Thursday, July 5, 2012

Mortgage Crisis - Federal Planning

I was writing comments on another article and I got me to thinking how our government hurts more times than it helps when it tries to do anything.  It is good at building a military, but to what end.  We try to rid the country of poverty and for the billions spent poverty is up sharply.  The government tries to increase home ownership and a housing bubble/crash ensues.

Local banks could have solved this mortgage crisis or even prevent it, but government regulation and fiat prevented them from doing so.  The were "encouraged" by force of law to make sub-prime mortgages or risk being forced out of business.  Lower your standards or else! Now, we have people walking away from mortgages on houses they never could have afforded without "government" help, plus a large number were victims of predatory lenders.  If the government should have been involved at all it should have been to regulate lending practices because the vast majority of the victims are minorities (talk about selective racism).  There are those banks that lent to anyone, no verifying paperwork necessary, because money was to be made and quasi-government Fanny and Freddy were there to catch them. 

Local banks know the local economy and the people's ability to pay for a house, so why not let the local bank handle it?  Would it not have been better to allow the banks to decide who could afford a house based on guidelines and verified with actual paperwork?  The government couldn't allow that because it is racist at its core because you are not allowed to have standards that apply equally to everyone.  You need special rules for special people because they are special.  What the heck makes them special?  Who gets to decide that someone is special and needs special patronizing treatment? 

I believe in equal treatment under that law and I know that because we ended slavery and the Indian wars yesterday and we need to protect these special people.  I must be a racist for saying such things because there really are special people in America and they need special rules.  Which I think is beyond racist in a country that says all men are created equal and enjoy equal protection under the law.

Back on topic, local control of mortgages (with legal guidelines to prevent criminal activity) also provides incentives to people to work hard and get that house.  It also means builders don't get to sell a $150K house for $400K because there would be no money available to pay these outrageous prices.  I wonder how the government scheme was suppose to work?  How do you sell overpriced houses to people that can't afford them and think of that as helping?  Once again thank you meddling problem solving government for your latest miracle of government planning.

The left always goes back to the fact that if can put a man on the moon the government should be able to do X, but that is a false argument because it truly wasn't the government that put a man on the moon but the caring and dedicated people.  Yes, they were supplied with a huge government budget and political will, but it was the individual contributor to the mission that made it possible.  We were scared and fighting for our lives, so everyone was pretty motivated.  I don't see that kind of motivation when it comes to home ownership or solving poverty, but rather half-assed measures to make ourselves feel better irregardless of if it actually helps or not.  Plus, there is zero thought to the long term consequences of such "helpful" actions, such as a massive recession brought on by the bursting of the housing bubble.

The best government is the one that helps the least because Austerity leads to Prosperity! 

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