Sunday, October 05, 2008

Affordable Housing -----The Great Multi-Trillion Dollar Social Experiment

So, you, (the middle class taxpayer), think that this near trillion dollar bailout legislation passed last week is a sign of relief in the financial markets that were threatening main street pension and retirement plans? THINK AGAIN!

There are some experts that say this is only the tip of the iceberg. Let’s start with the housing market:

The vast majority of subprime mortgages — 90 percent or more, by some estimates — are inside giant pools, or trusts, which have in turn sold bonds with different levels of seniority to institutional investors around the world.

Even if the government acquires hundreds of billions of dollars worth of mortgage-backed securities, finance experts say, the Treasury Department would be unlikely to acquire all the bonds tied to a particular mortgage pool. And if the government did not own all those bonds, it might not have the power to demand changes in the underlying mortgages. Link

This Times article appears to advocate home owner relief while the banking industry cautions this approach:

On Monday, 30 community and consumer groups from around the country sent an open letter to lawmakers to press their case.

“It is an illusion to assume that bailing out financial institutions is the same thing as providing relief to foreclosure-plagued American homeowners,” said the groups, which included the Consumers Union, the National Council of La Raza and the Leadership Conference on Civil Rights. “The only way to make sure that relief is achieved is to give Main Street Americans what they need: Chapter 13 bankruptcy relief.”

The banking and securities industries, meanwhile, are fighting the change with all their might, as they did when it came up with the housing bill that was adopted in July.

“Authorizing write-downs of mortgages by bankruptcy judges will increase the risks of mortgage lending at a time when the market is already struggling, and this will harm consumers,” wrote Floyd E. Stoner, a top lobbyist for the American Banking Association, in a statement on Monday.

And there are tons more assets that are undervalued and will need “propping up” to secure other sectors of the financial market. Interest rates and taxes will have to be raised to balance these “books”. With the already rising prices of “goods” to the consumer, spending will continue to spiral down. Without consumer confidence, spending, (which is the lifeblood of a healthy economy) will cause manufacturers to reduce production and inventories, which will mean layoffs. Layoffs mean more foreclosures. And here we are-----right back to a deteriorating housing market.

How do we break this downward cycle?

This returns us to the title of my post---- Affordable Housing -----The Great Multi-Trillion Dollar Social Experiment. I’m going to get brutal here, so if you’re a bleeding heart liberal that feeds on the part of society that wants to advance the poor and downtrodden by giving them a government handout at the taxpayers expense so you can feel better about yourself, stick your asinine selfish social experiment where the sun don't shine. YOU are slowly bleeding this nation’s economy of the free market principals based on capitalism, that little program where people worked, saved, and purchased their goods (and toys) based on the discipline and reality of living within their means.

This affordable housing experiment took a portion of our society that had no financial or personal business to purchase a home; created a market and a government sponsored institution to back it up, (Freddie and Fannie), and then waited for bill to come due on the unsuspecting middle-class American taxpayer. Talk about the ultimate Ponzi scheme. Yes folks, this was a liberal experiment started in the late eighties, accelerated in the nineties, and run amuck in the 21st century. Warnings were sounded and defeated by the interested parties. On the face it appears that our liberal Democrat friends had the bulk of the responsibility to put this runaway experiment in check and refused to let the money go. Personified greed and the asinine “understanding” that they were promoting societal health to the truly downtrodden may very well be the reason for another economic depression that could take twenty years to recover from, if at all.

Now here comes the real scary part. Barack Obama has based his entire political career on promising the electorate he will add to this “social experiment” by subsidizing health care and higher education using the same principals of this affordable housing experiment. Look in the Constitution! No where in this document does it say the people have a right to demand that the government supply taxpayer funded health care or education, or a damn free house! This is called SOCIALISM/COMMUNISM/MARXISM and Barack Obama and his leftist liberals friends plan on instituting these programs to the tune of TRILLIONS MORE OF YOUR HARD EARN MONEY.



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