Mein. Mein. Mein.

Apparently, nobody's safe in the current credit crisis:

HT: Challies

A message for journalists and the people who love them

Go read this article: Would the Last Honest Reporter Please Turn On the Lights?

Two of the best parts:

Isn't there a story here? Doesn't journalism require that you who produce our daily paper tell the truth about who brought us to a position where the only way to keep confidence in our economy was a $700 billion bailout? Aren't you supposed to follow the money and see which politicians were benefiting personally from the deregulation of mortgage lending?

I have no doubt that if these facts had pointed to the Republican Party or to John McCain as the guilty parties, you would be treating it as a vast scandal. "Housing-gate," no doubt. Or "Fannie-gate."

Instead, it was Senator Christopher Dodd and Congressman Barney Frank, both Democrats, who denied that there were any problems, who refused Bush administration requests to set up a regulatory agency to watch over Fannie Mae and Freddie Mac, and who were still pushing for these agencies to go even further in promoting sub-prime mortgage loans almost up to the minute they failed.

As Thomas Sowell points out in a TownHall.com essay entitled "Do Facts Matter?" ( http://snipurl.com/457townhall_com] ): "Alan Greenspan warned them four years ago. So did the Chairman of the Council of Economic Advisers to the President. So did Bush's Secretary of the Treasury."

These are facts. This financial crisis was completely preventable. The party that blocked any attempt to prevent it was … the Democratic Party. The party that tried to prevent it was … the Republican Party.

[...]

Your job, as journalists, is to tell the truth. That's what you claim you do, when you accept people's money to buy or subscribe to your paper.

But right now, you are consenting to or actively promoting a big fat lie — that the housing crisis should somehow be blamed on Bush, McCain, and the Republicans. You have trained the American people to blame everything bad — even bad weather — on Bush, and they are responding as you have taught them to.

If you had any personal honor, each reporter and editor would be insisting on telling the truth — even if it hurts the election chances of your favorite candidate.

Because that's what honorable people do. Honest people tell the truth even when they don't like the probable consequences. That's what honesty means . That's how trust is earned.

Seriously, go read the article.

HT: Jeff Meyers

Opposable thumbs

Doug Wilson gets it right again:

We are told that we have to intervene because all these financial entities are "too big to fail." But this simply assumes that for the Fed to step in this way is not setting us up for an even greater failure, down the road just a little ways. Virtually all government crises — including this one — are the result of the previous waves of reform that all the intelligent people were demanding. But having Congress oversee the economic markets of a nation like ours is like having a chimp disassemble your laptop computer for a little troubleshooting. Suit yourself. And when things go really badly, computer-wise, Nancy Pelosi will insist that the "next time this happens, we will take steps to ensure that the chimp repairmen are only allowed to use their thumbs." (emphasis mine)

He has also likened government intervention in the mortgage mess to calling the arsonist, instead of the fire department, to help put out the fire he set. This makes about as much sense as calling the friend of a domestic terrorist, whose goal was to destroy America, to save America. The bailout seems to be going very well. I expect Bill Ayers' friend will be equally successful in bringing about the changes this nation needs.

Insight

Given the current state of the nation's economy, I'm thinking about offering a seminar on financial security during times of economic upheaval. Some of the topics I would cover:

• How to apply for your own $700 billion bailout, while working from home
• Sell your home to the government in 3 easy missed payments
• Making money in a down market: Why it pays to be "too big to fail"

I could probably pack a room with an agenda like that…

Worth a thousand words

Yogi over at Red Planet Cartoons put into pictures what I said yesterday:

With the way The Media is, we won't see any real accountability on this one. It's W's fault, stupid. No reason to ask whether the policies of Big Government, aimed at helping the poor to buy houses in this case, actually worked. They *tried* to help, and that's the important thing. So what if Big Government now has to decide on whether a trillion dollar rescue strategy will save us all? These guys *care* about the poor, and they're happy to take your money from you to prove it.

Keep this in mind if, God forbid, Barry wins the election and then tries to tell you he can solve the nation's health care problems by putting Big Government in charge. If lenders were willing to make reckless decisions when they knew Big Brother had their back, what makes you think doctors and hospitals would be any different? Under that arrangement, "sub-prime" will likely mean ending up on the wrong side of the grass, if you catch my drift.

A little too late to do the right thing now

in 2003, President Bush proposed a "significant regulatory overhaul" of Fannie Mae and Freddie Mac, in order to "determine whether the two are adequately managing the risks of their ballooning portfolios." It didn't go anywhere. Why?

Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

"These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

The Democrats' priority on maintaining "affordable housing" is laughable. "Affordable housing" means low property values, which equates to smaller mortgages and, thereby, smaller mortgage payments. Under the banner of anti-discrimination and "war on poverty" policies, Democrats in the Nineties encouraged lenders (in the form of government backing) to loan money to people who were highly unlikely to pay it back. From Investor's Business Daily Editorials:

It was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street's most revered institutions.

Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.

Adding more home buyers into the market, thanks to artificially lax lending guidelines, drove up home prices. In order to keep housing "affordable", interest rates were suppressed (underpricing the risk associated with them), which drove more home owners into the market, which increased prices. This is how a bubble is created. Bush wisely saw that this cycle would eventually lead to major financial problems (like the ones in the papers today), but the Dems didn't want to put any "pressure" on Fannie or Freddie.

Jump forward a couple of years to when John McCain co-sponsored the Federal Housing Enterprise Regulatory Reform Act of 2005. McCain warned us that "If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole." It appears that his prediction was accurate, as the tab for the recent bailouts comes to more than $1,000 for every man woman and child in the country.

McCain's bill died in committee, under the leadership of Sen. Chris Dodd, a Democrat from Connecticut and chairman of the Banking Committee. Oddly enough, a scandal unearthed this summer involved Dodd receiving discounts and preferential treatment through Countrywide's V.I.P. program during 2003 and 2004. According to wikipedia, "in 2006 Countrywide financed 20% of all mortgages in the United States, at a value of about 3.5% of United States GDP, a proportion greater than any other single mortgage lender." Countrywide would have been directly affected by increased regulations, but thankfully they had a friend in high places looking out for them.

Speaking of Countrywide, during the primaries Obama accused Countrywide of "infecting the economy" and helping to create the home foreclosure crisis we are now in the middle of. However, when it came time to look for a running mate, Obama turned to James Johnson to help with the search. According to the New York Sun, Johnson received more than $7 million from the same Countrywide sweetheart program as Dodd.

You can tell a lot about a man by the friends he keeps, but if Obama's link to Johnson and Johnson's link to Countrywide isn't enough for you, consider this from John Gibson of Fox News:

Lehman Brothers’ collapse is traced back to Fannie Mae and Freddie Mac, the two big mortgage banks that got a federal bailout a few weeks ago. Freddie and Fannie used huge lobbying budgets and political contributions to keep regulators off their backs. A group called the center for responsive politics keeps track of which politicians get Fannie and Freddie political contributions. The top three U.S. Senators getting big Fannie and Freddie political bucks were democrats and number two is Senator Barack Obama.

Now, remember, he has only been in the Senate four years but still managed to grab the number two spot ahead of John Kerry, decades in the senate, and Chris Dodd who is chairman of the senate banking committee.

So now Obama and Joe Biden, the running mate James Johnson picked for him, are telling us that Republicans are to blame for the current economic problems.

My lord, take a look at what — who got us in this hole, whose policies. This has been a Republican philosophy of letting Wall Street do what they want and the middle class be damned. It's about time we change it. If I sound like I'm angry, I am fighting mad for middle-class people who have been the scapegoat of this economy because of the policies of the McCains and the Bushes.

Obama is singing the same song, mocking McCain for stating that "the fundamentals of our economy are still strong" (they are), and claiming that "what we need now is leadership that gets us out. I'll provide it. John McCain won't. And that's the choice for Americans in this election."

Yes, Americans have a choice this election. On the one hand is a leader who has decades of leadership experience and that warned us all about this problem years before it came to fruition. On the other hand is a politician with less than half a decade of leadership experience, whose party directly contributed to this problem while his historical revisionism has led him to blame everyone but those who are truly responsible for the crisis at hand. I don't think it's too tough to see which brand of "leadership" this nation needs.

To the rescue!

Want to lower your house payment? Want to save hundreds of dollars each month? Well, the Rescuer in Chief has a deal you can't afford to pass up. In order to qualify, you have to meet the following criteria:

• Have little or no equity in your house. Note: you can accomplish this either by not making a down payment or by getting a second mortgage to "leverage" your equity.
• Take a three-month break from sending in a house payment.
• Make a really pouty-looking face while saying "My lender tricked me!" one hundred times as you stomp around in a circle.

You'd better hurry up if you want to take advantage of this special offer because only the first 400,000 home owners who apply will be accepted.

Please note, if you have been making your house payment on time each month you are not eligible for this incredible opportunity.

—

Also, from the Department of Homeland Irony, White House spokesman Tony Fratto said that in light of the newly signed legislation, "the Federal Housing Administration would begin right away to implement new policies 'intended to keep more deserving American families in their homes.'" As it turns out, banks have already found a way to determine which American families deserve to stay in their homes. It's the ones who send them a check each month.

Posted by Mike Wittmann
on July 30th, 2008, in Culture, Politics
Discuss This (0) | | Permalink

A buyers' market

If the mortgage bailout doesn't go through, maybe banks should consult this website before trying to turn their foreclosed properties.

It's Lovely! I'll Take It! is "A collection of poorly chosen photos from real estate listings. With love." A couple of them (1, 2) are right here in Lincoln, but this one is probably my favorite.

HT: Challies

Unintended consequences

It's one thing to say you care about helping people, another thing to actually do something to help people, and yet another thing to do something that actually does help people in the long run. We should all rebuke the man who says he cares for the poor, but never offers them a loaf of bread. He's a hypocrite. But, don't forget that we should also rebuke the man who says he cares for the poor and then invents programs that will guarantee that they will always be so. This man is also a hypocrite, perhaps even more so because he likes to remind us all of how cold and calloused we are for not jumping on his programs-for-the-poor bandwagon.

Borrowing heavily from Doug Wilson's thoughts, we need to not only care about the needs of the poor, but we need to care enough to offer solutions that will actually help them. It's one thing to have good intentions, but what if the measures we take to "help the poor" actually make things worse? In such a case, everyone would be better off if we had done nothing at all. To borrow again from Wilson, what if our shipments of "relief" to an impoverished community in Africa are diverted to the local dictator and his armies, keeping him in power and assuring that the people under his tyranny will continue to starve? Are these people better off because of the so-called aid we've provided? What if sending out government checks to those "less fortunate than us" encourages them to not get married, not find a job, and to have more illegitimate children? Are they better off because of it? Judging by the progress in the War on Poverty (which, I should mention, has gone on much longer, and at much greater cost, than the war in Iraq), I would say that we're teaching people to be less responsible, and more dependent on their governmental ATM, which will most certainly run out of cash at some point.

While this shouldn't be misconstrued as an excuse to not do anything, it should serve as a warning that we should evaluate the potential consequences (intentional and otherwise) of any governmental (or social, for that matter) intervention before we launch the latest and greatest new program to solve everyone's problems for them. I say we employ this novel approach before the proposed legislation bailing out mortgage lenders and "distressed" home owners gets through Congress. The legislation is "meant to save hundreds of thousands of troubled homeowners from foreclosure. The legislation would create a government-backed mortgage insurance program with the power to refinance as much as $300 billion worth of failing home loans."

Hey, that sounds great. I mean, think of the CHILDREN! Think of their PETS! Don't we have a responsibility–nay, a duty–to protect people from the consequences of their decisions? Continue reading this post »