The mortgage bail-out plan announced yesterday dealt a ...
... clear blow to capitalism and a free market policy
The administration announced a bail-out plan for more then one million home-owners yesterday which took out sub-prime mortgages at the peak of the cycle and whose mortgage rates will re-set to higher rates next year.
The statement at the press release was worded very carefully so that it won’t appear as a bail-out and a away from the free market policy but there is no secret that it was a mere masquerade to hide the plan from what it really is.
A few options in the plan were put in place so that it appears better then what it is such as the fact that home-owners need to seek assistance in order to get it.
Let’s face a sad fact:
This was a move by the government away from capitalism and a free market policy and crossed the lines to socialism.
What’s next? A move away from democracy to communism since the government already decided to interfere with markets and businesses?
Of course Ben Bernanke supports the plan but what else would one expect from an unqualified Fed Chief?
Bernanke made so many mistakes in a very short period of time that a few more don’t really matter anymore.
Markets work best with no interference from the government, period. The market created this problem in the credit markets and housing markets and the best way to handle the problem is to let the market take care off it. It may sound brutal to the home-owners which shouldn’t be in the home they’ll never own in the first place but they have been caught up in a net which was emotionally driven by market participants in order to increase profits.
Not only did the emotional decisions not generate additional profits but resulted in huge write-downs at financial institutions and a blow to the market and the economy as a whole. That’s what happens when emotions influence decisions.
Mr. Bernanke tried to bail-out investors with interest rate-cuts and now the government tries to manipulate the markets as well. In the end neither will have the desired positive effect. The decisions were clearly politically motivated due to the election year around the corner but of course nobody would admit that fact.
If it would be not for the election year there would have been no rate-cuts and no socialistic move by the government but since there was never a recession during an election year in history everything needs to be done to artificially keep up any rally and paint a bright economic picture.
Hey, it’s December, the time for big lies and false hopes.
Maybe a mild recession and a small bear market is what this economy needed and really wanted but since some individuals want to deny the economy and the markets what they want the results may be far worse then to just let the markets do what they do and want.
The more the Fed and the government decides to intervene with the markets the worse it will be and the risk for a severe turn-around will increase.
Since the government now decided to move away from capitalism and a free market policy and seems to favor socialism, what’s next?
Investors did not get a bail-out during the burst of the dot com bubble, so how about they ask for a refund from the government?
Right, that was the past and not during an election year or a few weeks away from one. Ok.
How about investors which will loose money in the future due to government intervention with the free market policy get a bail-out? How about investors request a bail-out next year after they loose money in this market due to the steps taken as of late?
Right, investors are not worth a refund because nobody forced them to make stupid investment decisions which resulted in a loss but wait, nobody forced home owners to buy a home that they could not afford.
Since it appears that the recent trend is aimed at the destruction of the U.S. economy, first by Bernanke who insists to destroy the spending power of the U.S. economy and does everything he can to devalue the U.S. Dollar until it is not worth the paper it is printed on with his policy of interest rate cuts while printing new money at a record pace and now by the U.S. Government who betrayed the market and took one step away from capitalism and a free market policy to lay out a path to socialism, why don’t we just go ahead and speed up this destruction process and make sure that we put practices in place which will definitely kill the economy like the democratic proposal to hike taxes?
What message does this bail-out send to those home-owners who decided to take out fixed mortgages and purchase a liability that they can afford?
Those home-owners work hard and pay their bills on time and the thank you for that is absolutely nothing as in the end those were the idiots holding the bag along with those investors who purchased the bundled mortgages.
How about next pre-election year during the first half of 2011 we all take out as much debt that we can’t afford to pay because towards the end of 2011 and ahead of the election in 2012 guess who will be there and bail us out?
Ok, let’s put sarcasm on the sidelines but this move was one of the dumbest moves yet and it seems that the idiotic behavior was not confined to the Federal Reserve under the helm of an incompetent Fed Chief but now spread deep into the political field as well.
It is a very sad development…
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