Sunday, August 14, 2016

The U.S. Government Flails in Futility

January 31, 2010 by · Leave a Comment 

As China’s economic juggernaut resumes its course, after little more than a brief pause, the world’s former economic juggernaut lurches from one mini-crisis to another, completely bereft of any long-term planning.

A cynic would argue that any long-term economic planning for the U.S. economy is simply a waste of time, given the pending and inevitable default on its massive debts – which rapidly approaches. Indeed, the U.S. government spends half its time lying about the magnitudes of its debts (see “Treasury Department Stalls Budget Report”), and the other half of its time pilfering the tiny nest eggs of U.S. government “trust funds” (see “U.S. Government Squanders Trust Funds”). The more than $4 trillion stolen from those trust funds would have been enough to postpone bankruptcy for a decade or so if that money was currently invested and appreciating in value rather than simply being spent.

The reckless spending of the U.S. government is bad enough, but the ridiculous manner in which the U.S. government is throwing away trillions of taxpayer dollars is truly nothing less than criminal. Two successive U.S. governments have promised to “fix” the U.S. housing collapse. The Bush regime did nothing, while the Obama regime has done much worse than nothing.

Unwilling to make his banker-benefactors take the “hit” for housing losses (given that they created this multi-trillion mortgage scam), Obama’s “solution” to the bursting of the (first) U.S. housing bubble is to create a second bubble. With U.S. interest rates being (artificially) kept at extremely low levels (through the U.S. government “buying” most/all of its own bonds), no U.S. bank is willing to finance home purchases through offering long-term rates several percent lower than what they can sustain over the long term.

This has resulted in the Obama regime effectively nationalizing the entire U.S. mortgage market – originating/guaranteeing well over 90% of all new mortgages, with U.S. taxpayers now directly guaranteeing trillions of dollars worth of highly-stressed mortgages. If that isn’t bad enough, when the home-buyers’ credit is factored in, more than half of all U.S. homes purchased last year effectively had zero down-payments (see “The U.S. Government’s Zero Down-payment Mortgages”).

The only differences between the first housing bubble and the second housing bubble is that a) 100% of the losses will be borne by U.S. taxpayers; and b) American families are much less able to absorb the pain of the second collapse in U.S. housing than they were with the first. Meanwhile, the flimsy “mortgage rescue” plan for those already trapped in hopelessly underwater mortgages has helped virtually no one.

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