Gneubeck 23 hours agoIt's the best concise description of why we fell into a recession I've ever seen. I would only add this...that the credit crunch of the past 2 years has been heavily exacerbated by all of the bailouts that Congress has initiated. TARP ($850,000,000,000.00), GM/Chrysler ($100,000,000,000.00+), the "Stimulus" (or rather Porkulus) Package ($1,000,000,000,000.00 and counting) have all contributed to the drying up of credit in this country. Those funds were floated by the sale of government bonds and sucked up money that would have gone into the private sector as credit/loans to commerical enterprises. The construction/light manufacuring industries only thrive when credit is readily available. Once huge amounts of "rock-solid" government bonds dried up monies that would ordinarily been used by industry to finance projects...the possibility of a short recession was diminished, if not eliminated altogether.
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With the election of Obama, the American electorate signaled its intention to retreat from greatness; and, to initiate a descent into the financial abyss of Socialism. However, it would be prudent to cushion our landing at the bottom of the pit by curtailing Obama's redistribution technique of providing "a home in every pot".
Our current fiscal crisis, purely and simply, was initially set-in-motion by the cheerleading of the Politically Correct Social Engineering that flourished under the Clinton Administration in the artificially inflated boom years of the 1990s.
In an effort to increase minority home ownership, the Clinton regime threw sound fiscal discipline under-the-bus; and, promulgated policies that forbid mortgage lenders from using common-sense criteria such as : income; ability to afford a reasonable down payment; and, credit history, as metrics in the evaluation of mortgage applications. Charges of racism in mortgage lending practices flourished during this era; and, the lending institutions of Freddie Mac and Fannie Mae, flamed by Congressional diatribe that had been massaged by enormous contributions and favorable loan rates to select politicians, were appointed to lead the charge to "create" and to "absorb" non-performing assets from such institutions as Country-Wide Financial. Assets which were, by sheer definition, fraudulent loans with no ability to repay; and, "via the Quasi's" with the implied guarantee of Government backing, were proliferated throughout our financial sector as presumed safe mortgage backed securities. Aided and abetted by congressional left-wingers who, with their own insatiable appetite for social engineering, later vehemently rejected Bush Administration efforts in 2003 to re-implement sound regulatory practices, and to reign in the quasi-federal entities of Fannie Mae and Freddie Mac. Entities which the Obama Administration has now granted "UNLIMITED" liability.
In brief, mortgage lenders were compelled BY OUR OWN GOVERNMENT to abandon fiscal discipline and "RISK" as guiding principles in mortgage creation. Policies that were obscured so long as housing values continued to escalate; but, when the bubble burst similar to the dot-com fever; and, housing values began to implode, the crisis was set in motion.
Unless we own up to the historically documented cause factors of this self-constructed economic crisis that proliferated these toxic assets throughout our financial industry, we may well be doomed by current Obama policies which: seeks to forgive the principal on defaulting mortgages; continues to pressure lending institutions to continue issuing suspect loans to low-income recipients; and, blatantly excludes Fannie Mae and Freddie Mac from financial regulatory reform, to repeat this debacle. Obama and his Democrat colleagues such as Frank, Dodd, Schumer, etc., continue to militantly protect Fannie Mae and Freddie Mac from Republican efforts to tighten the Quasi's grossly irresponsible lending practices in the acquisition and disposition of fraudulent/worthless mortgage assets.
Barack Obama, as the second leading Senatorial recipient of lending institution largess; and, as the ACORN guru who instructed ACORN operatives in the strong-arm techniques and procedures to pressure mortgage lenders to issue loans to individuals who clearly did not have the capacity to repay, is unequivocally a principal initiator of our financial crisis; and, a determined advocate of the continuation of dangerous redistribution practices which promise to usher in still further financial meltdown.
2010, followed by 2012, have become the most important elections in American history. If left unrestrained, Obama, rather thru sheer incompetence or willful intention, will do irreparable harm to America's economic, and National Security interests.
Tuesday, June 29, 2010
From the comments on an article in the Washington Examiner comes this insightful comment on the origins of the financial collapse.