I admit, a year ago, the mortgage mess had me baffled. I couldn't figure out how mortgage portfolios got so toxic so quickly.
The excuse I heard from the left made absolutely no sense. They said that there were horrible people called predatory lenders who loaned money to people who couldn't pay the money back. These horrible people caused the mess.
I have no doubt that there are horrible people in this world. However, companies that make loans that never get paid back tend to go under. The free market would weed out such clowns.
A year into the crisis, when it is time to put taxpayers' dollars where the pundits' mouths are, we get to see the real cause of the mortgage mess.
The real cause of the mortgage mess are two comic book characters from the New Deal called Fannie Mae and Freddie Mac.
These two government spawned entities that handle half of the mortgage re-insurance. The two behemoths masquerade as private companies so that their actions would not be reflected in the government books. The companies would buy and repackage mortgage portfolios, with the tacit understanding that they would get a government bailout if ever things went south.)
So, just like the Savings and Loan Crisis of the 1980s, we find our financial markets mucked up by incompetent political drones. The S&L Crisis as enabled by another creation of FDR called the FSLIC that re-insured Savings and Loans.
So, the mortgage mess of 2008 is the second major financial crisis caused by Saint Roosevelt
The reason I filed this post under health care is that this re-insurance model is exactly the type of program that intellectual giants like Mitt Romney and Hillary Clinton want to define the health care industry.
BTW, I suspect that the neocons are partially to blame. A neocon is a Democrat who became a Republicans when it was politically expedient. The mantra of the neocons was to encourage ownership. Their ideology would be to use the power of the Fannie Mae and Feddie Mac to encourage risky loans, failing to realize that they were undermining their cause.
Statists can make the claim that it was the horrible neocons that enabled the horrible predatory lenders that caused their precious comic book companies Fannie Mae and Freddie Mac to behave comically.
Hidden behind statist excusism is the absurd notion that the comical government schemes to control markets for social justice are premised on having a perfect person with clairvoyant powers to oversee the agencies.
The reality is that these big government agencies work by thrashing from crisis to crisis. You have one big crisis and thrash to the next big crisis.
As fortunes dwindle in this mortgage mess, I hope people realize the inherent absurdity of the big government programs that are supposed to let us live below financial sea level without drowning in our own stupidity.
Sadly, in the same year that we suffer the mortgage mess, we are likely to vote in a president who wants to do unto health care what Fannie Mae and Freddie Mac did unto the housing market.