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Democrats Say: We Are Too Patriotic 2004 US Federal, State, and Local Government Spending

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The Sub-prime Blame Game

by Christopher Chantrill
March 11, 2007 at 10:24 am

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THANK GOODNESS the Plame Game is over and Scooter Libby safely convicted for—what exactly was it? Now we can concentrate on the next Big Thing; the meltdown in the sub-prime mortgage market.

As a veteran broker commented: “Anyone could have seen that was coming.”

After “Bush Lied” it’s “liar loans.”

Even The New York Times has noticed. Gretchen Morgenson warned March 11, 2007 of trouble ahead in “Crisis Looms in Market for Mortgages.” On March 1, 2007, she advised, an “analyst at Bear Stearns wrote an upbeat report on a company [New Century Financial] that specializes in making mortgages to cash-poor homebuyers,” By Friday’s close, NEW had collapsed from $30.25 per share on February 1 to $3.21.

The only thing that is uncertain is just how President Bush is to blame for the whole thing. But never fear: the central skill of practical politics is to take the latest systemic government failure that “anyone could have seen was coming” and confidently blame it on the president.

In the current mortgage meltdown the president is clearly responsible for permitting the development of a “liar loan” market, the “stated income” mortgage loans in which the borrower merely states his/her income in a loan application without having to back it up with documentation.

The very idea! It violates the first principle of the welfare state that people are helpless and not to be trusted in the normal transactions of adult life. Mr. President, how could you allow innocent working families to lie themselves into foreclosure and bankruptcy?

It’s a pity that Mike Wallace is no longer the lion of the ambush interview that he was in his prime. “You mean to say,” he would have bellowed to a humble loan officer, “You mean to say that no check is made of an applicant’s income?”

There ought to be a law.

There ought to be a law about the ridiculous level of subsidy for home ownership: the mortgage interest deduction, the federally insured home loans, the government-sponsored enterprises like Fannie Mae and Freddie Mac that are issuing oceans of mortgage debt. All these government programs conspire to raise the price of housing above that which would obtain in an unhampered market for housing and mortgage loans. When events conspire to create a perfect storm, combining subsidy, environmentalist “smart growth” restrictions, and record low interest rates needed to stave off deflation after the NASDAQ crash, well, you could have seen it coming: a mega-boom followed by a bust.

There ought to be a law.

Bu let us look at the big picture. Let us look at the big things that we spend money on. There is housing, health care, education. Those are the big three. Then there is transportation, food, clothing, housewares, recreation, savings. Then there is taxes.

Notice anything? The big three--housing, health care, and education--are so important that the governing class feels a compelling need to supervise them in detail.

(Notice also that housing, health care and education are areas in which women instinctively focus their interest. Is that why the governing class is so interested in supervision? The little lady just can’t be trusted to act responsibly?)

The result is that the big three are completely screwed up. Health care is screwed up because its third-party payment scheme encourages people to treat health care as a free resource. Education is screwed up because it is a government monopoly and people are powerless to seek out an education adapted to the individual needs of their children. They must take what they are given. Unable to exercise choice in health and education directly people--that is to say, women--focus all their energies and resources on housing, bidding up the price of housing in areas with good schools. Government adds fuel to the fire by subsidizing everyone’s housing dollar.

The result, as Mark Steyn has written, is that average westerners have become adult teenagers, provided with pocket money to buy fancy houses, cars, and home electronics, but powerless to make the important decisions in their lives.

One fine day we are going to stumble upon the radical notion that people ought to pay for the necessaries of life with their own money and with the minimum of privilege, subsidy and government control. Progressive people will declare it to be a question of human rights. Practical people will declare it to be a matter of common sense. Readers of The New York Times will confidently pronounce at fashionable dinner parties that the policy mix of subsidy in housing, third-party payment in health care, and compulsion in education that obtained at the turn of the twenty-first century was a disaster waiting to happen.

Anyone could have seen it coming and it was all Bush’s fault.

Meanwhile you can expect that your average presidential candidate and your average White House reporter will suddenly become experts in the “liar loan” department.

Christopher Chantrill blogs at www.roadtothemiddleclass.com.

Buy his Road to the Middle Class.

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Action

The incentive that impels a man to act is always some uneasiness... But to make a man act [he must have] the expectation that purposeful behavior has the power to remove or at least to alleviate the felt uneasiness.
Ludwig von Mises, Human Action


Chappies

“But I saw a man yesterday who knows a fellow who had it from a chappie that said that Urquhart had been dipping himself a bit recklessly off the deep end.”  —Freddy Arbuthnot
Dorothy L. Sayers, Strong Poison


China and Christianity

At first, we thought [the power of the West] was because you had more powerful guns than we had. Then we thought it was because you had the best political system. Next we focused on your economic system. But in the past twenty years, we have realized that the heart of your culture is your religion: Christianity.
David Aikman, Jesus in Beijing


Churches

[In the] higher Christian churches... they saunter through the liturgy like Mohawks along a string of scaffolding who have long since forgotten their danger. If God were to blast such a service to bits, the congregation would be, I believe, genuinely shocked. But in the low churches you expect it every minute.
Annie Dillard, Holy the Firm


Civil Society

“Civil Society”—a complex welter of intermediate institutions, including businesses, voluntary associations, educational institutions, clubs, unions, media, charities, and churches—builds, in turn, on the family, the primary instrument by which people are socialized into their culture and given the skills that allow them to live in broader society and through which the values and knowledge of that society are transmitted across the generations.
Francis Fukuyama, Trust


Class War

In England there were always two sharply opposed middle classes, the academic middle class and the commercial middle class. In the nineteenth century, the academic middle class won the battle for power and status... Then came the triumph of Margaret Thatcher... The academics lost their power and prestige and... have been gloomy ever since.
Freeman Dyson, “The Scientist as Rebel”


Conservatism

Conservatism is the philosophy of society. Its ethic is fraternity and its characteristic is authority — the non-coercive social persuasion which operates in a family or a community. It says ‘we should...’.
Danny Kruger, On Fraternity


Conservatism's Holy Grail

What distinguishes true Conservatism from the rest, and from the Blair project, is the belief in more personal freedom and more market freedom, along with less state intervention... The true Third Way is the Holy Grail of Tory politics today - compassion and community without compulsion.
Minette Marrin, The Daily Telegraph


Conversion

“When we received Christ,” Phil added, “all of a sudden we now had a rule book to go by, and when we had problems the preacher was right there to give us the answers.”
James M. Ault, Jr., Spirit and Flesh


Democratic Capitalism

I mean three systems in one: a predominantly market economy; a polity respectful of the rights of the individual to life, liberty, and the pursuit of happiness; and a system of cultural institutions moved by ideals of liberty and justice for all. In short, three dynamic and converging systems functioning as one: a democratic polity, an economy based on markets and incentives, and a moral-cultural system which is plural and, in the largest sense, liberal.
Michael Novak, The Spirit of Democratic Capitalism


Drang nach Osten

There was nothing new about the Frankish drive to the east... [let] us recall that the continuance of their rule depended upon regular, successful, predatory warfare.
Richard Fletcher, The Barbarian Conversion


Education

“We have met with families in which for weeks together, not an article of sustenance but potatoes had been used; yet for every child the hard-earned sum was provided to send them to school.”
E. G. West, Education and the State


presented by Christopher Chantrill

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