We have a government that cannot balance its books, defend its borders or win its wars. And what is it now doing? Drafting another entitlement program as we are informed that the Social Security and Medicare trust funds have unfunded liabilities in the trillions.
At the end of the first decade of the 21st century, the question is not whether we will preside over the creation of a New World Order, but whether America’s decline is irreversible.
Alex, I’ll take Government Interventionism for $40.
Today the U.S. government, directly or indirectly, underwrites nine of every 10 new residential mortgages, nearly twice the percentage before the crisis. Just last week, the Treasury said it would cover an unlimited amount of losses at mortgage giants Fannie Mae and Freddie Mac through 2012.
What is the definition of insanity?
Have you seen the signs that tout the fact that certain road projects are being funded by the stimulus bill passed earlier this year? I have. They apparently cost millions of dollars to make, but Democrats don’t want that funding cut, blaming the proposal instead on sour grapes that the stimulus is “working.”
Some of the projects are nice, I’ll have to admit. And one of them has resulted in a big hole in a road that has blocked use of that road for many rural commuters and doesn’t look like anybody’s working on it.
The signs actually put me in mind of ex-Gov. Rod Blagojevich’s name being plastered all over toll plazas.
Maybe the stimulus signs should say something like, “This project is expected to put your children and children’s children into heavy debt.”
Here is a perfect example of what C. John Sommerville writes about in “How the News Makes Us Dumb.”
On my Yahoo home page, the Associated Press has the headline:
Bernanke: Recession may end in ’09; stocks climb
The Reuters headline is:
Bernanke fears recession may extend to 2010
Cato Institute has posted this video about the ill-advised stimulus bill.
While in Indiana on Monday, Obama said the nation is facing “an economic crisis as deep and as dire as any since the Great Depression.”
Cato Institute has released the following video as a primer on the problems caused by farm subisidies — higher taxes, higher costs, unethical manipulation of legislation by congressmen representing rural/farm districts. The video focuses on the growth of the USDA as one example of oversized government.
You want to talk bailouts? What about the annual federal bailout called “farm subsidies”?
I love farming and farmers (although hugging is strictly off-limits). My grandpa was one. The best summers of my childhood were spent on his farm. My wife, kids and I live in the country on 2 acres, in the middle of farms, and tend to a 1/4-acre garden as well as a half dozen chickens.
But, as this article points out, most subsidy money goes to corporate farms, not the guys who live in our neighborhood. The impact of these subsidies on the physical health of the nation, let alone the financial health, can be seen in “The Omnivore’s Dilemma.”
Also, Thomas Sowell writes in “Basic Economics” that subsidies are never good, that they artifically inflate the cost of food and, eventually, everything else related to the production of that food.
It’d be good to reduce these subsidies. But, since Barack Obama is shaping up to be another FDR with his New New Deal (a/k/a a $1 trillion stimulus package), I doubt that’ll be happening soon.
While I disagree with U.S. Sen. Jim DeMint’s, R-S.C., speculation that we’ll “have riots” is the automakers bailout is passed, he has some wise things to say about the eventual economic impact.
“There is no question this will result in inflation,” DeMint said. “The amount of money we’ve borrowed, the amount of money we’ve printed has put us in a more dangerous situation than we’ve ever been in as a country. We may not see the inflation as long as the economy is slow. But, I’ve talked to some economic experts and once the economy starts picking up with so much money in the money supply and so much debt, we’re likely to see very high interest rates and very high inflation rates.”
On the other hand, higher interest rates wouldn’t be a bad thing for people who actually save some money instead of spending it all.
I have little doubt, though, that the automakers bailout will pass, and that the nationalization of the U.S. economy will continue under an Obama administration.
Who would’ve thought, he said, that the financial and economic disaster we’re enduring could have been brought on just by trying to offer low-income people the opportunity to have an affordable mortgage so they could participate in the American dream of owning a home?
My question is: Why didn’t more people see it coming? Easy credit is not the only cause of the current problems, but the government’s requirement of banks to make risky loans to people who, in any other situation, wouldn’t qualify because of bad credit or low income is one of the factors that has led to where we’re at today.
The availability of subprime mortgages, which also put the “American dream” into reach of many whose income and credit history wouldn’t otherwise have been able to get loans.
Here’s what economist and columnist Thomas Sowell wrote back in August:
The Community Reinvestment Act lets politicians pressure lenders to lend to people they might not lend to otherwise — and the same politicians are quick to cry “exploitation” when the interest charged to high-risk borrowers reflects that risk. The huge losses of sub-prime lenders, some of whom have gone bankrupt, demonstrate again the consequences of letting politicians try to micro-manage the economy. Yet with all the finger-pointing in the media and in government, seldom is a finger pointed at the politicians at local, state and national levels who have played a key role in setting up the conditions that led to financial disasters for individual home buyers and for those who lent to them.
The U.S. government has had to get involved in “rescuing” the market (instead of, apparently, letting it work itself out over time, because we’re too impatient for that) because of unnecessary government intervention in the loan process. This is a prime example of why the government needs to leave as small a footprint as possible in business and society. This is plainly the result of social engineering: government meddling in the markets to guarantee a social outcome.
Nothing good ever comes of social engineering, Rep. Jackson. Government should protect rights, for sure, but guaranteeing home loans at the expense of taxpayers? That’s forced equity, and won’t stand in a free market.
As should be obvious by now.