Since I have read many recent posts from our resident liberals who are obviously clueless, apologies for the redundancy, as to what caused the collapse in 2008, I thought it might be a good idea to revisit that. Many of the liberals are of course still in the blame Bush, blame republican mode and pointing to, and ridiculing the absence of Bush at the RNC convention as further proof of that. The first thing I want to point out is that Bush is a very private man which is in complete contrast to the media hound that Clinton is. Furthermore, when he told us that he was retired, he meant it, another concept liberals have trouble understanding so the only surprise to conservatives would be if in fact he did show up. Secondly, the GOP has a very young and deep bench, so I am sure Bush had no desire to take time away from them, again unlike Clinton but of course the DNC bench is pretty thin anyway.
Now onto the cause of the collapse, which of course was the housing bubble. It is estimated that 1 in 7 jobs are connected with housing industry, so it was no surprise that the collapse of that industry sent shocks wave across the entire country and adversely impacted nearly every other industry. Liberals want desperately to blame Bush and deregulation for the collapse, but unfortunately for them, Bush did not enact one piece of financial deregulation legislation during his eight year term. Not one. The last piece of financial deregulation was enacted in 1999 under President Bill Clinton. Furthermore, Bush started ringing the alarm bells on the GSE’s as early as 2001, and then again in 2002, 2003, 2004, 2005, 2007, and finally in 2008. Now to be fair, those warnings were ignored by Republicans and Democrats alike in all of those years, but most recently were mocked by Rep. Barney Framk and Rep. Maxine Waters when she stated that “there is nothing wrong with Fannie and Freddie” in September of 2008:
Maxine Waters: Through nearly a dozen hearings, we were frankly trying to fix something that wasn’t broke. Mr. Chairman, we do not have a crisis at Freddie Mac, and particularly at Fannie Mae, under the outstanding leadership of Franklin Raines.
Now the question is, why were the GSE’s so over leveraged? Well it was because of a misguided Washington DC policy that said that everyone, including the poor should have a shot at the American Dream and at home ownership. So banks were encouraged, in fact even threatened with Fed support, if they didn’t lower their mortgage standards and start giving more loans to more home buyers. Now, knowing that much of this paper was worthless, the banks started bundling these securities and started selling them to anyone who would buy them in an effort to rid themselves of the toxic assets. And the game continued, fueled even more by rising home values and higher valued loans, in addition to HELOC’s to home owners who saw their equity grow rapidly. When the house of cards fell, no pun intended, all that money evaporated and the economy is still suffering. Now there is no question that financial sector greed played a role, but the real culprit is the federal government, so the real question you need to ask your self is – is handing out millions of mortgages to people who have little means to pay them back, a liberal policy? Or a conservative policy? As Walter Cronkite would say, “And that’s the way it is”.