Tag Archives: Housing Bubble

Mexico’s Greek Problem

The Greeks are causing problems Everywhere!

If they’re not supposedly Raping College Coed’s, they’re screwing it up for North American Socialists.

So there I was killing a little time reading Lenin’s pamphlet “Imperialism, The Highest Stage of Capitalism” where he referenced Calwer’s book “An introduction to World Economics” and it dawned on me.  Since nothing is new… the citing of 19th century world power and wealth accumulation struck me as oddly relevant to the globe of 2015.

Climbing into the ‘way-back’ machine and ending up in the early nineties you would see many of us decrying the idea of an EU. We did this not because we feared the brilliant long-term success predicted for such a move towards the One World Socialist Utopia, but rather because we knew it would lead to economic instability throughout the world… exactly opposite of what those supporting the idea promised.

We were out in the wilderness attempting to explain to the handful of people who would listen that Huge mistakes could now be made by an entity so large… and the ramifications would be catastrophic.  We saw this with the EU insatiable appetite for US Junk Debt in the form of derivatives, and the subsequent economic meltdown of 2008 as a result.

But I must also give a nod to a secondary concern, that being the short-term success at combining all of these desperate countries into one large, for all intents and purposes, Nation.

It was the North American Socialists drive to do the same with the United States, Canada and Mexico.

This is still on the wish list of many Leftist Politicians and the legislation/treaties required are sitting in someones drawer waiting for the right time to be offered up to the American People… or simply Forced Upon Us as was Obamacare.

So let’s travel back to today…

Greece is about to sink the EU. And if not Greece, Spain and Portugal are waiting in the wings watching closely the events and waiting their turn to hold the rest of the EU hostage.

I will offer that the exit of Greece from the EU, read default, will set back the Socialists dream of an ‘Amero’ 50 years. I cannot say they will give up their attempts to destroy Freedom, Liberty and Free Exchange, as they never have. But the very events in Europe we are watching today are unwelcome by the Global Statists as it clearly demonstrates the fragility of monopolies as well as the futility of government planning.

Everybody cheats… including countries.

There are the Makers (Such as Germany) and the Takers (Such as Greece, Spain and Portugal).

The Takers are not interested in making an effort to be responsible for their actions and expendatures.

The Makers will always find themselves enabling the Taker’s addiction to spending and lethargy.

Self-interest will never be removed from the Human Condition… thank God.

Because of that, we are watching the dissolution of yet another Great Socialist Plan right before our eyes.

Luckily this is happening before the Untied States was convinced, or Pushed, into the same such agreement with our neighbors to the North and South of us.

If you are anything like me and read the stories coming out of Europe while wondering why the EU is trying so hard to keep the Greeks in the Club… it’s because the very legitimacy of Socialism is riding on a Healthy, Vibrant EU.

But what Socialists around the world simply cannot embrace is their very Governing Theory is poisonous… and the arrival of Death, Destruction and Oppression is only a matter of time.  The results of Force and Acceleration in the name of Administration will always be failure.  It’s simply to what degree.

So it is True.

The Greeks are indeed causing havoc Around the World.

However, the only people getting Raped are the Member Nations of the EU.

But they were asking for it.

I mean really… have you seen the way they dress?


Why are we Staring over the Fiscal Cliff?

And why are we not backing up?

After a brief exchange last night with an associate, and a subsequent conversation with a reader, I thought it wise to review how we arrived at the fiscal cliff and this global economic meltdown.  The not backing up part I don’t have a good answer for…

This will be as simplistic as I can make it without sacrificing accuracy…

As always, you have to understand the difference between Capitalism and Socialism.  Capitalism is the absence of force applied to markets and individuals.  Socialism is force applied to markets and individuals.  And of course Fascism… which is a variant of Socialism.  Some are trying to call much of what happened “Crony Capitalism”, but it is plain old-fashioned Fascism through and through with nothing Capitalist about it.

So why is there a global economic melt down?

Because Bill Clinton, Barney Frank and Chris Dodd felt that everyone regardless of ability to pay should realize the dream of owning a home.  Sounds like a nice idea…

So how did they decide to do this?

With Bill Clinton in the White House (Executive) and Barney Frank in the House of Representatives in combination with Chris Dodd in the Senate (Legislative) the argument was offered that the banks were “discriminating against minorities” as demonstrated by lending percentages.  (It’s important to note that the metric is “lending percentages” not “ability to pay” which is how the banks determine whom to lend to historically.)  So now enter the lawsuits and investigations by the Justice Department (Judicial) into lending practices.

With all three of their bases covered this motely crew used discrimination claims to order the banks (through regulation, threat of lawsuits and fines) to make loans to people who otherwise could not qualify for them, let alone afford to pay them back.  In a normal, unmolested market the banks do not lend to individuals who can’t show they are able to repay the loan.  But suspend reason here.

Now enter Fannie Mae and Freddie Mac… the two largest lenders in the United States.  Both of them are government-owned.  (The Socializing of the banking system has a long sordid history best saved for another post.)  These two government banks, receiving their orders from Congress, began buying loans forced to be originated by lenders using the “NINJA” (No Income, No Job, no Assets) criteria.

The Banks (Chase, Citi, Wells Fargo, Met Life etc.) were given an offer they couldn’t refuse…  if they did refuse, they were going to be sued, fined, and investigated until finally someone goes to jail and or having their Federally Issued Licences revoked.  So, destroyed.

So they made the loans.  Lots of them, as that is what would have to happen to “square” this new metric being applied measuring their performance.  It was no longer about making rational business investments and assuming the risk associated with those decisions… it was now about being “fair“.

Of course I would argue that making rational business investments is inherently “fair“, but the above troika does not care about what people like me think.  Remember, this is about votes… and feeling good about doing something… results be damned.  And damning they would be.

So what about all this “greed” we hear about?

Greed came to dinner but Clinton, Dodd and Frank cooked it up and set the table.

There are plenty of Bad Actors to cast blame upon.  You have Loan Officers, and Mortgage Brokers.  You have Bankers and Nobel Prize winners (The Nobel Prize was given to the creators of derivatives.  The banks loved the idea too as it was the only way they had to choke down the crap sandwich they were being forced to eat.) not to mention International security brokers who sold derivatives into the global investment markets.  The world was eager to buy up American Debt because we ALWAYS pay our bills.  (Whoops….)

The subsequent market distortion and enormous burst of the Housing Bubble created by these best of intentions shot us into this global and domestic recession.  And Bill Clinton, Barney Frank and Chris Dodd should have known better.  They had plenty of people around them telling them it was a very Bad idea.

The only question left in my mind is “Was it intentional?”  As you learn more about these three people you might be finding yourself asking the same question.  None of them are ignorant… just very wrong about many things.

I promised to keep this as simple as possible so I have left out some of the additionally nasty scenarios which arose from this debacle, many of which we are still living through.

I also left out things like party affiliation, individual histories on the mentioned players and some additional names of Bad Actors such as Raines and Mozillo etc.  As always, I expect you to make an effort to research more on this if your intellectually curious.  If you’re not, I can’t help you.

So raise a glass to three men who successfully destroyed more global wealth than any world war.

George Soros must be envious.

If you seriously want to understand this, I recommend The Housing Boom and Bust by Thomas Sowell, Reckless Endangerment by Gretchen Morgenson and The Forgotten Man by Amity Schlaes.  All of which can be found on Amazon.  That should get you started…  once you begin your search you’ll find it’s all been in front you the entire time.