. Many private corporations saw an opportunity to increase profits through "innovative" lending practices never seen before.

No money down, ARM's and lenient credit reviews. Don't get me wrong, FHA had it's share of underwriters letting credit and/or income issues pass. This will all pass and in the mean time make many new millionaires. Forclosure market, you know...

As far as the housing market being in a slump, what nobody is saying is that it is going through a correction. Just like the market does...and is is making that correction off of the strongest housing boom in history, so it is not all gloom and doom.

If other industries are suffering from a crackdown on "ILLEGAL IMMIGRANTS", change the existing law so that the...illegals??? are legal??? Or there is no longer such a thing as illegal?!? Whatever, just enforce the existing laws. That is all people want.....

Look, I condemn legal abortion but can't change the law, so I live with it. Those who can't change immigration laws to there liking...can also.....

Regards, MLeahy

Sam said...

Hey I hear you brudda, but where are we going to find the farm workers when they're all gone? I'm not making a case for allowing illegals to stay in the US as employees but it is obvious the USDA needs more than 200,000 hires on a visa, since they will do back-breaking work for very low pay. Try a million all legal documented workers and see what happens? You tell me the right number.

I also agree that the home credit market could well be a transitory thing, although most experts see another 60-90 days of ups and downs. Nobody, absolutely nobody, had predicted that a small macro-economic problem in the US could cause several trillion dollars of money to disappear overseas, and cause so many nations (including ours) to print to much fake money (central bank IOU bonds). The latest story today was the Bear Stearns plopped down 3 billion to keep some more hedge funds from being flushed down the toilet. Mike, this can't be a good thing.

Wow, trillions lost, hundreds of billions printed in fake money. Not good, brudda. /sam