Politicians are all clamoring mightily that greed caused the financial crash. They claim this greed was entirely that of Wall Street fat cats with multi-million dollar golden parachutes. They are right that greed had much to do with the crash. They are wrong to locate that greed primarily on financial company executives. The primary source of greed was Washington, state, and local politicians. The greed was primarily for power and secondarily for campaign contribution money and favors to keep them from messing with business. This greed circumvented the usual constraints that financial business executives have to keep them reality-oriented. This political greed forced businesses to take foolish risks to satisfy politicians who claimed they were guilty of racial discrimination if they did not loan enough money to people who did not have enough income to pay back the loans. This was the purpose of the Community Reinvestment Act given primarily to us by the Democrats.
Fanny Mae and Freddy Mac were set up as government-sponsored businesses to encourage risky home mortgage loans to people and package those in the form of securities that financial businesses and retirement funds would buy. The oversight of the Securities and Exchange Commission was minimized by Congress. Low interest rates set by the Federal Reserve further fed the madness. Local and state governments drove up the cost of housing with building restrictions often called growth management. People in managed growth places such as California where homes cost 8 times their average family incomes clamored for subprime mortgages and Congress saw that Fanny Mae and Freddy Mac provided them. Finally, when the financial companies found that they held mortgage loan-based securities with large subprime obligations and no one would pay anything like their purchase price for them at this time, they had to write their value down to almost nothing to be compliant with Congress' Sarbanes-Oxley accounting legislation. This further insured that no one could afford to buy these securities, even though only a fraction of the mortgages they are based on will not be repaid.
Some business executives went more overboard than others, thinking that the government policies would protect them from the consequences. Most of these executives have lost their jobs and most of the value of the company stock that was used to reward them for their work has vanished. But.....as usual, our politicians are unscathed and unrepentant for their dastardly roles. They have been able to use the crisis to grab even more power. The more they clamor, the more responsibility they generally have for the mess our economy has been put in. Look primarily to these polititicians, who are so good at distracting us from the real issues, for those most responsible for this catastrophy. Remember that many of these same rascals are backers of catastrophic global warming theories that will allow the government to take control of our use of energy, as well as our financial industries. Doubt their motives at all times! Throw these rascals out of office. Sweep the House and Senate clean.
Unfortunately, both of the major presidential candidates are busy spouting the nonsense that the crash was caused by the greed of Wall Street and of fat cat executives. They are among those trying to distract us from the real issues of governmental interference in the free market. When the market is free, businessmen act to make sound investments, not unsound investments. The scale of this financial crash is itself a great indicator that it was primarily government policies that fed the problem. This was clearly the case in socialist Europe as well.
We are now unreservedly the Socialist People's Republic of the United States! We must call a spade, a spade. Rational men will soon be retiring to Galt's Gulch as Atlas shrugs everywhere. The next president of the United States will either be a moderate socialist or he will be a very committed and very radical socialist. This socialist president will have a very socialist Congress to work with. The sovereign American individual will find nothing but disrespect and, increasingly, chains.
Alan Reynolds has written an interesting article on the plight of those businessmen who most followed Washington's lead and who most went overboard with risky loans and subprime-mortgage based securities.
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2 comments:
Great article that tells the real story.
We are headed on the path to disaster.
Thanks for your comment Grady. As you can see, I am thoroughly fed up with these politicians and their distractions. I am also sick that so few Americans have an understanding of what is really going on. Freedom is hard-won and has been rarely earned by any peoples in all of human history. It is easily lost. A people who would be free must be willing to diligently do their homework. Americans are increasingly unwilling to do so. This is at least in part a consequence of our public schools which do not teach students to think for themselves. Instead, these schools teach that the ideal is to conform and be non-confrontational, sensitive to anyone else's feelings but your own, and to associate yourself with various group identities rather than to think of yourself as an individual. In this light, we have a vice presidential candidate who says he does not believe in the inalienable right of the individual to life, liberty, and the pursuit of happiness, and no one even thinks that this is significant, let alone reason to keep him as far from the presidency as possible. We are a people who have lost our ability to defend the freedom of the individual both from attack at home and abroad.
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