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September 23, 2008

Finally: Republicans Finger Democrats as Responsible for Fannie/Freddie Meltdown

Good video report from Jim Angel at FoxNews.

It should be noted that "Republicans" do not include "McCain." Although McCain saw this crisis coming, and attempted to avert it, he is now foolishly engaging in demogogic populism, blaming Wall Street for "forcing" loans on poor people who coudn't afford them.

He knows better. But he's too foolish to know the truth is actually on his side. He doesn't need to demogogue up Wall Street. This was a fifteen year campaign by the Democrats, ACORN, and Fannie and Freddie's executives to loosen up mortgage requirements to the point where there simply where no requirements at all.

Net result? Trillions of federally guaranteed dollars flow into the housing market that shouldn't have been there -- suddenly buying a house becomes the easiest possible purchase you can make. All you need is a signature and a smile.

If the federal government were guaranteeing a trillion new dollars for no-money down car purchases with no credit checks or proof of employment or income, what do you think would happen to the price of cars?

They'd triple. For a while.

Housing market turns into dangerously overinflated bubble. Which is what always happens when a trillion fresh, cheap, easy dollars flow into a sector and begin chasing the same limited pool of goods.

Millions of credit-poor homebuyers -- with erratic and unverified incomes -- now have mortgages with payements well out of their range. But at least the homes are still worth their selling price... so if they default on a $350,000 house, no sweat, the bank now owns the $350,000 house, which can be sold for $350,000 to someone else.

But finally the bubble bursts -- and now all those credit-poor, erratic income homeowners now have mortgages for $350,000 on houses actually worth $150,000.

So what do they do? They walk away or stop paying. Which makes perfect economic sense.

Leaving Fannie and Freddie guaranteeing a trillion in bad mortgages. Which means you're guaranteeing them.

The bank made a $350,000 payment to the home-seller -- but now has only a $150,000 home to show for it. Uh-oh.

You the taxpayer just went on the hook for that $200,000 loss.

Wall Street's contribution? They stupidly bought up derivatives based on these junk mortgages, thus putting themselves, and the entire financial system, at dire risk.

But they didn't create the risk. The stupidly bought into the risk, but they didn't create it.

It was Barney Frank, Chris Dodd, ACORN, Franklin Raines, Penny Pritzker, Jim Johnson, and of course Barack Hussein Obama who actually built the bomb.

And I Repeat... Even now, the lisping marble-mouthed shufferin'-shucatash socialist moron Barney Frank is still fighting to federally guarantee the zero-money-down "seller financed" down payment mortgages that got us into this mess.

Because he's fucking stupid. As are most Democrats. They have no idea how money is made or how services and goods are exchanged. All they know is they want to distribute those services and goods more "fairly."

He doesn't agree with the basic idea that People who don't have enough money to afford a house shouldn't have one. He honestly believes that idea is "unfair."

Everyone should have a house. People who can't afford them most of all.

And if you tell him doing so will cost the government another 1-2 trillion in ten years, and will put the economy in crisis again, he'd say, "Fine." It's a fair trade as far as he's concerned.

Because who's paying that 1-2 trillion? People who have money. If provoking a crisis is the only manner to get the wealth distribution he craves, that's fine by him.

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posted by Ace at 08:04 PM

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