Yikes! Another catastrophe. Mortgage lenders are up to their eyeballs in bad debt, and the sky is falling. Some conservatives say it's due to to the Community Reinvestment Act of 1977, some libs say it's due to a lack of government regulation.
Truth is, it's both. On one hand, liberals felt it necessary to tell mortgage lenders how to run their business and to compel them to give mortgages to people who were poor risks. This is the sort of rhetoric modern socialists use to justify their wealth redistribution schemes, since bald-faced communist rhetoric--"we're going to take it away from working people to give to others"--doesn't fly in this country. (Modern Socialists = "Liberals," even though they are only liberal in promoting promiscuity, drug use, and decadence, and otherwise tend towards totalitarian government control) Liberal mouthpieces have justified this by stating that some non-CRA lenders made more bad loans, and hypothesizing that making risky loans actually encouraged responsible lending. Well, sorry, it was either a good idea or a bad one. The evidence on this one is in. It is as if Liberals are saying that someone who used only half as much crack cocaine is responsible, whereas his more indulgent neighbor is not.
Forcing companies to make bad judgments is disastrous. Left to their own devices, they will do plenty of it all by themselves. Greed rules the financial world; one could argue it defines it. These apparent fits of misjudgment come to light every so often, with predictable results:
The house of cards which our current financial system appears to be is shaken when the inevitable corporate misbehavior comes to light. Investors panic, mutual funds plummet. 401ks and 403bs get pounded (But Warren Buffett, et. al. never seem to . . .) People demand accountability. They demand regulation, as if the two are the same thing.
What we get, courtesy of Repbulicans, is a slap on the wrist for some corporate offender with or without time at Club Fed, a redirection of middle class tax dollars to prop up some greedy corporation that knowingly made bad decisions, and from Democrats, some new bureaucracy to supposedly oversee big business and keep this sort of thing from happening in the future. Supposedly these things will be "good for us." The implication is that "us" equals the average working American. You decide if that's the case.
What really happens? The corporations get richer, government gets bigger, and the middle class loses money via three mechanisms--the bailout, the poorly managed mutual fund, and the increase in taxes to pay for the soon to be useless new bureaucracy. Someone is always making money in the stock market--when your 401k just went down 50%, it's likely to be a hedge fund manager or a career investor selling stocks short. Not Joe Middle Class, to be sure.
And more importantly, power is taken from the middle class and given to the government, in the form of regulation and tax dollars, and irresponsible swindlers who, to paraphrase Kurt Vonnegut, "commit crimes against which no laws have been passed."
None of this makes sense, of course, unless one understands that our government and Big Business are devices to make the rich and powerful richer and more powerful at the expense of everyone else. And at this point I have to marvel at how the rich and powerful twist their self-generated calamities into opportunties.
So what do we do? And if one really has any belief in the notion of personal responsibility, big mortgage lenders are about as deserving of a financial bailout as a hard partying college kid who's maxed out his credit cards. Do you really think they're going to do anything but enrich themselves with the bailout money?
And anyone who took out a mortgage has personal responsibility to pay it.
Any reason mortgage lenders, and borrowers, can't experience the consequences of their actions?
Grownups, please?
