Thursday, September 18, 2008

Who caused the need for a bailout?

Thursday has come. Even though I had checked the temperature before I left for Senior Fitness this morning, it was a surprise when I got outdoors. Definitely not short sleeve weather at that time so I had to resort to a jacket. From what I understand, it’s going to be really cold tonight. At least the weather allowed a more active exercise this morning, but I came home with a very sore back.

Why is the federal government trying to rescue foolish people and business from the foolishness the government created? I probably have answered my own question in the question. The government created the foolishness in the first place. I feel badly for the people and business that got sucked in, but they took chances and now it is they who should be paying for those chances. Not me.

Congress began this financial crisis way back in 1977 when it passed the Community Redevelopment Act which urged lending institutions to lower their standards for loans. Let’s see. Who was the President back then? Why! It was Democrat Jimmy Carter. Fannie Mae, I believe, actually dates back to FDR in the 1930s. There have been several additions and modifications to the various laws since then which, at least in part, have led to the current meltdown. All this so everyone could have a chance at the American Dream.

In the 1980s as mortgage lenders, now by law, began to diversify their mortgages throughout all risks in communities, the building boom began. Many people who otherwise would never have been able to obtain a mortgage loan now were getting them, regardless of the ability to pay. The boom continued to grow and more risky mortgages were written. The burst was inevitable. And I’m sure you’re familiar with the events of the last several days.

I can’t help but wonder why I, you, we should have to pay for what I consider mismanagement of the mortgage companies. The obvious answer is the government started it by urging lending institutions to make questionable loans. While the bubble was growing, those banks and mortgage companies wrote more and more questionable loans. But then, other economic factors started to cause more and more people who had taken mortgages way beyond their ability to pay to lose their ability to make payments. Foreclosures soon were rampant. The building boom burst. The lending institutions were left holding the bag.

The government took over Fannie Mae and Freddie Mac which it had created in the first place. After they created them, the government then made them quasi-governmental and run by private enterprise. It worked behind the scenes to find a buyer for one institution. Work continues in solving the problem of another. And now the nation’s largest insurance company is on the verge of bankruptcy. The government is providing a huge loan to save it and we’re told the loan will be repaid in two years. Sure!

Partially at least on that last action, the stock market has fallen by almost five hundred points twice this week. That will affect nearly every American who has any kind of investment, including retirement accounts. Many of us who received some of our retirement income from those investment plans will get slightly smaller checks this month.

I thought I was a conservative believing in the free enterprise system. Now I guess I’m just a little jealous of those corporate executives reeling in those multi-million dollar bonuses each year. One just retired with a 12-million dollar bonus as his company was among those going belly up.

Our government gave the authority and ability and, in some cases, the insurance backing for the lending institutions to get themselves and us into this mess we now find ourselves. The road to that American Dream began 70 years ago. Now, like the real roads in Maine, the cost to repair it is astronomical. We all, Republicans and Democrats alike, along with people taking out mortgages way over their income heads and the lenders who sold those mortgages, share in this fall. And we’re all going to pay for it.

Of course it’s fun to poke just a little bit of blame. When that first financial institution, Bear Stern I think it was, folded, the Democrat controlled Congress should have know something had to be done. When the Democrats took over Congress two years ago, our financial being was in pretty good shape. Consumer confidence was pretty high. Energy costs were in line with the economy. Houses were still being sold. Two years later after no action by the Democrat controlled Congress, look where we are.

They have been excellent at one thing, though, and that’s pointing all the blame at President Bush and so the electorate will send them back in November to continue the free fall.


1 comment:

Anonymous said...

Every single person in D.C. are own, sold, bought, and worked for big corporation. The lobbies wrote the laws, Congress signed the bill. They are the conjoined twin. Slogans, such as government is bad, and the private industry is good and efficient is just a propaganda trying to fool people thinking that they're apart. Both parties received big money from private industry. The differece is that the Republican is more aggressively side with the industry to screw the people. Thus, lot of so called think tank groups, "conservative" talk shows hosts are set up, paid to create and to spread the propaganda, the smoke and mirror, fooling people. The social safety net is cut, dismantled, and money is channeling to the industries. Major corporation paid very little taxes and received lot and lot of incentives from the fed. This practice also apply to the state and local government. And yet they talk about free market and competition as if they receive no help from anyone. During the peak of the housing boom, local government loved it because it can collect lot of property taxes based on the ridiculous prices of the houses. They're all ganging up with each other to screw the little people, and comfort them with simple idealistic, one line slogan. I had heard many self proclaimed "conservative" chanted and repeated exact the same phrases about the greatness of the private industry and Capitalism that they heard on TV, radios (which all own by major corporation). They're the modern corporate slaves, working day and night to make somebody else rich, borrowing money to buy big SUVs, boats, houses, but thinking that they have made it and on the way to joint the high society. Most people are high in debts, but they all think that they are the "Middle Class". If you asked people in this country, everyone think they're in the middle. No one is poor, no one is rich. Even the wealthy guys chant the phony "middle class values" b*ll sh*t. The whole country was set up this way. Thus the bailout is unavoidable. You reap what you sow.