American Elephants

Did You Enjoy The Housing Bubble’s Collapse? Obama Wants To Do It Again! by The Elephant's Child

Barack Obama has claimed that the financial crisis was caused by all the money George W. Bush spent on “a dumb war” and the tax-breaks he gave only to the rich, or something like that. But most people, I think, recognize the collapse of the housing bubble.  It began with liberals’ conviction that banks wouldn’t lend to blacks and Hispanics because they were racist. They called it “Redlining.” Studies showed that the denial of loans was related to the inability of customers to pay the loans back, but everybody thought that encouraging more Americans to own their own homes was a very good thing. Home ownership meant that people would be more involved in good communities, and good schools.

They passed the Community Reinvestment Act so that banks were forced to reduce down payments and lend to a lot of people that would not get loans under normal prudent rules of banking. And when not enough minorities were owning their own homes, they pushed a little harder on the banks. Fannie Mae and Freddie Mac bundled those mortgages and sold them to Wall Street Investment houses who sold them to investors around the world, and when it became clear that people weren’t going to be able to pay their mortgages, banks everywhere were left holding the bag, and the Wall Street investment houses either went under of had to be bailed out by the federal government.

This cost the taxpayers close to a trillion dollars and put the economy in a hole, in which we remain, because the administration was more interested in “transforming America” than in doing the things necessary to heal the economy. Liberals said it was all the banks’ fault for “deceiving” all those poor people into thinking they could afford to buy homes, and the banks should be punished and those poor people should be allowed to keep their homes anyway. Big lesson for us all to learn.

Except they didn’t learn anything, and they are about to do it all over again.

The federal government is beginning another initiative to force banks to lend mortgage money to low-credit-rated blacks and Hispanics — specifically blacks and Hispanics — and is threatening and already imposing punitive fines if they don’t. This time they are going even farther, and are going to take over the credit rating agencies and force them to change their standards to accommodate blacks and Hispanics so that nobody will be able to tell who is a bad credit risk and who is not. The federal government is going to impose its will on the home-loan industry and force another round of bad loans, because they believe everything is about race.

This time the program comes from the brand-new Consumer Finance Protection Bureau, headed by the illegally appointed Richard Cordray, [without Senate approval when the President claimed the Senate was in recess because he said so, but it wasn’t]. Authorized by the disastrous Dodd-Frank bill, it has suddenly acquired 900 employees. The CFPB has just announced that it is adopting a 20-page “Policy Statement on Discrimination in Lending.”

Two weeks ago, Wells Fargo gave in to a Justice Department offensive and paid $175 million for “alleged past discriminating against minority borrowers.” The bank had received an “outstanding” grade in its most recent Community Reinvestment Act exam. The government did not bother to prove discrimination in a single instance but relied instead on statistics showing lower rates of homeownership in minority neighborhoods. The Justice Department ‘s Thomas Perez, who heads the campaign, says banks discriminate “with a smile” and “fine print” and are “every bit as destructive as the cross burned in a neighborhood.” Interesting language.

There are some simple rules for escaping poverty in America. Graduate from high school, don’t get married until after you graduate, don’t have babies until after you get married, and stay off drugs. Works most every time.

Combine this exciting new program with the president’ new budget that aims to spend $46.2 trillion over the next ten years. Add in the fact that this is a 57 percent increase over today’s spending levels and the budget proposes to have debt remaining permanently above 100 percent of GDP. And some people actually propose to vote for this man because he is “likeable.” Have we reached such a point?


Bar Stool Economics by The Elephant's Child
July 29, 2012, 8:01 pm
Filed under: Capitalism, Democrat Corruption, Economy, Election 2012, Politics, Socialism, Taxes

Bar Stool Economics has been around for a long time, but it’s always worth reviewing, as is any clear presentation of a fairly complicated subject. It’s particularly needed in the current economic climate, since so many of the players don’t seem to grasp the basics. Here’s who pays the taxes now. Obama wants to ignite a class war because he doesn’t think the highest quintile pay enough, and the lowest quintiles pay too much. He believes in redistribution of income, and believes that we should have equality of income — except those ideas never seem to include himself or his friends because he keeps redistributing taxpayer money to his friends and supporters. Go figure.

“We Tried Our Plan,” Obama Said, “And It Worked!” by The Elephant's Child

87,897,000 Americans are no longer in the work force. Nearly 13 million are officially unemployed. So the Democrats in the Senate narrowly voted (51-48) to raise taxes on 1.2 million small businesses. Senators Joe Lieberman (I-CT) and Jim Webb (D-VA) joined the Republicans in voting against the tax hike, which would likely kill more than 700,000 jobs. Ernst and Young estimates that these small businesses  who pay their taxes as flow-through  businesses employ 54 percent of the private sector work force.

The rule that you just don’t raise taxes in a recession is denied by Democrats who expect to win the election by running against “the rich” and portraying Mitt Romney as unspeakably, disgustingly rich. They hope to impress voters with how thrifty they are by insisting that the rich pay just a little more of their “fair share.”

And if that weren’t enough, the Senate actions would raise the death tax from 35 percent to 55 percent. Democrats try to portray this as the (probably illegally gotten ) gains of people who got rich through no efforts of their own. The rich can usually deal with their wealth with foundations or trusts.  Small businesses and farms often have to sell all or part of the business to pay the death tax. Ruins many, and slows the growth of others. And to top that they would increase the top tax rate on capital gains and dividends from 15% to 20%.

The President recently told a fundraising crowd that his economic plan has been working. “Just like we’ve tried [Republicans’] plan. We tried our plan— and it worked, he said.  To prove that it worked, he cited the auto industry bailouts. “I refused to turn my back on a great industry and American workers,” he said. “Three years later, the American auto industry has come roaring back.”

Obama’s violations of bankruptcy law made the bailout of GM and Chrysler $26.5 billion more expensive than it had to be. Taxpayers stand to lose around $35 billion if GM stock were sold today. GM’s recovery is based, at least in part, on the increasing use of subprime loans.

It is becoming apparent that President Obama will say anything if he thinks it will help him win the election. He is currently running an ad that says he has a plan to “pay down the debt in a balanced way.” He tries to justify his call for a tax increase on the grounds that the increased revenue will reduce the deficit. Obama belatedly — July 27 — complied with the law that requires that he submit a budget every year no later than July 16. Senator Jeff Sessions said:

His updated budget proposes a $10.6 trillion increase in gross debt through 2022, with debt remaining permanently above 100 percent of GDP. The picture in the out-years looks even bleaker. No change is proposed to our dangerously unsustainable debt course.

The President’s claim his tax hikes are for deficit reduction is shown to be false as well. His budget proposes to spend $46.2 trillion over ten years—an increase of nearly one-and-half trillion dollars above the current law baseline and a 57 percent increase above today’s spending levels. The President’s $1.8 trillion tax increase is not used to reduce the deficit but to fund this massive increase above what we are currently planning to spend.

His economic plan has been working? The only president who combined tax cuts and spending cuts as policy was Ronald Reagan, and that brought us  a twenty year-long economic boom. This wasn’t the worst recession since the Great Depression, as Obama has constantly claimed. But instead of correctly addressing the downturn, the administration turned at once to a huge, unfunded, unworkable  government-sponsored health insurance program that nobody wants. Layer on a huge financial bill that strangles business, and does not address the factors that caused the recession, and add on a war on fossil fuels with an attempt to replace them with two ancient technologies hampered by the same drawbacks that made them only mildly useful centuries ago. It didn’t have to be this way, and we didn’t have to be in such disastrous straits.  His plan has been working?

Fortunately, Obama’s plan will not pass the House.

(click to enlarge)

This is the President’s economic plan.

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