The Dramacrats, The Economy And The Mortage Crisis, Explained

From Dr Sanity’s Bleak House:

There is no doubt that both Clinton and Obama, for all their talk of “hope” are both heavily invested in misery and failure–both in their economic philosophy, as well as their desire for immediate (if not sooner) surrender in Iraq…

You would think that people with real “hope” would see the progress in Iraq and the turnabout that has occurred in the hearts and minds of the people there. You would think that people hyping “change” would come up with some ideas and programs that aren’t beholden to an ideology that has already failed in country after country, and which has made their economies circle the drain.

The Democratic party has become a bleak house that only knows how to pander to the pessimism and envy of Americans. Since 2000 when Bush was elected, they have been whining constantly and pointing to doom and gloom omens whenever they could about the economy. Their goal? To create a perception of disaster–even as the economy chugged along like the little engine that could. No group is happier or more excited over the possibility of a real recession than the Democratic elite, who are practically salivating over the word. Never mind that unemployment remains at historic lows…

Home ownership in the United States is at records levels- more Americans own homes than at any other time in history. That also means that there will be more mortgage defaults.

We are by no means minimizing the current mortgage crisis (one that originated with the banks and not the federal government), but rather let’s put things in perspective.

Almost 95% of all mortgage holders are meeting their obligations. That does not mean that the current mortgage ‘crisis’ is responsible for a full 5% increase in defaults- there are always a percentage of mortgages that go into default. With record numbers of new homeowners, the number own loan defaults increases accordingly.

Let’s look at the economic issues surrounding the mortgage crisis. Once we really understand those issues, how to deal with them becomes clear.

Suppose your brother in law demanded a $100 handout, a gift on demand. Chances are you would probably say no. Of course, if he asked you for a $100 loan, you might be more inclined to agree.

A year later your brother in law is unable to pay you back. More than likely, you would consider that $100 lost forever. You thought you were making a loan but in the end that money was a handout. Your brother in law has gotten away with defaulting on his loan with no consequences.

If your brother in law can borrow money without paying it back,where exactly is the incentive to work, save and invest money? It’s a whole lot easier to borrow money, spend it and never have to worry about paying it back!

Now, let’s revisit the mortgage issue. Like most people, he did his homework before he went shopping for a loan and thought he could handle a $250,000 loan without a problem. Your brother in law goes into BanKumbaya and walks out with a $400,000 to buy a spanking brand new house that is a whole lot bigger than he thought he could afford.

How did your brother in law get so lucky? Well, his banker played with a few numbers and told him that the bank would structure a loan with lower payments for a few years and after that, one of two things would happen.

1. He could refinance at the same or lower rates, or,
2. He could sell his house at a profit.

At that moment, your brother in law’s banker became a prophet with his very own crystal ball.

Anyone who cannot distinguish between their banker’s or mortgage lender’s greed and their own stupidity has no business buying a house. No one can predict the future. No one.

Now, people who do save and who are responsible with money are being asked to subsidize banks and government programs for those who do not save and those who are not responsible with money. Why should a guy who does the right thing have to pay for the guy who does not? Why should he be responsible for someone who is not?

This is no small matter. Your brother in law may get to keep making his reduced payments because of government bail out programs for the banks. It is you and not he, that is paying for the bailout. And all the while, in addition to the added burden you are now asked to shoulder, you are still paying taxes on your savings and earnings. Kind of takes the joy out of saving.

Now that you are sufficiently aware of reality, let’s all get on the same page, remember the potential mortgage defaults to date only represent about 5% of markets.

Moving on.

Let’s talk a bit more about the economy. By all accounts, there are between 12 and 20 million illegal aliens in this country (many of whom have bought homes and are meeting their mortgage obligations!). Despite the pressure that places on the economy, we are still at record low unemployment rates and our economic growth is still trending upwards. Let’s put some real numbers on that-  In 2007 the US Gross Domestic Product (GDP) grew 2% even as the Dollar tumbled on the forex markets!

So, how come the Dramacrats have assumed the role of chicken little?

Because make believe drama is all they’ve got.

Saving money and being responsible with money is antithetical to leftist values. It is only by keeping people in debt and flush with handouts, loans that do not have to be repaid and entitlement programs that leftists are able to camouflage the bondage in which their supporters are kept. Only persons who are kept blind cannot see or understand the damage and havoc that come about as the result of fiscal irresponsibility.

It is no wonder that schools under the umbrella of leftist ideologies have not educated our children. An educated child is a morally and fiscally responsible citizen, a state of affairs that liberal ideologues fear most.

Dr Sanity:

In fact, if you actually look at the behavior of the Democratic candidates and their leftist political base, you begin to see that “hope” and “change” are the last things in the world they stand for–or champion. More like hype and shortchange.