Skip to comments.Our Government-Created Financial Crisis (Walter Williams)
Posted on 12/10/2012 10:40:44 AM PST by jazusamo
Suppose you saw a building on fire. Would you seek counsel from the arsonist who set it ablaze for advice on how to put it out? You say, "Williams, you'd have to be a lunatic to do that!" But that's precisely what we've done: turned to the people who created our fiscal crisis to fix it. I have never read a better account of our doing just that than in John A. Allison's new book, "The Financial Crisis and the Free Market Cure."
Allison is the former CEO of Branch Banking and Trust, the nation's 10th largest bank. He assembles evidence that shows that our financial crisis, followed by the Great Recession, was caused by Congress, the Federal Reserve, Freddie Mac and Fannie Mae and was helped along by the Bill Clinton, George W. Bush and Barack Obama White Houses.
The Federal Reserve, under the chairmanship of Alan Greenspan, created the massive housing bubble by over-expanding the money supply. President Bush and members of Congress, through the Community Reinvestment Act, intimidated banks and other financial institutions into making home loans to people ineligible for loans under traditional lending criteria. They became subprime lenders. Lending institutions made these loans, now often demeaned as predator loans, because they knew they'd be sold to government-sponsored enterprises (GSEs) Freddie and Fannie.
The GSEs had no problem taking this risky path, because they knew that Congress would force taxpayers to bail them out. Current Fed Chairman Ben Bernanke is following in the footsteps of his predecessor by massively expanding the money supply by purchasing Treasury debt. He is creating prime conditions for a calamity by the end of this decade.
(Excerpt) Read more at creators.com ...
Walter Williams and Thomas Sowell are God’s gift to an stupid ungrateful America! Instead we see Puff Diddy, Kanye West, and their buddies.
Walter Williams and Thomas Sowell are arguably the smartest men on the face of the earth.
You nailed it.
Best condensed Reader’s Digest version of our financial woes I’ve read.
I like Williams, but he’s got this one backwards, I think.
The CRA was created precisely to create the Housing Bubble, in order to allow the FED to print money into it without causing inflation.
This is the new method the Federal Gov uses to provide some of its financing, I believe. The “.com” bubble, housing and I believe now healthcare/medicare (Humana, Scooter-Store, Free Meters/Catheters/Take-your-pick) - these are all orchestrated by the FG through changes in law. The economic bubble created causes a flurry of demand for the $, and the FED can then print freely without worry of inflation.
I expect we are in for a never-ending series of “bubbles” for as long as this trick continues to work.
These “fiscal cliff” cuts were decided during the last house fire. They’ve had a year to work on it. It’s only a so-called crisis now because nobody wants to be tagged with blame for these inevitable cuts.
We’ve spent trillions on the war on poverty, and it’s gotten worse. The big lie is only now being exposed. More band-aids and bubble gum won’t last for long.
It is because they both have an uncommon amout of intellect and common sense.
Sadly enough, their intelligence is not appreciated by the American public.
As we slowly decline on the world stage, all we will hear from now on is mondaymorning quarterbacking by the “conservative” commentators.
GWB 2002 Speech :
More and more people own their homes in America today. Yet we have a problem here in America because fewer than half the Hispanics and African Americans own their own homes. Thats a home ownership gap; a gap that we got to work together to close. And by the end of this decade well increase the number of minority homeowners (future Obama voters ) by 5.5 million families.
One of the major obstacles to minority home-ownership is financing. Fannie Mae and Freddy Mac (who I will bail out in 2008) have committed to provide more money for lenders, they committed to meet the shortage of capital available for minority home-buyers.
Freddie Mac just began 25 initiatives around the country to dismantle barriers (like income requirements) and create better opportunities for home-ownership. One of the programs is designed to help families with bad credit histories to qualify for home ownership loans (by faking their income) .
Bush goes on:
You dont have to have a lousy home for first time home-buyers. You put your mind to it the first time low income home buyer can have just as nice a house as anyone else.
Was that a policy, or just a speech?
What did Bush do, through the power of the presidency, to install policy which made things worse or bad for the economic crisis in housing?
I thought that George Bush asked Congress to rein in Fannie & Freddie but Barney Frank stonewalled the requests, saying the agencies were "basically sound"...
The Community Reinvestment Act, started under Carter didn't catch fire until the Clinton years. George Bush tried to step on the breaks and failed, and of course the Obama Administration did nothing at all to prevent it from crashing and taking the economy with it.
The only mistake you make is where you say: “... without causing inflation.”
A ‘bubble’ IS inflation. The printed funds are frothing up one sector’s prices in particular. Which wouldn’t have happened without the credit expansion (printed paper).
Nope!...CRA was started by Jimmah Carter....it took petty cash for yrs...the Clinton era extended it beyond belief...(the big money)...Bush..he kept it...but did try to tone it down....http://www.youtube.com/watch?v=NQXbT5ZMYaY
Didn't work...but Who cares...We all got “Free Houses”!..../S
Maxine Waters and Gregory Meeks along with other Dems in all their stupidity for the world to see. Maxine couldn't even recite her lies from memory, she had to read them. LOL!
As the electorate gets more dumbed down we'll be getting more of these idiots in Congress...God help us.
Copy the video to disc...it hard to find now!
...I used to have an editorial that explained exactly what happened....went hand and hand with the video...It’s no longer available....flushed down the memory hole
Well, you are saying what Williams said, in terms of the order of events, or cause and effect.
I am saying that the FED did not just start printing money first. That would cause generalized inflation, devaluation of the dollar.
What they are doing, is creating localized bubbles in the economy through changes in legislation. A housing boom takes off through the invention of the sub-prime interest loan. If only there were liquidity to support it! Voila, the FED prints the needed cash. Housing values soar! But elswhere the value of the dollar remains relatively undisturbed, despite the rampant printing. Boom! The housing market collapses. All that artficial wealth disappears. The FED just ripped-off all of the “investors” in housing, with the Dollar remaining pretty much unscathed.
Find a new bubble. Rinse and repeat.