Posted by
Sgt Relic on Friday, September 26, 2008 11:28:19 AM
You have a job. You’re getting by even in the face of rising food and gas prices and your managing to pay the mortgage on time. Your 401k plan has taken a slide but you still have time to recover since it a long-term investment and you understand this. The housing market is down but you are feeling like it will rebound given time, so you cut expenses and hope things don’t get too expensive. Your plan is simple; play defense and wait it out.
Does this scenario sound familiar to anyone? It should, since it describes most of Middle America.
Enter the government and the wizards of Wall Street. They have a plan too. It’s been in place for 30 years beginning with the Community Reinvestment Act of 1978 and culminating in the Clinton Banking Bill in 1999. CNN reported the signing of the later on November 12, 1999 saying in part: [emphasis is mine]
"This legislation is truly historic and it indicates what can happen when Republicans and Democrats work together in a spirit of genuine cooperation," Clinton said at a White House signing ceremony. The event brought together the president and several Republican members of Congress who have been among Clinton's sternest critics -- a sign of the bipartisan support that eventually developed for the package." [Don’t we just love bi-partisan support?]
"Congress passed the bipartisan measure November 5, opening the way for a blossoming of financial "supermarkets" selling loans, investments and insurance. Proponents had pushed the legislation in Congress for two decades, and Wall Street and the banking and insurance industries had poured millions of dollars into lobbying for it in the past few years."
"The world changes, and Congress and the laws have to change with it," said Senate Banking Committee Chairman Phil Gramm (R-Texas)” [Gramm could have said this yesterday and probably did!]
Read the full story here but the names are same as our current crisis champions. The same people who touted in glowing terms the creation of these “supermarkets” are now telling us that they are too big to allow them to fail.
The most damaging element of this legislation was the item most desired by the Clinton administration and had been the sticking point in the negotiations. Here is a quote from the CNN piece:
“…the Clinton Administration itself had threatened a veto of the legislation as it took various forms that raised a series of White House objections. In recent months, the administration objected most sharply to the issue of rules requiring that banks make loans in minority and low-income communities where they operate.” [This is the foundation of the misbegotten idea that homeownership is a right, regardless of ability to pay]
There is absolutely no good reason that the taxpayers should be happy about buying these toxic assets. We are constantly being bombarded with the idea that we need to “make investments” (read: be further taxed) in a myriad of government giveaways, bridge boondoggles, green alternatives, and a host of other unwanted or unnecessary programs. We don’t even get the courtesy of a prospectus from these “snake oil” salesmen.
Why would anyone, who fits the opening scenario, want to invest in a known bad investment? If we wouldn’t buy stock in AIG last month why would we want to buy it now? This is not how you go about keeping your assets.
The bailout is filled with hopes and promises that this will not happen. They say, Uncle will hold these properties until they can be sold at profitable prices. Should we believe that a glut of standing property doesn’t depress the sales market? Of course these are the same people who said the ’99 banking bill was revolutionary and would foster prosperity and huge savings for taxpayers.
Pardon me if I don’t cheer as another example of central planning goes down in flames, only to replaced by an even bigger scheme of central planning. This is a failure of government of colossal proportions. Any self-respecting person who was involved in this should resign quietly.
Have no fear. There will be a bailout package. The only question remaining is how bad will it fail? Congressional republicans should avoid this like the plague.