Blue Collar Muse

Hat tip to Eric Odom for the news that Politivity.com has just released another great video (embedded below) exposing the Democratic corruption, neglect and destruction wrought on the Housing Market and now, the broader American financial market, via their deception, manipulation and mismanagement of the Market in general and Fannie Mae and Freddie Mac in particular. The Truth seems to be gaining some traction. This is not a Free Market, deregulation, Republican problem. It’s a selfish, personal enrichment, bait and switch, deceptive Democratic Party problem. And Barack Obama is in it up to his neck.

In addition to noting the now familiar players Barney Frank, Franklin Raines and Tony Rezko, the video introduces us to two more top Obama advisors who got millions to serve the public and failed miserably to do so. Valerie Jarrett, CEO of Habitat Co. and Allison Davis, a former law firm associate of Obama, failed so poorly to provide good housing options with the money they received to do precisely that, that many of the housing units they oversaw were declared uninhabitable.

But they did manage to donate and raise hundreds of thousands of dollars for Obama and his political campaigns. They did manage to do quite well for themselves at the expense of the people they were supposed to serve. And Democrats like to point to heartless, corporate, Right Wingers as the culprits in taking advantage of the less fortunate and less powerful; enriching themselves at the expense of the little guy. Mr. Pot, meet Mr. Kettle!

Hopefully, in the few days left before the election, the general public will be broadly educated as to the character and intentions of the people the Democratic Party is backing for office. If entrusted with political and legislative authority, these men and women will assume, not without reason, they are free to continue their deceptive and manipulative ways. The irony is that the folks most hurt by this will be the ones least able to fend them off and the very ones these powerless citizens believe have their interests at heart.

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From the guy who gave us last week’s viral video “Burning Down the House” (1Million+ views), comes another great piece of YouTube goodness.   Democrats in the House, many of whom are playing major roles currently in both defending the Democrat’s involvement in the implosion of the housing market and blaming the GOP and the Free Market for the financial woes, are simply shown here talking about how wonderful Freddie and Fannie are.  This at a time when the GOP was calling for investigation, oversight and change at the agencies.  These people have no shame!

Blue Collar Muse

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I’m sorry but the play on words is just too much to resist. In any event, The Business and Media Institute outs Barney and his lover, whom he sometimes referred to as his “spouse”, who was a player at Fannie Mae. The relationship with Herb Moses evidently lasted over a decade. While over now, according to the article the two remain friends.

Given Frank’s vocal and stalwart defense of Fannie and Freddie, one naturally wonders what sort of quid pro quo, pillow talk or other form of undue influence Frank may have exercised while serving on the House Banking Committee for the entire 10 years of their relationship.

Ahh, yes … Democratic politics …

Blue

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I’m traveling today so I’m taking the liberty of simply cutting and pasting the text of an email I got from my good friend Fred Thompson.  Actually, I’ve never met the man, it just sounds cool to say it like that since he emailed me personally and all.  FDT writes a regular column at TownHall and this was his from a day or so ago.

The Danger of Government Guarantees

I’ll bet it came as a surprise to most folks that the financial stability of the world as we know it depends upon the survival of a couple of outfits called Fannie Mae and Freddie Mac. Yet that’s what the so-called experts are telling us. Moreover, we taxpayers are now being asked to guarantee Fannie and Freddie’s tab, one that could make the $124 billion S&L bailout of the late 1980s look cheap.

So how did we get stuck with this bill? Well, Congress wanted to “do something” about what it saw as a “housing problem.” To them that meant that they should create an even bigger problem.

So Congress passed laws that made it easier for hopeful home-buyers to buy houses … even when they couldn’t afford them. Then the Fed and other regulators helped, in the form of easy money and loose credit standards for mortgages.

Not surprisingly demand for houses grew, home prices rose, lenders financed additional questionable mortgages, fueling even higher prices and so on. You get the picture. This is called a bubble.

Then an amazing thing happened – apparently impossible to foresee. Home prices did not continue to rise forever! Home prices came down and easy money dried up, causing the above mentioned cycle to reverse. In other words, the bubble burst.

So you’d think the in-over-their-heads homebuyers and the mortgage bankers would take the hit, and the market would right itself. No reason for an international meltdown here, right?

Not so fast my friends. Years earlier Congress established Fannie and Freddie as purchasers of these mortgages, which they could bundle up, repackage and sell to investors, freeing up more mortgage money. As government creations tend to do, the two companies grew until they either owned or guaranteed about half the nation’s $12 trillion dollars in mortgages.

Fannie and Fred were “government sponsored enterprises” which means heads they win, tails you lose. If they make money stockholders, creditors and Fannie and Freddie employees – some making millions annually – get the benefit. But now that mortgages have hit the skids, with mounting losses, the taxpayers potentially face trillions in exposure. This is because there is an “implicit” (read “actual”) government guarantee of Fannie and Freddie’s obligations and both are now too big to be allowed to fail. This is called the “bailout phase,” which will probably lead to a bigger bubble in the future.

Lost in this immense, complex mess is the root problem most people are missing: the government is gradually becoming the guarantor of seemingly every important aspect of American secular life, creating incentives and bureaucracies that cause failure and invite fraud.

In Fan and Fred’s case, it was in no one’s interest to turn off the bubble machine. Just the opposite. The system induced borrowers to take on financial obligations they could not afford and lenders to lower lending standards. Fannie and Freddie went along because their managers’ compensation depended on the firms’ short term financial performance. And investors continued to buy complex security packages they didn’t understand, because the securities were viewed as government-backed.

Heavy campaign contributions by those benefiting from this scheme induced Members of Congress to avert their gaze from the ugly mess that was unfolding.

You’d think we’d have learned by now: when the backstop of the federal treasury makes it easier for politicians, lenders, borrowers, welfare recipients, government contractors, or anyone else, to serve their own self interest at the expense of the taxpayer, many will do just that.

That is why we continue to see self-dealing, moral lapses, outright fraud and lack of management and oversight in a wide array of programs and government-sponsored entities, from housing to Medicare, education and the Small Business Administration, all costing taxpayers billions, even trillions of dollars.

Our Founding Fathers knew more than a little bit about human nature. It is one reason why in the Constitution, the federal government was given certain delineated powers and no others. I hate to burst another bubble, but our government simply doesn’t have the authority or the capability to be the guarantor or insurer of our every need or desire. Isn’t it time we started sending that message loud and clear to the big enablers in Washington?

Blue Collar Muse

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