mlah The “culture” that has evolved here isn’t conducive to sissies

September 20, 2008

Financial Crisis

Filed under: Politics — mlah @ 11:05 am

Muslim Eye

so the financial crisis is stemming from the default on high risk home loans.

it’s not an exact statement, but that’s pretty much where the root of the problem is coming from.

there are two main components to the current troubles in the news though. the socialist aspect, and the free market aspect.

the free market aspect involves saving a few lending institutions, and a huge insurance carrier. the government has done this by extending them immediate long term sweetheart loans. nice, really nice. but bottom line? they’re still only loans. the news keeps touting how much this is going to cost us as taxpayers. but the loans we get back. the free market aspect, pays us back. albeit at a smaller interest rate, but the money DOES come back.

then there’s the socialist aspect. fannie mae and freddie mac.  they are both the same thing. semi government entities set up to make sure that high risk low income people can get loans too. notice the “f” at the front of both of those acronyms? it stands for federal.  they extended too many bad loans. too many people defaulted on loans to fannie mae and freddie mac. saving them is not a further loan. we were the extender of the loans goen bad in the first place. saving fannie mae and freddie mac are bailouts. they are money we spend, and it goes away. complete loss.

so. an interesting observation. when the free market needs a hand, we give them a loan. when the socialist system needs a hand, we take it in the shorts. and this is the fault of who? the republicans?

think about it. the government, and that should read, democrats in the govenrment, set up a couple of socialist entities in a free market, for the VERY PURPOSE of extending bad loans to people who are more than likely going to default, and when they cause the free market to fail, it is the free markets fault? because of the woeful underperformance of the socialist system, we are supposed to dump the free market and adopt the socialist system?

asshole dumbocrats

wake up people. the free market made us rich in the past, it will make us rich in the future. fannie mae and freddie mac need to be abolished. no more bad loans on purpose.

the wages of socialism are that everybody lives in squalor equally, except the politicians.

15 Comments »

  1. Your information is incorrect in many places.
    “the free market aspect involves saving a few lending institutions, and a huge insurance carrier. the government has done this by extending them immediate long term sweetheart loans.”
    How can you still call it the “free market” just because they’re loans? Special consideration of any sort, such as these loans, is a perversion of the free market. Call it Temporary Socialism if you must, but it is still Federal Socialism. And in fact, the gov’t tried the loan-only option with F & F a few months ago.

    “semi government entities set up to make sure that high risk low income people can get loans too.”
    No, wrong. Their main purpose has been to buy mortgage loans from the banks and brokerages that **originally agreed to make them**, in order to allow those banks/brokerages to originate their next loan. For most of their history, they (like all of the other actors in this drama) had good standards for the loans they bought. There was no special mission to cater to high-risk/low-income folks– that was the recent widespead use of ARM’s by loan originators. With the run-up in home prices, every actor, including Fannie and Freddie, loosened their standards and bought and often re-sold these loans (or bundles of fragments of these loans) happily on to the next guy for a profit; but when ARM’s reset to high rates and they started unraveling, all hell broke loose.

    “they extended too many bad loans.”
    F & F did not originate a single loan, dumbass.

    “too many people defaulted on loans to fannie mae and freddie mac.”
    Too many people defaulted on loans to whomever the hell happened to own them (or a sliver of them) at that point, which turned out to be pretty much everyone, not just F & F.

    “we were the extender of the loans goen bad in the first place.”
    Not! See above. Plus, who is”we”? F & F were not supported with gov’t money (but don’t feel bad– even Gov Palin made the same factual mistake recently).

    “saving fannie mae and freddie mac are bailouts. they are money we spend, and it goes away. complete loss.”
    So you don’t think we should have done that? So Paulson, Bernanke and Bush are Socialist infiltrators?
    Were you aware of the consequences of not doing this?

    I don’t like it any more than you do, bud, but what we’re paying for isn’t Socialism, but more like “A stitch in time (where 1 stitch might = $1 trillion) saves nine (total global financial armageddon).”

    “and this is the fault of who? the republicans?”
    Everyone who had an interest in believing that home prices would never stop rising: dumb/greedy borrowers, greedy mortgage brokers, greedy F & F, greedy Wall St. and greedy free market purists who rejected all attempts at regulation.

    “asshole dumbocrats”
    Fuck you, shit-for-brains. Fannie was created by FDR, then privatized (that’s a good thing, right?) by LBJ in ’68. It had been on its own ever since, until now. Nixon created Freddie. Those who have thwarted more regulation of them have been Repuglicans.

    Most home-owning Americans have F & F indirectly to thank for that state, at no cost to us taxpayers, period. Look around at your neighbors before you curse F & F. This clusterfuck can most firmly be blamed on most everyone in the housing and finance industries during the W Bush administration, because it wasn’t a problem before then.

    Comment by Gus — September 21, 2008 @ 9:35 am

  2. Dammit, Gus, here I was finding very little fault with your reply to Mlah until I got the end. (And I’ll ignore the Palin dig, as that little snark is about as factual as the One outright calling her a pig).

    When you mention “greedy free market purists who rejected all attempts at regulation” I assume you are not talking about Government regulation, but the generally accepted principles of financial engagement. The lenders got so greedy that they ignored the fundamentals of the market place and paid out on risky loans. If you are talking about Government regulation, then I might have to question your logic.

    “Those who have thwarted more regulation of [F&F] have been Repuglicans.” Actually, not. Bush came into office and proposed better regulation of these beasts, and he was thwarted by the Dummicrats in Congress who were demanding bipartisanship their way and only their way. (And of course, the Ranking Member of a certain Committee was getting a real home loan sweethart deal.) The current candidate for the GOP demanded better regulation of the twin Fs and was shouted down by the party that currently holds de jure, as well as de facto, power in the Congress.

    “This clusterfuck can most firmly be blamed on most everyone in the housing and finance industries during the W Bush administration, because it wasn’t a problem before then.” Sorry, that’s like blaming all the recessionary activity that began in 2001 in the market to the W administration, and not the dot-com bubble market that evolved during the previous administration. Let’s see, dot-com bubble, realty bubble. Hmmm, looks like it’s just the greedy people that have all the money that’s doing the damage. Again, look at the Bush call for better regulation of F&F since 2001 — and the stalwart refusal of the “bipartisan” Dems to do so.

    Just to remind you Gus, the President cannot write legislation. That’s the Congress’ job. That’s straight out of the Constitution. Bush could only do so much — if you want to lay blame on politicians, lay it at Congress’ feet, not your mortal enemy Bush’s.

    For your reference, here’s a guy who googled and compiled all the Bush White House calls for better F&F regulation:

    http://www.policelink.com/topics/31579-bush-called-for-reform-of-fannie-mae-freddie-mac-17-times-in-2008-alone-dems-ignored-warnings-/posts

    ANd of course, the F&F bailout is taxpayer funded with no hope of a return on investment. As opposed to the loans (however preferential) being made to the pillars of the banking industry. However, yes, better to avoid the large-scale loss of housing than to see Steinbeck’s Cannery Row once again become the way of life in America. That’s why Bush did it. So why is the Dummicrat Congress so up in arms about it???????

    Comment by yup — September 21, 2008 @ 6:29 pm

  3. I meant Grapes of Wrath. Sorry.

    Comment by yup — September 21, 2008 @ 6:31 pm

  4. oh gussy gus. where to begin.

    first, obama is going to raise taxes. you may fall for the eternal lie that politicians throw at the electorate about cutting taxes, but the democrats just have proven time and again that they only know how to raise them. Reagan is the real revolutionary. he’s the only one who really cut them. your little obama talking point about taxes going down on 60%, and i hear him say 95% on the news is out and out bs. to discredit that lie, you only have to realize that 40% pay ZERO taxes as it is, their taxes cannot be cut. any revenue they receive is nto a tax cut but tax redistribution. socialism = bad and impoverished. secondly, whether your name is obama or mccain, i don’t care. taxes are going up next year. they’re both lieing. yes gus, say it with me. obama has lied to you.

    f and f should not exist at all. never should have. they are socialist programs plain and simple. however, yes, we have to bail them out. our names are on the checks. we did it. we have to make our names good.

    the free market bailout? loans. i have mixed feelings about it. part of me wants to let the dead weight die, the rest of the free market will pick up the only viable pieces and move on, just like barclays and b of a did. but if we issue loans, i want a better return.

    no gussie gus. fannie and freddie were never privatized. only partly. again, i like to call that partly privatized crap lip service. kill those programs now.

    fannie was created by fdr as part of his new deal to socialize the us economy. bigger government is not better government. it only just costs more. and employs more liberal arts majors who would otherwise be asking “would you like fries with that?”

    yes. speculators who wrongly believed the price of housing would always rise should lose their asses.

    i love it. dim o crats, who controled the congress for what 100 years or so? well, ok, only 60 or so continuously insert social programs into the free market and then accuse the free market of failing when those programs have successfully throttled the free market system. bush’s real failure is trying to buddy up to the left by funding their social programs only to receive more hatred. THAT’s the real reason his approval ratings are so low. the left would have hated no matter what. but now the right hates him too.

    don’t believe obamas lies gus. he will not save any money in the health industry. he claims it, but he will fail, just like all social programs do.

    Comment by mlah — September 22, 2008 @ 1:43 am

  5. Sorry, I don’t have much time this week, but had to let you know about this.

    McCain Aide’s Firm Was Paid by Freddie Mac
    http://www.nytimes.com/2008/09/24/us/politics/24davis.html?hp

    One of the giant mortgage companies at the heart of the credit crisis paid $15,000 a month from the end of 2005 through last month to a firm owned by Senator John McCain’s campaign manager, according to two people with direct knowledge of the arrangement.

    From 2000 to the end of 2005, Mr. Davis received nearly $2 million as president of the coalition, the Homeownership Alliance, which the companies created to help them oppose new regulations and protect their status as federally chartered companies with implicit government backing. That status let them borrow cheaply, helping to fuel rapid growth but also their increased purchases of the risky mortgage securities that proved to be their downfall.

    Comment by Gus — September 24, 2008 @ 1:57 am

  6. Mlah: “first, obama is going to raise taxes.”
    Only for those who make a lot of money.

    “yes gus, say it with me. obama has lied to you.”
    Maybe he will, but you can’t say he already has.

    “your little obama talking point about taxes going down on 60%, and i hear him say 95% on the news is out and out bs.”
    That’s not what the non-partisan Brookings Institution found.

    “fannie and freddie were never privatized. only partly.”

    1968 Charter Act
    The 1968 Charter Act split Fannie Mae into two parts: Ginnie Mae and a reconstituted Fannie Mae. Ginnie Mae would continue as a federal agency and be responsible for the then-existing special assistance programs, and Fannie Mae would be transformed into a “government-sponsored private corporation” responsible for the self-supporting secondary market operations. The reconstituted Fannie Mae was to be stockholder-owned and managed. Fannie Mae retired the last of its government stock on September 30, 1968, and transformation to a government-sponsored private corporation was completed in 1970.

    Freddie was private from the get-go:

    Emergency Home Finance Act of 1970
    The Emergency Home Finance Act of 1970 created Freddie Mac and authorized it to create a secondary market for conventional mortgages. Parallel authority and limitations to deal in conventional mortgages were given to Fannie Mae.

    http://www.fanniemae.com/aboutfm/charter.jhtml

    Ginnie Mae, the part that stayed under the gov’t, probably helped you and your dad buy your homes, as they deal with VA loans:
    http://en.wikipedia.org/wiki/Ginnie_Mae

    “bigger government is not better government.”
    True, but they were a success for many years.

    “continuously insert social programs into the free market and then accuse the free market of failing when those programs have successfully throttled the free market system.”
    The free market is alive and well and has created much wealth.

    “THAT’s the real reason his approval ratings are so low.”
    No, it’s cuz he’s an asshole and especially cuz of Iraq.

    “he will fail, just like all social programs do.”
    You have no idea of all the good that social programs do, or of the vast array of them.

    Comment by Gus — September 24, 2008 @ 3:02 am

  7. Ha ha tee hee, Gus, you so funny!

    “McCain Aide’s Firm Was Paid by Freddie Mac”

    Oh, that’s rich. A real scandal brewing there, I tell ya! A lobbyist had among his many other clients the companies in question — Freddie and Fannie. And that lobbyist is an adviser to McCain. Oh, the horror! Those darned Ruthuglicans! EVIL INCARNATE!!

    Guess that little MSM-enabled scandal is meant to divert attention from the fact the Obama has as two of his senior economic advisers the former CEOs of Fannie, Messrs Franklin Raines and Jim Johnson. These guys were driving Fannie into the ground, helping actually create the current crisis. But they, and Obama, get a pass. Right?

    Comment by yup — September 24, 2008 @ 7:42 pm

  8. While we’re talking about apportioning blame, Gus, why not bring in Bubba and the Democrat Congress of 1992? In the words of the LA Times, the Democrat-controlled Congress passed regulations mandating Fannie and Freddie “increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains.”

    And then Bubba came in and pressured the lending industry to accept the Democrat PC kool-aid: Clinton’s HUD Secretary Andrew Cuomo “investigated Fannie Mae for racial discrimination and proposed that 50 percent of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low- to moderate-income borrowers by the year 2001.”

    “Threatening lawsuits, Clinton’s Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage.”

    Yup, that’s right. The Democrats forced Fannie and Freddie to accept loans written to low-income borrowers, all in the name of PC racial equality. They created the foundation for the lack of any rational control in the lending market over the past 6 or 8 years by using the overwhelming power of government to force the market to obey. The Democrats are directly responsible for the sub-prime loan fiasco we’ve been going through.

    (And yes, the parts in quotes are lifted from Coulter. Care to disprove her assessment, Gus?)

    Comment by yup — September 25, 2008 @ 7:08 pm

  9. Gus, if you absolutely can’t stomach something from Anne Coulter, here’s a NYT article on the Clinton administration’s perfidy in the current financial crisis. That’s the New York Times, the liberal establishment’s source of reliable news, and so this source is beyond reproach by the likes of you, Gus. Here is a redacted version of the story in question, with the actual words of the article in quotes. (Sorry Mlah, I thought it worth explaining things to Gus.)

    Fannie Mae Eases Credit To Aid Mortgage Lending
    By STEVEN A. HOLMES
    Published: September 30, 1999

    Fannie is “easing the credit requirements on loans that it will purchase from banks and other lenders” in hopes that it “will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans.” This as a result of “increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people.” This move will allow banks to “make more loans to so-called subprime borrowers.”

    Franklin D. Raines, Fannie Mae’s chairman and chief executive officer, explains that “‘there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.”” [Raines, Obama’s economic advisor!]

    “Fannie Mae is taking on significantly more risk” and “may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.” [How prophetic!]

    “In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

    The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants. “

    Comment by yup — September 25, 2008 @ 8:00 pm

  10. BTW h/t Ace for linking the NYT article.

    Comment by yup — September 25, 2008 @ 8:02 pm

  11. damnit yup! you’re stealin my thunder for my next post!

    i was planning on laying the “credit” for this crisis squarely at clinton’s feet along with his demoncrat congress.

    i was against the bailout from the start if y’all couldn’t tell.

    but my concern now is the transfer of wealth from middle and upper middle class to low income and illegals in the u.s.

    really no other way to describe the bailout. no, don’t let the institutions that made the bad loans fail! save them so they can continue to write bad loans for illegals! and wait! we need to bailout homeowners who are defaulting as well.

    and yet here’s more! they’re having trouble paying for their cars and student loans! let’s pay for those too!

    and all on the back of the middle class. 10k per person. but that’s arithemetic. since the bottom 40% pay no taxes and are the recipients of home loan relief, only the top 60% will pay, which makes it nearly double. so close to 20k per person. and considering that a chunk of those are children, plan on arond 30k per household.

    all as a socilaist redistribution of wealth. plain and simple.

    the democrats are simply forcing middle america to finance their import of a new more thoroughly socialist voting public.

    Comment by mlah — September 26, 2008 @ 12:44 am

  12. Yup: “Oh, that’s rich. A real scandal brewing there, I tell ya! A lobbyist had among his many other clients the companies in question — Freddie and Fannie. And that lobbyist is an adviser to McCain. Oh, the horror!”
    Oh, the horror, indeed, since McCain recently said this:

    “At the center of the problem were the lobbyists, politicians and bureaucrats who succeeded in persuading Congress and the administration to ignore the festering problems at Fannie Mae and Freddie Mac.’

    “Obama has as two of his senior economic advisers the former CEOs of Fannie, Messrs Franklin Raines and Jim Johnson.”
    Neither was ever an economic advisor to Obama, you lying sack of doo-doo:
    Raines had about 3 phone calls with the campaign:
    http://voices.washingtonpost.com/fact-checker/2008/09/obamas_fannie_mae_connection.html
    And all James Johnson did for Obama was help pick a running mate.

    “why not bring in Bubba and the Democrat Congress of 1992? In the words of the LA Times, the Democrat-controlled Congress passed regulations mandating Fannie and Freddie ‘increase their purchases of mortgages for low-income and medium-income borrowers.'”

    Why not bring that up? Partly because it’s painfully embarassing to watch you suffer yet another bout of yer feckin Clinton Derangement Syndrome, but mostly because loans from that time-frame aren’t causing this problem. And if the Bush WH and Re-pube-lickin’ Congress in power since then didn’t like it, they could have and really, really should have done something about it. Anyway, sub-prime mortgages in and of themselves have not been the problem. Subprimes don’t necessarily go arm-in-arm with ARM’s. It was the ARM’s which were given out in massively increasing numbers and with increasing delusion in the last several years that doomed us. Their market share only truly blossomed under the W admin. The “magic hand” of the market did the rest.

    “For your reference, here’s a guy who googled and compiled all the Bush White House calls for better F&F regulation”
    Oh, so it’s not really a WH press release? Why do you insist on making up these little stories?! (Hint: at the top, it says it’s a WH press release, idiot).
    As to the stuff mentioned in the press release, before 2006 Republicans controlled Congress . As to the 2007 entry, W himself said this: “The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted.” Let’s take a closer look at the bill in question:
    http://www.govtrack.us/congress/vote.xpd?vote=h2007-396
    Dems: 223 Ayes, 0 Nays. Pubes: 90 Ayes, 104 Nays.
    I don’t know why it got scuttled in the Senate committee, but based on the House vote, it’s probably safe to assume that it wasn’t the Dems’ fault!

    Yup: “(And Ill ignore the Palin dig, as that little snark is about as factual as the One outright calling her a pig)”
    GOV. SARAH PALIN: John McCain has been calling for years to reform things and cut bureaucracy, even at the lending agencies that our government supports. The fact is that Fannie Mae and Freddie Mac, they’ve gotten too big and too expensive to the taxpayers.
    There is no way to misconstrue what she thought was true: these are “agencies that our government supports” which have [past tense] gotten too expensive to us taxpayers. Give it up. She was totally clueless.

    Yup: “The lenders got so greedy that they ignored the fundamentals of the market place and paid out on risky loans. If you are talking about Government regulation, then I might have to question your logic.”

    A former colleague says Mr. Greenspan blocked a proposal to increase scrutiny of subprime lenders under the Fed’s broad authority.

    http://online.wsj.com/article/SB118134111823129555.html?mod=todays_us_money_and_investing

    The Federal Reserve could have acted faster to prevent a meltdown in the subprime-mortgage market by curbing the lax lending standards that contributed to the crisis, the Fed’s chief bank supervisor said.

    Data collected by the Federal Reserve Board clearly indicated lenders had started easing standards by early 2004…

    http://www.bloomberg.com/apps/news?pid=20601087&sid=a1.KbcMbvIiA&refer=home

    Yup: “Sorry, thats like blaming all the recessionary activity that began in 2001 in the market to the W administration”
    I didn’t blame the Bush admin. I said:

    This clusterfuck can most firmly be blamed on most everyone in the housing and finance industries DURING the W Bush administration, because it wasnt a problem before then.

    That is, the companies and brokers working during that time.

    Comment by Gus — September 26, 2008 @ 2:41 am

  13. Gus, I will reiterate that this economic crisis is largely the fault of the Democrats. The Democrat Congress passed legislation which made possible the Clinton Administration’s utilization of the courts to force lenders to make high-risk loans (so-called sub-prime loans). The policies of the Clinton Administration were carried out by the likes of Raines and Jones to push Fannie and Freddie to buy 50% of their annual loan purchases from the sub-prime category.

    The Bush Administration tried to change that by appealing to Congress to tighten up regulatory mechanisms for these two Government Sponsored Enterprises. Congress, despite the Republican majority, balked. The Republicans were not balking, however, the Democrats were. Chief among the Democrat bulwarks is Barney Frank. The Democrats framed their argument as one of Bush and the eeeevil Republicans trying to deny the civil rights of poor minorities by taking away their means to obtain sub-prime loans. The Republicans, weak-willed as they are, refused to get into that fight. After all, they still have to work to keep the taint of the racist Jim Crow Democrats from being smeared upon themselves.

    The Democrats were pushing the housing bubble kool-aid. In Democrat land, all houses continue to appreciate. Therefore, under such ground rules the sub-prime loans were not such a bad risk. The Democrats gambled, and lost. Now of course, they try to blame the eeeevil Republicans, or better yet, those greedy lenders on Wall Street (who were essentially coerced into taking the path of lunacy under threat of court action by the Clinton Administration; once there, they could not stop themselves because of all the apparent profits to be gained from the never-contracting housing market of Democrat kool-aid land). And since the propaganda machine known as the MSM is in the Democrat pocket, that is the story being fed to America.

    In the immortal words of Barney Frank, “”these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis.” He said that a few years ago when he was pushing the kool aid. Now, of course, his tune is a bit different, in that “The private sector got us into this mess.” Never mind that he and his Party forced the market into that kind of behavior.

    Since I showed you a New York Times article last time around, I will now point you to another bastion of Liberal groupthink, the Boston Globe. See Jacoby’s piece here: http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/09/28/franks_fingerprints_are_all_over_the_financial_fiasco/

    As for your poor understanding of syntax and English grammar, I will point out to you that when Governor Palin spoke that particular passage, the problem had become clear. It is Palin’s and McCain’s view that the government will have to come to the economic rescue, unless you wish to see mass dispossessions and a return to the floating population of migrants that we had in the Great Depression (ala Grapes of Wrath). At the point she spoke, the course had become clear, that although the government had not yet cut the bailout check, the problem has grown to cost us hundreds of billions of dollars. Accountants count debt like that in the balance statement, instead of ignoring it until it comes due like many in our society. Her statement is valid.

    Comment by yup — September 29, 2008 @ 8:00 pm

  14. http://www.slate.com/id/2201641/

    Comment by Gus — October 10, 2008 @ 3:45 am

  15. Oh please, Gus. You turn to a publication that is traditionally ideologically similar to your own beliefs and use that to refute — other ideologically similar publications that print things you don’t like? Funny.

    First, some basic economics. Federal government pushed banks to loan to people who did not have the income to afford the loans. NOT just Fanne and Freddie, who simply bought the loans from banks, but by applying direct pressure to the banks themselves by threatening legal action in Federal Courts for violation of Federal Civil Rights. Dubious on the face of it, but in line with the ideological goals of the White House and fellow travelers (such as Barney Frank and Chris Dodd) in Congress. In other words, the Democrats and their extreme liberal beliefs.

    So the banks complied. By making more money available, by creating more buyers for the same product (housing), by CREATING MORE DEMAND, the market responded by increasing the cost of the supply. Yes, this also spurred more supply — hence the housing construction boom we saw during the first half of this decade. But the increased demand drove the costs of the supply (housing) sky high. So the actions of the Democrats created the over-expensive housing market.

    Meanwhile, the banks, who were assured that the Fed, through Fannie and Freddie, would back their risky loans, saw a no-lose situation. Lending verification became a joke. People who could not otherwise afford to buy the loans were given ridiculous amounts of money. And once the less scrupulous lenders were raking in the cash from all these loan sales, the other, more responsible organizations were forced to keep up. They had investors who demanded profits commensurate with what the competition was earning. So even the more reputable lending institutions jumped on board the Democrats’ lending train.

    Recall that the actions of the Democrats created the rising cost of housing. Now the actions of the Democrats essentially created the situation in which people could borrow more money than they could afford. And thus, they created the situation in which we find ourselves: people owe more money than they can afford. This affects not just the sub-prime borrowers, because the rising costs (associated with greater demand) in turn forced people who could otherwise afford the loans to borrow ever more money to buy the same supply of quickly-appreciating housing.

    This fiasco is NOT the fault of the poor, as your Slate writer tries to portray conservatives as casting the blame. It is the fault of the liberal Democrats. Those Democrats achieved this condition by trying to manage the economy to achieve their social ends. They directly interfered in the markets to push those social goals, then refused to allow the government to regulate the situation (as demanded by W and McCain, for example) and this current economic meltdown is the result. Democrats’ social manipulation has resulted in a fouled-up economy. (Gee, and you wonder how the Soviet economy was so strong. Oh wait, it was similarly fouled up.)

    Comment by yup — October 10, 2008 @ 6:43 am

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