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Glenn Beck: Warning signs missed on economy

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  • Glenn Beck says U.S. economy has been slowly collapsing
  • He says some people are trashing their houses before leaving them
  • Politicians have a lot of ludicrous ideas for solving economic problems, he says
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By Glenn Beck
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Below is a commentary from Glenn Beck, who anchors "Glenn Beck" on Headline News nightly at 7 and 9 ET.

Glenn Beck says politicians don't have the answers to the housing crisis.

NEW YORK (CNN) -- Longtime viewers of my television program know that I've been banging the recession drum for a while now, but the truth is that an economy as large and complex as ours doesn't just collapse overnight. It happens slowly and methodically, with plenty of warning signs along the way.

Think about it as a series of waves heading toward the beach, with each one representing a different area of trouble. There's one for slowing consumer spending (American Express said that spending among its affluent clients slowed for the first time since 2001); one for inflation (wholesale and consumer prices recently posted their largest increases in 26 and 17 years, respectively); and one for the continuing credit crunch (Citigroup recently announced its fourth-quarter loss was the largest in its 196-year history).

But while those waves are the latest to form, we need to pay more attention to the wave that started it all: housing. In theory, looking closely at the housing market in some parts of the country could help predict what's in store for the rest of us. And if that's true, then buckle up.

If you look beyond the headlines, you'll find a couple of unnerving trends. The first began back in the housing collapse that followed the savings and loan crisis of the late '80s and early '90s. People with homes worth less than their mortgages simply stopped paying, put their keys into an envelope, mailed them back to the bank and just walked away. It's called "jingle mail," because when the banks receive the envelopes, all they hear are the jingling keys.

But trust me, lenders would much rather have an empty house than a trashed one. Unfortunately, they're starting to get both. Some homeowners, distraught over an imminent foreclosure, are destroying their homes before abandoning them. One Oregon man went so far as to lock three live pigs inside his house last year, making it unlivable, let alone sellable. You can think of it as a "reverse housewarming gift" to his bank. Unfortunately, such behavior is leaving banks across the country stuck with empty, trashed homes, along with mortgages that will never be repaid.

The result of it all -- the next wave to crash, if you will -- is that many lenders and banks will not be able to survive. We're already seeing the start of that with the fire-sale acquisition of Countrywide, the nation's largest lender, along with the historic loss just posted by the nation's largest bank, Citigroup.

So, the question that most people are now asking is: How do we stop things from getting worse? It's obvious: We should just listen to the politicians! After all, combining an impending recession with an impending election means that every candidate is also suddenly an award-winning economist.

Unfortunately, these "economists" all seem to believe that government intervention is the answer. From tax rebates to rescue funds to extra state aid, it seems that every politician believes that handouts will trigger prosperity.

While there are plenty of ludicrous ideas to highlight, one of my favorites was pitched by Hillary Clinton during the recent Democratic debate in Nevada:

"I want to see money in the pockets of people who are having trouble paying their energy bills. That stimulates the economy. ... And then, if we need additional stimulation, we should look at tax rebates for middle-class and working families, not for the wealthy who have already done very well under George Bush."

Now, I'm not a former first lady, but I am a thinker, so let me ask the obvious question: Exactly how does helping a low-income family stay warm stimulate the economy? Are they going to suddenly run out and buy an exotic vacation where they'll spend their days brainstorming ways to employ hundreds of people? Of course not. But whenever politicians see an opportunity to promote government handouts, they jump at it.

If you want to talk about heating assistance for low-income families, fine. I'm actually not a black-hearted monster, I want everyone to have heat. But that's an energy issue, not an economic stimulus one.

And instead of tax rebates, which are like economic crack because they result in a temporary high followed by an even lower low, how about we put some lasting trust back into the system by slashing government spending and finally sending the signal to businesses that taxes won't be going through the roof next year?

After all, no business owner -- including small-business owners like me -- are going to start expanding if they believe that our tax rates are about to skyrocket. That's why we've got to take away that uncertainty, cut corporate tax rates -- which are the second-highest in the developed world -- and watch as American businesses once again bail us out by creating thousands of jobs that pump billions of tax dollars back into Washington.

Or, of course, we could just give heating oil subsidies to the poor. That would probably work just as well.

The opinions expressed in this commentary are solely those of the writer. E-mail to a friend E-mail to a friend

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