Cash for Clunkers (click here)

by Chris | August 2nd, 2009

Cash for Clunkers is repeating the same tragic error Congress made under the Clinton and Bush administrations with the mortgage industry.

Our government decided that it was the right of every one to own a house.  They created Fanny Mae and Freddie Mac as a way for the federal government to force it’s charity on we the people.  In order to ensure their dream, Congress mandated that lending institutions lower their qualifying standards so that more people could qualify for a mortgage loan.  In doing so, the banks and other lending institutions were required to underwrite loans for people who clearly did not qualify.  These “troubled assets” were then packaged and sold as mortgage backed securities on the secondary market.

We’re all painfully aware of the result of our governments “compassion” … the collapse of real estate and the mortgage industry, lenders going out of business, banks and lending institutions going bankrupt, families losing their homes to foreclosure, tighter lending regulations, and on it goes …

The government’s cure for the crisis they created was to force all banks to accept “bail out money.”  The institutions that did not need it like Wells Fargo, were forced to take the hand out.  The reasoning from the Bush administration was that if some banks took the money while others did not, those who took it would appear to be in trouble and customers would pull their money out of those banks causing a catch-22 for those lenders.

Then along comes the Obama administration which saw an opportunity to grab power from the battered banks.  Step 1 was to demonize the evil and greedy bank CEO’s and boards lying that their desire for profits made them issue these loans.  Step 2 was to secure as much control over the banking industry using a two-fold scheme.  The government first began to impose its will on the banks reminding them that they took the tax payers bail out money and thus are now required to acquiesce to the governments desires; then trying to intimidate the banks into compliance by conducting dog-and-pony “stress tests” as if attorneys and congressmen understood the intricacies of the banking industry better then the banks themselves.

Now we find ourselves in a situation where the Obama administration owns or controls major parts of the auto industry and they have a vested interest in selling cars and doing it “green.”

Like the Fanny Mae and Freddie Mac fiasco the government is in control of another industry.  And like the arrogance demonstrated previously the government, they believe they know better than the experts in the field.  And, like their forced “compassion” of issuing mortgage notes to people who could not afford them, they are now forcing auto dealers to front money for each car turned in under this new ponzi scheme trusting that the government will repay them, that the new car owner can afford their new car payment during the coming months of hyper-inflation, and trusting that when people begin to default on their auto loans that the banks, lending institutions, and this time around, the auto dealers will have enough assets to keep from going under themselves.

Surely when this new crisis hits there will be another round of villains (the lenders and auto dealers) and another government power grab (because the auto industry is too big to fail) and another layer of government employees and programs to tax us for … but of course it is naive to think that free markets and capitalism can fix these problems because we need the government to protect us from ourselves.

 

3 Responses to “Cash for Clunkers (click here)”

  1. Wow! Thank you! I always wanted to note down in my website something similar to that. Is it alright if I take part of your article to my blog? Thanks again for taking the time to put this up. I definitely enjoyed every part of it.

  2. i CONCUR WITH EVERYTHNG CHRIS SAID. I HAD TWO SONS IN THE MORTGAGE INDUSTRY FOR OVER 15 YEARS AND THEY TOLD ME EXACTLY THE SAME THING.

    BARNEY FRANK AND THE CLINTON ADMINISTRATION STARTED IT ALL, BUT LIKE DEMOCRATS DO, THEY LIE AND COVER FOR EACH OTHER ALL THE TIME. THE PUBLIC IS SO MIS-INFORMED TO THE TRUTH, BECAUSE SO MANY OF THEM DO NOT WATCH FOX NEWS AND DEPEND ON THE LIBERAL PAPERS TO EXPOSE FRAUD, WHICH WE AS REPUBLICANS KNOW IS THE BIGGEST JOKE OF ALL.

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