Bush: Free market is best — under government control, that is

  Bush: Free market is best – under government control, that is


By Donald Hank


President Bush’s speech of 9/05/08 gave various reasons for the recent financial crash involving, among others, Bear Stearns, Lehman Brothers, AIG, Fanny Mae and Freddy Mac. But he overlooked one reason — the underlying one.

He attributed the crash to a large influx of money to US banks and financial institutions, which in turn made it easy for people to get credit, leading them to borrow for cars, college tuition, homes and so on. He said “Easy credit combined with the faulty assumption that home values would continue to rise, led to excesses and bad decisions.”

Ok, let’s stop right there and analyze this. The last sentence indicates all this was your fault, you irresponsible borrower.

But was it?

American realtors had seen a crisis on the horizon as early as July 15, 2004, when the National Association of Realtors sent a letter to HUD expressing their concerns that a proposed rule to increase the percentage of mortgages to “underserved” populations (minorities) could create precisely the kind of market destabilization that led to the recent meltdown.

What was this rule? Under Clinton, Fanny Mae and Freddy Mac were obligated to serve at least 21% of the “underserved” communities with mortgages. Under Bush, the percentage more than doubled. In reality this translated into providing mortgages to a significant number of families who simply could not afford them, at sub-prime rates and often with no down payment required. For many, foreclosure was a foregone conclusion at the outset. It was affirmative action for borrowers and worked just as well as the affirmative action in colleges, where minorities were assured of admission under diluted requirements, and almost equally assured of failing after the first year. Like welfare, which harmed the inner cities by making out of wedlock births a lucrative business, leading inevitably to an astronomical incarceration rate for blacks, it ensured failure for minority home-owners, making ownership a revolving door. For many in the “underserved” community, it was: “welcome homeowner,” followed immediately by “get out, deadbeat”!

This is really the essence of “compassionate conservatism,” which is a euphemism for a planned economy. Thus the people blaming the crisis on lack of regulation had actually made and enforced regulations that brought down the financial markets. Regulation was in fact the disease pathogen, not the remedy.

Bush goes on: “I’m a strong believer in free enterprise, so my natural instinct is to oppose government intervention. I believe companies that make bad decisions should be allowed to go out of business.”

He then explains that this current crisis is an exception and describes the “distressing scenario” that must be avoided at all expense — your expense, that is:

More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically.

But the banks that would fail would be the ones most heavily invested in the “compassionate conservatism” that you promoted through your HUD rules, Mr. Bush. That would be a very good thing. They should fail. They embraced the false utopian ideal of “social justice” at the expense of self-regulation of markets.

“And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs.”

Farmers and small businesses running thriftily will be the ones to survive. That too would be good, if only because it would enable the market to punish the foolish investors and reward the wise ones. And that in turn would serve as a useful example to the next generation of business people. If people became unemployed, they would be reminded that politicians who push snake-oil schemes with names like “compassionate conservatism” (or for that matter, who excuse illegal immigrants by saying things like “they are good people looking for a better way of life”) ultimately result in lost jobs.

“Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. And, ultimately, our country could experience a long and painful recession.”

Mr. Bush, it should be difficult to get loans. They aren’t for everyone. They are for people with good credit, regardless of race, color or creed. Period. But even so, how is the taxpayers experiencing an unwieldly debt any better than Americans experiencing a “long and painful recession”?

David Walker, the ex US Controller General, predicted that over the next 75 years the gap between what has been promised for entitlement programs like social security and Medicare and how much in dedicated revenue is likely to be received (e.g., through payroll taxes and premiums) is $38.8 trillion. Walker calls these “implicit exposures,” and says they represent the money we would need today, invested at Treasury rates, to pay for future entitlements. This gap represents over $128,000 for every man, woman, and child in the United States.

Peter Sims writes:

According to the GAO, the total fiscal burden over the next 75 years represents $400,000 for every full-time worker in the United States and $440,000 per household.

The bipartisan bailout plan is typical Bush double-talk. While paying lip service to the free market at the beginning of his speech, Bush sounds like a true leftwing revolutionary when his alter ego chimes in:

“Earlier this year, Secretary Paulson proposed a blueprint that would modernize our financial regulations. For example, the Federal Reserve would be authorized to take a closer look at the operations of companies across the financial spectrum and ensure that their practices do not threaten overall financial stability.”

In other words, the free market is fine, as long as it is under government control. That is why both parties can reach across the aisle so easily and into your pocketbook.

If McCain signs on to this plan and manages to somehow get elected, look for 4 more years of disastrous Bushonomics posing as free market principles.

If Obama gets elected, look for the same, but called by its real name: socialism.

If you agree that America deserves better than this devil’s bargain, contact your lawmaker at the site linked below and tell them to vote AGAINST the bailout:


 PS: For those who think I am making this up, here is the Bush Administration’s HUD site and a quote from that site promoting the “zero downpayment” initiative:


  • “Zero-Downpayment Initiative. In his FY 2005 budget, the President proposed the Zero-Downpayment Initiative. Preliminary projections indicate this Initiative would help about 150,000 homebuyers in the first year alone. This proposal would eliminate the statutory requirement of a minimum three percent down payment for FHA-insured single-family mortgages for first-time homebuyers. “

    PS: McCain on illegal immigration. He’s for it (no one knows where Palin stands):




    Bail-out time for conservatives?

    Bail out time for conservatives?


    by Donald Hank

    The government recently bailed out a number of bad decision makers in the lending industry and it will probably cost you and your children at least a trillion. The bad guys were rewarded and the innocent were punished, as so often happens in Washington.

    As Republicans read of one bailout after the other, many are making the decision to do a little bailout of their own – out of the Republican Party. But suppose you do decide to bail out, where can you go? To the Democrats, as some have?

    In the wake of the Lehman Brothers debacle, Obama issued a statement including these words:

    “I certainly don’t fault Senator McCain for these problems. But I do fault the economic philosophy he subscribes to, …. It’s a philosophy that says even common-sense regulations are unnecessary and unwise; one that says we should just stick our heads in the sand and ignore economic problems until they spiral into crises.”   

    McCain’s response suggests he would introduce regulations preventing bad lending practices.

    Both candidates miss the mark by a mile. Government meddling is precisely the source of the problem

    As pointed out by V-Dare’s Steve Sailor, leftist organizations, notably ACORN, with which Obama has a long-term cozy relationship, are one of the prime causes of the Fannie May-Freddy Mac disaster. In other words, it wasn’t the lack of oversight as charged by Obama and suggested by McCain, but government regulations themselves that caused the crisis.

    Leftwing groups and community organizers had long complained that most housing loans go to white people and that blacks, Latinos and other minorities were “underserved.” Playing the race card with great skill and shrillness, and using often intimidating tactics, these groups held government in their thrall, eventually leading the Clinton, and later Bush, administrations to cave in to their demands to extend home mortgages to people considered high credit risks. The upshot was a steady erosion of good lending practices, to the point that in many cases, no down payment at all was required. At variance with ACORN’s insistence that relaxed scrutiny of prospective borrowers was the ticket to eliminating poverty, many of the poor who moved into these homes were soon evicted under foreclosure proceedings. They suffered a fate similar to that of many minority students admitted to colleges under affirmative action. Getting in proved to be the least of their worries. Staying in was the real problem, and no Marxist magic could guarantee that. Our “Conservative” in the White House, who had talked a good talk against “growing the government,” was in fact the biggest offender.  Writes Sailor:

    Both the Clinton and Bush departments of Housing and Urban Development raised the quotas repeatedly. For example, initially, the Clinton Administration required 21% of these quasi-governmental mortgages must go to “underserved areas” (which are officially defined as “low-income census tracts or in low- or middle-income census tracts with high minority populations”), but the quota for 2008 established by the Bush Administration is 39 percent. [my emphasis]

    Lehman Brothers failed for essentially the same reasons, but that failure was precipitated by a general loss of confidence due to the Bear Stearns debacle.

    According to BBC News, Lehman Brothers “was considered one of Wall Street’s biggest dealers in fixed-interest trading and was heavily invested in securities linked to the US sub-prime mortgage market.” For novitiates in economics, sub-prime means very low interest rates, below the official government prime rates. They had assumed billions in bad and questionable mortgage debt and, due to these low rates, the slim profit margin could not pay for the losses incurred by foreclosures. After the Bear Stearns failure, it was just a matter of time before investors would lose confidence in this bank.

    Now why would Lehman Brothers, in particular, take the risks associated with assuming bad mortgage debt?

    Well, no one will ever know for certain, but most economic analysts ignore a factor that is looming larger and larger every day in business, and that is, ideology. After all, business is in the hands of graduates from universities, which are drifting ever leftward.

    The Lehman web site is brimming with clues suggesting a leftwing corporate culture.

    Chairman and CEO Richard Fuld is a member of the International Business Council of the World Economic Forum, which supports the UN Millennium Declaration, a socialist global governance plan, including an endorsement of the Kyoto Treaty, the global warming agenda, and radical actions aimed at bringing about “social justice” and more equitable wealth distribution.

    A look at the company’s downloadable philanthropy brochure suggests a corporate viewpoint according to which race is the chief cause of poverty. The photos of the communities served show almost no whites at all. Hence – transferring this overall mindset to the business aspects of the company – the willingness to give mortgages to the “underserved” communities, regardless of the perceived ability or willingness of the mortgagee to repay those loans.  

    When ideology trumps common-sense business policies, failure may be slow in coming, but is nonetheless inevitable.

    I am not suggesting that business should ignore the poor. Far from it. One of my heroes is Milton Hershey, who created a veritable paradise for his workers that soon became the town of Hershey, PA. But Milton never ran into financial difficulties as a result of his philanthropy, which included a now-famous amusement park intended originally for the use of his employees and their families, and also a free school for orphans which is still thriving, running off the profits of his chocolate empire. Hershey’s ideology was a traditional Christian-based one – work hard and God will bless. Then give what you can to the poor out of love (I Cor, 13:1-3) – not out of ideology. White people are not inherently evil and do not owe penance to minorities. After all, Mennonites like Hershey had founded and run the Underground Railroad in Lancaster County, PA.

    He understood that what businesses do owe the poor is what we owe everyone: lessons in responsibility, by personal example and through good business practices, rewarding the honest and punishing the shoddy and sluggardly.

    If you are considering changing your party affiliation based on a belief that the Left can fix the economy, you are making an awful mistake.

    The reason the “right” has bungled the economy is that we have an administration that has caved in to the Left’s demands – like the demand to serve “underserved” communities with financial services regardless of their ability of inability to repay loans. To switch your party affiliation further left just plainly makes no sense. Sadly, voting Republican may also make little sense any more because the party has shifted so far to the left that it will be very difficult to bring it back.

    So what has happened? How have we gotten a president who is so oblivious to real-world concerns like the economy, falling so easily for Marxist claptrap, and consequently, presiding over a financial crisis that is threatening to bankrupt America?

    Answer: In a nutshell, “conservative” voters include a very large percentage of Christians whose only criterion for choosing a president is his pro-life credentials. For them, everything else is immaterial. Jesus said “be gentle as doves and wise as serpents,” and we have excelled at the first part of that commandment but fallen flat on our faces at the second.

    Too many Christians ignore that the church, including the evangelical church, is now heavily riddled with leftwing ideology, carefully phrased to pass the low bar of unsuspecting Christians who don’t read their Bibles. I have written several articles on this problem and if you have not seen them, a representative sampling can be found here, here, here, and here.

    The stubborn insistence on applying only one criterion must stop or we will surely perish. Maybe this latest financial crash will be a wake-up call.

    So should Christians stop using candidates’ views on life as a litmus test? Absolutely not.

    But the test is not just whether the candidate believes in life for the unborn. He must also believe in life for the born, including all American taxpayers and citizens.

    Public policies that ignore economic survival are anything but pro-life.