Re: Community Reinvestment Act, and things like it.

There are people in this world (with exceptional commonsense and a keen understanding of human nature) who have great success predicting all the unintended dire consequences of each new law that Congress considers, but none of them ever seem to make it into the Congress. Many of them write books and articles that nobody reads till after their prediction comes true.

If these things don’t pull through… America will be subjected to heavy taxation to cover up the losses.

The Feds put us into this mess.

Their districts and a quick Google search for opponents next month over here. Let’s make them pay as well as us.

Your analysis is right on and unfortunately, when you don’t have conservatives in office representing your party, you have the potential for your ‘brand’ to be ruined. Bush, and now McCain, represent the big government GOP that sees government not as the problem but the solution. “We just use market solutions with the government’s help.”

Like Hoover did around the time of the great crash, Bush’s cabinet decided to do everything it could to prevent the inevitable slowdown. It put Republicans in a bind and forced them to support multiple un-conservative actions like the Bear Stearns bailout and F/F.

I don’t know how bad the economy will get but it’s going to be bad. And yes, Bush will get blamed for it. It is *now *that we must make sure we get our guiding philosophy in order and flush out all of the big government conservatives who will support any government action in the name of market stability.

We may have some of the most important fights ahead of us in the next four years and we need to be prepared to fight the coming calls for more government intervention. And we need to start being more careful to elect true conservatives – not just who we think is the most likely to win for our party. Winning at the expense of abandoning our small government principles is worthless.

You are correct, the key issue was ignored: government encourages lending to uncreditworthy borrowers, even to the point of penalizing lenders who don’t do it.

The GOP had the opportunity to make that the issue, but wimped out. Of course, a good portion of the GOP in Congress was following their leader, George Bush; and they’ve been doing if all these years, so expecting them to change their ways all of a sudden is a lot to expect. In that light, it’s actually heartening that we have as many friends of liberty in the Congress as we do.

This is why I was so against the “Crap Sandwich” (to quote John Boehner’s words we should make immortal): because it did nothing to address the source of the problem.

Now the pressure’s off — if this works; and if it doesn’t, Bush and the Party of Government (ignore the Ds and Rs behind people’s names–those don’t matter, don’t you folks get that? even now? McCain and Obama were shoulder to shoulder on this thing!) will run this same, Chicken Little play book over again.

A lot of the Redstate GOP partisans are really gonna hate what I’m gonna say now, but here goes: there is absolutely no basis for expecting McCain to be any different if he is elected.

You can say, “but he warned against Freddie and Fannie.” He jumped on Hegel’s bill, and he has managed mostly to forget about that since; why hasn’t he been talking about this issue? Why didn’t he press this point when he flew back to D.C.? No, all his ire has been directed at the markets — and he’s got Gov. Palin doing the same; it’s all “Wall Street Greed,” which is only part of the story.

So, what, do I want Obama? No; but consider this and think soberly: how many Republicans came along on the Crap Sandwich because they were pushed to by the leader of their own party? You really think Obama would have gotten Zach Wamp or Tom Coburn to go for this?

Conservatives need to get over the fantasy that we actually have a friend running for president this year. We do not. And if you have hopes for Gov. Palin (I do), do you really want her to spend the next four years serving Crap Sandwiches side-by-side with McCain?

We do have friends in Congress; we have a good base to build on. Those who stood against this withstood massive pressure. That’s something hopeful. If we are going to stop more Crap Sandwiches during the next four years, it lies there, not in the executive branch. And I’m sorry to say it, but: if McCain is in the White House, he’ll make that harder.

Two other regulatory failures were Sarbains-Oxley, which has been a meaningless distraction, and Mark to Market accounting which has been an accelerator to this crisis.
I wrote about the regulatory failings of this mess here…

Comments the Current Crisis – Regulation

…and called or a repel of SOX and adoption Principles Based Accounting.

Mark to Market accounting has made this crisis so much worse because it propelled a policy decision to make sub-prime loans, into a financial crises that will require Treasury intercession to fix.

Think of it this way: The IRS shows up at your house and says “Unless you justify every deposit into every account for the last three years you are going to jail.” You say, “No problem sir I have it all here in these 27 unsorted boxes” (and you do). You say “I’ll get back to you in a month.” And the IRS guy says, “Nope, You have 15 minutes or you’re getting cuffed”. That’s what Mark to Market accounting did to the banks.

Doug

www.dougist.com

And today’s WSJ has just such another conservative’s frightening government lending plan to ostensibly save the real estate market from its downward spiral. Seems to me that the real estate market can find its own proper bottom which ought to be related to the true cost of building new homes. Land values have always been ethereal but there is no good reason a government bailout should be used to keep them high. Negative equity homeowners have other things at stake that are being over looked: their credit-rating, their public character and their self-respect. And with good sense they can preserve those while waiting for the pendulum’s upswing.

"Mr. Obama’s "deregulation" trope may be good politics, but it’s bad history and is dangerous if he really believes it." Just ask Bill Clinton about what this crisis had to do with the GLBA.

It is the legislators’ cocktail of socialism and capitalist greed that has left our economy with this massive hangover following upon the ecstatic highs of its drunken binge. Government mandated socialism through Fannie, Freddie and the CRA impaired the market’s usual judgment so I’m for a detox phase aimed at softening the landing. But all toward teetotal. We need to buck up and get off the dole whether it is proposed by Hillary Clinton, Katrina Vanden Heuvel, Glenn Hubbard or Martin Feldstein. NO!

Buy low and sell high! The old advice is still correct! Stocks in general are at bargain prices: if you have any cash, and have been wondering about how to invest, choose long-term growth industries and run with them.

The panicked herd mentality currently reigning is also an opportunity for the entrepreneur and/or the calm investor. Business history shows that people who invested in stocks during the Depression did extremely well long term. This is no Depression, of course, but any downturn is an opportunity.

Let the morons sell low and lose even more money!

1.) You bought a home you knew you could not afford.

2.) You get real hungry and start skipping your mortgage payment.

3.) You are forced out of your house that you paid
$300,000 for.

4.) You have to move into an apartment or with family members or friends.

5.) The bank cannot sell your house for $300,000.

6.) No one is buying houses.

7.) The bank is stiffed the $300,00

8.) All the bank got paid was interest for a few years.

9.) Now – multiple this by 500,000 and you see the problem.

10.) But $300,000 x 500,000 is 150 Billion.

11.) You would have to have homes cost $700,000
and One million foreclosures to equal $700 Billion????

12.) You would have to sell assets at the value
it was purchased at. That will be difficult at best.
Even if you hold them for a few years, who is
paying to maintain and fix these assets.

13.) What is wrong with this picture??

The real Conservatives evidently got purged from the banking, credit and mortgage business some time around 1990, and then all the rest of them were left to die off.

Then someone had the wonderful idea to for banks to have credit-debt swap agreements with each other using fax machines, and to sell bad debt that had been recast as AAA or BBB bonds to each other.

And banks encouraged people to take second-mortgage loans to buy toys for themselves. To borrow against their equity, the only thing they really could count on, to finance braces and vacations.

Everyone got paid commissions.
Everyone got golden parachutes.
Everyone got screwed.

The problem is not legal, it is moral, and temperamental. You can’t encourage people who don’t have any money to invest in real property and expect them to pay, especially when builders overbuild and oversaturate the market and the value of the houses drop. Double whammy of stupidity.

It’s time for the real Conservatives to come back to the banking system and the mortgage and real estate system in this country. We need a full cleanout.

On the one hand, if suckers want to lose their money under the delusion they can get rich without working, go ahead.

On the other hand, precisely that kind of “philosophy” is so deleterious to the atmosphere of society that one would think we should not empower it so much.

Ohio is about to decide on whether to allow casinos: the “peer pressure” is immense. Except Kentucky, surrounding states have many more such things.

I didn’t see anyone force a gun to Wachovia’s head, forcing it to take on bad bonds. Same with the other financial institutions. And like it or not, the threat of mass insolvency was the pressure to have this bailout.

Heck, if Freddie and Fannie had been government owned, there’d likely have been no seeming guarantees of government security. For example, Department of Defense acquisitions have a nifty rule: If a bureaucrat commits the government to something without funding authorization, he’s personally liable for the full amount. Such rules encourage a healthy degree of caution. Letting essentially private companies use government money without restriction is unwise.

Sure, the government was influencing the country’s finances towards its own goals. You can’t expect such a big government to refrain from this. That doesn’t mean that the government shouldn’t justly regulate the markets.

The idea that capitalism is such a great economic system rests on everyone being informed, and on the availability of multiple supply sources. But individual sellers would do better if buyers didn’t know about risks or better offers. The government has to make sure the market is fair as well as free.

In this case, the credit crunch came about largely because people had no idea what banks were in trouble. More regulation could force such disclosure. And if we weren’t dependent on such a small number of institutions, we could allow them to fail when they deserve it.

I’m in full agreement that we don’t want socialism. But since we must have negative government interference in the market, let’s make sure to get some positive interference as well.