Sunday, September 21, 2008

A Liberal's Worst Nightmere: "Dead Center"

Give yourself an hour to learn everything you really need to know about the current financial meltdown: Mark Levin breaks it down with mathematical precision.

His bottom line point is this: More than any other party, it is the US government that is primarily responsible for the financial breakdown. It was the US government through acts of Congress, that imposed through coercion, policies upon our private sector financial institutions to lend out large sums of government guaranteed money to those who were completely ill equipped to repay the loans. No money down loans with no verifiable collateral or source of income. Home ownership for minorities and other sectors rose substantially and politicians pointed to the new "ownership society" and celebrated. But there was a dark side to this good news that no politician was willing to point to. The dark side? Many if not most of these new homeowners were simply not in a position to repay their loans, they were over their heads from day one. Speculators also took advantage of the easy credit and purchased multiple homes on the religious belief that home values will rise forever. When their new assets were suddenly worth less than what they owed, they simply walked away leaving the banks holding the bag. The banks suddenly own a lot less cash and a lot more illiquid assets in the form of real estate that is now worth less than was lent out originally on the property. So banks are now desperately short on cash; are not in a position to lend out money, and many are on the verge of collapse. Even a tiny "run" on the bank at this stage will spell disaster for the entire US economic system and could trigger a global recession... or worse.

Since it was Government's political policy to ease credit standards to the point of disaster, it is only fitting, natural and correct that Government step in and bail out the system before it collapses completely. But people need to understand that the Government is us. Our elected officials (primarily Democrats) pursued these policies of low credit standards in order to benefit what they believed was their constituencies, and of course to benefit their cronies at Fannie Mae and Freddie Mac who contributed millions to these same politicians and walked away with tens of millions each from those institutions. Some of these politicians should go to jail, but will instead certainly retire with comfortable taxpayer pensions.

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