Sunday, October 31, 2010

Health Care Brownshirts

The guy in this video is retired (thank god) General Willian G. Boykin, who was Undersecretary of Intelligence in the State Department under George Bush. He was previously known for publicly and in uniform spouting off thing like "I knew that my God was bigger than his. I knew that my God was a real God and his was an idol."

Happy Halloween!


hoyhoy said...

We do have redistribution of wealth -- from the populace to Wall Street bankers! The Tea Party is so co-opted at this point, it's absurd. They really believe that banks were "forced" by "big government" to give loans to people who couldn't afford them.

What's ironic is if these wingnuts would sit alone for a few days and read Marx and Engels, they might gain an understanding of how an economy actually operates instead of having their entire political and economic ideology consist of various distortions they picked up from watching Fox News.

Anonymous said...

Hoyhoy - Commercial banks are actually rather insignificant participants in the mortgage loan business. The greatest number of mortgages outstanding were originated by non-bank mortgage companies and then sold on the secondary mortgage market to Fannie Mae or Freddie Mac, which together hold more than 50% of all residential mortgages in the U.S.

Starting in 1992, Congress pressed Fannie Mae and Freddie Mac to increase their purchases of mortgages going to low- and moderate income borrowers. For 1996, HUD gave Fannie and Freddie an explcit target - 42% of their mortgage financing had to go to borrowers with income below the median in their area. The target increased to 50% in 2000 and 52% in 2005. For 1996, HUD required that 12% of all mortgage purchases by Fannie and Freddie be 'special affordable' loans, to borrowers with income less than 60% of their area's median income. That quota was increased to 20% in 2000 and 22% in 2005. The 2008 goal was to be 28%. From 2000 to 2005, Fannie and Freddie met those goals every year, buying hundreds of billions of dollars worth of loans, many of them subprime and adjustable-rate loans, made to borrowers who bought houses with less than 10% down.

Fannie and Freddie also purchased hundreds of billions in subprime mortgage-backed securities for their own portfolios to help satisfy HUD 'affordable housing' goals. They were important contributors to the demand for subprime securities.

To the extent that commercial banks were affected, it was not so much because they originated and held bad mortgages in their loan portfolios, as because they held bad mortgage-backed securities in their investment portfolios. They bought the latter mainly because they were highly rated and had the implicit backing of the Federal government. They were also, under the Basel accords, not required to set aside loan-loss reserves on these investments, as they would have been against any loans they made for their own portfolios.

These are among the reasons why all of the major commercial banks have paid back, with interest, the TARP monies placed with them by the Bush and later the Obama administrations - totalling over $300 billion - while the net loss to the taxpayer on Fannie and Freddie is expected to top $150 billion, and may go to more than $100 billion over that amount, without any hope for repayment.

If you'd get your nose out of Marx and Engels, whose theories after all failed so abjectly in the old Soviet Union, and pay some attention to how Federal intervention in the credit markets actually operates, you might understand why we had a mortgage meltdown. In short, it was because of the politically-directed allocation of credit to people without adequate resources for repayment, against seriously inadequate and overvalued collateral.

hoyhoy said...

I just watched all twelve hours of Milton Friedman's "Free to Choose", read all of Hayek, Ayn Rand, and Richard Dawkins "The Selfish Gene. After all that, I realized you're totally right. Turns out, Marx and Engels were incorrect.

Thanks for setting me straight. I just voted straight Tea Party down the ballot. We're going to shrink the size of the government for the first time in its 234 year history and send these spendocrats packing once and for all. Let's do this!

Anonymous said...

Forgive me if I don't believe you did all that reading so quickly, and that I suspect you intended to be sarcastic.

However, you don't need to read all those authorities to confirm that I am correct in the points that I made. Nor need you condescend to watch Fox News. You might benefit by reading "The Political Economy of the Subprime Crisis" by Atif Mian, Amir Sufi, and Francesco Trebbi at:

Mian is an economist at Berkeley, Sufi a finance professor at the University of Chicago business school, and Trebbi an economics professor also at the University of Chicago business school. These are academically respectable people and their institutions are hardly Tea-Party hotbeds.

David Xavier said...

History has proved Marx and Engels incorrect ( amazingly , in their life time)..its just that the socialist/progressive project is so intoxicating to some that they disregard the bodycount and the need to control every aspect of peoples lives to make it work ( however poorly) ...but who cares about millions dead or the transcedent when you are trying to create 'heaven on earth'.