Sunday, August 03, 2008
The title chosen for this Economist critique of the U.S. housing bill brings back memories of twenty some years ago - not only for the ineffective but common treatment of hangovers (does anyone else remember eating cereal with beer in the morning?) but also for the 1975 Nazareth title track more commonly called "Son of a Bitch", a term that could easily be applied to Fannie Mae or Freddie Mac, the subjects of the story.
A hair of the dogFrom the Hair of the dog entry at Wikiepedia:
Congress has been too lenient on Fannie Mae and Freddie Mac
IT IS hard to deal with an alcoholic. But most experts would agree that the answer is not to leave your credit card behind the bar, persuade the pub landlord to stay open till dawn and leave the inebriate to get on with it. Sadly that is how the American Congress, in its new housing bill, is treating those troubled mortgage groups, Fannie Mae and Freddie Mac.
A rescue of the pair was inevitable. With some $5.2 trillion of debt owned or guaranteed by the duo, their collapse could have ushered in financial catastrophe. Nor could the government close Fannie and Freddie to new business and wind down their old operations. Without them, the mortgage market in America would shut.
The whole package is an attempt to throw government cash at a market that is already heavily distorted by tax breaks and subsidies. And it comes at a time when house sales, if not prices, look at last to be bottoming. Nationalisation, followed by speedy, full privatisation would have been so much better. Are there are any free-market capitalists left in Congress?
The origin of the phrase is literal, and comes from an erroneous method of treatment of a rabid dog bite by placing hair from the dog in the bite wound. The use of the phrase as a metaphor for a hangover treatment dates back to the time of William Shakespeare. Ebenezer Cobham Brewer writes in the Dictionary of Phrase and Fable (1898): "In Scotland it is a popular belief that a few hairs of the dog that bit you applied to the wound will prevent evil consequences. Applied to drinks, it means, if overnight you have indulged too freely, take a glass of the same wine next morning to soothe the nerves."Obviously, the U.S. Treasury, Congress, the White House, and, most of all, the Federal Reserve are terrible doctors.
Physicians do not recommend 'hair of the dog' treatments for hangovers. It is not medically recommended for hangovers, nor for the long term treatment of problems related to alcohol consumption.
This week's cartoon: