Politicians never learn they can't change the facts
Bill Wilson 9/28/08
All the back and forth over the proposed $700 billion bailout of New York financial firms has degenerated into gibberish, incomprehensible to most voters.If people are confused, then they have no choice but to leave the decisions up to the very people who created the mess in the first place.
And that is exactly what the politicians want. As much as they are trying to cover Wall Street’s backside, they are far more interested in covering their own.
It is a big job. Because no matter how much they act “shocked” by this whole affair, there is no denying that this crisis is the direct result of planned government policy.
While a few elected officials try to figure out a way to deal with the crisis, many on Capitol Hill, in the media, and in the partisan salons are busy doing what they do best - playing the blame-game and looking to escape exposure of their culpability.
House Banking Committee chairman Rep. Barney Frank, D-MA, led off the spin effort by stating, “The private sector got us into this mess. The government has to get us out of it.”
Notice that Frank doesn’t say “Wall Street” got us in to this mess. For him and all too many of his allies, it is the “private sector” that is evil. A chorus of lesser voices have been dutifully parroting Frank ever since.
What Frank, Senate Banking Committee chairman Sen. Chris Dodd, D-CN, and others of their ilk are afraid of is that the public will learn the facts of this debacle. And the facts are clear.
The crisis we face is not a failure of the private sector. This crisis was conceived, manufactured, nurtured and defended by government and the horde of apologists who feed off of it.
As Deep Throat admonished a generation ago, let’s follow the money. In 1995, the Clinton Administration issued rules that required banks and lending institutions to give loans to people who could not afford them. The lending standards were essentially gutted. This was an overt act of government.
The banks complied and gave the loans. They got the money to lend by selling the bad mortgages to Fannie Mae and Freddie Mac. These semi-government entities “bought” the bad mortgages from the banks. But where did Fannie and Freddie get the money to buy the bad debt?
Fannie and Freddie got the money by packaging the bad debts into bundles and selling them to investors. Now, most people would never have bought these “mortgage backed securities” except for one thing: Fannie and Freddie marketed them as backed by the U.S. Government.
So, naturally, investors bought them. And over time, these securities were traded and treated just like real money. But of course they weren’t “real money.”
They were backed by little more than hope; hope that people with insufficient income or prospects would somehow be able to pay the mortgage.
When those mortgage payments failed to materialize, the securities couldn’t pay the dividends and the whole sordid deal started to fall apart.
Now, should investment companies and large banks have been aware and defended themselves and their stockholders? Yes, of course. But they were told from the beginning that the government had their back. It was “risk free.” Now they are calling the government’s bluff and we, the taxpayers, are getting stuck.
There was ample warning. Since 1999, responsible members of Congress and the two presidential administrations have attempted numerous times to tighten the lending standards and force reform of the system.
But using millions in political cash, Fannie Mae and Freddie Mac blocked all moves at reform. And people like Frank and Dodd – and, yes, Barrack Obama -- were there to defend the government social policy, while raking in tens of thousands of campaign contributions for themselves.
So now all of us will pay dearly for this failed utopian government policy. And while it will be an expensive and painful lesson to learn, learn it we must if we are to avoid a more costly repeat.
When government uses its power to distort the market for arbitrary ends, the scheme fails. Facts will not change just because some starry-eyed politician says they should.
It seems simple. So why do our politicians have such a hard time learning it?
Bill Wilson is chairman of Americans for Limited Government.
3 Comments
Reader Comments:
POSTED Sep 28, 2008
Ron Norman: "Senator Dodd even as the country teetered in the balance of disaster slipped in a $900 million 'earmark' to Acorn, the Democrat voting registration scam. We really need term limits because of the political thugs like this and Barney Frank."POSTED Sep 28, 2008
ic: "Politicians learn very fast, very well. Obama is master since day one. They learn to manipulate the system, the taxpayers, the voters (not all voters are taxpayers) to return them to office. They use the "contributions" to run enormous disinformation campaigns to put them in office. For the rest of the world, "campaign contributions" to put politicians in office are called bribes. They learn to fatten their donors with millions of taxpayers' money and call them earmarks. For the rest of the world "porks earmarked for cronies" are paybacks for the bribes. They also learn to blame everything bad happened on greedy Big Oil who supplies our economic life blood; Big Pharma, who saves our lives; Wall Street who provides us jobs. What have polticians done to improve our lives? The only people who have a hard time learning anything are the voters. They keep returning the same crooks to office to fleece them over and over again."POSTED Sep 28, 2008
attack machine fuel: "I hope McCain comes to the next debate armed with some compelling facts tying Obama to the meltdown through his personal history or his party's participation. If The Obamameister wants to use Bush as an anchor to sink McCaain, McCain needs a similar device that will knock BO off is holier-than-thou perch and make him stumble in front of the nation."