Monday, November 3, 2008

Are You Ready For More Change??

George Bush has been in office for 7 1/2 years. The first six the economy was fine.

A little over one year ago:
1) Consumer confidence stood at a 2 1/2 year high;
2) Regular gasoline sold for $2.19 a gallon;
3) the unemployment rate was 4.5%.
4) the DOW JONES hit a record high--14,000 +
5) American's were buying new cars, taking cruises, vacations overseas, living large!

But Americans wanted 'CHANGE'! So, in 2006, they voted in a Democratic Congress, and, yes--we got 'CHANGE' all right. In the PAST YEAR:

1) Consumer confidence has plummeted ;
2) Gasoline is now over $4 a gallon & climbing!
3) Unemployment is up to 5.5% (a 10% increase);
4) Americans have seen their home equity drop by $12 TRILLION DOLLARS and prices still dropping;
5) 1% or more of American homes are in foreclosure.

Some (including may argue that congress could not have caused all these policies in the space of one year...
I am fully aware of that, it has been years in the making. But I disagree with Snopes. Here is proof who caused these "changes":

First of all, Let's address the concerns:

1. High Prices of Gasoline: Who has refused to lift the ban of drilling for oil, uh that would be "Representative Nancy Pelosi and Senator Harry Reid of Nevada, the majority leader, who are intent on holding the line against calls to approve drilling in areas now off limits. With gas prices soaring, those drilling restrictions are facing their most severe test in years as calls intensify to more aggressively pursue domestic oil. Yet despite increasing pressure from President George W. Bush, a full-bore assault by congressional Republicans and some anxiety among her own rank-and-file Democrats, Pelosi and Reid are not budging."(see: If we could drill now - the prices of oil would be less (see Drill Here, Drill Now, Pay Less:

2. Home equity prices dropping and many American Homes in Foreclosure... let see who is to blame for that.
"For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac ... and the sheer magnitude of these companies and the role they play in the housing market. ... If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole." --John McCain arguing in 2005 for passage of the Federal Housing Enterprise Regulatory Reform Act (S. 190), which he sponsored.

"The enormous risk that Sen. McCain warned of in 2005 has now manifested as a financial crisis of staggering proportions. This crisis can trace its roots to Democrat initiatives to undermine free market banking practices in favor of targeted constituencies.

The Community Reinvestment Act was passed by Democrats of the 95th Congress and signed into law by Jimmy Carter in 1977. It coerced lending institutions to make loans "to the entire community," undermining means testing to qualify applicants for mortgages.

In 1989, President G. H. W. Bush signed the Financial Institutions Reform Recovery and Enforcement Act increasing public oversight of the process of issuing CRA ratings to banks, in the wake of the savings and loan debacle of the 1980s. That helped restore some integrity to the CRA.

However, Bill Clinton's signature on legislation making it easier for minority constituents with bad credit to obtain mortgages really reseeded the crisis.

On 20 November 1994, Clinton signed the United Nations International Convention on the Elimination of All Forms of Racial Discrimination. Article V(e)(iii) of that treaty asserts that all people have a "right" to housing.

A year later, in order to comply with the treaty and win the hearts and minds of millions of low income constituents, he had his Treasury Secretary, Robert Rubin, rewrite the lending rules for the CRA, opening the Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) subprime flood gates.

In other words, mortgage lenders were able to make millions of loans to borrowers who, subject to free market lending practices, would not have been able to qualify for loans.

Clinton's legislation, in effect, applied affirmative action to the lending industry, which is to say that the current crisis is NOT a "free market failure" but the result of socially engineered financial policy by the central government. The mortgage markets welcomed their new customers with open arms, fueling a real estate boom across the board.

These so-called "subprime mortgages," which were offered at variable interest rates, were widely perceived as good investments by financial institutions, which bought bundled mortgages from Fannie Mae and Freddie Mac.

In 1999, financial analysis by The New York Times noted, "Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people.... In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the [thrift industry] savings and loan industry in the 1980's."

Indeed, the article quoted economist Peter Wallison from the conservative American Enterprise Institute, who warned, "If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry."

In 2001, the administration of George W. Bush raised caution flags about lending by the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, noting in its '02 budget request that "financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity."

In 2003, the Bush administration upgraded its concern, requesting much stronger oversight. According to testimony by then Treasury Secretary John Snow, "We need a strong, world-class regulatory agency to oversee the prudential operations of the GSEs and the safety and the soundness of their financial activities."

The New York Times reported in September of '03, that the administration's plan was "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago," and "an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken."

But Democrats, particularly Rep. Barney Frank, now chairman of the House Financial Services Committee, would not support additional oversight or restrictions. On 10 September 2003 Frank declared in congressional hearings: "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis. The more people exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios. And even if there were a problem, the federal government does not bail them out."
Rep. Maxine Waters added, "We do not have a crisis at Freddie Mac and particularly Fannie Mae under the outstanding leadership of Frank Raines." (That is the same Frank Raines who directed enormous campaign contributions to Democrats John Kerry and, you guessed it, Barack Obama.)

In October of this year, Bill Clinton admitted, "I think the responsibility that the Democrats have may rests more in resisting any efforts by Republicans in the Congress to put some standards and tighten up a little on Fannie Mae and Freddie Mac."

Democrat Rep. Artur Davis was a bit more direct: "Like a lot of my Democratic colleagues, I was too slow to appreciate the recklessness of Fannie Mae and Freddie Mac. In retrospect I should have heeded the concerns in 2004. Frankly I wish my Democratic colleagues would admit that when it comes to Fannie and Freddie, we were wrong."
(see Economics 101: Crisis of Confidence by Mark Alexander

3. Unemployment, Consumer Confidence and the DOW dropping:
"Despite insistence by Democrats on the one hand, that "all is well with Fannie and Freddie," on the other hand, between 2006 and 2008, Democrat candidates, most notably Barack Obama, did what democrats are predisposed to do every election cycle -- they wantonly played the "economic fear card," in order to keep their liberal constituencies in line. One staple of the Democrats' political playbook is the use of scare tactics to rally their dependents. Obama and other Demos have been serving up a steady diet of dire economic rhetoric and, undoubtedly, all that economic hyperbole has influenced public perception of, and confidence in, our economy.

Our economic foundation begins to crumble, By 2008, because of eroding confidence in our economy, the housing market became saturated and free market prices did what prices do when there is more supply than demand -- they began to drop.

The housing "bubble burst" leading to the first big collapse of a mortgage lender, Countrywide, the nation's largest subprime lender. Then banks and mortgage lenders large and small began downsizing, dumping assets and closing their doors, which triggered a further drop in housing prices and mortgage defaults.

A few months later, Bear Stearns filed for bankruptcy. By the summer of '08, Fannie Mae and Freddie Mac, holders of trillions of dollars in mortgages, were bailed out with 200 billion taxpayer dollars. Lehman Brothers filed for bankruptcy, and insurance giant AIG was given an $85-billion taxpayer prop to keep it solvent.

Endeavoring to avert economic disaster, on 24 September 2008, President Bush, addressed the nation with a concise explanation of the unfolding crisis: "This is an extraordinary period for America's economy. Over the past few weeks, many Americans have felt anxiety about their finances and their future. I understand their worry and their frustration. We've seen triple-digit swings in the stock market. Major financial institutions have teetered on the edge of collapse, and some have failed. As uncertainty has grown, many banks have restricted lending. Credit markets have frozen. And families and businesses have found it harder to borrow money. We're in the midst of a serious financial crisis... So I've proposed that the federal government reduce the risk posed by these troubled assets, and supply urgently needed money so banks and other financial institutions can avoid collapse and resume lending. This rescue effort is not aimed at preserving any individual company or industry -- it is aimed at preserving America's overall economy. It will help American consumers and businesses get credit to meet their daily needs and create jobs. And it will help send a signal to markets around the world that America's financial system is back on track."

Thus, the devaluation of mortgages has had an enormous financial impact on institutions that trade in "packaged mortgages," and consequently, on other institutions that trade with them, and, well you get the picture. The dominoes have begun to fall.

Moreover in an effort to keep their dominoes standing, because of the potential that any new lending would result in additional foreclosure exposure if the housing market continues to decline, banks have restricted lending in order to preserve the capital necessary to cover the cost of a growing number of foreclosures. The constriction of the money supply extends far beyond the housing markets, as loans for business development and expansion are also drying up.

This combination of events creates the perfect economic storm, and the rain is falling.

Confidence in the perceived value of financial instruments, which are the foundation of our economy, is calculated minute by minute by indices such as Dow Jones, Standard and Poor's, and other measures of financial markets. These measurements amount to investor confidence indices, polls of investor perception about the strength and stability of the economy. The stability and direction of these indices are a good indication of investor confidence.

If the indices indicate significant instability of investor confidence, that instability can cause the financial markets to collapse in a single day. (See: "Great Depression.")

Here, it's important to note that the vast majority of Americans are among the "investor class." This isn't just about "the rich." Whether you are a billion dollar securities trader or a day laborer, you are a shareholder in our economy, and have a stake in the welfare of that place called "Wall Street."

With the economic consequences spread so broadly, should also be noted that one major stabilizing factor is, we, the people, have a fundamental desire for stability. Every member of our society, from that billion-dollar trader to the day laborer, is dependent on bread in the pantry and water from the tap.

The serious economic calamity confronting our nation, and the world, is being labeled a "credit crisis." But we are on the verge of a crisis of cascading confidence in the U.S. economy, which, in the absence of aggressive intervention which includes free market reforms, could result in a dramatic recession affecting every sector of the U.S. and, eventually, world economy.

The plan proposed by President George W. Bush and Treasury Secretary Henry Paulson -- and waiting for majorities in Congress to determine the details -- is an effort to stabilize investor confidence and, thus, our economy.

To pay for the bailout, Democrats are sure to demand higher taxes from "the rich Wall Street fat cats who got us into this mess." While this mess clearly ended on Wall Street, it didn't start there, but, undeterred, the Democrats will always bank on this observation from George Bernard Shaw: "A government which robs Peter to pay Paul can always depend on the support of Paul"."
(see Economics 101: Crisis of Confidence by Mark Alexander

To Sum it up:

Obama and the Democrats have been playing the "economic fear card" for the past four years, using the economy as political fodder for their campaigns. As Demo-gogue Nancy Pelosi framed it: "For too long, this government, in eight years, has followed a right-wing ideology of anything goes, no supervision, no discipline, no regulation."

As for all the Leftmedia economic fear card play, rest assured, ads like those produced and paid for by blaming John McCain for the meltdown and now running on Leftwing media outlets like CNN and NBC are nothing more than fabrications wrapped in deceptions embedded in lies.

As you can see, this crisis can trace its roots to Democrat initiatives to undermine free market banking practices in favor of targeted constituencies. The mortgage lenders were able to make millions of loans to borrowers who, subject to free market lending practices, would not have been able to qualify for loans. Clinton's legislation, in effect, applied affirmative action to the lending industry, which is to say that the current crisis is NOT a "free market failure" but the result of socially engineered financial policy by the central government. Regulations to keep Fanny Mae and Freddy Mac intact and regulated were consistently opposed of by the Democrats in Congress. This market manipulation caused the housing market to crumble, the devaluation of mortgages has had an enormous financial impact on institutions that trade in "packaged mortgages," and consequently, on other institutions that trade with them, which caused the economic foundation to crumble, the DOW to drop and consumer confident in the perceived value of financial instruments, which are the foundation of our economy to plummet.

Who was responsible for these "changes" -if you find out the facts you can clearly whose fault it was. And I do agree with on one thing change like this didn't happen in a year - it DID take the dems years to accomplish these changes .

No comments: