Hi Andrew! I'm Tom.

You are almost right. I have a friend who worked as a sales manager for Countrywide. I got the story first hand. The people who are in trouble now are in trouble because of misleading mortgage lending practices. My friends exact words were "Some of our best sales guys blatantly lied to people just to get them to sign." These guys were making 200k+ per year in commissions. They didn't care, they just wanted their money. They were under constant pressure from their superiors to sell sell sell. One example I can tell you about is about a woman whose husband was dying in a hospital. This was my friend's account (before he made dept manager). She wanted to refinance the house and borrow some money against the house to pay off credit cards and the balance of her husbands medical bills (over 100k after insurance paid). Their house was PAID OFF. She had no credit to speak of as she was a stay at home mom and credit was all in her husband's name. She should have never been given the second mortgage. She had other avenues that she could have taken to get help but my friend's supervisior told him to push it through and he did.

Case and point: She lost the house (130 years of family history in that house). Her husband died and the bank put a lien on the life insurance payout (it was a cheap policy like 50k) and they got it all. Leaving this elderly woman with nothing but her and her husbands social security (about 1600 per month combined).

Each individual is responsible for knowing what they can afford (luxuries or necessities), the banks are responsible for not loaning to those who they know damn well could never pay. And the government is responsible for pursuing a dangerous ideology that a totally unregulated market somehow brings about the best in people and the best for a nation.

Andrew

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Ethanol is a fabulous solution to our energy dilemma because it will provide more fuel for us to drive around and look for food.

-- Unknown

I take it you believe I started with a 0?

Hi, Tom! I'm curious, what would this woman have done if Countrywide didn't lend her the money?

What really gets me is this crisis was totally foreseeable and avoidable. WTF is wrong? How could this government allow the financial system to go completely bonkers...

Andrew

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Ethanol is a fabulous solution to our energy dilemma because it will provide more fuel for us to drive around and look for food.

-- Unknown

Does this mean that if someone has a baby they can't afford to provide for, they should bear the consequences of that choice? That they shouldn't be given the things they can no longer afford due to them having children? Should someone be provided with healthcare if they've spent what resources they do have on luxuries?
Responsible to whom? To those they loan the money to?
That's not at all the theory of free markets. Free markets don't speak at all to the "best" in people. If anything, free markets speak to bringing out (to you) the "worst" in people: that they would be as selfish and self-serving as possible.

In a free market there would be no interference. There would be no pressure to loan money to people because they belong to some minority, or some supposedly oppressed class. There would be no pressure to loan to someone who couldn't possibly pay back the loan simply because they have a hard-luck story - like, I don't know, maybe a husband in the hospital and mounting credit and medical bills. Instead, banks would loan money based upon their own self-interests; meaning they'll loan when they expect to be paid back.

But when the government says, "Hey, loan the money even if you might not be paid back. We'll cover it if it defaults." There's self-interest, but there are no consequences. That's not a free market.

They should; unfortunately, it's more likely that the baby will. I wish I could think of a policy change that would fix this, but so far I can't.

Yes indeed, but the curious thing about the free market "theory" (it should more properly be called an ideology) is the notion that maximizing selfish behavior will by some alchemy produce results more normally associated with unselfish behavior.

If i may - its would have taught her a painful lesson about credit card debt, and it would offer her a reminder that the US health care system needs reform so that she is not forced into massive debt by medical bills.

Andrew

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Ethanol is a fabulous solution to our energy dilemma because it will provide more fuel for us to drive around and look for food.

-- Unknown

The Community Reinvestment Act (CRA), a democratic program 'encourages' banks to make home loans to minorities. If banks don't make the loans, they get penalized.
I'm missing something here because you're saying the banks are scam artists (I don't doubt that there were shady loans made) yet it's a known fact that the CRA is the main reason subprime loans really took off. If banks don't make these loans, not only do they get penalized, they'll be accused of racism by ACORN and other groups.

Here's a subtle example of the race card being played by Fannie and Freddie:
And speaking of scam artists, what about the Clinton cronies that ran Fannie and Freddie into the ground such as Franklin Raines, Jamie Gorelick, and James Johnson? These people took tens of millions of dollars from those companies. They left a pile of ashes and the burning continues.

Kramer

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“It's time to admit that public education operates like a planned economy, a bureaucratic system in which everybody's role is spelled out in advance and there are few incentives for innovation and productivity. It's no surprise that our school system doesn't improve; it more resembles the communist economy than our own market economy."
Albert Shanker, former president of the American Federation of Teachers

Free market theory espouses no such notion.

No Cato, you didn't , but scroll up and see how fast it went stoopid.

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What reform would that be? Forcing healthcare providers not to charge so much?

I got 'cha. Immediately. I should've given them the attention they were worth. Mea culpa.

So your version doesn't make reference to Adam Smith's "invisible hand"? That makes it rather unusual as free-market ideologies go, if so.

Health Care should be indiscriminate.

The baby example is problematic given that the baby did not choose to be born.

Responsible to themselves and their clients. Whatever happened to a business being guided by ethics and respect for the client?
That's true, but proponents of free market theory look towards a positive end by means of selfish individuals behaving a certain way. (And they always assume the individual is rational, which is not the case in reality).

I'm not buying the scam artist as victim argument.

The government needs to be involved at some level to guarantee that the interests of all parties are protected. The bank, the end-user, and the tax payer.

America seems to have an irrational fear of so called 'interference' at any level. Yet somehow other nations are able to enjoy mixed economies with universal healthcare and easily accessible and highly rated education systems.


Its funny actually. Its sold as a free market right up until the moment it collapses, then America becomes a socialist nation with federal corporations like Canada. Welcome to Canada!

Andrew

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Ethanol is a fabulous solution to our energy dilemma because it will provide more fuel for us to drive around and look for food.

-- Unknown