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Saturday, November 10, 2012

Private Property and the Leftist Quest for Political Power




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 in 70 B. C. E.[2]  The Marxist-Leninist [3]solution to the evils of faction was state ownership of real estate and most other forms of property and ownership of business with complete control of commerce. The idea here is that the relentlessly limited supply of housing and rent-generating assets would best be controlled and distributed equally by benevolent governments. This is the egalitarian phantasm that has destroyed many nations up to this point. This notion failed (as Trotsky predicted) when the ruling revolutionary elites sought to engorge themselves from  the benefits of public chattels at the expense of the masses and merely constituted a different form of bourgeois conduct not distinguished from the original complains lodged against the feudal landlords and more-recent business owners. The Clintons are multimillionaires. Since failure is no barrier to more social angst, the original leftist solution to private property is, still, state control directly or indirectly. The leftist theme can best be described by a linear social progression:

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 in 1919 is an old sour (and amusing) joke. A bigger joke was Moscow Central Planning. There is a very limited pool of managers who can consistently make the proper decisions to maintain an orderly market system of goods and services and these people are usually not politicians. Politicians are ‘naturally selected’[5] using other criteria. When major mistakes are made, the capitalist system requires that the corporation be dissolved and the assets and talents reassembled in a new attempt to produce the required good sand services. Thus, the capitalism system reacts to market forces and adjusts to changes and innovations and continuously improves while political systems such as Marxism, socialism and contemporary left-liberalism tend to stubbornly ignore failure and satisfy their self-inflicted economic deficiencies by taxation.

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 ever seriously criticized the USSR during its 74 years of decrepitude of Eastern European society. The only proffered commentary was that the basic idea of Marxism or far-left socialism was vitally correct and some mistakes were obviously made. The transition process from entry into the business world and the parallel entry into the political world elevates different types of persons to dissimilar power constructs and they have very different outlooks and theories. Political dictatorships have a build-in profit motive conveniently derived from merely confiscating assets from others. This is how Fidel Castro eats $700 per pound ham from Italy while his victims are on the brink of starvation.

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.
[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 like Gary, In. or Buffalo, NY. The unpaid taxes are higher then the value of the property so no one wants it. It doesn't take long for something like that that to happen due to high tax rates and the low value of property. http://www.townhall.com/youropinion/comments.aspx?g=3d997678-96e7-46d9-a12e-43089e953aef#comment000248fd-3fe2-45cb-b11b-c38a8e242634

[14] Equity Loans. Ibid.
[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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