The End of Capitalism as We Know It?

Fed Chairman Ben Bernanke, Treasury Secretary Henry Paulson, Speaker of the House Nancy Pelosi, Majority Leader Harry Reid and other Congressional and Administration officials are meeting in Washington this weekend to administer what American socialists hope will be the final coup de grace to the American Capitalist system.  Participants in the Socialist movement have been working tirelessly generation after generation over the past hundred years to bring about this day.

Beginning with the “Trust Busting” of Theodore Roosevelt, the first “progressive” President, and the stock market collapse of 1929, a couple of decades later, socialist have made steady progress toward their Karl Marx inspired goal of destroying our capitalist system and building a socialist utopia on the rubble.

Socialist policies have all but destroyed our industrial base, our educational system, our healthcare system, our social structure, and are on the verge of destroying our economic system.  Each time government encroachment on the private sector creates a disaster, the solution offered is always more government involvement.  The current financial disaster is no exception.

The hallmark of the socialist movement is to create chaos and then point to their opposition and declare, “They did it!”  It seems to work more often than not.  The meltdown of our financial markets demonstrates this tactic with a clarity that cannot be denied.  An analysis of the development of the crisis shows without question that the root cause is socialist policies, not the capitalist system nor the policies of the Bush Administration.

There is widespread agreement among economists and politicians that sub-prime lending practices, prevalent among mortgage companies, is the primary culprit.  A number of circumstances converged during an election year that virtually guaranteed the collapse of major segments of the financial markets.  That they occurred during an election year made any sane thought-out remedies unattainable.  Facts, mixed with and distorted by political rhetoric, rendered an objective evaluation of the problems all but impossible.

The rapid rise in energy prices, soaring home values with the corresponding rise in real estate taxes, the vagaries of adjustable-rate mortgages, and the stagnation of lower and middle class incomes stretched family budgets to the point they could no longer be sustained.  Mortgage payments, the largest item in the average budget, simply had to be postponed or cut back in favor of survival.  All of these, when objectively judged by the facts, are revealed to be the result of socialist policies.

The populist view of history as promulgated by the Democratic Party, the mainstream media and even, somewhat, by the McCain camp, is that the crisis caused by sub-prime lending was brought about by corporate greed and “eight years of failed policies by the Bush Administration”. The truth is somewhat different.  An article in World Net Daily on September 20 is quite revealing in that it links to two articles written before Bush took office in 2001.  One is in the Los Angeles Times, the other The New York Times, neither of which are conservative publications.

Both articles were written to praise Bill Clinton during the final years of his Administration.  The first was an article in the Los Angeles Times dated May 31, 1999 titled “Minorities’ Home Ownership Booms Under Clinton But Still Lags Whites’”.  The opening paragraph begins with,

“It’s one of the hidden success stories of the Clinton era.  In the great housing boom of the 1990s, black and latino homeownership has surged to the highest level ever recorded.”

By itself, that would indeed be good news, but the article then goes on to explain the factors that gave rise to this phenomenon.  By indulging in an obligatory swipe at the Reagan-Bush administrations, the writer undermined what could have been the best alternative explanation, the booming economy.

“But the economy isn’t the whole story. As HUD Secretary Andrew Cuomo says: ‘There have been points in the past when the economy has done well but minority homeownership has not increased proportionally.’ Case in point: Despite generally good times in the 1980s, homeownership among blacks and Latinos actually declined slightly, while rising slightly among whites.” He writes.

He then returns to his theme of praising the leadership of Bill Clinton.

“All of this suggests that Clinton’s efforts to increase minority access to loans and capital also have spurred this decade’s gains. Under Clinton, bank regulators have breathed the first real life into enforcement of the Community Reinvestment Act, a 20-year-old statute meant to combat “redlining” by requiring banks to serve their low-income communities.”

“The administration also has sent a clear message by stiffening enforcement of the fair housing and fair lending laws. The bottom line: Between 1993 and 1997, home loans grew by 72% to blacks and by 45% to Latinos, far faster than the total growth rate.

“Lenders also have opened the door wider to minorities because of new initiatives at Fannie Mae and Freddie Mac–the giant federally chartered corporations that play critical, if obscure, roles in the home finance system…”

“…In 1992, Congress mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. …It [Fannie Mae] has aimed extensive advertising campaigns at minorities that explain how to buy a home and opened three dozen local offices to encourage lenders to serve these markets. Most importantly, Fannie Mae has agreed to buy more loans with very low down payments–or with mortgage payments that represent an unusually high percentage of a buyer’s income….”

“…But with discrimination in the banking system not yet eradicated, maintaining the momentum of the 1990s will also require a continuing nudge from Washington. One key is to defend the Community Reinvestment Act…The top priority may be to ask more of Fannie Mae and Freddie Mac. The two companies are now required to devote 42% of their portfolios to loans for low- and moderate-income borrowers; HUD, which has the authority to set the targets, is poised to propose an increase this summer“….

The facts presented by Ronald Brownstein in this article are indisputable and clearly point to Congress and the Clinton Administration as the primary causes of the eventual mortgage market meltdown.  A later article in the New York Times dated September 30, 1999 was less slanted toward praise of Clinton and gives us a few additional insights.

“… [A new Fannie Mae program] will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — [it] will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

“…Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people

“…In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called sub-prime borrowers.

“…In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.

“…said Peter Wallison a resident fellow at the American Enterprise Institute. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”

Keep in mind both of these articles were written well before George Bush moved into the White House.  No one can honestly deny that the problem was inherited by Bush from the Clinton administration.  It is also true that both Bush and McCain attempted to rein in the excessiveness of Fannie Mae and Freddie Mac but were prevented from doing so by socialist Democrats and their socialist leaning Republican allies in Congress.

It is imperative that McCain and Palin focus on these facts over the next few weeks instead of going along with the MSM version in courting independents and “moderates”.  This will not help in changing the results of decisions made in Washington this weekend or the follow-up actions by Congress next week.  It may, however, wake up some of the American voters encouraging them to vote some of the socialists in Congress out of office and give us a chance to begin returning the government back into the constitutional republic it was intended to be.
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5 responses to “The End of Capitalism as We Know It?

  1. The solution to the financial crisis does not reside on Wall Street, or in Washington D.C. It lives in the living rooms of the American people.

    The plan to get us out of this calamity is simple.

    Problem

    The banks, insurance agencies and brokerage houses cannot asses the value of their bonds because the falling housing values and the more that 5 million homeowners that will soon default on their mortgages. As they can’t assess their value, no one will purchase their bonds or any other financial products that the institution offers.

    Solution

    Reassess the value of the at-risk, Adjustable Rate Mortgages by reducing their value by 30% and refinancing the mortgages at a fixed rate of 6%. Anyone who took out an ARM loan in the past 4 years is eligible.

    This means:

    * The banks (IE., Wall Street) will absorb the loss and move on, now able to value their assets. If each of the 5,000,000 homeowners take an average of 30 percent off of their mortgage it will approximately cost Wall Street 500 billion dollars.
    * Treasury Secretary Paulson has asked for the authority to spend 1.2 Trillion dollars.
    * The Peoples Plan saves the country 700 billion dollars.
    * The 5 million at-risk homeowners will stay in their homes.
    * The tax payer won’t bail out the corporations.
    * Life will go on.

  2. Thank you for saying this! I am so scared about what will happen if the government takes over the economy in this way. I just don’t see how this is possibly a good idea! I know the Lord is always in control, and I know that everything will work out for good, so I’m at peace spiritually. However, I really would like to leave my children a good world to live in, one where they truly can be free, and it dismays me to see our government going in this socialist direction.

    I mean, why do people (and politicians) think that the government taking over something will make it better? Where can they possibly get this idea from? When has the government taken over ANYTHING and improved it? It boggles the mind. And where do people think this bailout money is going to come from? Money doesn’t grow on trees, you know, and you can tax “the rich” all you want but pretty soon there will be no incentive for people to even attempt to get rich anymore, especially if all their money is going to go to the government anyway.

    And I am beyond angry at all these stupid liberal blogs that keep bashing McCain/Palin and blindly praise Obama! McCain and Palin aren’t saints, they’re politicians like everyone else. Of course they have skeletons in their closet. But so do Obama and Biden, and you don’t hear squat about that. Honestly, it’s an attack on conservative ideology. McCain and Palin aren’t the real targets — conservatism and moral values are the targets. THAT is what is being attacked. And it makes me so frustrated! If Palin was a liberal, everyone would be singing her praises, but since she’s a conservative, the media is determined to tear her to shreds.

    I don’t know if the USA can truly recover from all this. Even if McCain does win the election, he’ll still have to work with congress, which will probably still be controlled by democrats. I don’t expect big progress to be made if McCain wins, but I do hope that this one-way ticket to socialism can at least be slowed down a bit. If Obama wins, then it’s Full Speed Ahead to Socialism!

    Sorry for all the venting. But this was the first wordpress blog I found that was actually talking sense. All those stupid liberal idiots blogging on here… Grr.

    ~ Emily

  3. The government should not bail out businesses that are reckless and irresponsible. We have been robbed with both eyes open and unfortunately, the government can’t do anything about it but help the people who decimated our economy. We have sold our souls to the devil of debt and really need to work on reducing it. Behind terrorism, our greatest national security threat is the countries that own our economy.

    Political Director
    antoinemembers.com

  4. There is an old and wise saying that “crime would not pay if the government ran it.” That’s mainly because Congress is not responsible for what it does, except that individual members may not get re-elected. Unfortunately, the ones that do not get re-elected are in many cases punished for doing the right thing. This tends to leave more politicos in charge making bad decisions which proves the saying.

    The driving force of change should be the voters. Unfortunately in most elections, voters that stay home are in the majority. The “what affects me today” crowd is the next largest voting block. And lastly comes the minority “what’s good for the country” group. This empirically proves that substantive “best practice” change is almost impossible to achieve.

    The paradox of good government is that bible of government is the Constitution and many people are totally ignorant of what it says.

    The latest crisis, and the ones before it, were preventable in large measure if the voters made decisions on what’s best for the country in terms of supporting the rule of law and the Constitution. Why are so many people ignorant of the document that has kept us safe for more than 200 years?

    Solving the systemic problem requires change on two fronts. Americans need to demand and learn more about the decisions government makes, and voters must commit themselves to participate more in the voting process.

    Only then will we have change we can celebrate.

  5. Fenton

    “Crime would not pay if government ran it”

    The problem is, government does run it.

    Cheers!

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