Sunday, October 2, 2011

The Great Recession is the Liberals’ Fault-Proof?

by Samuel Pennell

S.Paul Note:  Although I am an Independent voter with moderate toward liberal views, I submit the following so you can hear what the hard right believes caused the problems in the housing crisis, spawning the recession. Though I don't completely agree, the blame cannot be cast toward one side, only. Dems and Reps have equally shared in the causes of the bubble led by their own greed. I think We the People need to be aware of this bi-partisan quagmire the nation is stuck in in lieu of the one-sided views which are currently tearing us apart. 
One last time, to put a stamp on it: the Great Recession is the liberals’ fault. How do I know? It boils down to one sentence: Giving loans to poor people is a liberal idea. Honestly, if you can think of a criticism of us conservatives, what is it? It’s that we are fat cats sitting behind a desk at a bank saying “I’ve got mine, and you can’t have any.” Right? To be honest, we are the guys who, in a bad movie, deny a loan to a poor man, and then high five each other. This is far from the truth and is a sadistic liberal fantasy, but it is true that we want to put the ball in the hands of the guy who is going to score.

I should start off by saying that everyone who reads this article should read Peter Schiff’s new book “How an Economy Grows and Why it Crashes”-without exception. It will mesmerize you with its simplicity and accuracy, and you will be blown away at how it will realign your thinking with the truth-like Plato’s “Allegory of the Cave.” Peter Schiff is like God’s chiropractor. You will find yourself staring at the financial concepts like a flame, knowing that Peter Schiff is the sage of our tribe, and that he speaks the truth.
But anyways, back to my thesis. If there is a criticism of us conservatives, it is that we are practicing “I got mine” pig-like mentality.  We are the capitalists that Che Guevara hated so much, and executed in his prison yards. But think back to the more conservative 1970s. Back when my father was in the banking industry. Banks were still practicing red-lining and there was still the maxim “banks only give loans to people who don’t need them.” It made sense that bankers sat behind a mountain of credit qualifications, and you needed to pass a rigorous set of standards to get a mortgage. It was more free market, and the banks needed to know with certainty that you were going to pay them back their money-plus interest. You needed a job, you needed collateral. The math needed to add up.
Then along came Fredde, and along came Fannie. Along came ACORN and the Community Reinvestment Act. Red lining districts seemed to the prolitariat like elitism, it was the fence that kept all of the money on one side. It kept all of the money in one neighborhood. So in came Freddie and in came Fannie with their financial bulldozers. Along came the Community Reinvestment Act, and their ideologies of ideologues. They flattened the fences, like Josef Stalin, and saw no difference between the rich and the poor. Never mind the fact that they were giving loans to people who could never pay them back, and didn’t really understand the concepts that banking is predicated upon.  Once again, people, read Peter Schiff’s “How an Economy Grows and Whi it Crashes.” Banks need their money back-plus interest, for reasons that you can’t always think of. It’s Adam Smith’s invisible hand.
So, anyways, in the conservative 1970s (relative to banking anyways) banks out up fences and walls, and yes they kept poor people out. Poor people could not afford houses. But that makes financial sense, doesn’t it? I mean, say if you make $19,000 a year, should you really be occupying a house that is worth $240,000? If you’re a conservative, you’ll see something wrong with these numbers. Aren’t you thinking to yourself “well, it’s really the bank’s house-until the occupiers pay it off. If they pay it off.” But yes, we are seeing people like Michael Moore and others claim that the guy making $19,000 per year, deserves this house-as if he owns it, when you and I both know that he defaulted a long time ago, the house really belongs to the bank. It’s like Bob Barker pulling back the curtain on “The Price is Right” and yelling “You just won……a NEW HOUSE!!!”
Like Josef Stalin and Che Guevara, we are learning the hard way that houses really can’t be given to poor people who can’t afford them. That house cost a lot of money to build, and a lot of money for the bank to buy. They need their money back-plus interest. People showed up every day, bought boards, nails and drywall, bought roofing tiles, concrete, carpet and paint. Then they spent hours and hours hammering the whole thing together. Yes, a person who makes $19,000 could not afford it. That is what I’m saying. If that makes me a fat cat, sitting behind a desk at a bank, I guess that’s ok. It wasn’t cheap-the house costs a certain amount, and we really can’t bend that price downwards because we feel sorry for certain people. It distorts the market, and gives you the mess that we are in. The distortion has a ripple effect-throughout the banking industry, the building industry and the whole economy.
So, what of the idea that it was the deregulation of Wall St that caused the meltdown? As far as I know, the destruction of lending standards predates the credit rating debacle, where these mortgages were being rated unrealistically high. Thus, as I see it, the idea of packaging bad mortgages together and selling them with ‘fake-high” ratings was a reaction by the banks to being forced to sell bad mortgages in the first place. Once again, it was government intervention that was the pea under the mattress that was throwing off the whole game. Bankers were forced to make do with bad products, because these products were government mandated. They had to make-do, and they make-did.
Soon, banks were doing what they are supposed to do; they made money by making loans. Life gives you lemons and you make lemonade. I am glad that we live in a country where people try to make as much money as they can. I guess liberal government policy makers don’t really understand the concept that making a profit isn’t an option-it is a requirement in business.  As soon as one makes a profit, the profit is burned up, and then one needs to make more profit. There is no such thing as too much profit. I wish Barney Frank could get that through his thick skull. I mean, this guy went to Harvard? Never set foot in the business program, I’ll assume.
At the end of the day, it is a conservative idea for banks to have rights with their own money, and decide who to lend to. It is free market capitalism and a property right. Yes, it would seem that there is an impenetrable wall that poor people can’t climb, but that is looking at it from the idealistic, demand side. It is not reality. It is not the reality that considers how much a house is truly worth, and who truly owns it. Anything else is a distortion, and causes Great Recessions. At the end of the day, $19,000 can’t buy a $240,000 house. This is just reality, and there is nothing any conservative-or liberal can do about it. It is a conservative idea to own a house and not give it away to anyone who can’t afford it, and a liberal idea to just give it away. It was liberal precepts that got us into The Great Recession. Period. If we had stuck to conservative philosophies, all of the people applying for mortgages would have been denied, like in the conservative 1970s.

The question mark was added to the title to represent my disagreement with the premise and conclusion.  This article though, is an eye opener to the beliefs of the "conservative" side of our political spectrum. 

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