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Apr 04 2013

Teeing Up the Next Financial Crisis

Economically and politically, the country is still reeling from the aftershocks of the 2008 housing collapse, which was caused largely by the federal government coercing banks to make bad loans to persons of sacred nonwhiteness for the purpose of redistributing wealth. After all the hardship caused and the $zillions of wealth destroyed, at least our rulers know to back off on applying Affirmative Action to mortgage loans, right? Wrong:

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place. …

Obama pledged in his State of the Union address to do more to make sure more Americans can enjoy the benefits of the housing recovery, but critics say encouraging banks to lend as broadly as the administration hopes will sow the seeds of another housing disaster and endanger taxpayer dollars.

Obamunist bureaucrats are “encouraging lenders to use more subjective judgment in determining whether to offer a loan.” This offers a clue as to what is meant by “subjective judgment”:

The administration’s efforts come in the midst of a housing market that has been surging for the past year but that has been delivering most of the benefits to established homeowners with high credit scores or to investors who have been behind a significant number of new purchases.

“If you were going to tell people in low-income and moderate-income communities and communities of color there was a housing recovery, they would look at you as if you had two heads,” said John Taylor, president of the National Community Reinvestment Coalition, a nonprofit housing organization.

People who have worked hard and have made major sacrifices to retain their high credit scores should not be allowed to enjoy a rebound in the housing market while “communities of color” have to live within their means. That wouldn’t be Hopey Changey.

Deciding which borrowers get loans might seem like something that should be left up to the private market. But since the financial crisis in 2008, the government has shaped most of the housing market, insuring between 80 percent and 90 percent of all new loans, according to the industry publication Inside Mortgage Finance. It has done so primarily through the Federal Housing Administration, which is part of the executive branch, and taxpayer-backed mortgage giants Fannie Mae and Freddie Mac, run by an independent regulator.

The word for this arrangement — whereby nominally free market sectors of the economy are actually rigidly controlled by authoritarian bureaucrats — used to be fascism. But that word now means almost exactly the opposite of what it did in the days of Mussolini and Hitler. Now it can be defined as “anything liberals don’t like.” So we’ll call current housing policy corporatism — a stepping stone to the straightforward communism that is only one or two more government-engineered crises away.

money drain
Here we go again.

On tips from Bob Roberts, Sam Adams, G. Fox, and Artfldgr.

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  • Dr. 9

    I firmly believe that by the time he leaves office, assuming he does leave, Mullah Obummer will do everything he can to strip White America of everything it’s worked for and earned, and give it to black America. This will assure that blacks remain locked into supporting Demoncrats, and, will also assure their support for whatever the Marxist-in-Chief has planned for his future. You didn’t really think he would simply walk away, did you? With an ego the size of Alaska?

  • Ummah Gummah

    .

    Printing money will get you about 20 years in jail. But not when Obama is doing it.

    .

  • Wizard45

    I believe the operative “thought” here is the usual liberal “idea” that this program failed the first time because we didn’t do enough lending to people who can’t pay back the loans. We have the “right” people in charge this time so “what could go wrong”.

  • Rotohammer

    “taxpayer-backed mortgage giants Fannie Mae and Freddie Mac”.

    Uh, that statement is more loaded than the town drunk. I’m sure the writer is implying these agencies are approved by taxpayers, and that makes this OK. It would be more accurate to say “coercively-subsidized-by-taxpayers-at-the-barrel-of-a-gun mortgage giants”.

  • Ghost of FA Hayek

    Except this time there will be no risky derivatives for Wall street bankers to play with.
    Instead the taxpayer will bear the full on frontal burden of these bad loans.
    But wasn’t it your dream to own a little piece of Detroilette ?

  • Kevin R.

    The whole scam reminds me of Mugabe taking farms and giving them to his political base. It’s basically the same idea only it’s even more dishonest as the theft is done under the rubric of not being a taking at all.

  • Tax Slave

    Zimbabwe trillion dollar notes for sale at http://zimbabwedollars.net/.

    Weimar republic marks are more collectable, though.

  • Elections Have Consequences

    Bout time the community got some of that bammy stash. True believer voters are entitled to some of that bacon. The deep pocketed taxpayers will pay for it all when it goes over like a lead ballon.

  • Alborn

    In communities of color what is the unemployment rate, anyone? No jobs no obamie money no recovery. Why don’t moochelle and oblamer buy some of these people they put in the unemployment line a house. Just saying put YOUR money where your mouth is.

  • Son of Taz

    Go time is here. Let’s do it.

  • http://iopian.blogspot.com IOpian

    This is the kind of behavior from these people believing their own lies. They actually believe that the ‘failed policies of the past’ that collapsed the mortgage market and plunged us into this calamity but rather it was Bush and othe capitalists that caused this mess rather than their Community Re-Investment Act and control and protection of Freddie and Fannie.. again, isn’t the definition of stupid trying the same thing over and over expecting different results?

  • True Blue

    Ghost;
    Yes, they are repackaging these (yet again) as mutual funds etc and playing around with them, just like in the housing collapse; only this time it will be worse, because cars ONLY depreciate, which means that there won’t be a worthwhile asset to resell when the bank has to repo after the inevitable failures to repay the loans.

  • True Blue

    But hey, nobody worry; thanks to the supreme court ruling on ZeroCare, the government has the ability and right to force each and everyone of us to either buy a new GM or pay a tax. The sudden flood of people forced to make new purchases (even if they don’t need or use it) will offset the losses, and all the ‘poor, underprivileged people’ can of course have theirs for free.
    Just wait.

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