Posted on 09/25/2008 5:20:24 AM PDT by Kaslin
An indictment of greed! A case for more government intervention! Worst financial crisis since the Great Depression! Failure of capitalism! This list includes the "lessons" of the recent turmoil in the financial markets. Nonsense.
Down with greed!
Someone please produce the gun held to the temples of borrowers who put little or no money down, took out "teaser" rates, and then pleaded ignorance or victimhood when the lender -- as stipulated in the contract -- jacked up the rate. Lenders and borrowers expected government/taxpayers to somehow, someway, step in and shield them from the consequences of their decisions. This creates "moral hazard" -- behavior based upon the knowledge of protection from the bad consequences of reckless or irresponsible behavior. Decisions entail risk, whether personal or financial ones.
We need more regulation!
We have it -- lots of it. Ever hear of the Office of Federal Housing Enterprise Oversight (OFHEO)? This agency, which employs 200 people, exists for one thing and one thing only -- to "oversee" Freddie Mac and Fannie Mae, the "government-sponsored entities" that own or guarantee 40 percent of the nation's residential mortgages. Mere months before Freddie and Fannie's collapse and subsequent government takeover, OFHEO issued a report that saw only clean sailing. The Community Reinvestment Act, passed in 1977, mandated that lenders lend to high-risk borrowers -- or else. The government actually held up prudent bank mergers if one or both sides did not sufficiently "lend" to borrowers who, under normal circumstances, failed to qualify. Why is the federal government in the housing business in the first place? We need less government, not more regulation.
We are experiencing "the greatest financial crisis since the Great Depression"!
Even if this were true, we aren't even close to that catastrophic event. At the Great Depression's nadir, 25 percent of adults were unemployed, including nearly 50 percent of urban black adults. Economist David Wheelock, of the Federal Reserve Bank of St. Louis, says that by the dawn of 1934, nearly half the urban homes with mortgages were in default, and 7.3 percent of housing structures had been foreclosed. Today 6.4 percent of mortgages are delinquent, 2.75 percent are in the foreclosure process, and 0.6 percent of all housing units are bank-owned.
But what about since the Great Depression? Take the recession of 1980-81. In 1980, inflation averaged 13.58 percent, unemployment increased from 6.3 to 8.5 percent, and the prime loan rate reached an astonishing 21.5 percent. According to the Mortgage Bankers Association, today's delinquency rate is only a little higher than in 1985. And in 1999, the foreclosure rate set records.
According to the FDIC, in the almost two-year period of 2007 and 2008, 15 banks failed. Similarly, during Clinton's last two years in office, 1999 and 2000, 15 banks also failed. In the recession-free years of 1988 and 1989, there were 1,004 bank failures. And since the Great Depression, the average number of yearly bank failures has been 94.
This exposes the failure of capitalism!
What do you say we actually try capitalism, where private actors reap rewards and assume the risk? "Capitalism," says Kenneth Minogue, professor emeritus at the London School of Economics, "is what people do if you leave them alone." People want "hands off" until, that is, they want "hands on." People want homes, many preferring that option even when renting may be more prudent. Many want rent control to shield them from leasing at fair market rates. Democratic presidential candidate Barack Obama promises "world-class" education -- with taxpayers paying for it. And the federal government, in dramatic contradiction with the limited-government intention of the Constitution, involves itself in health care, guaranteeing private-sector retirement accounts, disaster relief, welfare, unemployment compensation benefits, retirement benefits, etc.
The Federal Reserve Bank, in effect, prints money to pay for things that voters demand -- but their taxes cannot cover. The proposed bailout of financial institutions enables the Fed to create hundreds of billions of dollars out of thin air. The cost is greater inflation -- a stealth tax on us all.
Government, meanwhile, grows and grows.
In 1930, before Franklin Delano Roosevelt's New Deal, taxpayers paid about 12 percent of their income to all three levels of government -- state, local and federal. Today we pay approximately 40 percent -- even more if you attach a value to unfunded mandates, such as those issued by agencies such as OSHA.
So, yes, our recent financial turmoil does suggest failure -- a failure to truly practice capitalism and a failure to accept and believe in the value, appropriateness and morality of a limited government and maximum personal responsibility.
We are looking at the Atlas Shrugged scenario.
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Thank you, I have told my wife and a couple of other people this week that I read a book in 1973 when I was a nineteen year old sailor stationed in Iceland. That book laid out in principle what is happening right now in America. It explained how collectivist thinking destroys everything it touches. It explained how and why language is corrupted so that it is impossible to have meaningful discourse. It explained how the greatest evils are worked by those who claim to be interested only in the common good. That book was Atlas Shrugged by Ayn Rand. Some on FR scorn that book and laugh at the writing style of the author but she knew what she was talking about.
I fear this is true. If it must be, then I hope it happens sooner rather than later. And though I fear it is inevitable, I still have hope that some awakening will occur before that point.
forlorn hope.
“Capitalism is what people do if you leave them alone.”
Amen to that!
And THIS Capitalist is going even further underground than she already is. :)
I encourage ALL of my fellow Freepers to get a handle on their own personal debt, to re-asses your tax base and to do everything within your legal and lawful power to keep every last dime of yours OUT of the hands of the Government.
And this comes from someone who is reaping the rewards of nine years of waiting for this collapse; and this isn’t even The Big One, LOL! I’ve never felt bad about making money before, but at this point in time, it’s coming at the expense of my Country.
However, I LOVE beating the money-grubbing Socialists at their own game. Jerks!
Amen! Well said!
See my Post #24. Kindred Spirit, here. :)
This mess isn’t so much about greed as it is about UNCONTROLLED greed.
Thank you, Mr. B.
I just hired a stock boy who is home schooled. The difference between him and the other stock boys that have cycled through here is stark. I love, love, love this kid! He’s on time, he’s ready to work, he asks for MORE to do than is expected of him; he will go far in our company if he’s so inclined, but I’m sure he’ll be off to bigger and better things.
When I compare him to some of my nephews, who won’t even work for me because they KNOW how hard I’ll work them, it’s like night and day.
So, thanks for bringing up kids this way. It’s appreciated by the rest of us; they’re a small percentage of the population we don’t have to worry about. :)
Having a veneer of capitalist appearance while government regulators control everything is the definition of Fascism.
Does he influence the others, or do they despise him
(like most of the “lights” in the Bible, like Daniel, Joseph, etc)?
Man, I admire your courage and dedication. While I don't consider myself a dummy, it never crossed my mind to take on such a daunting task. Instead, we just talked about things around the dinner table, often "correcting" what they might have "learned" in school. The one thing kids MUST learn is that a book is NOT something handed down from on high, it is someone else's interpretation of things and that they have every right in the world to think, question, and debate what others put before them. Critical thinking doesn't start in college. It starts the minute they reach the Terrible Two's and begin trying to make their own decisions.
Again, I admire your courage...
Well, he’s our Sole Survivor Stock Boy right now. I’ll put him in charge of the others when the time comes; we’re having a hard time finding kids that actually want to work. He’s 17 and MORE than capable of being in charge of others.
I mean, he’s a ‘Mini-Me’ at that age, LOL! :)
Government of, by and for the people is on the ropes.
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Dude, you’re an economist!
You should be out there as a beacon of truth!
Shine your light, brother! Tutor homeschoolers, for free! :)
(encouragement, not rebuke)
Well, I had excellent role models in my Grandpa and my Dad. Both retired completely by ages 55 and 53. I’m hoping to meet or beat that!
My Dad taught me all about trading commodities when I was a teen. Most girls spent their babysitting money on make-up and magazines; I was buying cocoa futures, LOL!
I am a very lucky woman to have been born to them. :)
Wear it as a badge of honor. Those that would call you that are the very same people that believe in the politics that got us here. This something akin to, "You know you're right when..."
I'm a strong believer in free enterprise, so my natural instinct is to oppose government intervention. I believe companies that make bad decisions should be allowed to go out of business. Under normal circumstances, I would have followed this course. But these are not normal circumstances. The market is not functioning properly. There has been a widespread loss of confidence, and major sectors of America's financial system are at risk of shutting down.
Plenty of Bible verses to back that up.
Here's another non-biblical ditty that I heard the other day:
"If you're not having headon collisions with Satan, check yourself, you might be travelling in the same direction"
I tried. My favorite course was the intro econ course taught (mostly) to college freshmen. Way back when, I used to give a lecture on poverty. At that time, a family of 4 making $9600/yr were "poor". I'd tell my students that I could end poverty overnight. Universally, they'd respond: "Really! How!" I'd say: "Simple. Gather all the people who make $9600 or less, line them up, and shoot them." Their eyes would go as big as pie plates! Then I'd ask them how long would it take before the person making $9601 started bitching because he was the poorest person in the land. I'd point out that, unless everyone has exactly the same income (pure communism, which has never existed), someone is going to be "poor". Then we'd talk about the old War on Poverty and how it could never be won, why capitalism is the most efficient system, and so on, and so on...
Believe me, I tried to give a conservative perspective in a very liberal setting. Some got the message. Others? I'm not so sure. Even though I'm retired now, I still badger people who have preconceived ideas but without the conviction of fact. Those are the people we need to work on!
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