The current economic situation, was manufactured by Washington politicians and the media. Granted, I doubt any of them wanted the end result to turn out the way it did, but the reality is, that it was manufactured.
Here’s what I mean. During the 1990’s, liberal politicians and the media created the problem of “unaffordable housing”. They used bizarre statistics, saying that minorities were turned down for mortgages more often than whites, and that they also had lower levels of home ownership than whites. Both of which were probably true.
One has to ask then, why was this true? Was it because all mortgage lenders were racist? Or was it because in general whites were more credit-worthy than other minority groups? And just because minorities had lower levels of home ownership, did that mean that they were living on the street, rather than in a home that they owned? Or did minorities rent more than they owned?
Washington’s solution: more restrictions and quotas placed on banks to increase lending to low-income and minority families. This caused banks to loosen their lending policies, and issue more risky loans.
In the short term, this appeared to work in the benefit of lower income families, as they were finally able to get approved for a loan to buy a home. Now, however, we’re seeing massive foreclosures, and a collapsing economy due to tightening credit markets, and bankrupt financial institutions.
During the 1990’s, there wasn’t a problem with unaffordable housing, as everyone, in general, was living within their means. People who couldn’t afford a home, rented, and those who could afford to buy a home did just that. Politicians trying to fix a problem that didn’t exist created exactly the problem that they were trying to solve. People can’t afford to live in the homes they bought, and are now being forced to foreclose.
What’s next? If minorities are foreclosing more than whites, does that mean that there are unfair foreclosure practices in place? Are we going to keep banks from foreclosing on delinquent loans if the loan is to a minority?
Let’s hope Washington has more sense than that.