Posted by
rycK on Saturday, September 27, 2008 3:12:35 PM
The NYT Guest
Economist Advises Us on the Mortgage Crisis. More Socialism is the Solution, as
Usual.
The New York Times—aka
the Walter
Duranty Papers has a 90+ year history of apologizing for Communism, fostering any form of anti-anticommunism,
defending despots like Fidel Castro, World Wars started by leftists, the USSR, Cuba and their interminable
endorsement of far left political types who would run for high office in the United States.
They also sit as constant watch dogs and barnyard squealers as the
capitalist economies parade past their faces and lament that so much wealth
goes untaxed or unregulated.
Their famous non-economist frequently blesses us with his political acumen from
time to time just to spice up the caldrons.
Today, we read of a grand rescue
plan for the mortgage crisis by a business school maven:
“At the
heart of the financial crisis is an unprecedented decline
in house prices. Yet the government response so far has been to try to
prop up insolvent financial institutions while doing nothing about the
underlying housing problem. The proposed Wall Street bailout would not stop the
next wave of defaults, which are coming from the rapidly rising delinquencies
in near-prime mortgages.” -- Help Housing by Chris
Mayer Op-Ed Contributor [Emphasis is mine in
all quotes.]
This
comment is fine as far as it extends into the problem. The underlying housing problem was actually
caused by the phony socialist Community Reinvestment Act [CRA]. Lenders were forced to offer
shaky business loans to people with lousy credit. Here, the government
essentially offered free housing to the ‘poor’
or minorities in a sleazy exchange for their votes. The politics of this was based on anti-redlining and pro-greenlining.
[See Greenlining.org[5],
the opposite of Redlining.]
What we are apparently offered in this op-ed article is the use
of government tax proceeds to rescue real estate-based debt, much of it held by
the government, that was put in jeopardy by the government. If that sounds like
a circular argument then you are correct. The original erroneous government action created an
artificial demand for housing because the price was subsidized by law so the
Law of Supply and Demand worked, as it should, and the number of houses soared
with new construction. When the oversupply worked in the opposite direction and
prices fell then the mortgage liability was valued greater than the house
market price and loses abruptly became apparent. As a cofactor those people who
took out equity loans on their houses and bought other items merely added to
their inability to make mortgage payments and also loosened what ever holds up
the credit market. The rise encouraged investment people who hoped for a fast
flip and a high return. We all know that 9 of every 10 millionaires were made
in the real estate market and the sidewalks were littered with schemes of how
to buy houses with mo money down.
Here is
the Mayer Plan
[1] “The
first step should be to reduce mortgage interest rates. “
[2] “Along
with lower rates, the government should provide temporary
down-payment assistance for buyers.”
[3] “The
credit crisis will not be over until house prices stop falling. Direct
assistance for home buyers and homeowners is the best, and the fairest, way to
make that happen.”
I cannot
tell if he means old or new interest rates. It really doesn’t matter as any rate
adjustment means an alteration of a contract by the government, a direct
violation of the privilege of any state within the Constitution. Here, if you
attempt to ‘fix’ the price, or in this case the rates, then the risk is that
the new level chosen [by guessing] will induce either a surplus or a scarcity.
Low interest rates would boost the demand for houses, but this might just prop
up a synthetic market and pave the way for another bubble.
This does NOTHING
to alter the problem. CRA needs to be repealed, a minimum down payment and strict credit
credentials must be established and a way to finance mortgages that does not
involve Fanny Mae must be found. The home buyer must put up a buy-in in this
deal so that he or she is a player in this game and some ‘temporary’ down
payment, whatever that means, is a joke
If you let incompetent political hacks hack up
your mortgage market they will do so gleefully and debase our capitalist system
with socialism.
We thank the New York Times, again, for giving
us the choices that we DO NOT WANT to pursue. They are famous for their faulty advice disguised as
the outcome of some thoughtful analysis and their lofty acclaim of Communists, perverts and losers shows their true intent.
We should
just say NO to anything the Times offers. They are a form of social leprosy on
our society.
rycK
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to: ryckki@gmail.com