Posted on 09/25/2008 5:20:24 AM PDT by Kaslin
An indictment of greed! A case for more government intervention! Worst financial crisis since the Great Depression! Failure of capitalism! This list includes the "lessons" of the recent turmoil in the financial markets. Nonsense.
Down with greed!
Someone please produce the gun held to the temples of borrowers who put little or no money down, took out "teaser" rates, and then pleaded ignorance or victimhood when the lender -- as stipulated in the contract -- jacked up the rate. Lenders and borrowers expected government/taxpayers to somehow, someway, step in and shield them from the consequences of their decisions. This creates "moral hazard" -- behavior based upon the knowledge of protection from the bad consequences of reckless or irresponsible behavior. Decisions entail risk, whether personal or financial ones.
We need more regulation!
We have it -- lots of it. Ever hear of the Office of Federal Housing Enterprise Oversight (OFHEO)? This agency, which employs 200 people, exists for one thing and one thing only -- to "oversee" Freddie Mac and Fannie Mae, the "government-sponsored entities" that own or guarantee 40 percent of the nation's residential mortgages. Mere months before Freddie and Fannie's collapse and subsequent government takeover, OFHEO issued a report that saw only clean sailing. The Community Reinvestment Act, passed in 1977, mandated that lenders lend to high-risk borrowers -- or else. The government actually held up prudent bank mergers if one or both sides did not sufficiently "lend" to borrowers who, under normal circumstances, failed to qualify. Why is the federal government in the housing business in the first place? We need less government, not more regulation.
We are experiencing "the greatest financial crisis since the Great Depression"!
Even if this were true, we aren't even close to that catastrophic event. At the Great Depression's nadir, 25 percent of adults were unemployed, including nearly 50 percent of urban black adults. Economist David Wheelock, of the Federal Reserve Bank of St. Louis, says that by the dawn of 1934, nearly half the urban homes with mortgages were in default, and 7.3 percent of housing structures had been foreclosed. Today 6.4 percent of mortgages are delinquent, 2.75 percent are in the foreclosure process, and 0.6 percent of all housing units are bank-owned.
But what about since the Great Depression? Take the recession of 1980-81. In 1980, inflation averaged 13.58 percent, unemployment increased from 6.3 to 8.5 percent, and the prime loan rate reached an astonishing 21.5 percent. According to the Mortgage Bankers Association, today's delinquency rate is only a little higher than in 1985. And in 1999, the foreclosure rate set records.
According to the FDIC, in the almost two-year period of 2007 and 2008, 15 banks failed. Similarly, during Clinton's last two years in office, 1999 and 2000, 15 banks also failed. In the recession-free years of 1988 and 1989, there were 1,004 bank failures. And since the Great Depression, the average number of yearly bank failures has been 94.
This exposes the failure of capitalism!
What do you say we actually try capitalism, where private actors reap rewards and assume the risk? "Capitalism," says Kenneth Minogue, professor emeritus at the London School of Economics, "is what people do if you leave them alone." People want "hands off" until, that is, they want "hands on." People want homes, many preferring that option even when renting may be more prudent. Many want rent control to shield them from leasing at fair market rates. Democratic presidential candidate Barack Obama promises "world-class" education -- with taxpayers paying for it. And the federal government, in dramatic contradiction with the limited-government intention of the Constitution, involves itself in health care, guaranteeing private-sector retirement accounts, disaster relief, welfare, unemployment compensation benefits, retirement benefits, etc.
The Federal Reserve Bank, in effect, prints money to pay for things that voters demand -- but their taxes cannot cover. The proposed bailout of financial institutions enables the Fed to create hundreds of billions of dollars out of thin air. The cost is greater inflation -- a stealth tax on us all.
Government, meanwhile, grows and grows.
In 1930, before Franklin Delano Roosevelt's New Deal, taxpayers paid about 12 percent of their income to all three levels of government -- state, local and federal. Today we pay approximately 40 percent -- even more if you attach a value to unfunded mandates, such as those issued by agencies such as OSHA.
So, yes, our recent financial turmoil does suggest failure -- a failure to truly practice capitalism and a failure to accept and believe in the value, appropriateness and morality of a limited government and maximum personal responsibility.
Socialism has failed. A massive gov’t bailout is an effort to recover from that failure and breathe a little more life into American socialism.
No, it’s not. It’s the best system, and will prevail. It’s the only system that allows the individual to decide their own economic fate. It’s the only system that nurtures creativity.
Social Security? I'll honor those currently in the program, but you have an option. You can opt out of SS and take your contributions, along with your employer's, and put them in an IRA and manage them however you see fit. If you do opt out, you're on your own. If you're starving when age 65 rolls around, not my problem. You mismanaged things so I guess you don't get to retire.
Health insurance? Invest in yourself...educate yourself to the point where a private company with a health plan employs you. Don't have enough money to educate yourself? Join the army and learn a skill. The military is the most underutilized educational facility on the planet. Health insurance is not a right, you earn it. If you can't learn enough for health insurance, I guess survival of the fittest eventually takes care of that.
I had a bellyful of seeing productive members of society tow the weight for the unproductive. If you're greedy and invested in high-risk investments because they promised high returns and that didn't pan out, not my problem. You built your house 8' below sea level and didn't insure it. Also not my problem...you gambled, you lost. The day of the free lunch is over. Get off your lazy a$$ and start working or your lifestyle is going to plummet.
Socialism fails by capitalist standards, but it succeeds with flying colors by their standards - keeping the masses poor, dependent and under the control of elites who get to consume the resources denied to the masses.
All your ideas come from the traditional American culture of self reliance and personal responsibility.
The left has spent generations trying to push this out of the mindset of the average American.
We are looking at the Atlas Shrugged scenario. Big government creates problems. The solution proposed is bigger government which will create more problems, for which they will impose even bigger government.
The sad irony is that the people who bought homes that they can afford, and are making the payments, may be the ones losing their homes because they will not be able to pay the higher taxes resulting from the bailout of the deadbeats.
Last sentence in the article:
“So, yes, our recent financial turmoil does suggest failure — a failure to truly practice capitalism and a failure to accept and believe in the value, appropriateness and morality of a limited government and maximum personal responsibility.”
How do you get people to see the truth in this statement? Every time I use the term ‘personal responsibility’ I am labeled racist, heartless, inhumane. You can’t get through to entitlement oriented folks.
The people you describe are personally responsible, and personally self reliant.
That has to be beaten out of people if they are to be controlled.
The best way to do this is to incentivize irresponsibility and disincentivize personal responsibility.
There are those who want to be irresponsible, and those that want people to be irresponsible in order to get control of them.
We are too far gone now.
The dependent class is so huge, that I don't see any good end to this.
If we had 20 years to slowly destroy socialism, and the majority will to do so there might be hope.
We are facing a second Revolution.
I hope we're up to it.
Read the article, not just the headline.
Let's hope our personal freedoms don't continue to go the same way.
>>Profit is private and individual. Loss is public and social.
Scary. When I saw Bear Stearns I thought “great, we are in a system that privatizes profits and socializes the risk.” Didn’t realize there was a historical antecedent.
Yeah, you're right. I'm pretty much an old fuddy-duddy who helped raise his kids believing that their fate is in their hands, not anyone else's. We fought the "we don't keep score 'cause every child's a winner" crap. The good news is that my kids are doing great. The bad news is that their kids are forced to join soccer leagues where they don't keep score. No problem, I just sit in the stands and yell the score out each time it changes. It's a little thing, but you'd be amazed how many parents come up to me later and say they appreciate me keeping score. Kids must learn that life does keep score and you are either competitive or you lose...on so many levels...
I have wondered what could possibly turn it around and renew our country. Another WWII? A massive pestilence? Another Great Depression? Well, I don't want these things to happen, but I do think that the only thing that can make this country well will be a period of great stress and strife -- not as catharsis, but just to flush out the bad ideas that have permeated our system.
I think we are at the point where we take our medicine. I oppose the bailout. I'm aware that pain will follow -- I've been in pain for 40 years. I want my country back.
Yes, and we saw what a wonderful success Fascist Italy was, eh?
:-(
Agreed.
And the sooner it happens, the younger I'll be and the better the chance I'll be able to help the republic survive and see the other side.
Homeschooler here.
Our family, and the other families at our church that homeschool (90% do, with LARGE families), “armor up” our kids to be an influence on the culture, instead of the other way around.
My homeschool philosophy centers around the theme of “impervious to nonsense”:
Strong Biblical Worldview
Strong understanding of economics
Knowledge of probability and statistics
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