Crisis causes. Hunting down Orlet. Only in Reich’s world do certain folks need help. Plus more.
Re: Quin Hillyer’s Defiance for the Greater Good:
The Bielski brothers and those who joined them are a reminder
that God commanded the Jews not just to survive but to
— Ira M. Kessel
Rochester, New York
Re: Peter Wallison’s The True Origins of This Financial Crisis:
Thank goodness… Finally someone talking about the true source of this mess. We have been real estate investors for 27 years, in oil country, so we have seen our share of booms and busts. Until the last 3 years (this mess had already ruined much of the market 3 years ago) we have sold our high-end houses in 10 days or less, and always doubled our money. Now, we have lost all our savings and any hope of retirement at a decent age after working 80 hour weeks all those years to do things the right way, meaning we paid our bills on time every time. We still are, only now we are stuck with a high-end house that we are working three jobs to keep from losing, no home our own and three children in college (who are also working their tails off.)
Housing does best in an 8% interest atmosphere, not in an artificially created lower interest rate world. Overheated markets make for a cold plunge into icy waters in the end.
Thank you again.
— D. Carroll
Peter Wallison did a great job explaining in simple terms what happened to cause the buildup to the present crisis.
The narrative from the New York Times, which he correctly deflates, is the story put out by the same political actors in Congress who were major forces in instigating the true causes described by Mr. Wallison. They have profited greatly both politically and personally (hello special loans from Countrywide). They can’t allow their political kingdoms to be destroyed by the truth. They have fought the Bush administration tooth and nail when attempts were made to rein in the excesses. And they are using the crisis and their lies about the crisis to establish even greater powers for themselves.
We readers need to make sure that the true story beats down the phony propaganda, or else we will get more of the same problems.
I would add a couple extra details, probably omitted because of length. We don’t have an official market designated for trading these bundled securities. Yet huge sums of money are involved. Markets like the stock exchange help to set and stabilize prices. They also help to require openness. These bundled securities intentionally obscured the realities underneath. They made it vary difficult to do any do diligence in estimating prices. The same irrational exuberance that led people to forget the real-estate crash that triggered the ‘87 S&L crisis, the horribly depressed rust belt markets and other real-estate problems and claim housing prices never fall, led the investors to believe that the shell game of selling homes for profit would never end and caused them to shrug their worries aside, thinking that defaulters could always sell at a profit, covering the loans.
And then we added the mark to market rules. These rules make great sense when there is a market. The market establishes the going rate. It also makes sure the price falls to find buyers or rises to find sellers, guaranteeing that every trade can happen. Yes, there will be horrible losses, but because mark to market is being applied without a market, and irrational greed has turned into irrational fear, the bundles are now considered worthless. Yet even with hundreds of billions of losses possible, there are trillions of dollars of good real-estate with solid payment track records, and even in a depression most of these people will keep their jobs and houses. So there should be a bottom value to these assets, which we can’t find due to the lack of a market and the inability to see the underlying reality. Otherwise, someone would come in and buy them cheap, making a killing from the good ones. For the same reason, no one is willing to sell. No market means no buyers, no sellers, the values can’t be corrected, and everything stays worthless.
The lenders fail, the insurers fail, and we rush to save the fat cats who give so generously to the same bad political actors. But we don’t try to fix the broken mechanism that is keeping things down. We could use all this money to buy the bad assets and try and recover as much value from them as we can. Not my preferred choice. Or we could repeal mark to market rules for these assets, also not the best path. The best path would be to establish a good market, and to clean up the mal-regulation that Wallison has described when we do so. We need to establish transparency in underlying information. A temporary suspension of mark to market might be necessary until the market is established, and we may still need to intervene in cleaning up assets from failed lenders, like we did in the S&L crisis.
Unfortunately, the one thing that could immediately reignite the
economy is not going to happen. Instead of the needed tax cuts,
we are getting massive spending as pay back rewarding political
supporters, and calling this pork “stimulus.” That means that we
have to either tax the money from the economy, steal the money
through inflation, or borrow it, starving out businesses from
being able to borrow the same funds. Either way, we all pay, and
this will be a drag on the economy, dragging us deeper in trouble
and slowing our recovery.
The economy should recover by itself, unless government does something stupid like the tariffs they passed that caused the great depression to happen, or repeats FDR’s New Deal which kept full recovery from happening, gaining political advantage by keeping people down and acting as their savior with government hand outs. But it will recover more slowly with the present policies. It could recover quite quickly with well targeted tax cuts. It would also help to stabilize the money supply and strengthen the dollar. The present crash has followed the horrible increases in the money supply.
Who gives jobs? Those who want to use their present money to make more money. Punish the rich and the want to be rich (that is nearly all of us), and we starve ourselves of jobs. But the bad political actors, who are telling the lies that Mr. Wallison has debunked, got power by demonizing the rich and giving handouts to those who suffer as a result. They want total power and total credit for all the good that happens, and they must have scapegoats to demonize to get away with their schemes. Hence the latest in their phony narratives.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?