Tag Archives: freddie mac

Really simple explanations as to why government involvement in home loans is counterproductive

The Federal government’s involvement in home loans has been a disaster, costing the nation hundreds of billions of dollars, damaging the nation’s credit rating — probably permanently, and causing misery for millions of people.  It was all preventable, but childish ideals got in the way of clear thinking.  You don’t have to be an economist to understand these principles.

Q. If you increase the demand for something, do prices go up or down?

A. Up.  Most people understand that intuitively.

Q. So if the government decides that more people should own homes and makes it easy for them to borrow money for them — whether they can afford it or not — will home prices go up or down?

A. Up, of course.  That is what drove home prices up in the housing bubble.  So the government increased housing costs for everyone, including the people they were trying to put into homes.

Q. At a given price of a house, say $100,000, and all other things being equal, which borrower is more likely to repay, the one who makes a down payment of $10,000, resulting in a $90,000 loan balance, or someone who borrows at 100%?

A. The one who made the down payment, of course.  Even if you ignore that those who have the cash to make down payments are probably in a better financial situation and more likely to make payments, the lower mortgage will have a lower payment.  But the government made it easy for people to borrow with no money down.  Then people were surprised when loan defaults went up.

Q. If you could go to Las Vegas and gamble knowing that you could keep all your winnings and others would cover all your losses, would you go?

A. Of course!  And that’s why bailouts are always horrifically bad ideas.  The mortgage mess involved government promises to cover losses, so people did exactly as expected: They made loans they never would have made otherwise.

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The government needs to get out of the home loan business. Privatize Freddie Mac and Fannie Mae asap.

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Roundup

Do you want to glorify God?  Check out this great list of ways.

Why do Christians believe that Jesus’ tomb was found empty? – Very, very important question.

Follow. The. Money. — Green Is the Color of the Environment… and of Money – don’t be suckered by the Global Warming scam.

Leaders of 15 top Big Green environmental groups are paid more than $300,000 in annual compensation, according to an Examiner analysis of the organizations’ most recent IRS Form 990 tax returns.

For comparison, Charity Navigator’s current study of compensation in the nonprofit sector calculates that the median nonprofit CEO salary in the mid-Atlantic region, which includes Washington, D.C., is $164,575.

I hope this gets lot of press: New film “Waiting for Superman” is stunning indictment of unions

More about unions: As FBI Probes Possible SEIU Corruption, FEC Shockingly Gives SEIU a Free Pass

California Workers Laid Off and Their Jobs Shipped to China by Greedy Republican Democrat Jane Harman? – think this will get a lot of mainstream press coverage?

What a freak show: Author and columnist Virginia Ironside says that a loving mother would smother a sickly child with a pillow and that most adoptees would be better off dead.

Lila Rose is a hero of the pro-life movement, exposing how Planned Parenthood routinely hides statutory rape (among other things).  They must be quaking in their boots, because she has many hours of unpublished videos that expose the “rogue employee” excuse for the lie that it is.  Check out this from CNN.

Democrats in their own words covering up the Fannie Mae, Freddie Mac mess — this is a keeper.  Watch Barney, Maxine et al in their fantasy world that ultimately devastated the economy.  Oh, but it was all Bush’s fault, right?

Roundup

Are you better off than you were 4 years ago when the Democrats took control of Congress? January 3rd, 2007 was the day that Barney Frank took over the House Financial Services Committee and Chris Dodd took over the Senate Banking Committee.  Before that the Democrats pushed for plans that would inevitably drive high foreclosure rates but they insulated the lenders from risk.  Horrible, horrible idea.  Bush tried to reform Fannie and Freddie and was blocked.  Who took the third highest pay-off from Fannie Mae AND Freddie Mac?  Barack Obama.

Remember, Nancy Pelosi said that the Democrats “are prepared to govern and ready to lead.”  When did she say that?  November 8, 2006.

Home Depot founder rips Obama WH as “tenured” academics, apologizes for creating jobs

Jr. High Students Take Field Trip to Mosque, Pressured into Praying to Allah — any major media coverage of this?  Any ACLU outrage?

An interesting piece by Pastor Timothy about Christianity and the Godfather.  A snippet:

The movie is a great example of what happens when sin goes unrestrained. You have every manner of sin being delved into by those who believe they live in a protected world due to the fact that Godfather Don Corleone has all the judges in his back pocket. That is how Michael can gun down one of the mob bosses and a police captain and get away with it. When you own those who are charged with keeping the law, then you can keep them from using the law against you.

The movie’s popularity is due to the fact that it does appeal to our sin nature. We want to be in control of the world in which we live and The Godfather shows us a world where the Don controls a good portion of his own world. Of course, he has to use intimidation, fear, the threat of having your favorite pet’s head severed and dumped in your bed over night, death, etc., in order to control that world. But wouldn’t we love to control our world in such a way?

Stunner: Congresswoman wheedles lobbyist for money – your tax dollars at work.  The audacity of her shakedown is bad enough, but I’m she was so bold / stupid as to leave it on a voicemail.  This is getting major coverage in the mainstream media, right?

Former-leftist Robin of Berkeley explains the left’s corruption of children – read it.

Communist atheist Mao Zedong killed 45 million people – It was really quite gruesome.  The numbers are staggering.  Ideas have consequences.  Wasn’t Mao a hero of one of Obama’s top advisors?

Black Conservatives Blast Al Sharpton Protesters – sweet.  Great ideas, but they disagree with Obama & Co. so they must be racists.  Seriously, she was well armed with facts about the impact of Democratic policies on nuclear families and the high rate of abortion in black communities.  The other guy played the “but they’ll be poor” argument to justify his pro-abortion views, which ignores the facts that the abortion kills an innocent human being and we don’t “solve” poverty by killing people inside the womb or outside.

funny pictures-And do not forget the special shampoo,  I think it's getting worse.

Jobs!!! Part 3

The final piece of this short series . . .

If you had to blame the recession on one person, who would it be? — The Wintery Knight rightly picks Barney Frank, who along with his fellow Democrats insisted that Fannie Mae and Freddie Mac were fine and the concerns over a housing bubble were unfounded.  Oh, and they resisted the Republican calls for regulation.  Watch the videos.  Facts are pesky things.  If only they got reported by the mainstream media we’d all be in better shape.

And guess what party the top 5 recipients of Fannie/Freddie contributions belonged to?  Hint: It starts with a “D.”

We need more Junior Achievement classes in all grades.  They are proven to reduce drop out rates and they provide excellent training in basic economic and money management principles.

Intel CEO Otellini: The Democrats Are Destroying our Economy — this is basic stuff to people who know anything about business.  You shop at businesses that treat you better and have lower prices, right?  What makes you think investors won’t do the same?  If you charge higher prices (i.e., taxes), offer lousy service and demonize your customers then don’t be surprised when they leave you.

The most disturbing part of Otellini’s comments is that he says nothing groundbreaking, nothing unexpected, and nothing that we have not heard many times before. Otellini talks about regulation, taxation, litigation and transparency – all issues that have been cited by business leaders for years. But our ‘leaders’ in Washington ignore these concerns, and instead pile on more taxes, more regulation, more litigation costs, greater uncertainty about the climate going forward. And they do all this while claiming to be ‘pro-jobs.’

Will Congress and the White House ever realize that business leaders are telling the truth? As our government continues to make it more difficult to do business in the US, companies must increasingly look to more favorable climates abroad. If Washington really wants to spur job creation here in the US, they should repeal the health care overhaul, reduce spending, cut the corporate tax rate, give up on cap and trade, and reform litigation. Instead we have been treated to an extended experiment in government control – one that is obviously not producing new wealth, new jobs, or any real hope for the emergence of the industries of the future.

As noted in the first part, it is proven that Liberals have a very poor understanding of basic economic principles.  They should not be in charge of the economy.  Get out and vote this November, people!  Republicans have their flaws, but their policies result in having employed people complain about them rather than unemployed.

Jobs!!! Part 2

Continuing a three-part series on jobs . . .

Roxanne explores the vast misunderstandings about job creation in Failing Capitalism (and common sense) 101.  Read it all.

Whether or not you ascribe to that  particular ideology, you should understand the theoretical basis of the reigning ideology of your country.  So, if you live in the Western world, you should have some idea of what capitalism is all about.  That is, you should not write things like:

“Creating jobs is not about intelligence or education. It’s about having enough money to pay someone to do something. And :drumroll:…. having money is not exclusively a function of being educated, intelligent, good-smelling, or anything else, really. Of course, if we argue that wealth is solely a function of merit (as measured by education, which we assume is a function of intelligence), then yeah, it’s pretty much axiomatic that a more educated populace will create more jobs.”

Then Marshall asks, “Who would hire?  Who could?”

This article from Investor’s Business Daily lists ten reasons for the poor job situation in this country: (Hat tip–Wintery Knight)
-Executive orders and regulations promoting compulsory unionism.
-Obama’s forced restructuring of GM.
-Patient Protection and Affordable Health Care Act of 2010 (ObamaCare).
-Extension of unemployment benefits to 99 weeks — almost two years!
-American Recovery & Reinvestment Act of 2009.
-Minimum wage laws.
-Restoring American Financial Stability Act of 2010.
-Moratorium on offshore oil drilling.
-Expiration of the Bush tax cuts.
-Obama’s runaway spending.

Not surprisingly, people with no business experience don’t know how to create jobs. Obama’s cabinet has the least private sector experience ever, by far.

Is the media helping educate people on the problem? Of course not. As Rich Karlgaard of Forbes notes, editorial after editorial blames business for the problem but never talks to the business people. I guess they must be omniscient and don’t need to actually interview the people in question.

Also see Obama’s Washington: No experience necessary

Wonder how Recovery Summer turned into Wreckovery Bummer?  How an administration ginned up its entire economic strategy into one stimulus bill and has done nothing since, even as the economy disintegrated?  Marty Robins advises his readers to check the CVs of the people in charge in Washington to understand just how incompetence has triumphed — and not just Barack Obama’s . . .

Jobs!!! Part 1

I really feel for the countless people out of work now.  That is an extremely stressful place to be.  Then there is the multiplier effect: People without jobs spend less and consume more resources from the public (i.e., those who are fortunate to still have jobs), so there is less demand, which results in fewer jobs, and so on.

Here’s a huge part of the problem: Are You Smarter Than a Fifth Grader?  Self-identified liberals and Democrats do badly on questions of basic economics.

Who is better informed about the policy choices facing the country—liberals, conservatives or libertarians? According to a Zogby International survey that I write about in the May issue of Econ Journal Watch, the answer is unequivocal: The left flunks Econ 101.

These are the scores by political affiliation on a basic economics survey.  Anyone who can’t get at least six right should not be considered for public office.  (Yes, I got all eight right, but I wouldn’t expect everyone to do that.  I’m a CPA with 25 years of business experience and taught Junior Achievement for 12 years.)

If these people can’t get basic economic questions right — and those scores are squarely in the FAIL category — why would you hire them to run your economy?

Not surprisingly, you really, really don’t want to listen to what “progressive” (read: theologically Liberal or just “fake”) churches have to say about economics.  They don’t even understand the Bible, let alone a basic understanding of economics.  So why should people like Jim “the Gospel is all about wealth redistribution” Wallis be advising the President — especially after he was caught lying about taking donations from George Soros?

What you do want is more Junior Achievement classes in all grades.  They are proven to reduce drop out rates and they provide excellent training in basic economic and money management principles.