Monday, August 2, 2010

NOW TO FINISH UP

Finish the sentence: "If you can't afford to buy a house..."

There are two possible completions to that sentence in America today.

The first is: "...don't buy it."

It's the principle of delayed gratification.

Work and save until you can afford to make a down payment, as well as the monthly morgtage payments.

That's the way my grandparents did it.

That's the way my parents did it.

That's the way I've done it.

Work and save...work and save...work and save.

The other answer is one that has been put forth by the government for thirty-three years:

"If you can't afford to buy a house, we won't look at your credit rating, we won't require a down payment, we won't make you pay any principle for three years, and we'll give you a below market interest rate (called a sub-prime mortgage)."

There are two reasons the government did that: 1) because they wanted to promote the idea that everyone deserves the "American Dream;" 2) That will make you like us and will help get us re-elected.

The first is patently false. Everyone does NOT deserve the "American Dream."

Everyone deserves to get educated, work hard and have an opportunity to reach for the "American Dream," But NOT everyone deserves it just because he/she exists.

Nevertheless, the governmnent said to lenders (banks and others): YOU MUST PROVIDE MORTGAGES TO PEOPLE WHO CANNOT JUSTIFY HAVING ONE...BUT DON'T WORRY, WE'LL GUARANTEE THE PAYMENT OF THOSE MORTGAGES IF THE PEOPLE CAN'T KEEP UP WITH THE PAYMENTS.

Lenders responded in the way they had to, as dictated by the government and by their responsibilities to their share-holders, for whom they had a feduciary resonsibility: they established the mortgages.

They were not surprised when people started defaulting on their mortgages, but they did not worry, because they had the full faith and credit of the government of the United States of America behind them, and could not possible lose money on the deal, so it did not matter.

The ones who were surprised were the federal government, especially the likes of Barney Frank, Chris Dodd, Maxine Waters, Charlie Rangel and others, who repeatedly stated that there was no problem with loan backers, Freddie Mack and Fannie Mae, as well as others involved on the government's side of the deal.

Barney, Chris, Maxine, Charlie and friends insisted over and over again that those who were objecting to the LACK OF GOVERNMENT REGULATION which THEY had instituted were nothing more than fear-mongers who just wanted to say, "NO!"

Then, when defaults on mortgages started snow-balling out of control, Barney, Chris, Maxine, Charlie and friends moved to the head of the "we need more government regulation" line.

See, the colapse of the economy in America came about, not because of the failed policies of any one president (especially not because of George W. Bush), but because of a series of very bad decisions by congress, whose unintended consequences were unforseen.

So, the next time you hear Presdient BO state that he inherited this economic mess, remind yourself that it was HIS party that instituted the Community Reinvestment Act of 1977 which ultimately led to the economic colapse we're now experiencing.

The Community Reinvestment Act of 1977 tried to address discrimination in loans made to individuals and businesses from low and moderate-income neighborhoods. The Act mandated that all banking institutions that receive FDIC insurance be evaluated by Federal banking agencies to determine if the bank offerd credit [in a manner consistent with safe and sound operation as per Section 802(b) and Section 804(1)] in all communities in which they are chartered to do business.

The last part of that mandate [Section 802 (b) and Section 804(1)] was eventually ignored because it resulted in "too few" sub-prime loans being made.

The idea may have had smatterings of nobility about it, but it was ill-conceived, ill-planned, ill-implemented and had dire consequences.

The result was not too few sub-prime loans being made, but too many.

But the answer will not lie in placing blame.

The answer will lie in ridding ourselves of these whale-sized loans to people who cannot make ant-sized mortgage payments and allow the market to self-stableize over what will be a very long and painful time.

The lesson should be: Things done for the purpose of re-election should not be done unless the perpetrator(s) have some viable, sure way to determine the possible unpleasant side effects on the country and then to avoid those side effects.

What other unintended consequences might we expect from the decisions made by our government?

Make a list in the comments section.

15 comments:

Leticia said...

If you can't afford to buy a house...

...save until you can afford it.
...win the lottery
...use your inheritance
...sell that expensive car you are driving and make the payments on the house.
...use a land line and lose the cell phone
...quit having kids!
...get a better job

That's all I can think of.

lisa said...

If you can't afford to buy a house..."

Don't expect one from the government ,we already can't afford our debt.

get off the drugs/alcohol

lose the cable TV

)O( said...

If you can't afford to buy a house. Don't expect me to buy it for you!

The racial hustlers and poverty pimps and those complicit with them in government and the media have left us with a nonsensical notion of right and wrong in this area.

Lone Ranger said...

If you can't afford to buy a house, move to North Dakota. A nice, although small house in my hometown just sold for $15,000. My grandparents found their house abandoned and just moved in. That house has always been the center of my universe.

Joe said...

LR: Doesn't it get cold in North Dakota?

Randal Graves said...

Never has a president, elected on a promise of "change" and with such enthusiasm on the part of the electorate, done so little.
Let's review:
1. Health reform. Yeah, gotta love the title, but reform? Not so much. And it goes into effect when? Like 2013? Stay healthy!
2. Ending the wars in Iraq and Afghanistan. Maybe later. Not now.
3. Closing Gitmo and ending extraordinary rendition. Um, no.
4. Ending "too big to fail" on Wall Street. Hahahahaha. C'mon, you believed that?
5. Response to the Gulf oil spill. Are we going to use this tragedy to get Americans on board with a Manhattan Project-type response to ending our oil addiction? Oh, look! Ponies!
People really were sick of the direction this country was on in 2008 and looking for someone who would turn the ship of state. They thought of Hillary as part of the Old Guard and voted for Barry instead. (Including me.)
Can we have a do-over on his election? Please!

Remember when Obama promised us the most “open” administration? The most “transparent” administration?

Remember when he promised to“create or save” hundreds of thousands of jobs and then he hired thousands of Census takers!

Remember when he promised to to beef up border security!
And how about those lezbo commies he put on the Supreme Court!
Shall I go on?
Barack Obama take part at a wreath laying ceremony at the Tomb of Unknown Soldier in Moscow, Russia,but couldn't find the time to visit Arlington on Memorial Day!

When President Bush leaned over at Ground Zero and gently placed a flower on the memorial, Obama nonchalantly tossed his flower onto the pile without leaning over.
YES, We noticed!
When your pastor of 20 years, “God-damned America ” and said that 9/11 was “America’s chickens coming home to roost” — and you denied having heard recriminations of that nature, we wondered how that could be. You later disassociated yourself from that church and Pastor Wright because it was politically expedient to do so, but we know that you continue to have secret meetings with him.
YES, We noticed.
All through your campaign and even now, you have surrounded yourself with individuals who are basically unqualified for the positions for which you appointed them. Worse than that, the majority of them are people who, like you, bear no special allegiance, respect, or affection for this country and her traditions.
YES, We noticed

Lone Ranger said...

Don't MAKE me tell the stories about walking two miles to school in snow up to my hips. You're too old to be fed stories about the hardships of a past generation. Now my kids...my kids have those stories memorized.

Joe said...

LR:Being from Florida, I thought nothing of trudging to school in fine, white palm-tree bordered sand, with soft balmy winds blowing of the Gulf Stream into my innocent little face.

Z said...

Oh, MAN, Joe, every time I hear them blaming Bush on TV, I'm yelling at the screen, you are SO RIGHT!

Lone Ranger said "My grandparents found their house abandoned and just moved in. That house has always been the center of my universe." How really beautifully said.

sue said...

Joe - Since I don't have a blog anymore may I borrow yours to say:

happy birthday, president bo

Joe said...

sue: When and where was he born?

lisa said...

Hawaii Joe -didn't you see his on line Cert of live birth?

That's the only proof they need becaue he has a "D" after his name not an 'R' although in his case an "S"

Joe said...

lisa: I DID see that. I was unimpressed.

sue said...

joe - I haven't a clue. Just making a little joke. I heard there is going to be a big bash in his honor!

lisa said...

who gives hoot about his birthday. Nobody cares. They are sick of this elitist acting like he is so wonderful like he's some kind of royalty and the rest of us are his peasants.
Sickening!