You see, two things led us here; artificially low interest rates driven directly in some cases and indirectly in others by federal government intervention, and irresponsible consumption by us, the consumers. There were entities in the government, from BOTH parties, pressuring the Federal Reserve to lower rates in order to promote poor home ownership and just lending in general. The one side got to say, “See how good we are doing? More people own homes now than ever!!!!1!!1! We are doing good!!!!1!!!1” and the other got to say, “See how good this economy is? We did that!!!11!1!!” Unfortunately for us, those low rates inflated competition between banks and other lending institutions to lend all this cheap money. Those companies then started coming up with and promoting “creative” ways to lend. Thats how a couple who makes a combined $19 an hour qualified for a $120,000 home loan, at one time. Thats where irresponsible consumption comes into play. When lending institutions lend responsibly, your pre-qualification letter is generally a pretty good indicator of the amount you can spend on a house. The consuming public saw what they qualified for and after they put their eyeballs back in their heads, shopped in that price range. But little did they know that those numbers were inflated because of that banks low credit standards caused by inflated competition, and in most cases, their, *ahem*, “creative” loan programs. That ultimately comes down on the consumer because THEY are the ones responsible for determining what they can afford, not the bank. Now these people are out because they couldn't afford their home. These banks are typically not the ones having the financial issues now, as they already sold their bad debt off to other investment entities, like Bear Sterns. But why would they buy the bad debt? It's simple, that debt was RATED as a safe investment. Thanks federal government!
Okay, so how do we fix this? It's simple DO NOTHING! The market already fixed the problem!That's what the downturn was. It's wasn't the problem, it was the solution!
Okay, so what will the bailout do? The bailout will do 1 of 2 things; either these lending institutions will sell of their debt, and continue to lend irresponsibly, driving us into the same place that we are in right now in 5-10 years, essentially wasting that $850+ billion, or, whats more likely, is the lending institutions will sell of their bad debt, and say “Thanks, but we learned from our mistake, and are going to make solid investments from now on”, essentially wasting $850+ Billion, because we'll be in the same spot we are now.
The kicker is, not only will we have to pay that money back in the form of taxes, they essentially created that money out of thin air, like they like to do, which inflates the dollar, and really punishes the poorer population who has to make each dollar go farther. Apart from sending our troops and Trillions of dollars into a voluntary war, this is the most irresponsible thing the federal government can do. And our lawmakers refused to defend us, the people they were sworn to represent. Dave camp, my representative, bent right over both times. Carl Levin took it in the mouth both times. Pete Hoekstra, the neighboring representative, wasn't satisfied with the size the first time, but opened wide for the second, and much bigger one. Actually, the sexual innuendo is misplaced. They didn't get fucked, WE DID. And THAT'S THE TRUTH.
http://www.campaignforliberty.com
http://www.bobbarr2008.com (the only candidate who really understands economics)
P.S. That couple who qualified for that giant loan, are now making over twice as much an hour as they were and still cant imagine how they would have afforded an extra $40 grand in debt. Thank heaven for good decisions.
