What caused the home mortgage crisis was governmental interference in the market
place. This interference was intended to force lending institutions to lend to
under- / un- qualified home buyers, usually minorities, in the typically leftwing
desire artificially (i.e. against the market) to increase home ownership. Well,
Democrats' redlining and subprime mortgages caused an increase in home ownership,
alright. But when the mortgage payments became unsustainable by these borrowers,
as was inevitably the case, the bottom fell out of the mortgage system.
What the leftwing proposes, in typical fashion, is to fight government
interference-caused calamity with more government interference-caused calamity.
[Aside: Isn't the definition of "insanity" the continued repetition of an action
that results in a failure, only with the expectation that there will this time
be a different result?]
The so-called "bailout" is no bailout at all. In honest terms, it would be
called a "recycled disaster" because all it will do is allow the original
government interference-caused problem to survive to poison us yet another time.
What is euphemistically being called a "bailout" is really just like rebuilding
New Orleans 60 feet below sea level again. The disaster will certainly return -
it's merely a question of when it will return, not if. Regard it like putting
a bandage on arterial bleeding; it doesn't solve the problem, it just masks it
from view for awhile. And what about next time, hmmm? More socialism is not
a remedy for socialism.
What should be done is: First get rid of Freddie's Fannie (renamed under the
Truth in Labeling Law, and in honor of Barney Frank) and any and all other forms
of federal "dogooding" in the mortgage marketplace. If you don't get rid of the
poison in the first place, you do not save the patient, you only prolong his
suffering. Yes, there are going to be widespread problems in the economy. But
there always are when socialists are allowed to have their way.
Second, to overcome the economy's ills is: to eliminate permanently all corporate
taxation, both individual and capital gains. This would boost the economy
tremendously, and make the damage very short-lived. Not to mention make the
economy much more robust henceforth and forever more.
Oh, and hey, here's another thought. If the federal government seriously
proposes to indemnify all unpaid mortgage loans, why should you or I or anyone
else continue making our mortgage payments?