Topic: Monetary Policy
Paul Advocates Dramatic Housing Reform The Ron Paul campaign issued a release today which not only rejected Hillary Clinton's call for government bailouts in the subprime mortgage crisis but also called the government the main culprit in the crisis.by Walt Thiessen
(Libertarian)
Friday, December 7, 2007
"Of all the candidates currently running for president, only Ron Paul has a legislative record, spanning four decades, of opposing the monetary policy that led to the current sub-prime mortgage crisis," says a press release from the Paul campaign dated today. It marked one more way that Paul is so different from his Republican counterparts on the campaign trail.
Unlike typical Republicans on the one hand who avoid talking about the subprime mortgage crisis altogether or Democrats on the other hand who talk about additional form of political bailouts for subprime borrowers, Paul actually addresses the root cause of the problem and proposes that it be directly addressed. He said:
"The root of this crisis, as with past financial and economic crises, results from federal government intervention into the economy, not to anything endemic to the market, nor to the actions of market participants.
"The collapse of the housing market has served as a catalyst for the economy's latest bust. Various federal mortgage programs through the FHA, Fannie Mae, and Freddie Mac have distorted the normal workings of the housing market.
"The Federal Reserve's loose monetary policy and lowering of interest rates were a major spur to the housing boom. Low interest rates influence marginal buyers, those who are sitting on the fence, and encourage them to take on a mortgage that they otherwise would not.
"It is time for the federal government to get out of the housing business ."
I can't begin to tell you how refreshing this sounds! After decades of hearing politicans blame everyone but the government itself for the fiscal messes it imposes upon us, it's wonderful to hear a politician tell the truth for a change.
Of course, getting out of the housing business is only one step in Paul's overall plan. He also wants to get the government out of the fiat money business, which would dramatically reduce the chance that the government could engage in such destructive financial behavior in the future.
I can already hear critics to my claims, shouting that the Fed is a private, non-profit organization that works independently of the government. Yes, of course, I believe in fairy tales. The big banks that control the 12 banks of the Federal Reserve do so at no profit to themselves and out of the goodness of their hearts. Yet, somehow, I find such fairy tales to be less convincing than they were when I was very young. Could my skepticism have something to do with hidden 13% inflation rates, a plummeting dollar, soaring energy and housing costs, and stock market pricing that is therefore highly misleading? Nah!
"Ron Paul has long predicted this type of crisis would result from federal interventions into the housing market and excessively low interest rates," said Ron Paul 2008 campaign chairman Kent Snyder. "Only Dr. Paul has the expertise to explain why we must reject further political intervention into the housing market, such as that advocated by Hillary Clinton."
I only hope he can be elected in time to actually do something constructive before the whole house of cards has the chance to fall into our collective laps. For all we know, it may already be too late. The patient may already be dead even though the nurse monitoring its life support hasn't noticed.
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2007 Walt Thiessen, all rights reserved.
Published: Friday, December 7, 2007
Last modified: Friday, December 7, 2007
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Thankfully, there appears to be one man in this country and this government that understands that a quick-fix will do little but make the entire situation worse. This government is adept at band-aid patches that usually only serve to make the problem expand.
Ron Paul understands the issues this country faces and the rest of the candidates continue to live in their empty-promises fantasy land.
I myself would have fallen into the sub-prime borrower catagory, if I had realized how easy it was to obtain credit.
The reality is this, I looked at what I was making $48K per year, and realized I couldn't afford a $250K house.
There should be a standardized "30% total monthly payment for housing, on VERIFIED gross income" Law.
If there had been a law, then the housing prices wouldn't have skyrocketed in the first place.
I am no Wall St wizard, but I understand Common Sense, if the average pay raise is 2 - 4 %, then that is what house prices should be rising, (Not 8 - 16 %!!!).
Are you telling me then Highly Educated Financial Geniuses didn't see this coming???
Something has to support these hikes in prices.
Greed Kills...
This was deliberately executed by the Greedy Bankers, because of the Huge volume and the amount of Loans that will be struggled to be paid, the financial lenders will still gain, even with the Foreclosures coming!!!
Then they will charge all of the people with messed up credit, exhorbinant interest rates for future purchases, Autos, College, etc...
They will double the money supply again, so the lenders get their $$$ on paper, unfortunately, this will devalue the Fiat Money even further, causing the cost of all the "Minor" purchases, such as food, clothing, gas / fuel to double in price.
Well, America is getting fat, so less food in our bellies will actually be healthy.
Maybe, then we will start bicycling or walking to work, due to gas prices, also healthy...
Unfortunately, our education system doesn't teach how to manage money, RESPONSIBLY.
Law: 30% of income-to-mortgage, verified.
Give free financial education to future borrowers, if that was the case, "Can You really afford a Mortgage" class was given, this mess also, would be less severe.
Teach people at a young age to start SAVING and RESTRAIN from IMPULSE Purchases...
I had to learn the hard way, but at least I learned about what I can realistically afford.
Suggestion:
Write law about lending practices, (Max 30% Rule and Income Verification) So lenders are enforced to lend RESPONSIBLY and avoid this Running up the prices!!!
Stop the Subsidies, the FAIR price will NATURALLY evolve from the 30% Rule, in other words 'Let the House Prices come to the Borrower' not the other way around.
Kick the frail leg out from under the Housing Bubble Now. Let the prices sink back to levels where the 30% Rule works for the average person with no IRS penalties for people who got suckered into this Fraudulent Lending Practices.
Freeze the "PRIME RATE" at 3% and quit this massaging and meddling of the Markets.
Get rid of the Conflict of Interest, credit reporting agencies.
The Government should make this illegal, as these numbers have NO Real Point values for Credit Positives and Negatives, just a RANGE of Numbers for variable credit histories.
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2007 Walt Thiessen, all rights reserved.