Ask yourself, do you believe everything you hear?

Is the one who “lied” in fact more trustworthy?

Listen and learn. Here is Barack Obama giving his explanation for the current financial crisis:

While the crisis cannot be totally blamed on the massive amount of mortgage defaults, the bad loans that have been defaulted on, which were purchased and securitized by Fannie Mae and Freddie Mac, were the trigger, a significant factor in this crisis. The mortgage-backed securities that have been called “toxic”, bringing the credit markets grinding to a halt, partly because they are so complicated hardly anyone can determine their value, came directly from Fannie Mae and Freddie Mac.

In addition, Obama, before he became president, endorsed the scheme that generated subprime loans, because the theory went that splitting up the mortgages into securities would bring in needed credit to finance affordable housing, and it would spread the risk thinly, so that foreclosures wouldn’t significantly impact the value of mortgage-backed securities.

Further information from Fox News on Democratic opposition to regulating Fannie and Freddie, and McCain’s attempt to regulate them:

Fool me once…er…Fool me twice?

We as a nation seem prepared to elect Democrats to control congress, and the White House. Are we sure we want to do that? It seems to me we are bringing the fox inside the hen house, all because we think that by getting rid of “Bush’s policies” (which McCain will continue, so says Obama) we will fix what got us in this mess. Ask yourselves, are you sure you’re blaming the right culprits, or are the culprits convincingly shifting blame where it doesn’t belong so they can turn your tragedy into their victory? If you feel like a fool now because you got wiped out in this crisis, how are you going to feel after the election? All I’m saying is be careful what you wish for, because you might get more than you bargained for.

I think Fannie Mae started out as a good idea, making housing more affordable to people. It was started during the Great Depression for that purpose. It had a good run of many decades. The problem is it got tweaked with over those years. Increasingly politicians (and it seems Democrats are the more culpable in this) played with fire and flammable substances around it (to use some metaphors), and this year it finally blew up on all of us. The fault is with those who tried to mess with a good thing, and turned it into something that has sickened our economy, and made us all poorer. So I think we should not give up on the idea of financing affordable housing, and we need to properly hold accountable those who stood in the way of fixing what was broken about that system. Does anyone really think that’s going to get addressed in a Democratic administration, and a Democratic congress, given this evidence??? I think not. More likely they’ll make Wall Street the scapegoat and put the economic kibosh on it, killing any chances we’ll get out of this recession in a speedy fashion. And they’ll tell the banks to do more of the risky lending that helped get us into this mess, in the name of helping the poor (of which there are more already).

Wall Street should have been better regulated (they are a part of the problem, but not the only culprit), but not constrained from producing legitimate wealth, which I think it has done over the years very well. The full story on this has not been told yet (and has not been told here, either, just part of it on which I’ve been able to find material). That has yet to unfold, and I think we will know (hopefully) with time.

Foreclosure hits “Extreme Makeover” home

I happened to catch an episode of the show “Extreme Makeover” a few years ago that wowed me. I didn’t watch the show regularly (still don’t), but this one was captivating. The Extreme Makeover team was coming to the aid of a black family who lived in a modest, rather run down home. What I expected the team to do was work with the existing house in some way. Instead they tore the whole house down and built a brand new, large home on their plot of land, with a lot of new furnishings. It looked like a small mansion. When the family came back to see what they had done they were astounded beyond words. They were jubilant. The children were celebrating. The father got down on his knees and cried. The team took the family on a tour of their new home. The whole place was beautiful. Of course the family could not thank the team enough.

I was very happy for the family, but somehow it seemed a bit much. It was like a dream, where a family would get its fondest wish for free from people who were infinitely loving and generous. It seemed just a bit too good to be true. What was the point in totally replacing the existing home with a brand new one? I thought the name of the show, “makeover”, meant you took an existing place and “did it up” some to make it nicer, though there was the “extreme” qualifier. A thought entered my head, “I wonder if ABC did this as a PR move for ratings.” Did they do this sort of thing on a regular basis? I didn’t know. Shortly after the show ended, reality set in for me. I wondered, “How is the family going to pay the property taxes, and the insurance on this place?” This wasn’t a dream. There are real costs to having luxury. Given that the family originally existed on a modest income (made apparent by the house they originally had), could they afford their new home?

Well reality eventually set in. The family has lost the home to foreclosure, not for the reasons I thought. The family took out a mortgage on the house in order to start up a construction business, which recently failed. A lot of construction businesses have been folding up due to the mortgage/foreclosure mess. The real estate business has gone through another bust, not unlike the dot com bust of 8 years ago. Anyway, I feel sorry for the family being put through this. They got a “taste of paradise”, so to speak, and are now having to give it up. They didn’t fall victim to a subprime mortgage, but rather to the mess created by those types of mortgages. It was kind of like the fall of Enron. Not only did it hurt the employees of Enron, but many other ancillary businesses that had some sort of relationship to it.

What happened to this family is not unusual, in a sense. A friend of my family built a custom home for his own family about 14 years ago. They kept it for about a year, but it ultimately got to be too expensive for them, and they had to sell it. That’s at least better than foreclosure, but this was their dream house, the one they thought they’d stay in for many years.

Nevertheless, I think my gut suspicion was right. Despite the fact that the Extreme Makeover family fell victim to forces beyond their control, I think it’s also got to be said that the family got more than it could handle.

I’ve had this theory for a while that there’s usually a reason why people are where they are financially and materially, whether they be rich, middle class, or poor in America. There are skills of judgement, discernment, investigation, discipline, management, having a good eye for the value of things, plus qualities like ambition, curiosity, being extroverted/outgoing, risk taking, being educated, and having a good work ethic that make the difference between the economic levels. When I was in my 20s I had this thought that if you took all the money from the rich and gave it to the poor, and watched what happened, eventually those who were rich (before their money was taken away) would get their money back, and the people who were originally poor would go back to being poor, simply because the rich knew how to create wealth and maintain it, unlike the poor. Not that I’m an exemplar of being rich. Far from it. I’m saying that I know a little about why I am where I am financially and materially.

Anyway, I think it would’ve been more realistic and generous at the same time for the Extreme Makeover team to have worked at improving the existing home the family had in some way, making it a nicer place to live, rather than discarding it totally and thinking they were doing the family a favor by giving them a mansion. The family thought it was a wonderful gift at first. I thought it was, too. I wonder if they feel that way now though.