Government meddling led to the financial housing crisis
By Scott Sexton
Winston-Salem Journal
If you accept the premise that a root cause of the current predicament is the subprime-mortgage morass, the shaky foundation on which so many financial titans built paper portfolios, perhaps you'll be surprised (or perhaps not) to learn that the very government that sailed in with a bailout package set the table for disaster.
Why do people keep asking the government for help when they are usually the ones who created the mess to begin with. If they (government) would have minded their own business and let the free market work, this whole mess could have been avoided.
"The frustrating part to me is that the government caused this problem in the first place with the misguided idea that it's everyone's ‘right' to access money and own a house even if the person's credit didn't rise to that level," Jarrell said. "So the banks had to make so many loans or prove that they made an effort to (help) economically disadvantaged members of the community."
As far back as 2004, even as signs emerged that subprime lenders were approving mortgages for borrowers who couldn't afford them, the U.S. Department of Housing and Urban Development plunged ahead with a policy that allowed Freddie Mac and Fannie Mae to invest billions in subprime loans under the guise that it promoted affordable housing.
"That caused a distortion of the risk in the normal market mechanism," Jarrell said.
Which means?
"People didn't have to save so much for a down payment, bought houses with no money down, borrowed 110 percent of what a house was actually worth," Jarrell said.
And wonder of wonders, many of those loans that were extended to people with dicey credit histories wound up in default.
"It sounds like I'm picking on poor people, but I'm not," she said. "There was a mispriced risk because of government involvement."
We turned owning a home to a 'right' instead of it being a 'privilege' like it had always been in the past. We've gotten so politically correct in this country that not loaning money to people with bad credit is now considered discrimination. It's crazy, and we as taxpayers are going to be on the hook for $700 billion for this failed experiment in socialism. :-(
posted by Andy W. Rogers | 9:18 PM
7 Comments:
"...if you own something, you have a vital stake in the future of our country. The more ownership there is in America, the more vitality there is in America, and the more people have a vital stake in the future of this country." — President George W. Bush, June 17, 2004
The "ownership society," as I recall, was an important tenet of George W. Bush's compassionate conservatism; that working Americans should invest in the real estate industry in order to make themselves more free, more happy, more independent, etc. And sure, at first it may seem empowering to "own" what you could never afford, but having an exorbitant loan isn't ownership; it's just exorbitant debt (and exorbitant profit for someone else) for a looong time. Let's all hope that our friends and family will have jobs for as long as they owe in order to be a part of this glorified society.
You could say that the "ownership society" allowed many builders, lenders, and real estate salespeople to make a killing on the overextension of the average American's personal budget. You could also say "caveat emptor." Either way, it still comes down to the haves, the have-nots, and lots and lots of shysters.
From MarkLevin.com:
"September 2008 will be remembered as the time when socialism really took hold of this country. There is a reason the politicians are running for the hills and hiding - because they are the proponents and the ones who are at fault for the current mess we are in. Their finger prints are all over this the problem. We aren’t the ones at fault here; we weren’t the ones in charge of Fannie Mae, Freddie Mac, etc. They didn’t let capitalism and the free market work, and thus you are seeing what happens in a socialist society - financial disarray, and more poor people."
Actually, the origins of the situation we're in today started in the 1990's when Bill Clinton started enforcing the Community Redevelopment Act, a law that was originally passed during the Jimmy Carter presidency to encourage minority homeownership. It helped create the market for the risky subprime loans because Clinton and Congress pushed lenders to loan money to people with either bad or no credit at all. As usual, it was another social government experiment gone out of control.
This is why I wish Sarah Palin was the GOP nominee: She's the only one on either ticket that's not from Washington. McCain, Obama & Biden are jokes. The reason they are jokes is that all three are creatures of Washington. Now I see why a lot of our presidents over the years were governors before entering the presidency.
The "ownership society," as I recall, was an important tenet of George W. Bush's compassionate conservatism;
Actually, the origins of the situation we're in today started in the 1990's when Bill Clinton started enforcing the Community Redevelopment Act, a law that was originally passed during the Jimmy Carter presidency to encourage minority homeownership.
Strother conveniently manages to forget that all of these financial debacles are the product of both Republican and Democrat policies. But he will tell you at length about how he is an independent swing voter.
This mess is nothing compared to the pain we're in for when either Obama or McCain makes it to the Oval office. Obama thinks nothing of claiming first rights to your income and McCain's brand of populist fascism has a long history of nationalizing industry and business to suit its own ends.
Politicians like the current national crop can tinker with the social aspect of our civilization for a long, long time before effecting its complete collapse. That's because social norms and morality are so ethereal and malleable. However, history is littered with fallen civilizations whose leaders thought they could similarly tinker with the laws of economics. They are no more mutable than the laws of physics and attempting to violate them causes a lot more people a lot more pain.
Obama thinks nothing of claiming first rights to your income and McCain's brand of populist fascism has a long history of nationalizing industry and business to suit its own ends.
If you break it all down, it sounds like you're basically saying that Obama is a socialist, and McCain is a fascist. I know what sounds scarier ...
But since you claim to have both of these guys figured out, can you give us an example or two of what America would be more like after 8 years of either? Based on your opinions, would American under Obama closer resemble a European socialist-leaning nation? Canada? A South American socialist nation? What about McCain? (I'm actually afraid to offer any fascist examples …)
Or maybe we're all giving the president of the United States just a bit too much credit? I mean, how much difference can a president really make in economic policy in eight years? Is American-style capitalism just too wily to be led by a single administration?
...it sounds like you're basically saying that Obama is a socialist, and McCain is a fascist.
Actually I am saying that Obama is a Marxist, but yes, and I've been saying this for about a year.
If Obama is mostly successful in getting his way, America will begin to resemble any one of the other hellholes created by radical black Marxians. Angola comes to mind. Washington, DC is another example.
If you want examples of American Fascism, you need only go back as far as the (Franklin) Roosevelt Administration. The Wilson Administration provides another. If McCain is successful in pursuing his agenda, I expect that kind of fascism accompanied by a strong wave of corporatism.
The President, by himself, can't really push huge changes on the country. Fortunately, the Republicans lost the Congress before the Bush Administration could go very far in completing the Imperial Presidency. But therein lies the problem. When the Oval Office and the Capitol Building are held by the same party, and especially when there is a weak, ineffectual opposition party in the Congress, Presidents have always been historically successful in implementing their own agendas.
American-style capitalism is a moving target these days. It is many things, but it is definitely not capitalist.
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