Tuesday, July 29, 2008
Foreclosures and Real Estate Debacle...Who Is Responsible?
(Important message from the Controller General of the USA, David Walker (60 Minutes program))
A friend of mine posed this question today in an email. Who is responsible for this economic mess in the USA? The borrower? The brokers? The financial institutions? The Federal Government?
EVERYONE is responsible in some way for their part of the chain of events, cause and effect. It’s a mad cycle.
1) The GOVERNMENT is responsible because they run the national economy…they control the Federal Reserve, Central Bank, determine interest rates, provide programs like FreddieMac and FannieMae to secure insecure loan positions, and continue to spend beyond their means on a global scale when they have no money to spend…just printing more without authorization of the governed, which causes the devaluation of our currency and decreases the global value of our properties. Now this government is passing laws to bailout the huge institutions they are “in bed with”…and using your and my money and future retirement funds to do so.
2) The FINANCIAL INSTITUTIONS are to blame because they are greedy and prey upon the weak and underfunded. They push and sell contracts that further drive their client towards dependency, bankruptcy and ruin. They provide easy, almost free money in exchange for control and 1st position on the borrower's heavily financed properties…which they seem to assume will always go up in value…just like the borrower does. They also are charging multiple times interest compared to what they are paying on interest THEY are paying for the source funds. They deserve no bailout. It was their risk, it should be their bath or correction to manage, or they should be swallowed up by their competition just like what would happen in most any other industry.
3) The BORROWER is to blame because they have blindly “drank the Kool-Aid” of free and easy credit and hidden behind historic bankruptcy laws that protect the debtor more than the lender. They are ultimately responsible because THEY signed the legal contract, terms and conditions of their loans and mortgages. They are the ones who have not put away money in savings or towards their future retirement to cover their debts/obligations during down times like this one. They are the ones who continue to fuel the fires of commercialism and consumerism along with voting for big government programs that will give them guarantees in life…which feeds back to…culprit # 1 above!
4) The REST OF US are to blame for going along with government bailouts and using our tax dollars and social security funds to guarantee covering these debts we didn’t enter into. We blindly expect our government to find the solution and cover everyone’s greed and stupidity…without realizing they are going to do it out of OUR financial hides and future revenues. The few producers are expected to cover the masses lack of knowledge, work ethic and sense of responsibility…but there comes a point where we just have to say NO…
Whatever happened to free markets and Laissez-faire economics? "Laissez-faire" is now an old fashioned concept of "...a doctrine that maintains that private initiative and production are best allowed a minimal of economic interventionism and taxation by the state beyond what is necessary to maintain individual liberty, peace, security, and property rights." What right does the government have constitutionally to interfere with our economic system and the contracts that we sign? And the biggest question yet...what right does the government have to forcefully take from me and you (via taxes, fees or secured social funds) to cover the obligations of other 3rd parties? NONE.
So, per my perspective, we have all contributed to this colossal failure in our system...if only by allowing everyone to "pass the buck" all the way down to us, the tax payers.