America’s Second Wake-Up Call!

America’s Second Wake-Up Call!

By INVESTOR’S BUSINESS DAILY | Posted Friday, October 10, 2008 4:20 PM PT

History is important to study… if you can trust the national media to not withhold key information they don’t want you to see or twist daily news to fit their agenda.

Read More: Economy


In the last 40 years, there have been nine major surveys of editors and reporters who work for national media. The most they ever voted Republican in a national election was 14%; the more common range has been 4% to 7%.

This is one reason why no matter who wins a political debate, the media almost en masse repeatedly tell you their man won. And most voters who don’t pay close attention will believe them. It’s called coordinated propaganda.

What were the most consistently repeated and strongly asserted slogans you’ve heard over the last few years? “We’re losing in Iraq . . . we must get out . . . it’s costing us $10 billion a month we could use here at home . . . we’re not any safer . . . the surge won’t work.”

A year ago, vice presidential candidate Joe Biden opined that we should get out of Iraq immediately and then divide it into three separate countries. This is the sound, seasoned judgment that’s supposed to compensate for running mate Barack Obama’s youth and complete lack of experience with the military or America’s security in a dangerous world!

Well, the surge in Iraq has worked, we are winning decisively and, as a result, now have a new democracy and strong ally in the Mideast. Meanwhile, seven years have passed since 9/11, and we still haven’t had another major terrorist attack on our soil.

Yet the media give no credit at all to President Bush, the only president to do something about the terrorist attacks that we had suffered repeatedly beginning in 1992.

With the economy slowing and a weak financial market created solely by our subprime mortgage mess, what do we keep hearing now from the media in hopes the majority will believe it and vote accordingly? “The mess is caused by eight years of failed Bush economic policies, including the tax cuts for the rich that should be rescinded.”

This is not the talk of a uniter of people, but rather a separator stirring up class warfare, envy and resentment. It’s a stirring-up of hate in an attempt to endlessly criticize, condemn, demean and destroy every opponent.

Do you know the real cause of the out-of-control subprime loan mess that’s creating so much fear and hurting every American? It’s not something the media or a certain political party wants you to find out. A picture is worth a thousand words, however, and we’ve made notes of key events on the chart above that you can follow as we give you some key facts.

In 1995, President Clinton mandated new regulations that coerced banks to make significantly more subprime loans to inner-city residents previously viewed as unqualified buyers in high-risk areas. Banks were rated on how well they complied and faced big fines if they didn’t do what government regulators wanted.

The government’s worst decision was allowing and encouraging banks, for the first time, to bundle these subprime loans in giant packages with prime loans. These packages were then sold to other investors as safe because they were government-sponsored by Fannie Mae and Freddie Mac.

The first of these government-encouraged packages came to market in 1997. For the banks, they were profitable because they could be sold quickly and thereby absolve the banks of any risk in the loans they made. Many subprimes were variable-rate loans made without down payments or documentation of borrowers’ incomes.

The banks could then use the money to make even more of these lower-quality, government-required loans, and Fannie Mae and Freddie Mac bought them with virtual abandon.

It evolved into a Big Government pyramid scheme with Democrats in charge of Fannie and Freddie making large political donations to Barney Frank, Chris Dodd, Barack Obama and other politicians who continually defended the anything-goes lending of the two agencies.

In short, this was yet another well-intended, Democrat-supported,government-designed and run program that failed miserably and had the usual unintended consequences.

A few more facts:

April 2001: The Bush administration’s fiscal budget stated that the size of Fannie and Freddie was “potential problem because financial trouble of a large Government-Sponsored Enterprise could cause repercussions in financial markets, affecting federally insured entities and economic activity.”

May 2002: The Office of Management and Budget wanted disclosure and governance principles in Bush’s 10-point plan for corporate responsibility to apply to Fannie and Freddie.

February 2003: A federal housing oversight report warned that unexpected problems at Fannie Mae could immediately spread into financial sectors.

September 2003: Treasury Secretary John Snow, in testimony to the House Financial Services Committee, recommended that Congress enact legislation to create new agency to regulate and supervise financial activities of housing-related government entities to set prudent and appropriate minimum capital requirements.

Rep. Frank, the committee’s ranking member, strongly disagreed, saying: “Fannie Mae and Freddie Mac are not facing any kind of financial crisis . . . . The more people exaggerate these problems, the more pressure there is on these companies, the less we’ll see in terms of affordable housing.”

February 2004: The president’s new budget again highlighted risks of the explosive growth of these government enterprises and the then-low levels of required capital. It also called for the creation of a world class regulator. The administration determined that housing regulators of government agencies lacked the power and stature to meet their responsibilities and should be replaced with a strong new third regulator.

February 2004: Greg Mankiw, chairman of Bush’s Council of Economic Advisers, cautioned Congress against taking the strength of financial markets for granted. He too called for reducing the risk by ensuring that housing GSEs are overseen by an effective regulator.

April 2004: Rep. Frank ignored warnings, accusing the administration of creating an “artificial issue.” “People pay their mortgages,” he told a group of mortgage bankers. “I don’t think we are in any remote danger here. This focus on receivership, I think, is intended to create fears that aren’t there.”

From 2004 to 2008 the Bush administration made 12 more attempts to get Congress to pass legislation to have safer, sounder regulatory oversight of Fannie and Freddie and capital rules. You can see them for yourself on the White House Web site. But here are a couple of examples that show how Democrats resisted:

July 2005: Senate Majority Leader Harry Reid rejected legislation on reforming Fannie and Freddie. “While I favor improving oversight by our federal housing regulators to ensure safety and soundness, we cannot pass legislation that would limit Americans from owning homes and harm our economy in the process,” he said.

August 2007: Sen. Dodd, another Democrat, ignored President Bush’s emphatic calls for Congress to pass Fannie and Freddie reform legislation and called for him to immediately reconsider his ill-advised position.

Democrats have become a far-left propaganda party with the lowest-ranked Congress in history. For six years, they have consistently refused to rein in the monumentally risky subprime loans that Clinton Democrats gave birth to.

Yet, voters are blaming Republicans for this crisis and seem to think that a newcomer they know little about, despite his questionable past associates and mentors, can bring us more huge programs. These include one that would socialize the health care system at a time when government-run systems in Canada and Britain are lower in quality and nearly bankrupt.

We will not have another 1929. The chart above shows we are in a 1937-type correction with a 1938-39 perhaps ahead. That’s when England’s Neville Chamberlain thought he could appease Hitler just by talking to him and getting a signature on a piece of paper that guaranteed “peace in our time.”

Today, a new Hitler in Iran says he wants to have similar relations with the U.S. Are terrorists hoping that we will sign a nice agreement that gives Iran another couple of years to develop a nuclear weapon?

Finally, history shows that since World War II, our best results-oriented presidents were Truman, Eisenhower and Reagan. They were much older — in their 60s and 70s — more experienced and made sounder, more productive decisions. The three youngest presidents — Kennedy, Carter and Clinton — all had more problems, particularly with national defense and dealing with dangerous dictators that were threats to America’s security.


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