http://despair.com/
Posted on 01/01/2009 6:44:05 AM PST by Brilliant
The politicians in Washington have been working overtime to persuade you that the free market system is responsible for this recession--and for good reason. In reality, government and the politicians who run it should themselves shoulder the bulk of the blame.
Who was it that got the housing bubble going by subsidizing housing? The federal government.
Who was it that used the power of Congressional oversight to influence Fannie Mae and Freddie Mac to appoint former Clinton cronies like Franklin Raines to their top management? Congress. And who was it that cheered them on as they diverted hundreds of billions of dollars in corporate monies to the purchase of low quality loans in the name of "affordable housing?" It again was Congress. That was not purely a coincidence. It was a disaster planned and coordinated by liberal members of Congress.
Who was it who facilitated the real estate bubble by a vast expansion of the money supply? The Federal Reserve, which is also controlled by the federal government.
Who was it that gave the bubble a further boost by allowing millions of illegal immigrants to enter the US for the purpose of providing cheap labor for the housing boom? The federal government.
Who was it that continued to pour hundreds of billions of taxpayer dollars into housing subsidies even though it was apparent that the housing industry did not need them because we were already in the greatest housing boom the world has ever known? Congress.
And finally, who was it who pulled the plug on the housing bubble by tightening the money supply during the fall of 2007 and the spring and summer of 2008? It again was the Federal Reserve.
Yes, it is true that banks and other financial institutions are stressed to the point of collapse, and it is true that those institutions made the mistake of originating hundreds of billions of dollars in bad loans. But those institutions were simply adjusting to market conditions that had been artificially created by the government precisely with the intent of encouraging such loans. Government manipulated the markets until the banks began to make such loans because that is what the government wanted them to do. Then having created an unsustainable situation, the government pulled the rug out from under the financial industry, bringing about this crisis, which has now spread throughout the economy.
Far from a failure of the free market system, this recession we are in is a failure of government--a failure of central economic planning.
And yet, we are now told by the very politicians who caused the recession that government will come to our rescue, and will bailout private enterprise from what are portrayed as its own mistakes. Clearly, since they are the ones who caused the mess, they should fix it. But I don't have much confidence that politicians who caused this mess will be able to fix it. More likely, the free market system will fix itself, as it is bound to do anyway over time, provided that the government does not continue to mess things up.
But even that is a tall order. It is in the nature of government to mess things up. When government makes economic decisions, they are made on the basis of political expediency--not on the basis of good economics. Government also is much slower to adjust to changing economic realities than free markets are. The political process is very slow, cumbersome, and inefficient when it comes to making economic decisions.
We saw that with the on-again off-again financial sector bailout which started out as a plan to buy toxic assets from banks, then morphed into a plan to socialize the banks, then the insurance companies, then morphed back into a plan to buy assets, and now has morphed into a plan to bailout the auto industry--maybe (or maybe not, depending on the day of the week). It seems pretty clear that the politicians have no earthly clue what they are doing, or how to do it.
So we are being asked to tolerate a massive reorganization of the US economy by folks who have no earthly clue what they are doing. Capitalism has created in the US the most powerful economy the world has ever known, yet Washington tells us it is broken. It may be broken, but only because they broke it.
We are told that laissez-faire policies are to blame for this mess. Nevermind that we have not had laissez-faire policies in this country since before the Great Depression. We have the biggest, most intrusive government that we've ever had in the history of this country. If the advocates of Big Government can't make it work with all of the power and resources they have at their disposal now, then they simply can't make Big Government work, period.
The more they “do” to “fix it” the worse it will get.
"We've been through nearly a dozen hearings where frankly we were trying to fix something that wasn't broke. Mr. Chairman we do not have a crisis at Freddie Mac and in particular at Fannie Mae under the outstanding leadership of Mr. Frank Raines."-Rep. Maxine Waters, 2004
http://www.youtube.com/watch?v=YL36nwCSYUM
___________________________________________________________
History of Fannie Mae scandal
"Fannie Mae announces its long-awaited restatement, erasing $6.3 billion in profit from 2001 through June 30, 2004."
http://www.boston.com/business/articles/2006/12/07/history_of_fannie_mae_scandal/?page=1
_________________________________________________________
Bailout Politics: The Congressional Dems who enabled this crisis are now being trusted to fix it?
Thomas Sowell, September 30, 2008
http://article.nationalreview.com/?q=OWE3OWU3OTExYzNlNTUzMzY2YmJmOWZjMzcwN2M1NjU=
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Guilty Party: ACORN, Obama, and the mortgage mess
Mona Charen, September 30, 2008
http://article.nationalreview.com/?q=Mzk4MmVkNzA1NGQ2NGRkZjQ2YjNmYjdlODZkMmQ4N2I=
_________________________________________________________
An ACORN Falls from the Tree: A congressional outrage
Ken Blackwell, September 29, 2008
http://article.nationalreview.com/?q=N2Y5MTc0ZTAyMmE1Mjk3NGE3OWRiY2FkMjZlN2YxYzc=
Indeed, stupid is as stupid does and the American politicians and all the voters who elected Obama are the most stupid of all the stupid who run federal government.
When the blind lead the blind, all will fall into the ditch.
OUTSTANDING!
Bill Clinton, Barney Frank, and Christopher Dodd.
Media Mum on Barney Frank's Fannie Mae Love Connection:
Democratic House Financial Services Committee Chair promoted GSEs while former 'spouse' was Fannie Mae executive
By Jeff Poor
Business & Media Institute, 9/24/2008
excerpt...
"Frank, who is openly gay, had a relationship with Herb Moses, an executive for the now-government controlled Fannie Mae. The column revealed the two had split up at the time but also said Frank was referring to Moses as his "spouse." Another Washington Post report said Frank called Moses his "lover" and that the two were "still friends" after the breakup.
Frank was and remains a stalwart defender of Fannie Mae, which is now under FBI investigation along with its sister organization Freddie Mac, American International Group Inc. (NYSE:AIG) and Lehman Brothers (NYSE:LEH) – all recently participants in government bailouts. But Frank has derailed efforts to regulate the institution, as well as denying it posed any financial risk."
http://www.businessandmedia.org/printer/2008/20080924145932.aspx
I do agree the severity of the affect to whichever segment it applies shows the hand of government. A depression is a recession after the government "fix."
Of COURSE the government is to blame. DUHHH! More particularly, Democrats in the Fed.gov!
Amen! Can you say "term limits?" I'm all for sending 535 new faces to Washington, D.C. Newbies couldn't do any worse!
“Now, legal plunder can be committed in an infinite number of ways. Thus we have an infinite number of plans for organizing it: tariffs, protection, benefits, subsidies, encouragements, progressive taxation, public schools, guaranteed jobs, guaranteed profits, minimum wages, a right to relief, a right to the tools of labor, free credit, and so on, and so on. All these plans as a whole — with their common aim of legal plunder — constitute socialism.”
Frederic Bastiat - “The Law” - Legal Plunder Has Many Names
http://bastiat.org/en/the_law.html#SECTION_G1799
Thanks to FReeper raygun for the link.
Also, the never ending invasion of illegal aliens into this country, working mostly under the table, sending parts of their wages back to their families in Latin America also helped drain the American economy.
The first thing that needs to happen is term limits. It is the only way to get these career elitist to do the right thing. Let 2009 be the year of a new revolution. Drain the swamp that Washington D.C. is.
Your post has me confused somewhat. The financial dispair we, and the World I might add suffer today was caused by Democrats in Government for the purpose of gaining voter support for their Socialist inclined Political Party.
Today the Democrats in Government are mostly focused on how to salvage the disastrous results of their gerrymandering of the traditions of the system to their benefit making any expedient recovery less likely.
As these Democrats are all major players in the “Government”, and have been for many years leading to the demise of the ploy that placed us in this recession, it would seem to me that the “Government” did in fact cause the recession.
What am I missing?
Not all recessions are caused by the business cycle. This one was made in Washington.
It seems pretty clear that the politicians have no earthly clue what they are doing, or how to do it.
It is my belief that they know exactly what they are doing, which was articulated by the founders of the ACLU, Norman Thomas and Roger Baldwin:
"The American people will never knowingly adopt socialism, but under the name of liberalism they will adopt every fragment of the socialist program until one day America will be a socialist nation without ever knowing how it happened."
"I seek social ownership of property, the abolition of the propertied class, and sole control of those who produced the wealth: communism is the goal."
It is all part of their plan to turn the USA, and therefore the world, into their communist utopia. Meanwhile, the American people yawn and say; "There's nothing we can do."
I believe that government, governs best when it governs least.
This notion that we need some bureaucratic nanny to subsidize our very existence is in abject opposition to the values held by the people who founded and built this country.
It is an affront against the freedom bought and paid for with courage and blood.
Does this mean that those less fortunate should be cast aside and ignored? Heavens no! But to force this “help” on those who neither need it nor want it is not liberty by any definition I recognize.
Charity begins in the heart. Some thing this country has never been in short supply of.
The following is a quote from an essay I first read from 2banana a couple of years ago titled ‘Can Government do the Work of God?”
“Charity,” enforced by the government, is not charity, it is extortion. “Charity,” delivered by the government, is not charity, it is a bribe which corrupts both the giver and the receiver.
Rant/off
JC
As far as I can tell, this is a RINO economy promoted and overseen by Bush and his cronies in congress. Whatever Clinton did, Bush could have undone in the 6 years he and the RINOs controlled congress and the executive branch.
Bush and his cabinet proposed the bailout.
Bush wanted the “ownership society”.
Barny Frank did not run anything until two years ago. And the only reason Barney Frank got into power is because the Republican congress was spending like drunk sailors with Bush’s veto pen stuck in his pocket. Let’s not kid ourselves.
We need to keep working to get real conservatives back in control. Bush has been a disaster for the conservative cause.
I'm trying to think of any commodity that doesn't experience flows and ebbs in supply AND demand, even in a laizzes faire environment. I've been through half a dozen bear markets which suggests half a dozen new peaks in stock prices.
I've lived through at least two housing cycles in my neighborhood, possibly three except the first was prior to the purchase of my first house.
The peak on this last one was artificially high, as demand was artificially high. Much was demanded by people incapable of covering the cost. Now that was enabled by bad governemnt policy, which drove demand ever higher thus making the fall more precipice like or trap door like. However, government policy didn't stop the cycle in housing values.
The collapse in the financial institutions was, again, exacerbated by horrendous government interference. It was also assisted by people such as Henry Paulson and so many like him who tell each other and themselves day after day that the cycle has been broken by them because they are so much smarter than their predecessors. They almost never are. Now I know this anecdotally because I have worked in financial institutions and can assure you we told ourselves we were the brightest bulbs extant. This didn't always guarantee success.
I believe government can and does cause massive market dislocations. Government cannot eliminate markets or the natural laws that govern them. I marvel in my dotage that the newest crop of smartest people ever (in government) don't see what they are doing, and voters don't seem to care.
I also marvel at hgh ranking business leaders climbing into bed with these snakes. Apparently education is lost both in and out of government.
I marvel at the majority voters who continue to care not at all.
We have just ended a pretty grim year economically between the Atlantic and Pacific. I wonder how bad it will be when the United States is officially bankrupt. At least then business cycles will be left to their own ends sans interference by really smart people.
No one forced them to do it, but Fannie Mae bought those low quality mortgages, after Congressional prompting. Fannie Mae made a market for low quality mortgages, and if there is a market, you can bet such mortgages will be made.
Without the market, they would not have been made.
http://despair.com/
Point me to the legislation....
Comments?
Bump!
Happy New Year!
Further details later...but I agree even from the title of your article. They screw it up, vote themselves pay raises, and get more of the screw-ups elected...including a president who barely did his job as senator.
Like I said in the post, it was not so much legislation as it was the fact that Congress exercises the power of oversight over Fannie Mae and Freddie. They call the top management as witnesses, and then beat them silly under oath. They used the leverage they had by virtue of that process to influence Fannie Mae to appoint Raines and others who they knew they could control, to top management within the organization. Raines did the bidding of Congressional liberals. They wanted him to buy low quality mortgages, thinking that would help poor people buy homes. The result is that Fannie loaded up with hundreds of billions of dollars of low quality mortgages, proceeded to package them in securitizations, and then sold the securities to banks and other private financial institutions. There was no need for legislation. Just the threat of Congressional action was enough to exact compliance with the politicians’ demands.
When the real estate market finally went South, as it was certain to do, Fannie Mae and Freddie themselves went down, and took dozens of financial institutions with them.
A great vanity post. I’m sure you can believe, many people I meet are convinced that unregulated capitalism has brought us all of this woe.
Congress grills Fannie and Freddie on a regular basis. Here is an example posted in one of the earlier posts:
http://www.youtube.com/watch?v=YL36nwCSYUM
Fannie CEO, Franklin Raines, who was a former Clinton director of management and budget, is questioned at about 7:13, but view the entire tape. There are plenty of places in this tape where the Congress members talk about their oversight of Fannie, and at one point, Maxine Waters even states that there is no need for change because Fannie has been meeting its affordable housing requirements.
Fact is they’ve been grilling the Fannie execs since 1967, when Fannie was first privatized. That was one of the conditions in the legislation approving the privatization.
Credit Default Swaps became illegal to regulate with the Commodity Futures Modernization Act of 2000, which was also responsible for the Enron loophole. Phil Gramm introduced the Act on behalf of financial industry lobbyists. The Modernization Act was rushed through Congress as a companion bill to the omnibus spending bill, the last day before the Christmas holiday[11]. It by-passed the substantive policy committees in both the House and the Senate so that there were neither hearings nor opportunities for recorded committee votes [12]. The omnibus spending bill, which was 11,000 pages long, is the financial plan the government requires for everyday operations. President Clinton signed the bill into Public Law (106-554) on December 21, 2000.
2004, has nothing to do with your post, damn near after the fact.
ABSOLUTELY AGREE!
And how bright are WE to allow the same MORONS who engineered this mess to propose and implement “SOLUTIONS?”
In a column on the financial melt-down published around 11/30/08, New York Times columnist Thomas “The Earth is Flat” Friedman treated readers to yet more classic MISinformation so typical of the soon-to-be-bankrupt Times. Could their long history of historical revisionism be the reason they’re in trouble? But that’s a topic for another post.
Friedman portrayed the greedy bankers and Wall Streeters as the villains.
Yes, many of them may have gamed “the system,” bundling this “junk” into “derivatives” even PhDs in economics didn’t understand.
But if that “system” hadn’t been created in the first instance, the gaming would not have even been possible. Friedman conveniently failed to mention that the system was a creature of the 1977 Jimmy Carter sponsored “Community Reinvestment Act.”
Allegedly designed to make the American Dream of home ownership available to all, it was expanded in the Clinton years to include even those with virtually no prospect of repaying. Lenders who refused to “get with the program” were threatened with loss of their charters.
Until it unraveled, it was a brilliant Democrat vote-buying scheme.
And as it unraveled, Barney Frank, Chris Dodd, et al stood silently by and watched. These clowns are either too stupid to hold public office or the new poster boys for UNINTENDED CONSEQUENCES.
For all the pain they have caused with their idiocy, these alleged “leaders” should be hauled into a courtroom and tried. If found guilty, I think public hangings are in order.
Bin Laden and his ilk have long sought to bring this country down economically. With that job now done by Frank, Dodd, Reid, Carter, Clinton, et al, the Islamofascists can now devote themselves to full time bomb building.
And for those who think I exaggerate, here is some of the rare wisdom offered by a former President (with whom I have many problems but at least got THIS part right):
“At what point shall we expect the approach of danger? By what means shall we fortify against it? Shall we expect some transatlantic giant to step the ocean and crush us at one blow? Never! All the armies of Europe, Asia and Africa combined with all the treasure of the earth (our own excepted) in their military chest, with a Bonaparte for a commander, could not take a drink from the Ohio or make a track on the Blue Ridge in a trial of a thousand years.
“At what point, then, is the approach of danger to be expected? I answer, if it ever reach us it must spring up amongst us; it cannot come from abroad. If destruction be our lot we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.”
Abraham Lincoln, 1837
OH YEAH, WITH JUST A HANDFUL OF EXCEPTIONS RE-ELECT NOBODY.
To find out who the exeptions might be, visit
yuck! LOL!
Old story but worth the reading: http://www.newsweek.com/id/161199/page/2
Reference bump! Thanks. ;-)
ABSOLUTELY AGREE!
And how bright are WE to allow the same MORONS who engineered this mess to propose and implement “SOLUTIONS?”
In a column on the financial melt-down published around 11/30/08, New York Times columnist Thomas “The Earth is Flat” Friedman treated readers to yet more classic MISinformation so typical of the soon-to-be-bankrupt Times. Could their long history of historical revisionism be the reason they’re in trouble? But that’s a topic for another post.
Friedman portrayed the greedy bankers and Wall Streeters as the villains.
Yes, many of them may have gamed “the system,” bundling this “junk” into “derivatives” even PhDs in economics didn’t understand.
But if that “system” hadn’t been created in the first instance, the gaming would not have even been possible. Friedman conveniently failed to mention that the system was a creature of the 1977 Jimmy Carter sponsored “Community Reinvestment Act.”
Allegedly designed to make the American Dream of home ownership available to all, it was expanded in the Clinton years to include even those with virtually no prospect of repaying. Lenders who refused to “get with the program” were threatened with loss of their charters.
Until it unraveled, it was a brilliant Democrat vote-buying scheme.
And as it unraveled, Barney Frank, Chris Dodd, et al stood silently by and watched. These clowns are either too stupid to hold public office or the new poster boys for UNINTENDED CONSEQUENCES.
For all the pain they have caused with their idiocy, these alleged “leaders” should be hauled into a courtroom and tried. If found guilty, I think public hangings are in order.
Bin Laden and his ilk have long sought to bring this country down economically. With that job now done by Frank, Dodd, Reid, Carter, Clinton, et al, the Islamofascists can now devote themselves to full time bomb building.
And for those who think I exaggerate, here is some of the rare wisdom offered by a former President (with whom I have many problems but at least got THIS part right):
“At what point shall we expect the approach of danger? By what means shall we fortify against it? Shall we expect some transatlantic giant to step the ocean and crush us at one blow? Never! All the armies of Europe, Asia and Africa combined with all the treasure of the earth (our own excepted) in their military chest, with a Bonaparte for a commander, could not take a drink from the Ohio or make a track on the Blue Ridge in a trial of a thousand years.
“At what point, then, is the approach of danger to be expected? I answer, if it ever reach us it must spring up amongst us; it cannot come from abroad. If destruction be our lot we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.”
Abraham Lincoln, 1837
OH YEAH, WITH JUST A HANDFUL OF EXCEPTIONS RE-ELECT NOBODY.
To find out who the exeptions might be, visit
Nevertheless, credit default swaps did not cause this problem. The real estate bubble caused this problem, and that was caused by Fannie and Freddie, both under the control of Congressional oversight. I point to the 2004 hearings (which were pretty much the midpoint of the bubble) because they illustrate what I was saying and you were disputing. Congress did have oversight over these companies, and they were calling the shots.
They put their people into high positions at Fannie. You can’t deny that. And those people they used the corporate assets to do the bidding of Barney Frank and Chris Dodd.
Oh yeah it was indeed Democrat trigger men who hold responsibility for the housing crisis, but don't you dare forget that McCain and even President Bush, did little to put things into perspective when it came to telling Americans what was happening. Sure, Bush and some other Republicans tried to call attention to this looming disaster as long ago as 6 years or more ago. But when the crisis became apparent back in August, their statement of blame was on "greedy wall street brokers and bankers"; and not the Democrats who had legislated bad banking laws, and requirements on mortgage companies, forcing suicidal loans. Again to quote Bill O'Reilly, "the powerful protect the powerful." And the folks be damned!
Hey folks,....... get a clue here. Their all in it together!
Meanwhile, the very same group of idiots who caused this mess, are holding televised hearing and and giving away money we don't have, while daring to tell us, they know what their doing.
INCREDIBLE; isn't it?
I agree completely with your assessment on Bush, but I contend his administration couldn't have done all it's negatives, if he hadn't had a willing House and Senate; Which of course is exactly the reason the GOP lost control of both houses.
I see only one way for Conservatives to go, and that is the way of a third party. I know it's an uphill struggle; but unless conservatives ban together under one umbrella, we will never be able to get anything done.
LOL
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