Faulty assumptions dangerous for economy

While reading Michael Lewis' new book, “The Big Short,” I was surprised that lessons from recent economic problems are being ignored so quickly after the crisis. A major contributor to our current economic situation was the issuance of manipulated subprime mortgages and the underrated risk of their mortgage-backed securities.

Lewis points out that these mortgage-backed securities were rated incorrectly because of poor assumptions by the ratings agency and regulators. It was assumed that housing prices would continue to rise, and that only 5 percent of these faulty mortgages would default.

Unfortunately, Congress has just passed a new major law that uses similar faulty assumptions claiming that the cost savings from Medicare can be used twice. The Congressional Budget Office states that its score for the health care reform bill is an illusion because they were required to use this faulty assumption when calculating their findings.

Our economy is still in recovery from the last crisis caused by faulty assumptions; now we must wait to see the economic reaction caused by the blatant misrepresentation used to pass a bill that does so little to improve health care in this country, and so much to destroy our economy.

Robbin Rekemeyer

Cedar Rapids