From 3.28.2008
The
leftists, starting with J. J. Rousseau and culminating with Marx and Lenin and
some drooling amateurs like Al Gore and the Clintons have struggled with the problem of private
property over the many decades and have
usually ‘solved’ the problem by advocating state ownership or control. We saw
the majesty in this concept in the high-rise slum projects in the 60s and 70s,
many of which were imploded after a few years because the elevators were piled
high with feces and the fixtures torn out and sold. The 18th Century
notion of faction [best defined here
as ‘special interest groups’ in today’s lexicon[1]]
pivoted, ultimately, around the concept of direct ownership of property. This
is the basis in income in terms of rents and commerce. Groups of special
interest individuals have one attribute in common: they always seek to gain
control of some sector of the economy and/or political power base that leads to
some increase in wealth and real estate is always the best choice. Nine out of ten millionaires made their fortunes in real estate as did Crassus in Rome Clintons
“Marx illustrated his ideas most prominently
by the development of capitalism from feudalism and by the prediction of the
development of socialism from capitalism.”[4]
The
chief difficulty here is that socialism as assessed by the myriad of flavors
proffered around the globe has not shown sufficient efficiency to provide the
necessary social benefits to compete with its capitalistic counterpart. Placing
the workers in charge of the factories as we saw in Italy
Given
that economic failure is probably the best
opportunity for the introduction of socialism and its adherents to gain power
[World Wars 1, 2 and the Great Depression], we cannot accuse the left of
attempting to best or even match capitalism. No dedicated progressive in the US USSR Italy
Now,
as times change and property takes on new definitions and dimensions not envisioned by Marx and his stilites we tumble down to the progressive political
realities where the lower classes are promised or offered personal property in
terms of real estate and guaranteed jobs by the leftist political machines of
the various states and the federal system. This is traded for votes of course.
When the housing market increased monotonically for decades the rising costs of
home ownership surged beyond the reach of the lower classes (of course) and
laments for government intervention into home loans were opined and implemented
into law, unfortunately. The dichotomy here is that the leftist paternalism
actually creates and, more importantly, sustains those as the bottom of the
social class structure, but the progressives will not admit this in spite of
the overwhelming evidence. Without the helpless, poor and criminal elements,
the leftists would be out of votes and decay. The FHA style programs (along
with ultimate failures such as HUD) and other measures appeared, politically,
to offer the American Dream to those in the
lower economic classes as long as the actual selling price of homes increased
in a linear upward ramp even if propelled by inflation alone.[6]
When loan issuers estimated the creditworthiness of barrowers in the 60s and
rejected applications by those who could not afford homes the process was known
as Redlining.[7]
The solution to this was Greenling[8],
a leftist political solution of giving perks to the low class with poor credit
habits or criminal activity such as writing bad checks, an indirect form of
taxation. That gets votes for the leftists and maintains their voter base.
Thus, those lacking the cognitive skills to generate sufficient income to
afford private property were offered a free ride on the capitalist system and
the banks and lenders would pay for this out of their profits. It is difficult
to find a better example of a leftist political solution to private property.
But, then, when the housing market vector reverses its attitude, the cost of
ownership exceeds the financial assets of the lower class home owners and we
predict foreclosure, a standard business mechanism that is necessary to
maintain an orderly market. This is not a leftist political option however.
Somebody must be blamed and the private property restored to the loyal voters
merely for political purposes while the costs and penalties must be
accommodated by either the lenders or the taxpayers or both. There are no other
leftist political options.
In
previous New York Times articles the Q/A on the subject runs like this:
“Q: So
what policy ideas are out there?
A: None are wholly satisfactory. On the Democratic side,
Barack Obama and Chris Dodd are proposing federally backed loan guarantees. People in danger of defaulting could get new mortgages that reflected the new, lower value of their
homes. Lenders would write off some value, but it would be better than
nothing.”[9]
[Emphasis in color and italics are mine in all quotes unless otherwise
indicated.]
So,
there you have it. Let the lenders [evil capitalists] pay. We can wonder what
happens if some loser defaults on a federal loan guarantee? Restructure the
loan?? Forgive the loan?
As
the instant New
York Times[10]
maudlin screed sobs along the rosy path we read in today’s article about the
equity aspects of home ownership. Equity is a major aspect of home ownership,
but is seen to be a social danger prospect by the left in the avalanche of loan
scams designed to strip the poor of their rights to own property at any cost.
It seems that people who barrowed more money using their homes as collateral
are unfairly expected to pay back the money. This makes liberal sense.
“Little by little, millions
of Americans surrendered equity in their homes in recent years. Lulled
by good times, they borrowed — sometimes heavily — against the roofs over their
heads.” [11]
Is
this like being robbed? Was this a plot by lenders to grab their homes? Maybe
this would not have happened in bad times, the best of times for the left.
“Lenders also encouraged
many aspiring homeowners to take out not one but two mortgages
simultaneously — ordinary ones plus “piggyback” loans — to avoid putting any
cash down.
The result is a nation
that only half-owns its homes. While homeownership climbed to record heights in
recent years, home equity — the value of the
properties minus the mortgages against them — has fallen
below 50 percent for the first time, according to the Federal Reserve.”[12]
Mortgages
were invented by the Greeks about the 6th century B.C.E. We should
have learned something about them by now.
There
is, we learn, a hierarchal array of loaners who have sequential rights to
reaming assets and debt in loans as the Times correctly reports:
“Lenders holding first mortgages get first
dibs on borrowers’ cash or on the homes should people fall behind on their
payments. Banks that made home equity loans are second in line. This
arrangement sometimes pits one lender against another.”
[Insert comment here. See footnote [13]] The government actually
stands first in line in taxes, which supersede mortages if taxes are due. Thanx
to Baldeagle http://thebaldeagle.blogtownhall.com/default.aspx
for this timely correction.
Everybody
knew this. This is a detail in the sad saga where people sought loans they
could not afford and does not satisfy the political question. It serves only to
fraction the loaners in the eyes of the left. This is a standard business risk.
The price of such risk is usually higher interest rates inversely proportional
to credit levels with other charges, but those are frequently biased by
governments and state laws. The risk is astronomical when the loan is
terminated by some government or court action and will quickly dry up such
financial misadventures.
The leftist mandate is: You MUST loan to deadbeats, losers, druggies,
welfare queens, illegal aliens, criminals and the ‘poor’ and when they fail to meet their payments you
must forgive the loan.
“Experts
say it is in everyone’s interest to settle these loans, but doing so is not
always easy.”[14]
Ah,
the expert sings his leftist song from afar, perhaps from the 18 or 19
Centuries or beyond!! We should heed the advice of ‘experts’ like Marx or Lenin,
Krugman[15]
[16]
or FDR or others.
“Underscoring the difficulties likely to
arise from home equity loans, a Democratic proposal in Congress to refinance troubled mortgages and provide them with government backing specifically excludes second liens.
Lenders holding a second lien would be required to write
off their debts before the first loan could be refinanced. That could
leave out a significant number of loans, analysts say.”[17]
This
cuts away a whole segment of the commercial loan business and would dry up
second mortgages and such. What a deal!! Second lien holders are mere dirt, or
worse and deserve to swallow huge business loses. But, would it now be more
difficult or more expensive to get such secondary loans for TVs, tickets to see
the Fliers and all that??
““[For]
… People with weak, or subprime, credit could be hurt the most…”This is
turning out to be a real impediment to solving this problem,” said Mark Zandi,
chief economist at Economy.com, “at least, solving it quickly.””[18]
Notice
that the government intervention is a given and proffered without debate,
explanation or excuse and we are now not concerned with lenders but how the
credit system would affect those with poor credit. Isn’t this the ‘root problem’ that we might discover
when rooting around and brandishing the root
cause cliché? This is a triumph of Greenlining:[19]
Let the ‘poor’ make foolish financial decisions, get into deserved trouble,
blame the loaners for complying with the mandated laws designed by the Green Marxists and let
the taxpayer ‘solve’ the problem by backing up the bad loans, extending
mortgage payments, truncating principle and
lowering interest rates. This is a new and exciting project for the
courts! Let us buy some economic justice
at the expense of the taxpayers. Let there be no penalty for ignorance, sloth,
criminality and parasitism by those who are dependent upon the left and are
rewarded for both stupidity and crime. Sure.
As
usual, the drooling leftists have no concern for market forces, investments,
credit levels or other forms of social conduct in a capitalist system. The
theme here is that: If anybody loses in the system, the government must solve
the problem by direct taxation on the tax payers and by penalizing those who
make the loans. And we wonder why Redlining existed, and hopefully, exists today?
Some
pigs really can fly.
rycK
Comments
to: ryckki@gmail.com
[1] A political faction is a
grouping of individuals, especially within a political organisation, such as a
political party, a trade union, or other group with a political purpose. It may
also be referred to as a power bloc, or a voting bloc. The individuals within a
faction are united in a common goal or set of common goals for the organisation
they are a part of, not necessarily shared by all of that organisation's
members. They band together as a way of achieving these goals and advancing
their agenda and position within the organisation. http://en.wikipedia.org/wiki/Political_faction
[2]
http://www.roman-empire.net/republic/crassus.html
[3]
http://nostalgia.wikipedia.org/wiki/Marxism
[4]
http://nostalgia.wikipedia.org/wiki/Marxism
[5] A slam at Darwin and his
lackeys.
[6] Inflation riders on
union jobs and Social Security entitlements create a compensating tax paid by
others.
[7] The Bailout Artists
Crawl out of every Crack in the Wall [Street] Community with Advice: Socialism
is Best.
Posted
by rycK on Tuesday, March
18, 2008 9:17:36 AM
[9] [9]
The Bailout Artists By DAVID BROOKS
Op-Ed Columnist Published: March
18, 2008
The
B Word By PAUL KRUGMAN Op-Ed Columnist
Published: March 17, 2008 .
http://www.nytimes.com/2008/03/17/opinion/17krugman.html?em&ex=1205985600&en=6a7c992f84f9b3f6&ei=5087%0A
[10] A legacy of Walter Duranty.
[11] Equity Loans as Next
Round in Credit Crisis By VIKAS BAJAJ Published: March 27, 2008 .http://www.nytimes.com/2008/03/27/business/27loan.html?ei=5087&em=&en=c0387602531f27d6&ex=1206849600&adxnnl=1&adxnnlx=1206706109-dOsw0ZoQrjzmsacgntrcxw
[12] Equity Loans. Ibid.
[13] Comment by http://thebaldeagle.blogtownhall.com/default.aspx.
The Baldeagle, Rich Boomker writes:mortgage foreclosed
Actually the first mortgage holder
is second in line for the remaining value of a foreclosed house. The
outstanding property taxes are paid first before ANYTHING else. The government
is ALWAYS first no matter the level. Most folks behind on their mortgage are
not paying the property taxes either so it happens this way most of the time. (Its
like federal college loans you can't ditch even if you are bankrupt). The
government doesn't lose the money, it gets paid even if nobody else does.
Its one of the reasons there are so many abandoned houses and businesses in places likeGary Buffalo , NY
Its one of the reasons there are so many abandoned houses and businesses in places like
[14] Equity Loans. Ibid.
[15] Posted by rycK on Friday, March 14, 2008 11:56:25 AM
[16] Krugman of the New York
Times Slaps His own Face over a New Theory to Raise Taxes.
Posted
by rycK on Monday, March 10,
2008 11:19:13 AM
[17] Equity Loans. Ibid.
[18] Equity Loans. Ibid.
[19] Much of the Mortgage
Crisis is due to the Marxian Greenlining
Posted
by rycK on Sunday, March 16,
2008 1:13:25 PM
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