Obama Zombies Believed It --Smart People Don't
What caused our current economic crisis? If you are an Obama Zombie, your answer, (all together now) is "Bush's failed economic policies." Of course, you have no idea what that means because you were only taught the mantra, not the realities.
The economic crisis came because of liberal government. Period. Pressure was brought to bear on banks to lend money to people who couldn't pay it back. "Prime" lending rates get that label because they are the reduced rates that banks offer only to their best customers. "Sub-Prime" is below that. Now, banks would not lend money that cheap unless they could make it back.
Here's how the scheme worked: The liberals in government pressured banks to make housing loans to people who couldn't pay back, thinking it was the right thing to do to help the poor buy houses. As good as those intentions might be, it was foolish. The banks then were promised that someone would buy those bad loans from them. Who would do that? Government backed Freddie Mac and Fannie Mae. These institutions that Barney Frank said were "in no danger" and which Bush and McCain said, needed to be controlled. The banks, greedy for the money, gave into the pressure, sold the loans till freddie and fannie ran out of money. Then the tax payers had to step in (for the record, No More Bailouts! there's been too many already).
That's where our crisis comes from. What to the Obama Zombies say it comes from? "Bush tax cuts to the wealthy!" Of course, libs don't do real economics --only theoretical economics that work in socialist classrooms, so these silly explanations are all they offer. And the Bush haters (there are many) are ready to take that answer and leave it at that.
What does this mean will happen when Barak solves the problems by raising taxes on the rich and our government continues the stupidity of bailing out banks? More disaster. But those details will have to wait for another post...
For a good summary of the sub-prime mess, click here.
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3 comments:
Hi Mike-
Quote Wikipedia:
"Stemming from the "credit crunch", attention has been drawn to recent subprime lending practices. It has been suggested that some lenders engaged in predatory lending practices. More extreme allegations included lenders deliberately targeting borrowers who may not have fully understood the terms of their loan, or lending to people who were never likely to afford the interest payments in the long-run. Many of these loans included exorbitant fees and hidden terms and conditions, and they frequently led to default, seizure of collateral, and foreclosure. While often defended on the basis of lending to borrowers with compromised credit histories, the Wall Street Journal reported in 2006 that 61% of all borrowers receiving subprime loans had credit scores high enough to qualify for prime conventional loans.[1]"
Did you read that last line?
Last time I looked, the poor were still poor, living in apartments, projects, and section 8 housing.
Seems to me the only people really going after these subprime mortgages were people who should have been content living in a modest town but had to have a McMansion on elite street instead.
And yes, I know. I'm still in my modest little starter home of 13 years and it never fails to make me laugh when someone pulls up outside in a BMW and asks for a contract to be mailed to Mendham then asks if there's any kind of discount I can give them. Sort of nervy of them asking for money out of my pocket so they can have extra to decorate their Mendham Mansion.
It's way more the "wanna-be" rich folk that got us into this mess, not the poor.
If there was any form of regulation involved, it never could have gotten this bad. There are many faults and many reasons, not one single fault belonging to one single party.
Most of the people I know managed to get their homes with a loan like that- but they didn't bite off more than they could chew, that is the difference. They knew how much they made, they knew if they could afford the payments. For many others, they just saw that nice huge home and took a gamble. Maybe they'd make it. And the banks were more than happy enough to roll up these mortgages and sell them off, and profit.
During Clinton's era- homes were still normally priced. They didn't skyrocket to ridiculous prices like they did in the Bush era. Homes that were only worth $150,000 were being appraised for $400,000. Especially in NJ. The modest little home in a nice town that I got was $107,000 13 years ago. They appraised it for $310 a few years ago, even with the bathroom falling apart!
So that is another HUGE facet of this. What about that? The fact that home prices were grossly engorged? And if a real estate agent refused to grossly exaggerate an appraisal, there were 50 in line who would do it. It's a fact.
(We've since had the bathroom done, now maybe I an get $400,000 for my tiny cottage!)
I'm not trying to start with you, it just seems there's alot you don't consider.
BTW- I have met you in NJ. I saw you preach. I think you are a tremendously phenomenal preacher, but I really scratch my head at this blog! I remain anonymous online because I do have many clients and I don't want them searching me and finding personal, unrelated to business posts. I'd be happy to share my identity, but privately.
I agree there is a lot to consider. Not all that can make it on a blog. I also agree that banks are happy to be greedy.
But what they will not do is loan money that they will not get back. so why did they make the loans?
Answer: because they were assured that the bad loans that they made could be SOLD. So it was really a retail thing for them. They made a bad loan, then sold it, took the money from the institutions that bought them. How can that be? Easy. Banks only have to have 1 dollar for every 9 that they lend. So it is all on paper.
Therefore, if a bank has 1 dollar, loans 9 to someone who can't pay it back, and then sells the loan to someone who will give them 9 dollars, then they have made 8 dollars, and the person who bought the loan has to deal with the foreclosure, owning property less than it's valued, etc.
But who would be stupid enough to buy these loans? No one, unless there were politicians (like Jamie Gorelic, Raines, and the rest) who were forcing the buy through freedie mac and fannie mae.
Now, the last you looked there were poor, but remember, the evidence is greater than yoru personal observation. How many people do you know who's housing prices went way up and they sold at a prophet?
Anyway, the facts don't lie. Minority ownership and home ownership in general were at an all time high (that's right, all time high) in the first 5 years of this century.
Remember, you live in NJ --where the cost of living is huge. But if you went to FBC and know the people, I could list off a dozen right now that bought and sold houses while there, many of them making quite a penny of the sale because of the inflated market. These were not rich people.
Many people who could not afford it were buying houses, whether you noticed them or not.
Regulation? Are you kidding? The very people who are regulating it got rich from it. Check out Gorelick sometime (if I'm spelling her name right).
The regulation you want was proposed by McCain. But you don't believe it because he wasn't yoru candidate (I wasn't nuts about him either, but what choice did I have).
the regulation you want would put elected officials in jail. people like Barney Frank who said it was all okay. Doesn't that bother you that Barney Frank was the overseer of those who ran Fannie and Freddie and he said it was all okay?
You see what you want to see, perhaps. Or, what you have been trained by local political winds to see.
(by the way, sell your modest house and move to PA. Life is good out here and with what you get for a Jersey house, you can get some nice acres and have plenty left over)
Hi Mike-
I did see the whole Barney frank thing, so I do know about that. The entire thing is annoying, all of it.
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