"Community Reinvestment" to Global Financial Crisis

The left's standard argument that deregulation caused the Global Financial Crisis belies history involving the left's own champions:
 

1) Barney Frank & Maxine Water’s Community Reinvestment Act (with the rabid support of ACORN) forced lenders to loan billions to unqualified borrowers or face stiff penalties--even closure. Not surprisingly, their districts directly benefited enormously from this redistributive injunction. The loans were guaranteed by propping up Fanny & Freddy (which would otherwise be insolvent) with billions in tax-payer money—could there be more blatant redistribution?
 

2) All these new home buyers and the Fed’s artificially low interest rates fueled red hot demand for housing which inflated the housing bubble.
 

3) Most qualified American homeowners began to believe they were wealthy because of rapid appreciation. That encouraged consumption and a rash of refi’s & 2nds…still more loans to fuel the fire!
 

4) With the full blessing of Clinton's SEC and the Fed, First Union Capital Markets and Bear-Stearns begin to securitize CRA loans. The securities were guaranteed by Freddie Mac and had an IMPLIED "AAA" rating (spread the manure around enough and it won’t stink up the place--freaking nuts!!!) Not surprisingly, “The public offering was several times oversubscribed.” Ya think?
 

5) No body including the government (and Wall Street whom they’re in bed with) took into account what would happen to this new artificial system built on Barney Frank’s crap loans when his unqualified borrowers inevitably defaulted. Billions in these toxic securities were now spread throughout global markets. --If everyone is affected it’s nobody’s fault.
 

6) The GOVERNMENT did absolutely nothing to slow the effects of the problem IT CREATED. And why should it? When the system collapsed, they had created a perfect crisis to facilitate the largest power and asset grab in US history!
 

7) The failure was not capitalism. It was Barney Frankism! Not free markets, but government bureaucrats attempting to manipulate the market to achieve their redistributive agenda. And it wasn’t a failure at all. Rather, it was a smashing success in advancing the aims sought by the progressive movement for over a century! Not surprising that George Soros’ Center for American Progress was one of very few who have made a lame attempt to discount the impact of CRA enforcement and securitization of CRA loans on the crisis. Go figure! Soros & company have made gazillions trading derivatives packed with CRA crap loans.

How to turn a Free Market Bonfire into a Crater of Ash...in Half a Generation

Imagine the Free Market is a Bonfire in a nice big pit freely available to all who wish to take advantage of its warmth and power.

It will consistently burn within the confines of the pit proportionate to the amount of fuel it is fed. Stray coals that manage to escape are easily put out or returned to the pit.

Stable Fuels are Innovation, Capital, Effective Trade Policies, (and to a necessarily much lesser extent) Monetary Policy.

The Fire Pit & Stone Barrier are Regulation and Enforcement that are Reasonable, Consistent, Clearly Defined, and objectively enforced.

Everyone knows fires burn just as we know that Firms Maximize Profits – Econ 101. That’s why we have the fire in a pit! And it is not difficult to carefully enlarge the pit in order to accommodate a gradually growing fire. This will offer more benefit to more people. This process may require removing stumps, trees, or whatever might impede the path of safe growth.

This role of government is to remove barriers and provide containment. Self-serving suppression of certain segments of the fire or careless dumping of unstable fuels on others are NOT the role of government. Just maintain the pit and make sure the fire stays in it!

A decade of irresponsible monetary policy in the form of artificially low interest rates has been like a gasoline truck adding dangerous flash fuel to various parts of the fire. But that’s not the worst of it.

The affect of dumping unlimited government backed, securitized loans on the market (compliments of Barney Frank & the CRA) was akin to throwing a pre-triggered nuke in the pit.

Go figure—the inferno consumed all the stable fuel, the gas truck, and everything else in site. No more cozy fire, no more consistent source of stable fuel, no nicely bordered fire pit—all that was left was a smoldering crater and toxic fallout.

And the crater is bigger than everything we can muster to fill it with. Yet we have got to get the fire relit before more catastrophic harm is done to those desperately waiting for the heat and power provided by the fire.

In suggesting that Free Market Capitalism is to blame for this crisis one is literally suggesting that the conflagration is the fault of the fire. That greedy fire should have been more responsible and not burned all the unstable fuel (or the nuke) that was recklessly hurled upon it. It should have willfully contained itself within the original fire pit boundaries. Sorry folks, that’s just contrary to the nature of fire.

The guardians who should have known better and strictly performed their role completely abandoned their responsibilities. Rather, they betook to manipulate the fire to achieve their own agenda—irresponsibly tossing unstable fuel into it with no forethought as to what the consequences might be. Like today’s wildfires in Arizona, the ensuing inferno quickly became completely uncontainable by any number of firemen. Ultimately, we all got burned—including those the “guardians” professed to be trying to help! This is why they need to strictly stick to their role.

Now, how do we attempt fill the crater and relight the fire we originally had? Bailouts!

Tarp One – A Borrowed Gas Truck with a limited amount of Borrowed Flash Fuel and a warning beacon on top. It may have helped some to not fall into the crater but was totally ineffectual at relighting a sustained bonfire. Thanks CW!

Tarp Two – Another Borrowed Gas Truck with a limited amount of Borrowed Flash Fuel—also totally ineffectual in lighting a sustained fire.

Who did we borrow the trucks from? China.

The borrowed fuel is now nearly spent. The crater is still there (because you can’t fill in a crater with gasoline) and the bonfire still won’t stay lit.

Now what? Will China loan us any more trucks? No. They just dumped 97% of their short-term holdings in US debt.

Other options? In historical Weimar fashion the Fed has broken its long-standing promise and begun to monetize our debt…because we are so over-extended nobody else wants to buy it! The idea is that by artificially reheating and eating old beans cooked on the original bonfire we can then FART IN THE CRATER ENOUGH TO SOMEHOW RESTART THE BONFIRE!

Will this work? It never has. All it has done is scorch the backside of every economy that has tried it!

So Mr. O, since you are yet unwilling to pursue stable fuels; and now that you’ve spent all the borrowed flash fuel; how will you fill the crater and restart the bonfire? We know you’re full of voluminous amounts of hot air, but the solutions to this problem you have so exacerbated fall well outside the confines of your ideology—an ideology which has assured we rushed to this point at break-neck speed.

China and King George

China’s environmental minister publicly admitted this week that all six of his country’s largest rivers are “too polluted to be utilized for irrigation”. Let’s see, Mao lovers in the US hold up China as the beacon of the newly coined “State Capitalism” (communism with a silk apron-and a gun behind it) yet it’s the planet’s largest polluter (and soon to be largest consumer) with a record of human rights abuses that would make Pol Pot blush.

Oh, and they still practice forced labor of women and children in appalling conditions (but it makes for cheap products Americans love to buy at the expense of our own work force). And they forcibly confiscate private property--imprisoning or killing citizens who oppose. Anyone else see the guy on his rooftop set himself on fire (before mp's could shoot him) in protest of his government demolishing his home of 20 years without compensation to expedite a $1.5 billion development? Oh yeah, and China still openly criticizes the US for its position on the Kyoto Protocol--further bolstering leftist support in the US for their regime.

How do the Anita Dunns in this country rationalize such wanton disregard for life, the environment and human rights when championing a regime of such unrestrained brutality? Oh, but if you ask Mr. Soros, “the US is the greatest obstacle to creating a new world order and China would serve as...[wait for it] the better leader."

Mr. Soros, you might want to read some history and see how things fared for the last King George who tried to enslave citizens of this land. While you're at it let us introduce you to a declaration written by some truly intelligent, real revolutionaries a few hundred years ago. It will clarify precisely what you and your minions can do with the likes of your NWO!