The basic problem driving the economic crisis, at least in the United States, is the mortgage crisis. This was combined with the fuel spike and a few other problems, but generally the housing market crash reverberated throughout the economy.
Some blamed bank mismanagement, but the federal government ponied up money anyway. Banks are the engines of capitalism. If they fail, we have serious problems. But why did they fail?
Last year the media gave us their answer. The simple greed of banks and individuals trying to turn a fast buck. Banks give questionable loans to questionable investors. Middle class greed was blamed; families spending too much on things they don't need. The whole issue became a homily on the evils of capitalism.
If only we had stuck to capitalism! In 1993 the federal government decided to enforce laws that the Reagan and first Bush administrations chose to ignore. These laws required banks to make an effort to find non traditional targets for loans. The idea was to expand home ownership among populations who generally could not afford them or who had poor credit. Banks had to prove that they made an effort to locate bad credit risks and give them loans.
Banks complied with the law. So long as the economy went very well, the industry could absorb losses and many credit risks could continue to pay. When a glitch in the system developed, up to 8% of the mortgage holders in the nation fell behind, some badly. Some folks truly hit hard times. They had jobs they expected to keep, made sound decisions, and were hit by unforeseen issues. Many were undisciplined, made poor decisions, and found themselves in trouble. Banks now held massive amounts of bad debt because of federal government policies that forced them to take it on in the first place.
The banks had the government by the you know whats. They get no money? Fine. They explain to the nation just exactly who got them into trouble in the first place. Instead of disavowing this nice little bit of socialism, we gave out the money and stabilized the system.
Now THE WON (kudos to whoever thought that one up, referring to the arrogant pronouncement to congressional Republicans that "I (Obama) won!" as if that means that Republicans should stop doing their jobs and kowtow) wants to compound the problem by sending many more billions to help people who never should have been homeowners to begin with. Some people responsibly went to their banks, worked out new arrangements, sacrificed, and got their bills paid up. Obama does not want to distinguish between those who sacrificed and those who are still just waiting around for the government to help them. Enough already!
Time for the honest taxpayer to take a stand. Massive federal interference in the market is what intensified a recession and turned it into the Great Depression. Back then it was the Smoot-Hawley Tariff. Now it is Obamiac spending plans. Let's get a grip here and think for a second before tossing more money away. After all, it is generating the disturbing trend of rising inflation during a contracting economy. Obama is transforming a recession into stagflation.
At least we know how to deal with that. Elect a conservative Republican as president. The way things are going, we ought to see one replace WON in a few years.
I agree 100% the enemy is the federal government.
ReplyDeleteHowever, I not sure that Republican's have much of an answer either. Look at the amount of spending they are doing in order to
steal our freedom. How do they justify this kind of spending. They're just as big of crooks and robbers as Nancy and Henry. And maybe worse since a good number of them are being hypocritical by not voting for a bill with their own spending measures.