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How we got into this mess
Vanity ^ | 3-1-08 | Dangus

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.


TOPICS: Government; Philosophy; Politics/Elections; Your Opinion/Questions
KEYWORDS: dangus; depression; economy; housing; mortgages

1 posted on 03/01/2009 10:30:02 AM PST by dangus
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To: dangus

email this to Michael Steele.


2 posted on 03/01/2009 10:33:04 AM PST by DDLL
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To: dangus

How? Because its true what my dad used to say - people are idiots.


3 posted on 03/01/2009 10:33:26 AM PST by svcw
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To: dangus

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.


4 posted on 03/01/2009 10:35:35 AM PST by Frantzie (Boycott GE - they own NBC, MSNBC, CNBC & Universal. Boycott Disney - they own ABC)
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To: Frantzie

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?


5 posted on 03/01/2009 10:38:58 AM PST by dangus
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To: dangus
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.

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.

6 posted on 03/01/2009 10:39:07 AM PST by marktwain
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To: marktwain

>> 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.


7 posted on 03/01/2009 10:41:47 AM PST by dangus
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To: dangus

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.


8 posted on 03/01/2009 10:46:28 AM PST by Frantzie (Boycott GE - they own NBC, MSNBC, CNBC & Universal. Boycott Disney - they own ABC)
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To: dangus

“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.


9 posted on 03/01/2009 10:46:30 AM PST by marktwain
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To: marktwain

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.


10 posted on 03/01/2009 10:46:56 AM PST by dangus
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To: dangus
Pragmatic conservative = I'm a principled conservative until it costs me something.

Compassionate conservative = I'm a principled conservative until my "feelings" get involved.

Put them together and you have a liberal.

11 posted on 03/01/2009 10:48:40 AM PST by Prokopton
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To: marktwain

>> “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?


12 posted on 03/01/2009 10:50:53 AM PST by dangus
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To: svcw

>> 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. :^)


13 posted on 03/01/2009 10:53:07 AM PST by dangus
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To: dangus
Nicely written. But this won't sell to the average liberal because the average liberal only cares about abstract concepts like 'equality' and 'fairness' and that everyone gets a 'slice of the pie' regardless of their ability to earn it. They aren't interested in reasoning. The Democrat politicians on the other hand knew full well what they were doing, but to them it was only about buying off a numerical majority of voters using your tax money.
14 posted on 03/01/2009 10:54:40 AM PST by libh8er
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To: libh8er

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.


15 posted on 03/01/2009 11:00:27 AM PST by dangus
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To: dangus; Frantzie
But we can’t control the media

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.

16 posted on 03/01/2009 11:00:29 AM PST by Prokopton
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To: dangus

We’ve seen big government statists in the guise of:

Compassionate conservatives.

Pragmatic conservatives.

Moderate conservatives.

Centrist conservatives.

Maverick conservatives.

Wouldn’t it be nice to just see a...conservative, minus the need to qualify it?


17 posted on 03/01/2009 11:00:55 AM PST by DPMD (~)
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To: Frantzie
"We need to boycott and cancel cable and sat TV unless someone has another idea."

Already done years ago. Man the lifeboats.

18 posted on 03/01/2009 11:01:20 AM PST by Paladin2 (No, pundits strongly believe that the proper solution is more dilution.)
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To: dangus
". . . 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."

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.

19 posted on 03/01/2009 11:04:48 AM PST by oldbill
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To: Prokopton

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!)


20 posted on 03/01/2009 11:07:25 AM PST by dangus
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To: oldbill

>> Here is where the author gets it right, <<

I’ll be sure to tell the author that. My wife looks at me wierd when I talk to him. ;^)


21 posted on 03/01/2009 11:09:38 AM PST by dangus
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To: dangus
“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.’

I tend to agree with you on this. It is one of the ways to work against the MSM.

Unfortunately, crisis also ratchet us toward more powerful governments. GWB actually was working toward reducing the size and reach of the State when 911 hit.

22 posted on 03/01/2009 11:11:55 AM PST by marktwain
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To: marktwain

>> Unfortunately, crisis also ratchet us toward more powerful governments. GWB actually was working toward reducing the size and reach of the State when 911 hit. <<

So it’s OK to sell out your principles when a crisis hits? A crisis reveals character. When the economic crisis hit, Bush was exposed to being only slightly to the right of Hugo Chavez. All that other stuff that streamed from his mouth was just enough to keep the conservatives electing him. After 2006, he had no more use for us at all.

Useful idiots. A phrase once used for communist sympathizers, but I feel like a useful idiot for having voted for Bush.


23 posted on 03/01/2009 11:21:14 AM PST by dangus
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To: marktwain

>> Unfortunately, crisis also ratchet us toward more powerful governments. GWB actually was working toward reducing the size and reach of the State when 911 hit. <<

So it’s OK to sell out your principles when a crisis hits? A crisis reveals character. When the economic crisis hit, Bush was exposed to being only slightly to the right of Hugo Chavez. All that other stuff that streamed from his mouth was just enough to keep the conservatives electing him. After 2006, he had no more use for us at all.

Useful idiots. A phrase once used for communist sympathizers, but I feel like a useful idiot for having voted for Bush.


24 posted on 03/01/2009 11:21:15 AM PST by dangus
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To: dangus

>> I feel like a useful idiot for having voted for Bush. <<

(Well, no, I wasn’t going to vote for Gore, Kerry or McCain... but I sure would’ve been much grumpier about my options if I had known Bush’s true character.)


25 posted on 03/01/2009 11:22:35 AM PST by dangus
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To: dangus

I don’t the early emphasis on blacks in your vanity. If you honestly believe that we’re in the this mess because of the extremely small number of loans made to black people, I have a bridge to sell you.


26 posted on 03/01/2009 11:33:09 AM PST by Melas
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To: dangus
I’m not trying to sell it to the average liberal. Conservatives outnumber liberals.

The apolitical outnumber both combined.

27 posted on 03/01/2009 11:34:45 AM PST by Melas
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To: DPMD

There it is in a nutshell.

Conservatism has been almost redefined out of existence.

I have even seen some people on this forum who believe in a “new” conservatism, which to me, means nothing but appeasing the enemy.

Some people are labeled as too conservative-like that’s a bad thing.


28 posted on 03/01/2009 11:37:50 AM PST by Califreak (1/20/13-Sunrise in America)
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To: dangus

I had serious private fears about bush. I knew who is daddy was. But, what choice did we have? And then he became a hero after 9-11.


29 posted on 03/01/2009 11:43:31 AM PST by mamelukesabre
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To: dangus
Not a bad analysis, but I think you mean MBS, not CDO. The CDO systemic risk is part of the problem however. The cart and horse are a little blurry, but back in 1999 and 2000 both parties passed the legislation to allow gambling on CDO's (specifically CDS). One of the criteria that Dems attached was more loans for minority areas. The big banks got their CDO's, insurance companies were merged with banks to help issue them using the insurance companies assets, and everyone else was allowed to gamble (could buy credit default swaps that essentially bet that the housing house of cards would fail).

The risk was effectively transferred to the taxpayers two ways. First Fannie and Freddie had nationalized their risks, so when they inevitably failed taxpayers would be on the hook. Second, the big banks and companies like AIG that had made or underwritten the bets on the market in either direction would be deemed to big to fail and would be bailed out. It was all perfectly inevitable except when some civic-minded republicans and a handful of progressive democrats voted against the bailout.

Raising rates is inevitable, the central bank can't do much about that except inflate or allow debt to build up to force default. So Greenspan raised rates, too much and too late. Now Bernanke is frantically lowering them too much and too late. Low rates now cause more problems than they solve. It is ridiculous for anyone to loan at low rates to an American with an overpriced house and dimming job prospects. Rates should be about 10-15% depending on the borrower, anything less is artificial and only contributing to the problem.

30 posted on 03/01/2009 11:43:44 AM PST by palmer (Cooperating with Obama = helping him extend the depression and implement socialism.)
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To: Frantzie
Bear market raids by Soros, Flower and John Paulson leading up to october.

European finance melted down October 5th when Germany threw in the towel and went financially protectionist. That spread here the next day. Whether these other bit players had anything to do with that timing is kind of irrelevant. Their money is small potatoes compared to the trillions owed by insolvent players like Eastern Europeans.

The bottom line is the whole credit charade was doomed. The most the people you mention could have done is affect the timing a little. Had the timing been different, we would now have an ineffective, although not malicious, President McCain. The financial meltdown would be just as real and deep, but at least McCain might have spared the job creators a bit.

31 posted on 03/01/2009 11:48:44 AM PST by palmer (Cooperating with Obama = helping him extend the depression and implement socialism.)
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To: dangus

We got into this by not standing up for Conservative principles.
Decades of politically correct pacifism and giving in to the socialists has caused this.
It stops now.
First don’t call them liberals or progressive.
They are socialists. Call them socialists.
They hate it because it is true.


32 posted on 03/01/2009 12:08:24 PM PST by BuffaloJack (I want President Obama to Fail !)
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To: dangus

bttt


33 posted on 03/01/2009 12:11:40 PM PST by A Cyrenian
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To: marktwain; dangus
“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.

---•---•---•---•---•---•---•---•---•---•---•----
One word

Arnold


....arrgh!!!!

34 posted on 03/01/2009 2:17:33 PM PST by itsahoot (We will have world government. Whether by conquest or consent. Looks like that question is answered)
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To: Prokopton
“The liberals control the MSM fair and square, they were not given control by the government nor did they steal it from conservatives.”

I am not certain of this at all. Much of the media was pushed into networks by government intervention and control of the airwaves. How much of the media was pushed into liberal hands by FDR policies during WWII is uncertain. In my darker moments, I wonder how much certain careers in the media may have been aided and abetted by money and influence from our enemies.

The media changed radically between 1930 and 1960, when it was most under government control. This was the same period when government funded universities most taught journalist schools that promoted journalism as an activist career rather than a job.

Thomas Sowell recently wrote mentioned how influential media types were ostracising conservatives as early as the 1950’s.

I'd love for someone to study how the MSM came to be completely dominated by “progressives” but I have not yet seen it. Perhaps it is a natural progression when all the MSM is based in urban centers.

35 posted on 03/01/2009 2:48:16 PM PST by marktwain
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To: marktwain

“The media changed radically between 1930 and 1960, when it was most under government control. This was the same period when government funded universities most taught journalist schools that promoted journalism as an activist career rather than a job.”


That is what I get for typing rapidly without real thought. The Journalism schools have just continued to get much worse from 1960 to the present, and government control was pretty much the same from 1950 to the end of the “fairness doctrine” in 1987. Much of the damage of the Progressives taking over the MSM was done by 1980, I think, but the MSM has become more radical and activist since then, IMHO.

This is a subject that deserves serious study. Anybody know if any good books have been written about it?


36 posted on 03/01/2009 2:58:01 PM PST by marktwain
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To: Frantzie
Virus was placed in banks through fellow travelers working at Fannie & Freddie.

If I understand what you are saying, your scenario doesn't seem to take into account the facts of the matter.

Are you saying that banks were somehow forced to make high-risk loans?

If so, why aren't all banks in trouble? I live in Colorado, where there is a tremendously high rate of default on mortgages, yet my bank (a local bank) is in excellent health, and my state have not had a single bank default. Add to that the fact that we've had an ever-growing illegal population for close to the last decade or so, which has been shown to directly feed the mortgage default rate, and you have a real puzzler on your hands.

ILLEGAL ALIENS & THE MORTGAGE MESS(^), Michelle Malkin, September 24, 2008, New York Post

Where the banks are failing(^)CNN

2008 Foreclosure Rates(^)CBSNews

If banks were unilaterally forced to make bad loans, why aren't they all failing? We actually checked to see the mortgage default rate at our own bank, and it is a tiny fraction of 1%, about as good as it gets.

So, some (in fact, probably most) banks did not dive head first into the shallow end of the mortgage pool, and are doing just fine, given the failure around them.

Why is that?

37 posted on 03/01/2009 3:15:22 PM PST by mountainbunny
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