Recently in Recession Category

Housing sales plunge--let them

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The real estate market is the ultimate example of the maladies that government can cause with its intrusion into free markets.

We all know the story by now. The Bush Administration fought off the tech stock bubble collapse by keeping interest rates low. Coupled with lax lending standards and a government desire to increase home ownership among groups that have traditionally been unable to own homes, the real estate bubble was inflated.

Unsustainable markets don't stay hot forever--despite what you heard at the peak of the bubble--and it too popped, nearly took the whole economy with it, and swept Obama into office.

Up to that point, blame Bush, Greenspan, and Bernanke. Obama deserves credit for the events after that.

To keep the real estate market from returning to sanity (because that would cost votes) Obama unveiled tax credits for purchasing houses, kept interest rates obscenely low, and bailed out lenders.

The tax credit was so successful that demand drove housing prices higher than the credit was worth, but that didn't stop many people from buying homes. In Ventura County, your average starter home will run you $400,000, up from the low $300,000's right at the initial collapse.

Now, sales are down 27 percent nationwide and 8 percent in Ventura County as the credits have expired. In the last two years, more people have been suckered into buying homes they soon will be underwater on. [continue reading]

Study concludes risky lending is solution to problem caused by risky lending

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Contradictions don't exist by definition. If a contradiction is reached in any given analysis, one must check the premises that led to that conclusion for in it lay an error.

On Tuesday, the Center for Responsible Lending released a report that "paints a picture of the foreclosure crisis in California, examines the who, the where, and the why of foreclosures in the Golden State and discusses what we should do to prevent as many avoidable foreclosures as possible."

The study was the subject of a subsequent Ventura County Star article entitled "Foreclosure crisis not driven by luxury home purchases." It states:

Largely because they were more likely to receive high-rate loans, the study found that Latino and African-American homeowners were much more likely to incur foreclosures than non-Hispanic whites.

Latinos experienced foreclosure rates 2.3 times that of non-Hispanic whites, the study found, and almost half (48 percent) of all Californians who have lost their homes to foreclosure have been Latinos.

RACIST!

Apologies--that's just a tic I've picked up from my progressive friends whenever someone mentions anything that has to do with race. I have to keep telling myself that it's not racist to report facts.

Half the state's foreclosures were from Latinos. That fits in with the stated government policy to encourage home ownership among minorities, a decision "that contributed to an escalation of subprime lending that is roiling the U.S. economy," according to the Washington Post.

In 2004, as regulators warned that subprime lenders were saddling borrowers with mortgages they could not afford, the U.S. Department of Housing and Urban Development helped fuel more of that risky lending.

Eager to put more low-income and minority families into their own homes, the agency required that two government-chartered mortgage finance firms purchase far more "affordable" loans made to these borrowers.

The Center for Responsible Lending--notice that it's NOT called the Center for Responsible Borrowing, but more on this later--came to this conclusion in its report:

As the nation begins to address a potential restructuring of the entire housing finance system, it is crucial to focus on the need for access to credit for communities of color and lower-income communities.

The Star article ends by noting that the report lauds the new financial reform act signed by President Obama earlier this summer.

And herein lays our contradiction. The Center for Responsible Lending set out to discuss "what we should do prevent as many avoidable foreclosures as possible." Its policy recommendation is to "focus on the need for access to credit for communities of color and lower-income communities."

To quote the Washington Post again, "Eager to put more low-income and minority families into their own homes, the agency required that two government-chartered mortgage finance firms purchase far more 'affordable' loans made to these borrowers."

In short, the Center for Responsible Lending recommended as the solution to the problem the very thing that led to the problem in the first place! How could an objective organization propose such a self-defeating recommendation?  

Don't forget to check your premises.

Who is the Center for Responsible Lending, exactly? The Star article merely identifies it as a nonprofit organization. A reader might assume it's merely a group of concerned people advocating responsible lending--certainly a laudable goal in and of itself.

However, a quick visit to its website reveals that it's funded in part by the Open Society Institute. And who is that you might ask? I'll give you a hint--its website is www.soros.org.

Two clicks! That's all it took to get from this report to George Soros, the Uncle Moneybags of the progressive movement.

This is by no means an isolated incident. It's how progressive opinions are laundered to become fact. A Soros groups funds money to agenda-driven think-tanks. The tanks churn out official-sounding studies. They issue press releases that the mainstream media blindly picks up and reports as hard, scientific fact.

Lather. Rinse. Repeat.

Meanwhile, readers have no idea they're being taken to the cleaners unless journalists make a more concerted effort to put organizations, people, and stories into proper context.

IngeMusings
Topic
This blog attempts to add perspective and context to local and national politics, through a variety of disciplines, such as history, economics, and philosophy--all tempered with common sense. About the author

Eric Ingemunson's commentary has been featured on Hannity, CNN, NBC, Inside Edition, and KFI's The John and Ken Show. Eric was born and raised in Ventura County and currently resides in Moorpark. He earned a master's degree in Public Policy and Administration from California Lutheran University. As a conservative, Eric supports smaller government, less taxation, more individual freedom, the rule of law, and a strict adherence to the Constitution.
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