Yesterday, Lehman Brothers filed for bankruptcy and Merrill Lynch was bought out. Predictably, the Dow responded today by dropping more than 500 points. Even more predictably, a chorus of politicians began calling for government regulation while depicting these firms' downfall as some kind of flaw in capitalism. We should oppose that chorus with all our might, for it is a textbook case of politicians lying through their teeth in order to expand their power at our expense.
According to The Guaradian, the primary cause of Lehman Brothers' and Merrill Lynch's finanical woes is "the unfolding credit crisis." This is a fancy way of saying they are in peril because large numbers of mortgages are going into default. Six months ago the same thing nearly caused Bear Sterns to fail, and less than two weeks ago it led to a taxpayer bail out of Fannie Mae and Freddie Mac. All of which begs the question: Why are bad mortgages so ubiquitous?
Politicians from both parties, along with their retinue of useful idiots in the MSM, have spent a great deal of time blaming mortgage companies for creating the mess by engaging in "predatory lending." This is nonsense, since even kindergarteners can figure out that when Peter loans Paul money that Paul can't pay back, it is a much worse deal for Peter than it is for Paul.
The truth is that mortgage companies have never been eager to loan money to people without a great deal of confidence those people would hold up their end of the bargain. But politicans mandated that mortgage companies do just that, and even restricted how much interest the mortgage companies could charge.
Of course, the politicians never admitted that they were forcing private businesses into bad deals. Instead, they praised themselves for "helping working families" and for taking action to "correct" the gap in approval rates between black loan applicants and white loan applicants. In other words, they hustled for votes with the mindless fervor of hogs running to the slop trough.
The result was a rash of loans that would not have existed otherwise. Many of them were structured as adjustable-rate or interest-only mortgages, in order to lower the early payments and thereby accomplish the shortsighted goal of increased borrowing that politicans had mandated. And look where we are now!
The bottom line is that by forcing businesses to do things that businesses would never choose to do, government created the credit crisis that is convulsing Wall Street. But politicians never admit their errors, so now they are whitewashing the facts and using Wall Street's unease as an excuse to expand their power and restrict free enterprise. Ronald Reagan's famous quip is just as true today as it was years ago: "Government is not the resolution to our problem; government is the problem"
According to The Guaradian, the primary cause of Lehman Brothers' and Merrill Lynch's finanical woes is "the unfolding credit crisis." This is a fancy way of saying they are in peril because large numbers of mortgages are going into default. Six months ago the same thing nearly caused Bear Sterns to fail, and less than two weeks ago it led to a taxpayer bail out of Fannie Mae and Freddie Mac. All of which begs the question: Why are bad mortgages so ubiquitous?
Politicians from both parties, along with their retinue of useful idiots in the MSM, have spent a great deal of time blaming mortgage companies for creating the mess by engaging in "predatory lending." This is nonsense, since even kindergarteners can figure out that when Peter loans Paul money that Paul can't pay back, it is a much worse deal for Peter than it is for Paul.
The truth is that mortgage companies have never been eager to loan money to people without a great deal of confidence those people would hold up their end of the bargain. But politicans mandated that mortgage companies do just that, and even restricted how much interest the mortgage companies could charge.
Of course, the politicians never admitted that they were forcing private businesses into bad deals. Instead, they praised themselves for "helping working families" and for taking action to "correct" the gap in approval rates between black loan applicants and white loan applicants. In other words, they hustled for votes with the mindless fervor of hogs running to the slop trough.
The result was a rash of loans that would not have existed otherwise. Many of them were structured as adjustable-rate or interest-only mortgages, in order to lower the early payments and thereby accomplish the shortsighted goal of increased borrowing that politicans had mandated. And look where we are now!
The bottom line is that by forcing businesses to do things that businesses would never choose to do, government created the credit crisis that is convulsing Wall Street. But politicians never admit their errors, so now they are whitewashing the facts and using Wall Street's unease as an excuse to expand their power and restrict free enterprise. Ronald Reagan's famous quip is just as true today as it was years ago: "Government is not the resolution to our problem; government is the problem"
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