[ExI] Sudden outbreak of democracy baffles US pundits
lcorbin at rawbw.com
Mon Oct 13 17:50:31 UTC 2008
Damien (Sent: Saturday, October 04, 2008 4:21 PM) commented on a
number of views he'd read, but it wasn't too easy to see what he himself
was affirming. But apparently he writes
> A good idea in theory, to extend the dream of home ownership to more
> Americans, and particularly, more minorities, lower-income Americans,
> but banks aren't well-suited to applying progressive social programs.
> How creditworthiness is defined was altered to meet egalitarian ideals.
Quite right. But did anyone mention the legal climate that congress
has created since the late sixties? Mortgage and loan lenders can
be *sued* for turning down loans, and very often successfully so,
because of pieces of legislation going back to 1977. And the last
thing that the lenders want is a law-suit.
I think that their solution was, later on, to very cleverly start bundling
what they feared were bad loans into packages, packages which
ultimately would receive backing from Fannie Mae and Freddie Mac,
which ultimately have the implied power of the government behind them.
So the *immediate* cause of the collapse was the existence of all
the bad loans, which had been forced upon an otherwise very careful
(and very self-interested) banking community. But the *distal* cause
remained, and remains, the very idea that the government can inject
"stimulants" into the economy whenever it feels like it.
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