Obama’s “Logic” on the Mortgage Crisis

by | Mar 10, 2009 | Housing, POLITICS

In his “Remarks by the President on the mortgage crisis” on February 18, Obama stated: Our housing crisis was born of eroding home values, but it was also an erosion of our common values, and in some case, common sense. It was brought about by big banks that traded in risky mortgages in return for […]

In his “Remarks by the President on the mortgage crisis” on February 18, Obama stated:

Our housing crisis was born of eroding home values, but it was also an erosion of our common values, and in some case, common sense. It was brought about by big banks that traded in risky mortgages in return for profits that were literally too good to be true; by lenders who knowingly took advantage of homebuyers; by homebuyers who knowingly borrowed too much from lenders; by speculators who gambled on ever-rising prices; and by leaders in our nation’s capital who failed to act amidst a deepening crisis.

So, according to Obama, the guilt of our leaders was that they failed to act. This claim is consistent with Obama’s claim throughout his Presidential campaign that it was deregulation that caused the housing crisis.

The essential cause of the housing crisis was Fannie Mae and Freddie Mac–directed by long-standing welfare-state policy, and in effect using banks as their sales reps–making trillions of dollars in loans (“they own or guarantee roughly half of the nation’s $12 trillion mortgage market” [The New York Times in 2008]) to people who could not afford to buy a home in free society.

Fannie Mae and Freddie Mac are GSEs–government sponsored enterprises. The government turned them into pseudo-corporations solely for the deception of removing their expenditures from the official federal budget. The GSEs are agents of government welfare-state social policy.

In the past decade, Democrats (such as Bill Clinton and Barney Frank) in the federal government encouraged these GSEs to run amuck, and fought against attempts to regulate the GSEs. So here is Obama’s “logic”: Government failed to regulate government; therefore we need more regulation of citizens. Obama has the mentality of a tyrant. He makes no distinction between limiting government and limiting freedom of citizens.

Another current lie by Obama and the Democrats is that Bush’s tax cuts were policies of capitalism. But the key is not how much government taxes, but rather how much government spends. The government has two ways of getting money: robbing and stealing. Taxation is robbing, and deficit-spending ultimately financed by inflation is stealing. Bush robbed less, but he stole more. Federal spending–the total of robbing and stealing–increased significantly under Bush.

What has failed is the government robbing, stealing from, and controlling private citizens–all in the name of welfare-state policy of sacrifice and service to others. Obama’s policy is even more of the same.

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Ron Pisaturo is a writer and philosopher. He has written a screenplay, The Merchant of Mars.

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