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| Political Astrology... |
If you are able to make yourself believe that "13th floors" do not exist, you definitely have a great future in modern day Washington politics!
The "There is no 13th floor " way of thinking is very much alive and well in the national discussion over mortgage reform. Before moving on, let's take one last look at the
Top Five "There is no 13th floor" beliefs that are driving the political mortgage debate:
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| Stop ! Or I'll shoot... |
The black-mailing of Congress by the Wall St. banks was a "real world re-enactment" of the famous scene from the movie classic "Blazing Saddles", where the unpopular sheriff strides into the rowdy mob, points a gun to his own head, and tells the crowd to calm down or he'll shoot. The crowd in the movie - and Congress in real life - puppy-like, rolled over. Real reform would require this response to Wall Street: "Please go ahead and shoot..."
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| A basket case... |
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| How can we give up such ... a wonderful system? |
3) The Country Can't Survive Without A Taxpayer Guaranteed Secondary Mortgage Market - The secondary market has generated massive corruption on a local, state, national, and global basis - or do you believe the last six or seven years of financial disaster was all just "one big misunderstanding". A secondary market may be a good idea; a secondary market which props up an unsound financial product, guaranteed by the federal government to penalize the poor and shaft the taxpayer is not. Why can't the private sector figure this out? We don't think the mortgage market can function without the support of systemic corruption?
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| Two Red Herrings.... |
Since we have seen the advantage of exporting American manufacturing jobs, it clearly makes sense to make every effort possible to export financial service jobs and financial profits overseas - which is what our secondary mortgage market does. How so? The largest "profit" potential in a mortgage loan is the stream of interest income paid on the loan. When the loan is sold outside of the local community, that stream of earnings is exported and is not available to be circulated to enhance and build the local economy.
This problem is accentuated when no local
... let's maintain the status quo for the good of the status quo!
3 comments:
Quislings always support the status quo!
While we generally are in agreement, you post only talks to the superficial reasons for the last collapse. To some extent I agree with most of your post. It does seem it never get to the true reason for the problem:
I am a capitalist! Capitalism has virtues and vices like all systems. One of the problems is unrestrained greed. All people look for a "Silver Bullet" to make them fabulously wealth with little effort. We delude ourselves into the belief that this time it will be different. We morphed from a home mortgage industry to a housing mortgage industry. People stopped borrowing for a shelter from life's storms which is a home, and started investing in houses as an investment that never went down. Some how the granite industry convinced fools that if you had counter tops make of granite you worth as a human was enhanced. It also put a multiple on the cost to the value of the property. Fools also brought into the belief that "Bigger Is Better". Wait until they have to maintain the castle. If is reasonable to have you think of your home as an investment, it is only fair for you to take the loss!
Nobody objected to the housing industry balloon because the secondary perceived positive effects was great employment across multiple industries. Even the marginally wealthy were mortgaging their gains are vehicles that have more unused buttons than most people who grew up with rollup windows and an AM radio understand how to use.
You right point out the problems with the secondary market and the 30 fixed mortgage. Try to make a nonconforming mortgage which is in the best interest of the member and the credit union and see if NCUA and CFPB don't come down hard.
The commitment to the mindless 30 fixed mortgage will cause the next melt down if the Fed ever is successful in raising interest rates. My bet is that the Fed has screwed up so bad that them have not chance in raising rates much more that a superficial quarter of a point or two.
Think you're right only a hard core capitalist would expect "silver bullets"!
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