Skip to comments.How we got into this mess
Posted on 03/01/2009 10:30:02 AM PST by dangus
As destructive as socialism is, it would be powerless without pragmatic conservatives.
Socialism, like such explosions, is destructive in our society. Voters don't like destruction of our society, our wealth, or our institutions. So why do socialists keep winning elections? Because pragmatic conservatives, like President Bush and the Hastert/McConnell-era Republican Congress, witness socialists playing with dangerous reactants and try to make them safe. In doing so, they create bombs.
CDOs proved to be the ultimate bomb. Here's how they were created: Democrats were frustrated that banks didn't grant as many loans to black people as they did to white people. The banks weren't being racist though. Even though a more elite portion of blacks than whites were being granted mortgages, they were still at least as likely to default on a loan. As we're now seeing, banks actually do lose money on loan defaults. So it was not in the bank's self interest to lower loan criteria to blacks. In fact, it would be unjust and economically harmful to make loans to less qualifying people, and make up for that increased risk by raising interest rates on qualified people.
Some Democrats suggested forcing the banks to make loans. Of course, that would have immediately proved destructive when blacks started defaulting on the loans. The voters, the bank lobbyists, whoever it may be, someone would have forced that decision to be reversed. Maybe even the courts might have; nothing undermines affirmative-action-like remedies better than cold hard proof that they don't work.
Instead, the Republican party worked out a compromise. The ugly, brute force of governmental power wouldn't force banks to make loans; government would just motivate banks by allowing them to create abstract objects called CDOs which would allow banks to pass risk along to other entities at higher interest rates. Of course, flooding the housing market with new buyers caused prices to boom. When housing prices were escalating, CDOs seemed as safe as any other type of debt; even if the home-owner defaulted, the bank got a property which had gone up in value!
In a freer market, as banking policies made mortgages easier to get, housing construction would have grown, stirring the economy. But zoning and environmental policies limited the real estate available for new housing. Instead, prices went up. Construction did increase, but with government-mandated population growth (20 million immigrants), growth in demand outstripped growth in supply. Perversely, the increased debt caused by housing inflation made the GDP appear to grow, because the government price indexes dramatically undercount the portion of income spent on housing.
Unemployment was historically low, but people complained about the economy because wages weren't keeping up with housing costs. The solution was more government action: the federal reserve artificially lowered interest rates. This didn't help supply problems, it just triggered staggeringly high home prices. With interest rates so low, people were willing to assume debt to buy their houses. If they didn't buy now, who knows what their housing costs would become?
It's easy to attack people now for buying homes they couldn't afford. But say you were a new worker in 1998. You didn't get a mortgage because that $1000 mortgage seemed like too great of an expense. You'd be smart, and save your money, while you rent for $450. Now, forward to 2005, and you're rent is $1500. Are you feeling very smart? But hey, guess what? Interest rates have come down so far that you can still get a $1500 Adjustable-Rate Mortgage (ARM), even though the price of the house has tripled! Oh, happy day!
But then the government became concerned with escalating debt. The solution? Clamp down on CDOs? Repeal zoning ordinances? No, big government again! In the all-time biggest bonehead move in the history of America, Federal Reserve Chairman Ben Bernanke simply doubled interest rates. Hey, that was a painful, but successful action in 1982, wasn't it? Somehow it escaped his attention that a lot of people were affording their mortgages by getting Adjustable Rate Mortgages, an economic risk which seemed reasonable since the market didn't seem likely to raise interest rates.
Now, that $1500 payment is $2500. Is this the fault of the home-buyer? Not really. Getting that ARM seemed reasonable because there was nothing happening in the economy which would suggest a sudden surge in interest rates. The surge that happened was not a free-market correction, but a sudden change in government policy.
BOOM! There's your explosion. Who gets blamed? The Republicans. But don't just dismiss the electorate as having suddenly turned liberal, or curse fate. When St. John Crysostom (the golden-mouthed) said the floor of hell was paved with the skulls of bishops, he was defending the Christian Church. He recognized that weak leadership from within is far deadlier than anything the enemy can do from without; by seizing and misusing authority, the culpability of such bishops was worse even pagans who slaughtered Christians in the arena.
Now, we can blame metaphorical pagans like people like President Obama, Senator Dodd and President Clinton. But where's that going to get us? Another RINO administration and a new set of time bombs? Don't make it about people; make it about principles and policies. Obama's socialist policies will blow up in his hands. When that happens, we want a real conservative, not another John McCain to share the blame.
email this to Michael Steele.
How? Because its true what my dad used to say - people are idiots.
This was a setup folks. Started with CRA’s and mortgages started by lawyers like Obama who di it as a community organzier. Virus was placed in banks through fellow travelers working at Fannie & Freddie. Pelosi and Reid NO Energy Policy drives oil abd gas prices to $4+ a gallon.
Bear market raids by Soros, Flower and John Paulson leading up to october. Bush and Paulson panic etc etc. TV News and MSM newspaper media 100% behind Obama.
Obama keeps pushing panic to push socialism. I wonder if this is what really happened in 1929 and FDR.
The newspapers are dying but the TV news media will lead us to serfdom and Islamification. ACORN and their sister group SEIU will keep the Dems in power forever. The GOP has it’s hopes on 2010 but ACORN may throw monkey wrenh into that plan.
We need to boycott and cancel cable and sat TV unless someone has another idea.
The tough part is when you boycott it all, your boycott becomes 100% ineffective. (Which is not to say that youre boycott wouldn’t have personal benefits.) But if you punish the decent programming with the bad programming, they just decide you’re unreachable and give up on you.
(IOW: The Amish never affected a programming decision.)
The problem: Is there any good TV?
We have a very hard time winning because the MSM set the agenda and formulate the rules of the debate. Obama is almost entirely a product of the MSM. The whole Acorn, sub-prime lending scandal is a product of the MSM setting the debate.
Visionary, principled Republicans are demonized and delegitimized by the MSM. Unless you have pulpit such as Rush does to defend yourself, Republicans have very little way to defend themselves against the MSM onslaught.
The MSM was taken over by so called “Progressives” long ago. If we are to win, we need to keep finding ways to work around them, convert them, or create alternative means of educating the public.
>> Your analysis misses an obvious point. The Republicans compromise on these things and are blamed for these things because that is the agenda of the MSM. <<\
No, I don’t miss that point. But we can’t control the media. We CAN control who we select to represent us in our primaries, and we can urgently and strongly denounce those fools among us who say, “Yes, but [the pragmatic guy] is more electable than [the ideologue].” We can Micheal Steele and George Will to shut the hell up and listen to Rush Limbaugh instead.
There is almost no good TV. It is a form of control and manipulation. Most Americans will stick with TV and let their kids be sold into serfdom because they cannot miss American Idol or a ball game.
If 30 million people cancelled cable/sat TV then we might get some unbiased TV news coverage. FOX is around 15%(?) owned by Saudis. They are the money behind getting O elected.
Yes, but [the pragmatic guy] is more electable than [the ideologue].
This part I agree with:
>> If we are to win, we need to keep finding ways to work around them, convert them, or create alternative means of educating the public. <<
But we have to realize that our elected officials are an important voice in educating the public. They represent us. And when Bob Dole, George Bush, John McCain and their ilk attack conservatism, we need to look for better leaders. It may be wise to vote for George Bush over John Kerry in the general, but it’s fatal to vote for an Arlen Specter over a Brian Toomey in the primary.
Compassionate conservative = I'm a principled conservative until my "feelings" get involved.
Put them together and you have a liberal.
>> Yes, but [the pragmatic guy] is more electable than [the ideologue]. You have correctly identified the ratchet the MSM uses to drive us toward the left. <<
Not just the MSM. Do you remember some of the abject hatred and venom on FR, by the supporters of Arnold Schwartzenegger for McClintock supporters?
>> How? Because its true what my dad used to say - people are idiots. <<
I’m trying to address the causes we can do something about. :^)
I’m not trying to sell it to the average liberal. Conservatives outnumber liberals. My main focus is first on the conservative core, then on the on-again-off-again conservatives.
It is a form of control and manipulation.
Why is it that we can't control the media? The liberals do. Is there something fundamental that lets liberals control the media but prevents conservatives from doing so?
Of course not. Liberals control much of the media because they own or control a large potion of the media outlets. Were they given this ownership/control? No, they put their money where their mouths are and they bought it. Liberals are willing to invest in a propaganda machine that gets their message across even if they are not the best monetary investments. The "pragmatic" conservatives look for the best monetary return on their investment and will not take less to advance their political beliefs.
The liberals control the MSM fair and square, they were not given control by the government nor did they steal it from conservatives.
As long as conservatives believe their "pragmatism" is more important than their ideology, they should quit whining about the MSM and liberal control of the media.
We’ve seen big government statists in the guise of:
Wouldn’t it be nice to just see a...conservative, minus the need to qualify it?
Already done years ago. Man the lifeboats.
Sorry, but that's not what happened. True, some of the early legislative meddling in increasing mortgage availability to minorities set the stage for the subsequent banking collape, but it wasn't subprimes to blacks - there just weren't enough of them to make it happen.
". . . but with government-mandated population growth (20 million immigrants), growth in demand outstripped growth in supply.
Aha! - Here is where the author gets it right, except for the number, which is really closer to 30-40 million illegals in the USA, which will be validated after amnesty when the applications come in.
It was not until there was a huge demand for housing these tens of millions of illegal aliens starting after 2001, that the subprime lenders could find enough customers (suckers) to let the subprime market grow out of sight, and allow a huge Ponzi base to support the derivataive phony financial paper that leveraged the already out of control subprimes to the trillions of CDOs and Mortgage-based bonds that were guaranteed to go into default.
The real story is how well the media, RINOs, and Democrats have covered up that prime causation of today's meltdown because they did not want to jeopardize their open borders agenda.
The liberals don’t CONTROL the media; the liberals ARE the media.
I think conservatives have focused too long on control; we have to focus on the arts; we have to develop ways of expressing conservatism and our values beyond pleading for a fair shot at air time. But every level of creative expression in America hates conservatives.
(This may have partly to do with funding; liberals only bought avant-garde because they reject the classics!)