An Expectation Gap
9/6/2006 5:04:47 PM - Rich Galen
This being the official opening of the fall campaign, the Washington Post came out of the box with an above-the-fold front pager about how "mortgage moms" and their uncertainty about the economy are going to harm Republicans on November 7th.
Maybe so. Especially if every newspaper and every network spends the next nine weeks telling us how desperate our economic situation really is.
According to the piece, co-written by Jeff Birnbaum and Chris Cillizza, a "recent survey by Bloomberg News and the Los Angeles Times, [showed] six in 10 self-described independents said the economy was doing badly, and seven in 10 said the country was on the wrong track."
This in the face of the Dow Jones industrial average which is up nearly seven percent for the year, and job data which, just last week, showed "the unemployment rate ticking lower to 4.7%." On top of that, the Organization for Economic Cooperation and Development based in Paris expects the US Gross Domestic Product to grow by about 3.7% in 2006 compared to a much more modest 2.2% in France, 2.4% in Germany, and 2.8% in the UK.
Nevertheless the Washington Post found Dale and Sharon Condit, a couple from Burlington, Kentucky, who "need more room but can't seem to sell their current home - on the market now for three months." Mrs. Condit said, "We have dreams of this future, but we can't get it right now."
It is the "right now" part which is the problem.
Birnbaum and Cillizza came up with, but buried, a powerful new phrase: The Expectation Gap.
Every American believes it is their Constitutional right to own anything they want the second they decide they want it.
Save up for something? Hah. Order online before 5 PM today and have it delivered to your doorstep by noon tomorrow.
Lay-away? I'll bet you can't find three people in the country under the age of fifty who have ever heard of it or, having had it explained to them, would understand why it ever existed.
The Post reporters pointed to anxiety due to "the interest paid by people carrying credit card debt or mortgages whose monthly payments vary with interest rates."
Ohhhh. Credit cards. Free money. The bottomless ATM machine. Put $2,000 on your credit card at 18% interest, pay the minimum every month and it will take 30 years to pay it off.
But, no matter. If you max out on one card, just return the pre-printed form you got in the mail yesterday and another $2,500 to $5,000 in free money becomes available today for you to buy whatever decide you want tomorrow.
And for those who couldn't wait to score big in the housing boom:
"Among the most exposed are those who bought into one of the great fads in mortgage lending in recent years - adjustable rates - [which are] scheduled to readjust to a higher interest rate for the first time…"
Want a bigger house right now? No problem. We have a whole array of esoteric mortgage products available for you.
Of course, you are betting on interest rates remaining low and resale prices remaining high. If you lose the bet on either one, you may also lose your house.
Those who have lost the bet will try to unload the house they can't (and never could) afford driving housing prices below what the banks have lent, causing a national mortgage margin call which will lead to more houses being dumped on the market which will then lead to … a call for the federal government to bail out everyone whose every expectation was not immediately met.
Robert Browning wrote in 1855: "Ah, but a man's reach should exceed his grasp, or what's a heaven for?"
The problem with Americans is we expect our reach, should it exceed our grasp (thus creating an expectation gap), to be met by our government; not by a hand up, but by a handout.
On the Secret Decoder Ring Page today: Links to the Washington Post piece and to the poem by Robert Browning (which, if you attempt to read you will certainly turn to stone); plus a darkly Metaphorical Mullfoto; and the worst pun in the past 2,000 years as the Catchy Caption of the Day.