UPDATE: Don’t believe me? How about one of America’s leading economists, who happens to also be African-American, Thomas Sowell: “Do Facts Matter?”
If you want to cut to the chase, and understand the root problem of the current US financial meltdown, watch this 90-second video:
As the sharp drop in US consumer confidence takes its toll on my own business, I’ve had a chance to read quite a bit about what has happened. Here’s my take, in layman’s terms:
Democrat social engineers in US elected office – starting with Jimmy Carter and his Community Reinvestment Act, and Bill Clinton’s radical expansion of government-mandated sub-prime loans through Fannie & Freddie in the late 1990s – created a real-estate bubble fuelled by irresponsible people receiving credit they could never repay unless home prices continued to rise forever. But as the Clinton-era rules created positive fiscal and political incentives to keep the bad loans going, the risks were ignored by the issuing banks. The issuing banks, and their enablers at Fannie & Freddie, assumed that, in the case of a meltdown, they would be bailed out.
In order to hide the extreme risk of this mass of bad loans, the Mortgage industry conspired with Wall Street investment bankers to hide these loans amongst a variety of better-quality assets in Asset-Backed Commercial Paper, spreading the risk throughout the world.
When the Bush White House, and certain Republican congressional leaders, raised the alarm about this powderkeg of a problem starting in 2001, they were thwarted time-and-again by dissembling, corrupted Freddie & Fanny-connected Democrats (as shown in the video), and possibly some connected Republicans as well, although I’ve never seen names. Said politicians knew the whole ponzi scheme would eventually blow up; but Plan B was always in their back pocket: BAILOUT at the hands of taxpayers.
The bottom line: every penny of this nearly-trillion-dollar bailout is essentially a socialist transfer of wealth, from hard-working American taxpayers and international investors, to irresponsible non-working fools who will continue to be propped up in homes they never should have owned in the first place.
In other words: a massive back-door welfare scheme, who’s bill has finally come due.