The title I have chosen for this entry is unusual for me, as it is a quote from a non-founder. It is, in fact, a quote from Ronald Reagan. I have used it because it captures perfectly and succinctly a principle on which the Founders expounded at considerable length and which served as the basis for the very design of the Constitution.
Today, I’m feeling succinct. I’ll not burden you with the quotes from the founders. You can look them up yourselves. I’m moving straight on to Exhibit A:
So let me get this out of the way right off the bat: whoever made this montage did a great job, but is obviously a blind partisan. They conveniently left out the part where Bush turns a blind eye to egregiously overreaching government involvement in free market economics and then brags that more Americans have achieved the American dream of home ownership during his administration than in any other.
What he chose to ignore and the Democrats in Congress chose to embrace was the social engineering of “affordable housing”. Simply put, the government pressured Fannie Mae and Freddie Mac to loosen the rules for giving loans so that more people could own homes. More people owning homes: sounds great, right? Wrong. More people achieving, earning, and affording homes is good. More people getting homes isn’t.
What went wrong? Well, people were approved for loans that shouldn’t have been. Why did they buy them? Well, they figured that if the government-regulated industry was approving them for the loan then they could obviously afford it. Why on earth would banks give loans to people who couldn’t afford to pay them? Because the GSEs bought up the loans, packaged them into mortgage-backed securities, and sold them to the banks on the pretense that these securities were just as reliable as they always had been.
And then this happened:
Crash and Burn
So whose fault is it? Well, let’s recap:
- People made these loans because they thought they could afford them.
- They thought they could afford them because brokers approved them.
- Brokers approved them because Fannie Mae and Freddie Mac were willing to buy the loans under looser restrictions.
- Banks and financial institutions bought the mortgage-backed securities because they had always been sound and they had no reason to believe that federally regulated entities would actually pass them bad paper instead of good loans.
- The looser restrictions came about because Congress enacted legislation to pressure Fannie and Freddie to make loans to more people (remember, these are GSEs beholden to the government).
- Fannie and Freddie then cooked the books to make this stuff look legit and good so that they could get their big bonuses.
- Fannie and Freddie CEO’s then used those massive bonuses to make hefty contributions to their favorite senators: Dodd, Kerry, Obama, Clinton, etc.
- The government then steps in to rescue the whole mess by printing money we don’t have to shore up home values while devaluing the dollar those values are based on. You see, if dollars are worth less then those debts don’t look so big after all… right?
I guess, if nothing else, this whole thing achieved what it was intended to: affordable housing. Houses are now worth much less than they used to be, which makes them more affordable. See, government is effective after all.
Now that government has solved affordable housing for the nation, Barack Obama wants to put it to work on affordable health care. Here’s the best part: we’re asking him to. He’s making govenment cool again… you know: like it was under Jimmy Carter. Or was it FDR? No? How about Wilson? I’m just sure it was cool at some point and then it just lost its way.
The truth is that government ruins everything it touches. Even the most strident socialist falters when I ask him to name one private institution or industry that has been improved by government involvement. Furthermore, government simply has no prerogative to be stepping into the areas of finance and ownership. We should all want the government as far from our pockets and property as possible and this is a perfect example of why.
I could go on and on about this, but I think you folks get the picture: that government is best which governs least. All of this garbage is so far out of the scope of the intended role of our government, it’s ridiculous. Forget windmills; we could solve our nation’s energy problems by harnessing the rotation of our Founding Fathers in their graves.
Fabius Cincinnatus
