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09/19/2007: "Fed Rate Cut Hurts Environment, Homeowners"

One editor's opnion:

This morning's NYT headline read, "Global Markets Rise Sharply After Rate Cut," which may be bad news for the environment, and for homeowners.

Doesn't make sense? Think of why they cut the rate: to spur consumption, and in response to the mortgage meltdown.

Consumption in the modern sense depends on externalities: neither sellers nor buyers generally pay much for the effects of pollution spewed by delivery trucks, planes, ships, and rail carriers, nor for accommodating the trash composed of packaging debris and items discarded after being replaced by newer, similar ones that are more "fashionable." Nor for the effects of dirty (in both the physical and social senses) manufacture in exploited countries. Nor for the effects on the earth and our cultures of ever more obsessive roadbuilding to accommodate all those new cars they hope to sell, taking land out of the ecosystem as well as end its tax-revenue generation.

As for homeowners? The mortgage meltdown made it harder to sell or refinance overpriced houses, so people were unable to buy bigger and less efficient domiciles than they need, and were unable to plunge themselves neck-deep in debt to buy more junk. With the rate cut, US residents will be able to continue it immure themselves in permanent debt, which cannot really be permanent, because when they can't pay they will be foreclosed, and neighborhoods will begin again to fill with abandoned houses. And of course permanent debt makes homestewards (not "homeowners"; after all, the bank really owns the place, not you) docile slaves to their corporate masters, who also own the debt that owns the house.

Not a good thing. We're being encouraged to live beyond our means, with a downfall simply delayed a bit, so profit-takers can grab some short-term gains at the expense of our freedom, our tranquillity, our social networks, and the planet itself.

Nothing much to do about it right now, except not take the bait ourselves.

Richard Risemberg, on 09.19.07 @ 04:40PST