The Housing Bust and Obamanomics, Five Years On
This month and next mark the fifth anniversaries of the Housing Bust-caused financial crisis that led to TARP and other Fat Cat-bailouts and the election of the purveyor of Obamanomics.
Next month also marks the seventh anniversary of the Election of 2006 that returned Democrats to power in the House for four years and in the Senate for six years and counting that have, along with President Barack Obama, delivered to us: Obamacare, a non-Stimulus, Dodd-Frank, and a War on Coal and other affordable energy.
Does the sound of Barack Hussein Obama’s voice (to some a reminder of Thursday’s umpteenth anniversary of Halloween) and the feel of food stamps and a Medicaid card in your pocket still suffice as satisfying substitutes for a good paying job and a life less encumbered by government bureaucrats, i.e. an independence life? Didn’t think so, and so, do you miss Bush yet? I do.
Yes, the Housing Bubble boomed and burst while President George W. Bush occupied the Oval Office and yes, he did endorse the American Dream Down Payment Initiative in 2003 that was a minor contributor to the “affordable housing” craze begun a decade earlier. But the Bush Administration and most Republicans in Congress attempted to rein in Fannie Mae and Freddie Mac from continuing to guarantee sub-prime loans, only to be thwarted by an always sufficient number of Democrats in a non-filibuster-proof U.S. Senate.
President Bill Clinton’s Justice Department got the ball rolling in the early 90s when Attorney General Janet Reno threatened banks with discrimination lawsuits and regulatory denials of access to Federal Reserve funds and other basic banking needs, unless they got on board the Community Reinvestment Act train of loans to those that couldn’t afford them. But not to worry, Fannie and Freddie would guarantee or own outright those loans in bundles to the tune of $5 trillion, and as everybody always knew, they were at all times Too Big Too Fail.
The lowering of income and credit history loan standards by Fannie and Freddie coupled with quotas for sub-primes loans imposed by Clinton’s HUD, together with threats against banks yet sweetened with taxpayer-guarantees proved an irresistible mix for investors, speculators and American home-ownership dreams. The result: Massive loss of wealth by the middle class; bailouts of Fannie and Freddie to the tune of nearly $200 billion; $780B TARP bailouts of banks, AIG and GM’s labor unions; a Great Recession; and the election of Democrats to power that think the main cause of same was too little regulation by government and corporate greed.
Five years on, after higher taxes, more regulation, and a faux-blame-greed lawsuit against JP Morgan that produced a settlement payment last week to Fan&Fred of $5.1B (see below video for more on Mae and Mac); fewer Americans are working today than were employed on Election Day 2008, four of five Obama budget deficits have exceeded $1T (highest under Bush was approx. $400B and averaged less than $250B), and economic growth in the anemic so-called “recovery” has averaged less than 2% as compared to 3% under Bush.
Inexplicably, and arguably for the first time in history, the American electorate violated James Carville’s “It’s the Economy, Stupid” Rule and re-hired a Chief Executive when they were not better off than they had been four years earlier. And now, the brilliant Democratic party strategy of lying about Obamacare and staggering its roll-out so that the bad parts are revealed just after Democrats are elected, is made manifest.
Shakespeare famously wrote in Julius Caesar, “there is a tide in the affairs of men.” This tide will last, at some level, for more than three more years. Hopefully, more and more of We the People are being re-educated, as so many were after the Jimmy Carter-Ronald Reagan contrast, in the consequences of letting Democrats experiment with our lives to affirm their liberal dreams.
For more extensive study on the causes of the Housing Bubble, financial crisis and recession, I recommend Reckless Endangerment (2011) by Gretchen Morgenson et al and The Housing Boom and Bust (2009) by Thomas Sowell.
Mike DeVine‘s Right.com
“One man with courage makes a majority.” – Andrew Jackson