Crash ...!!!

Upside Down Economics
Thomas Sowell
Wednesday, February 18, 2009

From television specials to newspaper editorials, the media are pushing the idea that current economic problems were caused by the market and that only the government can rescue us.
What was lacking in the housing market, they say, was government regulation of the market's "greed." That makes great moral melodrama, but it turns the facts upside down.

It was precisely government intervention which turned a thriving industry into a basket case.
An economist specializing in financial markets gave a glimpse of the history of housing markets when he said: "Lending money to American homebuyers had been one of the least risky and most profitable businesses a bank could engage in for nearly a century."

That was what the market was like before the government intervened. Like many government interventions, it began small and later grew.
The Community Reinvestment Act of 1977 directed federal regulatory agencies to "encourage" banks and other lending institutions "to help meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institutions."

That sounds pretty innocent and, in fact, it had little effect for more than a decade. However, its premise was that bureaucrats and politicians know where loans should go, better than people who are in the business of making loans.

The real potential of that premise became apparent in the 1990s, when the Department of Housing and Urban Development (HUD) imposed a requirement that mortgage lenders demonstrate with hard data that they were meeting their responsibilities under the Community Reinvestment Act.
What HUD wanted were numbers showing that mortgage loans were being made to low-income and moderate-income people on a scale that HUD expected, even if this required "innovative or flexible" mortgage eligibility standards.

In other words, quotas were imposed-- and if some people didn't meet the standards, then the standards need to be changed.
Both HUD and the Department of Justice began bringing lawsuits against mortgage bakers when a higher percentage of minority applicants than white applicants were turned down for mortgage loans.

A substantial majority of both black and white mortgage loan applicants had their loans approved but a statistical difference was enough to get a bank sued.
It should also be noted that the same statistical sources from which data on blacks and whites were obtained usually contained data on Asian Americans as well. But those data on Asian Americans were almost never mentioned.

Whites were turned down for mortgage loans more often than Asian Americans. But saying that would undermine the reasoning on which the whole moral melodrama and political crusades were based.
Lawsuits were only part of the pressures put on lenders by government officials. Banks and other lenders are overseen by regulatory agencies and must go to those agencies for approval of many business decisions that other businesses make without needing anyone else's approval.

Government regulators refused to approve such decisions when a lender was under investigation for not producing satisfactory statistics on loans to low-income people or minorities.
Under growing pressures from both the Clinton administration and later the George W. Bush administration, banks began to lower their lending standards.

Mortgage loans with no down payment, no income verification and other "creative" financial arrangements abounded. Although this was done under pressures begun in the name of the poor and minorities, people who were neither could also get these mortgage loans.
With mortgage loans widely available to people with questionable prospects of being able to keep up the payments, it was an open invitation to financial disaster.
Those who warned of the dangers had their warnings dismissed. Now, apparently, we need more politicians intervening in more industries, if you believe the politicians and the media.

http://townhall.com/columnists/ThomasSowell/2009/02/18/upside_down_economics

calmage wrote:Well...
how bout a bit of good noos...??

http://www.financialpost.com/story.html?id=1301645

NO SMALL CHANGE:
THE STIMULUS PACKAGE AND ITS IMPACT

In its final form, the American Economic Recovery and Reinvestment Act of 2009 (H.R. 1) bill passed February 13 is the largest combined spending and tax bill in American history, with a total of $787 billion in spending and tax cuts. The bill will impact a wide range of businesses and industries from healthcare to energy to education and transportation.

Click here to download
Patton Boggs Economic Stimulus Analysis
The American Recovery and Reinvestment Act of 2009
Updated: February 19, 2009
To provide a sense of the package's overall funding levels, Patton Boggs has prepared a general overview of the bill by subject area (please note we are not reporting on every aspect of the bill).
For our funding overview, click here

[...]

If you are dependent, then that means you're not independent. It means by default you rely on other people to carry your dead, fat weight in this economy (just like Caroline Kennedy). And whereas Malthus' concern was food production, mine is just pure simple economic production.

Though I have not run the figures, the macro-figures being posted about bailouts, as well as our cornerstone institutions showing themselves to be nothing more than parasites upon the masses, I think that there literally is not enough producers in this country to produce enough wealth to support all the people in the nation. And given the recent election of Barack Obama and his forever increasing amounts of stimulus spending, it not only convinces me the country is not serious (nor educated enough) about getting out of this recession, as much as they are about getting theirs and transferring as much wealth to themselves off this dead rotting carcass known as America. The only question I ask "where is all this money going to come from?"

Of course I ask myself the question rhetorically.

Socialists in congress combined with comrade Obama have eliminated any incentive to excel and produce the wealth necessary to bail out this economy (and I mean really bailout as in REAL economic production, not just transferring money and calling it a bailout, I mean like our problems would be over bailout). Obama and his socialist democrat ilk have done nothing more than promise to transfer wealth from one group of people to another to bribe the recipients into voting for them. Ergo, no real consideration has ever been given to how to actually increase the production of wealth as much as it has been to use a transference of existing (and dwindling) wealth for political purposes. Of course there are obvious shortcomings of this politicking;

1. With taxes going up on the rich (or as I like to say the "productive" or "employers") what incentive will the have to invest/create jobs here.

2. With wealth transfers what incentive with the burgeoning recipients have to get off their lazy, fat welfare asses and produce some kind of wealth (let alone enough to support them?)

I'm sorry folks. I know you like to believe that "America will always pull through." Or that if you "pray enough" God will save America like he always has. Sadly, the truth is nobody puts this country ahead of themselves and when you have a certain "critical percentage" of the population nothing more than a bunch of whinny, self-entitled, spoiled brat "Barack save me now" socialist parasites, your country is doomed.

Previous, less ambitious, efforts have flopped. George Bush’s first plan aimed to help up to 240,000 delinquent subprime borrowers refinance their debts into government-backed fixed-rate mortgages. Only 4,000 did so. A Democrat-inspired $300 billion plan to guarantee up to 400,000 mortgages attracted just 517 applications, as lenders balked at the requirement that they first write down the principal. Private-sector programmes have achieved higher numbers, but their success is mixed. Of 73,000 loans modified in the first quarter of last year, 43% were again delinquent eight months later (see chart).