“It is the policy of the federal government to use all resources at its disposal to make our financial system stronger,” Paulson said. “We will use all of the tools we’ve been given to maximum effectiveness, including strengthening the capitalization of financial institutions of every size.”<\/p><\/blockquote>\n
This “strengthening” may include purchasing troubled assets these institutions in exchange for equity in the institution. As such, I wouldn’t characterize this as a pure play socialistic intervention as some pundits have of late.<\/p>\n
On the other hand, lets not lose sight of the fact that American taxpayers have unwillingly found themselves party to a violation of epic proportions.<\/p>\n
Back to the medicine and the disease: let us not at the same time forget who caused this crisis.<\/p>\n
Once upon a time, Liberals in Washington decided that their constituents held a the right <\/em>(not the opportunity) <\/em>to home ownership, without regard to their economic relevance to the economy. This pressure was manifested in directives and incentives for their buddies at Frannie Make to acquire mortgages that would otherwise not be considered good long-term investments. All this while the liberals nudged and winked “Don’t worry, we’ll bail you out if this all goes awry.”<\/p>\n(A self fulfilling prophecy if ever there was one)<\/p>\n
This created a vacuum that was willfully and eagerly filled by the likes of WAMU and Countrywide who flooded the market with cheap mortgages, sold them to anyone that could fog a mirror, knowing that Frannie Make would take them off of their hands.<\/p>\n
Meanwhile, these mortgages were\u00a0packaged as safe investments\u00a0and sold to companies like AIG.<\/p>\n
In turn, artificial demand for homes elevated their value and created an enormous drive to buy land and build homes to satisfy the voracious appetite for them. These homes, once occupied, continued to artificially appreciate, creating a refinancing craze and providing capital via increasing debt for the purchase of consumer goods including but not limited to the items to fill these homes.<\/p>\n
(The Bubble)<\/p>\n
Once the inevitable failure of many homeowners to continue servicing this ill-gotten debt ensued, the domino effect followed close behind. So much of our economy hinged on the ability of homeowners to borrow against their homes – or even the psychological effect of the knowledge that they could – that when it vanished, consumerism went with it.<\/p>\n
Institutions found themselves in receipt of illiquid assets as the market for them was flooded.<\/p>\n
(Pop! )<\/p>\n
Clearly it was not free-market “Republican” principles that caused this crisis, and unfortunately, due to the magnitude, it won’t be solved by free-market principles alone. The American people have little appetite for long-term solutions that require short-term pain. Furthermore, I bristle at the fact that domain of free-market and free-enterprise principles have been relegated solely to the Republicans – I’ve always thought of them as fundamental American<\/em> values.<\/p>\nLiberals have brainwashed Americans for years into thinking that they need government to solve their problems, to take the sting out of life, to shave the peaks to fill in the valleys in the interest of fairness.<\/p>\n
Barack Obama is the most liberal Senator in America. He personifies all that is wrong with American fiscal policy. His rhetoric belies his record, his history, his choice of advisers and associates and his claimed intent to lower taxes. His actions speak so loud, his words we should be smart enough to discount. His brainwashed minions follow him and don’t even know why, nor do they realize the damage he and his liberal brethren could do to our economy.<\/p>\n
It was the very government meddling that Obama espouses, some years ago, perpetuated by unchecked greed and political power, and despite warnings of John McCain and others, that created a crisis of such proportion that only government intervention could solve it. We can only hope that this truth is not lost on the American people as they consider solutions for our country’s most pressing issues.<\/p>\n","protected":false},"excerpt":{"rendered":"
The markets appear poised to take a\u00a0breather today as the hysteria subsides (update: ok, maybe not)\u00a0if only for a moment. The bailout has passed but has not been implemented; it’s effect limited to the psychological benefit to those who value short-term fixes for long-term issues. In her post-debate analysis\u00a0of the Presidential debate, Nina Easton of […]<\/p>\n","protected":false},"author":228,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[57,51],"tags":[],"class_list":["post-3437","post","type-post","status-publish","format-standard","hentry","category-economy-and-the-market","category-liberal-tyranny"],"_links":{"self":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts\/3437","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/users\/228"}],"replies":[{"embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3437"}],"version-history":[{"count":0,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts\/3437\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3437"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3437"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3437"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}