New housing bubble: Obama proposes lowering mortgage-lending requirements

I must have blogged a million times about how the Democrats caused the recession by forcing banks to make bad loans to people who couldn’t pay them back. Although the Republicans got blamed for the crisis, they were the ones who tried to regulate Fannie Mae and Freddie Mac, but they were shut down by Democrats. Well, guess what? The Democrats didn’t learn their lesson the first time, and they want to start another housing bubble, just like the first one that gave us the recession.

Take a look at this article in the leftist Washington Post. (H/T ECM)

Excerpt:

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.

[...][A]dministration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.

Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.

Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan and are seeking to make it easier for people who owe more than their properties are worth to refinance at today’s low interest rates, among other steps.

Obama pledged in his State of the Union address to do more to make sure more Americans can enjoy the benefits of the housing recovery, but critics say encouraging banks to lend as broadly as the administration hopes will sow the seeds of another housing disaster and endanger taxpayer dollars.

“If that were to come to pass, that would open the floodgates to highly excessive risk and would send us right back on the same path we were just trying to recover from,” said Ed Pinto, a resident fellow at the American Enterprise Institute and former top executive at mortgage giant Fannie Mae.

And if that was not enough,the Democrats also have another bubble being inflated. They nationalized the student loan industry, and now taxpayers are going to have to bail out those risky unpaid student loans as well.

Excerpt:

America’s now-nationalized student loan industry just reached a value of $1 trillion, according to Citigroup, growing at a 20 percent-per-year pace. Since President Obama nationalized the industry (a tacked-on provision of the Obamacare bill), tuition has gone up 25 percent and the three-year default rate is at a record 13.4 percent.

[...]With many young people unable to pay their loans (average graduating debt is about $29,000), Citigroup and others are speculating that this industry might be ripe for a bailout.

To pay off all the current defaults, Citigroup says it would cost taxpayers $74 billion. However, this number doesn’t include those who will default in the coming years, and, when the government rewards the defaulters, it will encourage more borrowers not to pay their debts.

And liberals in Congress have proposed forgiving all student loans via “The Student Loan Forgiveness Act 2012,” costing taxpayers $1 trillion.

Adding another $1 trillion dollars to the national debt isn’t exactly “forgiveness” for young people—it’s prolonging the payoff. In fact, student loan bailouts are a catch-22 for young people because they’re going to be held accountable for paying off the national debt and interest payments.

At least the young people who voted for Obama are going to be the ones to get the bill for his socialist economic policies.

Related posts

• What was the real cause of the financial crisis?
• Thomas Sowell on the root causes of the mortgage lending crisis
• Democrat Barney Frank admits his role in causing the recession
• If you had to blame the recession on one person, who would it be?
• Who benefits from the Democrats financial regulation bill?
• Wall Street bankers gave Obama millions in campaign contributions
• Who are the ten most corrupt politicians of 2009?
• Thomas Sowell explains how politicians cause recessions while getting elected
• Democrats planning government regulation of more large companies
• Democrats use TARP money to shore up personal fortunes
• Democrats caused the recession and Republicans tried to stop it

Filed under: News, Bank, Banking Committee, Barack Obama, Barney Frank, Bubble, Chris Dodd, Community Reinvestment Act, Democrat, Democrat Party, Fannie Mae, Federal Housing Administration, FHA, Finance, Freddie Mac, GSE, Housing and Urban Development, Housing Boom, Housing Bubble, HUD, Keynes, Keynesianism, Mortgage Lender, Socialism, Thomas Sowell, Wall Street

Thomas Sowell: Guns can be used defensively to save lives

Economist Thomas Sowell

Thomas Sowell’s latest column is up at National Review. If you’ve ever read any of Dr. John Lott’s books, you’ll know that his central argument is that allowing law-abiding citizens to own and carry firearms has a net positive effect, when compared with restricting or banning gun ownership. How could that be? What good effect could there be to allowing people to own guns? Well, that’s what Tom Sowell – a former pistol marksmanship instructor – is going to explain to us in his article.

Excerpt:

We all know that guns can cost lives because the media repeat this message endlessly, as if we could not figure it out for ourselves. But even someone who reads newspapers regularly and watches numerous television newscasts may never learn that guns also save lives — much less see any hard facts comparing how many lives are lost and how many are saved.

But that trade-off is the real issue — not the Second Amendment or the National Rifle Association, which so many in the media obsess about. If guns cost more lives than they save, we can always repeal the Second Amendment. But if guns save more lives than they cost, we need to know that, instead of spending time demonizing the National Rifle Association.

The defensive use of guns is usually either not discussed at all in the media or else is depicted as if it means bullets flying in all directions, like the gunfight at the O.K. Corral. But most defensive uses of guns do not involve actually pulling the trigger.

If someone comes at you with a knife and you point a gun at him, he is very unlikely to keep coming and far more likely to head in the other direction, perhaps in some haste, if he has a brain in his head. Only if he is an idiot are you likely to have to pull the trigger — and if an idiot with a knife is coming after you, you had better have a trigger to pull.

Surveys of American gun owners have found that 4 to 6 percent reported using a gun in self-defense within the previous five years. That is not a very high percentage but, in a country with 300 million people, that works out to hundreds of thousands of defensive uses of guns per year.

Yet we almost never hear about these hundreds of thousands of defensive uses of guns from the media, which will report the killing of a dozen people endlessly around the clock. The murder of a dozen innocent people is unquestionably a human tragedy. But that is no excuse for reacting blindly by preventing hundreds of thousands of other people from defending themselves against meeting the same fate.

Although most defensive uses of guns do not involve actually shooting, nevertheless, the total number of criminals killed by armed private citizens runs into the thousands per year. A gun can also come in handy if a pit bull or some other dangerous animal is after you or your child.

 

This is an important article that expresses the central argument for allowing law-abiding citizens to protect themselves and their families from criminals.

It’s worth noting that both Thomas Sowell and John Lott are economists, and economists use quantitative methods to evaluate policies. It would be great if everyone who talked about policies like gun legislation argued from logic and evidence, like economists do. We need to ask what effects and incentives are created for all groups of people when policies are adopted. And that’s what economists do.

Filed under: Commentary, Crime, Deterrence, Firearms, Gun Control, Guns, Self-Defense, Thomas Sowell, Tom Sowell

Thomas Sowell: could a Cyprus-style confiscation of private savings happen here?

Thomas Sowell, an economist for the people

Surprise! It already is happening here. Thomas Sowell explains in the American Spectator.

Excerpt:

One of the big differences between the United States and Cyprus is that the U.S. government can simply print more money to get out of a financial crisis. But Cyprus cannot print more euros, which are controlled by international institutions.But could similar policies be imposed in other countries, including the United States?

Does that mean that Americans’ money is safe in banks? Yes and no.

The U.S. government is very unlikely to just seize money wholesale from people’s bank accounts, as is being done in Cyprus. But does that mean that your life savings are safe?

No. There are more sophisticated ways for governments to take what you have put aside for yourself and use it for whatever the politicians feel like using it for. If they do it slowly but steadily, they can take a big chunk of what you have sacrificed for years to save, before you are even aware, much less alarmed.

That is in fact already happening. When officials of the Federal Reserve System speak in vague and lofty terms about “quantitative easing,” what they are talking about is creating more money out of thin air, as the Federal Reserve is authorized to do — and has been doing in recent years, to the tune of tens of billions of dollars a month.

When the federal government spends far beyond the tax revenues it has, it gets the extra money by selling bonds. The Federal Reserve has become the biggest buyer of these bonds, since it costs them nothing to create more money.

This new money buys just as much as the money you sacrificed to save for years. More money in circulation, without a corresponding increase in output, means rising prices. Although the numbers in your bank book may remain the same, part of the purchasing power of your money is transferred to the government. Is that really different from what Cyprus has done?

I noticed that Brian Lilley had an article about whether Cyprus-style confiscations could happen in Canada. The short answer: yes – for amounts above $100,000 Canadian.

Filed under: News, Bank, Ben Bernancke, Communism, Confiscation, Currency, Europe, European Socialism, European Union, Federal Reserve, Inflation, Marxism, Money Printing, Obamunism, Redistribution, Savings, Socialism, Spread the Wealth Around, The Fed, Thomas Sowell

Economist Walter Williams blames school violence on secularism and moral relativism

Economist Walter Williams

My two favorite economists are Walter Williams and Thomas Sowell. Both are conservative or libertarian. Both of them happen to be black. But neither is especially outspoken about religion. But imagine my surprise when I read this CNS News column on gun violence in schools by Walter Williams, who I always thought was the more libertarian of the two.

Look:

When I attended primary and secondary school — during the 1940s and ’50s — one didn’t hear of the kind of shooting mayhem that’s become routine today. Why? It surely wasn’t because of strict firearm laws. My replica of the 1902 Sears mail-order catalog shows 35 pages of firearm advertisements. People just sent in their money, and a firearm was shipped.

Dr. John Lott, author of “More Guns, Less Crime,” reports that until the 1960s, some New York City public high schools had shooting clubs where students competed in citywide shooting contests for university scholarships. They carried their rifles to school on the subways and, upon arrival, turned them over to their homeroom teacher or the gym coach and retrieved their rifles after school for target practice. Virginia’s rural areas had a long tradition of high-school students going hunting in the morning before school and sometimes storing their rifles in the trunks of their cars that were parked on school grounds. Often a youngster’s 12th or 14th birthday present was a shiny new .22-caliber rifle, given to him by his father.

Fathers? Children don’t grow up with fathers any more, 42% of the time. And why not? The feminists told us that men are evil, and that marriage is sexist. And the socialists told us that rewarding single motherhood was a good idea, because it makes women who don’t bother to get married before having sex more equal to those who do bother to get married first. But fatherlessness is a huge factor in criminal behavior, as I showed before.

Dr. Williams continues:

What explains today’s behavior versus yesteryear’s? For well over a half-century, the nation’s liberals and progressives — along with the education establishment, pseudo-intellectuals and the courts — have waged war on traditions, customs and moral values. These people taught their vision, that there are no moral absolutes, to our young people. To them, what’s moral or immoral is a matter of convenience, personal opinion or a consensus.

During the ’50s and ’60s, the education establishment launched its agenda to undermine lessons children learned from their parents and the church with fads such as “values clarification.” So-called sex education classes are simply indoctrination that sought to undermine family and church strictures against premarital sex.
Lessons of abstinence were ridiculed and considered passé and replaced with lessons about condoms, birth control pills and abortions. Further undermining of parental authority came with legal and extralegal measures to assist teenage abortions with neither parental knowledge nor consent.

Customs, traditions, moral values and rules of etiquette, not laws and government regulations, are what make for a civilized society. These behavioral norms — transmitted by example, word of mouth and religious teachings — represent a body of wisdom distilled through ages of experience, trial and error, and looking at what works.

The importance of customs, traditions and moral values as a means of regulating behavior is that people behave themselves even if nobody’s watching. Police and laws can never replace these restraints on personal conduct so as to produce a civilized society. At best, the police and criminal justice system are the last desperate line of defense for a civilized society. The more uncivilized we become the more laws that are needed to regulate behavior.

Many customs, traditions and moral values have been discarded without an appreciation for the role they played in creating a civilized society, and now we’re paying the price. What’s worse is that instead of a return to what worked, people want to replace what worked with what sounds good, such as zero-tolerance policies in which bringing a water pistol, drawing a picture of a pistol, or pointing a finger and shouting “bang-bang” produces a school suspension or arrest.

See, now that’s a smart libertarian. Smart libertarians understand that liberty depends on people being aware of the design of the universe, and the objective moral obligations imposed by that design. If we don’t promote institutions and people that help us to explore the design of the universe, then we are going to have to rely on big government to regulate us instead of regulating ourselves. What we’ve done instead is make impossible to speak about the reality of God and the reality of objective morality in schools, or in any other public place, for that matter. Hearing about God and morality is just too offensive to people who want to put their own selfishness above the moral law.

Similarly, libertarians should not be pushing for promiscuity, abortion and same-sex marriage, either. Intact families are necessary for raising the next generation of citizens to be well-adjusted, law-abiding and productive. Marriages are more stable when the participants are chaste and/or abstinent for a period of time early in the relationship. And children do better when raised by a mother and a father, and less well in other arrangements. Either we feel an obligation to control our own desires and make a plan for marriage success, so that we can provide children with a stable nurturing environment, or the government will have to control the anti-social behavior of fatherless children.

Thomas Sowell has posted a more traditional argument against gun control, in the extremist left-wing UK Guardian, of all places.

Filed under: Commentary, Community, Culture, Economics, Education, Family, Fiscal Issues, Gun Control, Gun Violence, Guns, Libertarian, Libertarianism, Liberty, Marriage, Moral Relativism, Morality, Objective Morality, Religion, School, School Shootings, Shooting, Social Issues, Thomas Sowell, Walter Williams

Walter Williams explains why capitalism is moral in 5 minutes

Who is Walter Williams?

Dr. Walter E. Williams holds a B.A. in economics from California State University, Los Angeles, and M.A. and Ph.D. degrees in economics from UCLA. He has served on the faculty of George Mason University in Fairfax, Virginia, as John M. Olin Distinguished Professor of Economics, since 1980.

Williams was born into an African-American family. His family during childhood consisted of himself, his mother, and his sister. His father played no role in raising either child. He grew up in Philadelphia. The family initially lived in West Philadelphia, moving to North Philadelphia and the Richard Allen housing projects when Williams was ten. In 1959 he was drafted into the military, and served as a Private in the United States Army. Following his military service, he re-entered college as a far more motivated student.

While at UCLA, Thomas Sowell arrived on campus in 1969 as a visiting professor. Though he never took a class from Dr. Sowell, the two met and began a friendship that has lasted to this day.

Watch this 5-minute video where he explains why capitalism is more moral than socialism:

And here’s another 5-minute video where he explains the profit motive:

Now let’s consider another economist, Thomas Sowell:

Thomas Sowell (born June 30, 1930) is an American economist, social theorist, political philosopher, and author. A National Humanities Medal winner, he advocates laissez-faire economics and writes from a conservative and libertarian perspective. He is currently the Rose and Milton Friedman Senior Fellow on Public Policy at the Hoover Institution, Stanford University. He is considered a leading representative of the Chicago school of economics.

Sowell was born in North Carolina, but grew up in Harlem, New York. He dropped out of high school, and served in the United States Marine Corps during the Korean War. He received a bachelor’s degree from Harvard University in 1958 and a master’s degree from Columbia University in 1959. In 1968, he earned his doctorate degree in Economics from the University of Chicago.

Sowell has served on the faculties of several universities, including Cornell University and University of California, Los Angeles, and worked for think tanks such as the Urban Institute. Since 1980 he has worked at the Hoover Institution. He is the author of more than 30 books.

Here is a 33-minute interview with Thomas Sowell on basic economics:

Lately, I have been thinking a lot about Christians who focus on only one issue during elections, typically abortion. I consider this to be a weak and short-sighted approach. Even if the main goal you desire is to stop the murder of unborn babies, you would do well to consider your opponent and use every tool available to defeat them in elections. Our opponent on the abortion issue is the Democrat voter. A Democrat is a person who is liberal on social policy – who supports abortion and gay marriage. If you want to defeat the Democrat candidate in an election, then you need to appeal to as many voters as possible on as many issues as possible – not just on social policy. You need to defeat Democrat fiscal policy with arguments and evidence. You need to defeat Democrat foreign policy with arguments and evidence. If you engage every target using every argument and every piece of evidence, you will get more success and win the battle for public opinion.

Let’s face it. We are not going to win elections if we turn only to people who call themselves Christians and try to get them to vote pro-life. There are not enough Christians – and not every person who calls himself a Christians is one. Focusing only on Christians is not going to get the pro-life majority we are looking for. It may be easier to avoid confronting people outside of our church, but it won’t work. A much better idea is to use every argument against every person – Christian or not. And to be able to address objections on every issue – not just one social issue. If the voters don’t care about one issue, then you can argue on another issue. You must be all things to all people so that you can win some by knowing what to say when they ask you for reasons and evidence. Now where have I heard that before?

Here is a full audio course on economics from famous Christian philosopher Ron Nash which I recommend to those who have not yet learned to integrate their Christian faith with economics. His two favorite economists are Walter Williams and Thomas Sowell – he says so in the lectures. In fact, he actually quotes a lot of Walter Williams material from his public lectures on economics, and Thomas Sowell material from his books on economics.

Note: for those who want MP3s of the Thomas Sowell lecture I posted above, here they are:

• http://dl.dropbox.com/u/1701569/BasicEconomics1of5.mp3
• http://dl.dropbox.com/u/1701569/BasicEconomics2of5.mp3
• http://dl.dropbox.com/u/1701569/BasicEconomics3of5.mp3
• http://dl.dropbox.com/u/1701569/BasicEconomics4of5.mp3
• http://dl.dropbox.com/u/1701569/BasicEconomics5of5.mp3

These are low-quality so they could be smaller for downloading.

Filed under: Videos, Bank, Basic Economics, Deficit, Economics, Economy, Federal Reserve, Health-care, Hoover Institute, Housing, Keynes, Learning, Mortgage, Peter Robinson, Spending, Stanford University, Taxes, Thomas Sowell, Tom Sowell, Trade, Tutorial