Posted on 01/25/2009 8:47:56 AM PST by wartman
We’ve all heard it. In the last couple months, the refrain of “deregulation and lack of government intervention” caused the financial crisis we’re currently working through. However, a quick look back shows that this wasn’t the case. In fact, it’s pretty clear that the real cause is the exact opposite: the crisis was caused by too much government intervention.
The fairy tale usually goes like this: greedy financial companies gave unfair subprime loans to borrowers who couldn’t qualify for standard mortgages and hid in the fine print the real terms of the mortgage in an attempt to fraudulently enrich themselves.
There are so many logical fallacies and outright laughable stupidity in that above fairy tale it’s almost hard to take seriously anyone who actually believes that. But, I’ll try.
1) The first fallacy that needs to get out of the way is that the mortgage companies handed out the subprime loans because they didn’t care whether the person would be able to stay in the home or not. That idea shows a strong ignorance of the way credit institutions work. No one wanted the borrowers to stay in their homes more than the lending companies. If the mortgage goes into default, the lending company stands to lose a lot of money. Foreclosure is a losing proposition for the lending company.
2) The subprime loans we’re given out in the first place because the Democrats demanded it. This is a historical fact. It shouldn’t be hard to follow the logic:
* Democrats demand that poor borrowers be given access to mortgages. * Because they have poor credit, these borrowers cannot qualify for standard mortgages. Hence subprime interest rates. * The banks then bundle these mortgages into securities which are purchased by a government sponsored entities nicknamed Fannie Mae and...
(Excerpt) Read more at jeffwartman.com ...
First you have to ping these things to the guys who will get it around.
But then other people got on board and the cancer spread up the food chain all the way to the top. People went overboard on easy credit from 2nd mtgs. on existing homes that are now worth 1/2 of what they were. Anybody in that situation is going to have to go bankrupt in the next few years. Why pay 400,000 for a house worth 150,000? This market has got a lot lower to go.
Actually, this idiot is spreading HS. First, the idiots on wall street did not exactly spend a lot of money lobbying against subprime mortgages. WS knows how to meet a requirement with minimal compliance when they choose. Second, subprime is but the tip of the iceberg of 3 decades of financial excess.
Whether or not we have a policy of sound money is squarely under the control of the government. That the Congress, the treasury and the Federal Reserve all went along with the creation and extension of the biggest financial bubble in history is squarely on their shoulders. While banks want the government out of their affairs, they still want first dibs on the freshly minted money.
Great piece...enjoyed it.
Been telling everyone I know this same stuff...but not many are buying it either because the media is constantly telling them otherwise, or they’re too stupid to understand.
We are in for a rough ride.
How did the democrats "demand" poor people, people who could not afford these loans, be given these loans?
What forced banks to underwrite these loans? A banks does not have to lend to anyone who can not afford the payment!
I’m not sure what you’re referring to, as I have never addressed anything close to that matter, ever.
Oh, I guess you’re just one of those uneducated yokels who pretends to know what he’s talking about. Congrats!
The MSM has no interest in challenging this fairy tale. That would interfere in their role as tool of the Dem party. The GOP will wear the hat as the party of corruption alone for the forseeable future because the MSM will only highlight GOP dirtballs.
The same guys that installed John McLaim as republican candidate for President.. and caused republicans to be too proud to ask themselves HOW? that happened..
Voter fraud has become an art AND a science.. so much so that someone out of the blue(O'bama) can be elected to ANYTHING.. And republicans will not even query HOW? they could have be bamboozled.. scammed.. and totally out-conived..
John McLaim as republican candidate.. pullleeese..
The Howard Dean of the republican party..
And, Bush pushed for increasing the percentage that Fannie and Freddie would purchase.
Please be more honest about this. Bush's "ownership" society was also to blame. He advocated using tax dollars to assist low income borrowers with their down payments for one thing.
Bush also pushed for minority home ownership over others using tax dollars to promote it.
Please, let's put the blame where it belongs - squarely on the Federal Government, both legislative and executive.
They spent more than they could ever hope to take in and both tried to ride the mortgage backed securities gravy train to popularity and approval.
Our inept, corrupt, ever growing government, and the terrible leadership that spent America into oblivion....
One of the few responsibilities government has are to secure our sovereign borders, and they could even do that... Instead government and our leadership aided and abetted an epic violent invasion of our country.
This monster government is the cause of most all of Americas problems,
Subprime mortgages are not the problem, it's all a matter of affordability and dumbass buyers. Why would WS lobby against them? Freddie and Fannie are so culpable in this mess it should make everybody's head spin!
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