Tuesday, August 31, 2010

The Economy

Lets start with the economy. Very few Americans haven't been hit hard by the current economic downturn. Both how we got into this predicament and how we've responded to it are very interesting. While all the details of what caused the economic downturn are complicated, at the heart of it all is the housing market. For the last few decades dating back to Clintons regime the liberals in office (and that include several Republicans) noticed that very few poor people owned a house. While a conservative would look at that and say, "houses are expensive, you need to have a good job if you want to buy a house" the liberals looked at that and said, "that just isn't fair that poor people can't have a house, we need to make things fair." They then passed a law that FORCED the banks to make it easier for low income people to get a mortgage. Of course anyone who could make a buck jumped on the band wagon and went along with this including many of the more irresponsible banks. You could get homes with zero dollars down, you could get loans without proof of income and even illegal immigrants could get a mortgage. Of course the government controlled banks like "Freddy Mac" and "Fanny Mae" were the worst ones.

As you can imagine things were great for a very long time. The huge demand in houses drove the prices up and people who had a lot of equity in their homes refinanced them and took out cash and the housing market grew at an incredible rate. Eventually, as you knew it had to, the bubble burst. The mortgage backed line of credits ran out, the interest only loans came due and the foreclosures began. Once the foreclosures started the collapse fed on itself. The foreclosed homes went up for sale and drove down the price of houses and now a large portion of the population were upside down in their mortgages. They owed more than the house was worth so now they couldn't even sell their homes to pay off the loan and more foreclosures went on the market.

The liberals looked at this and said. Oh those mean banks are taking away everyones homes and they forced the banks to renegotiate the loans so now they put the banks in financial jeopardy. Once the banks are in trouble now the liberals want to fix the problem and they bail out the banks. The problem is that in order for the government to give someone a dollar they have to take three dollars away from someone else. That someone else my friend is you and me who pay taxes.

The conservative looks at this financial crises and say, "that is real sad that my neighbor is losing his house but if he can't afford to buy it then he's better off without that huge mortgage hanging over him." They look at the bank that was stupid enough to loan money to a guy making $60,000 a year so he can buy a $500,000 house and say, "if you're dumb enough to make a loan like that then perhaps you shouldn't be in the banking business." The sad thing is that the government is taking money away from the banks that were responsible and giving it to the banks that were irresponsible. They are punishing the good guys and rewarding the bad guys. It makes no sense to me.

So now the economy is in a real shambles so the liberals say, "oh my goodness, people are suffering, we must fix this". They cook up a trillion dollar "stimulus" package that my grand children will be paying off and bail out irresponsible companies like GM. That means that now the government is competing against responsible car companies like Ford and Toyota who wouldn't touch a dime of government money. Tell me how it is far to take my tax dollars and help GM compete against private industry? The pathetic thing is that almost all of the jobs created by the stimulus package are government jobs so all of that borrowed money isn't producing anything that has any value. At least in the depression the jobs that the government created built highways and the Hoover damn and produced something of value. Just a little side note here. The stimulus package is funding some energy research which is paying my salary at the moment. Thanks all you tax payers for giving me a job.

Conservatives will allow the irresponsible companies to fail and allow the responsible companies to succeed. That is called the free market and it ALWAYS results in the best quality product for the lowest price. If a company tries to cut corners then their product will suffer and nobody will buy it. You could argue that the government may have a place in setting standards for some products like fuel efficiency in cars and a certain level of safety so that the car doesn't cause accidents because those things could affect the safety of innocent people but the more the government gets involved then the more it will mess up the free market.

If the government taxed every single dollar that every single American makes it would not be enough to pay off our national debt.

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