Everybody Loves a Crisis…

Hyperbole, thy name is mud…  After a careful look at the news and political press statements, I am becoming more and more convinced that the DNC was greedily wringing their hands when the financial crisis hit.  Not because they are all angry and sadistic SOB’s (to be fair, a couple of them aren’t… and to say so would be a horrible insult to angry and sadistic SOB’s…) but rather because crises are the mother of political reformation.  The worst part is that this current crisis is entirely of our own making.

So… where did the trouble start in the financial sector?  While it is popular to blame El Presidente Bushy, to do so is horribly short-sighted and naive.  Crashes such as occured in the financial market take years to build to the catastrophic cacophony of cumbustibility that we see in the market today.  Since the free market is all about making money while minimalizing risk (and thus, avoiding pitfalls) and overhead (meaning outstanding profits), we need to look back for an event that caused people to throw all forms of caution to the wind in the hope of making the world a better place.  Taking into account that Fannie Mae and Freddie Mac were the first big corporations to fail, we need to find something that affected them.  To find this event, we need to delve back into the 90’s.

For those of us whose short-term memory doesn’t go back that far or have a mental block on the decade, in the 90’s we were all supposed to be happy-peppy people living under the thumb of Grand Poobah Clinton.  Boybands and post-grunge were the musical styles of the day, and Newt Gingrich rode the republicans into power like a stallion in the Kentucky Derby.  Now that we all remember the frame of mind we had, we need to look at what congress did.  In the mid-90’s, the congressional democrats introduced a bit of legislation that mandated Fannie Mae and Freddie Mac to give more “sub-prime” mortgages (ie, mortgages to people who couldn’t afford them).

So people who should never have gotten mortgages got mortgages and people started flocking to the financial markets like they did during the “dot com” thing.  With choruses of “Let the Good Times Roll” playing in the background, tons of money was being dumped into the mortgage market while banks made tons of money off of the interest that was being paid to them… until those loans started defaulting.  Now because the loan business involves not only making loans but selling them to other lenders, all of those bad mortgages started spreading until nobody knew who had what.  Hence, we find ourselves where we are right now… our very own financial version of 9/11.

My big concern is that the kind of reforms that were swept in to the American consciousness by the shock of 9/11 will be played out in the financial sector under the new administration.  I’m concerned that the Government is going to be able to decide who does and does not get a car or a house or start up a new business.  The only time there is zero risk involved in finances is when the Government is handing out all the money.  While it sounds a little “doomsday”ish to say, I think we may well be witnessing the complete destruction of the free market in America.  If you don’t believe me, check out the soundbites coming from the left.  “We will pursue an aggresive agenda…”  “Now is the time to reform the financial market…”  While I agree that the policy that got us into our mess was disappointing, we need to remember whose policy it was that got us into our mess.  Here’s a hint… it wasn’t the Bush tax cuts.




~ by xristosdomini on December 23, 2008.

2 Responses to “Everybody Loves a Crisis…”

  1. Ha ha ha …
    Your line about insulting the “angry and sadistic SOB’s” is very very funny! 😀

  2. good show, adam. i like political insight from folks who actually look past the ridiculous circus of our country’s media.

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