During the riots of the late 1960’s and early 1970’s the blacks burned down and looted their communities. A decade later their communities were still rubble. Investors and banks did not want to lose money and would not reinvest in these areas as they were “bad risks”. This was termed “red lining”.
Jimmy Carter and his liberal congress passed the Community Reinvestment Act (1977). For the intellectually challenged liberals, this law forced banks and investors to make high risk loans and outlawed “red lining”.
In 1993 Bill Clinton and his liberal cronies expanded the CRA and forced financial institutions to make even more high risk loans. If they adhered to common sense credit standards and did not increase the risky loans to those unable to repay them, the Clinton administration would levy heavy fines or deny requested expansions or mergers. Banks still balked at losing money. The liberal answer was more involvement by the quasi-government agencies, Fannie Mae and Freddy Mac. They purchased these bad loans from the banks so the liberal housing welfare program could continue at tax payer expense, even though economist warned this would result in a future economic crisis.
In the early 2000’s, financial experts, economist and conservatives in congress tried to reign in the fraud and risky loans by Fannie Mae and Freddie Mac. They warned it would cause a severe crisis in the housing and financial markets. These institutions had already amassed two trillion dollars in “bad paper”. Liberals like “Banking Queen” Rep. Barney Frank and Sen. Chris Dodd, both pocketing thousands in contributions and sweet mortgage deals, declared the republicans were just crying wolf and the liberal housing welfare program was sound. A few more trillion dollars in bad loans were promptly added to Fannie and Freddie’s portfolio.
The economy, with the help of the Bush tax cuts, continued chug along with robust growth, while the liberal democrats and media continued with a daily barrage of doom and gloom. They convinced a majority of dumbed-down Americans that the country needed a change. In 2006 democrats gained control of congress and promptly gave Americans change. First they increased the minimum wage even though it would increase unemployment as history proves it always does. Throw in the ethanol gasoline fiasco and other business killing regulations that Bush would not veto, and 2007 saw the beginning of the liberal’s self fulfilling prophecy.
Unemployment bumped up a little. While the cost of gasoline was increasing, ethanol was causing corn to be redirected from food products to fuel. The result was even a greater increase in the cost of gas and a sizeable increase in diary, meat and other food products. Now, many of those with the risky and creative loans could not make their mortgage payments. Bankruptcies and home foreclosures began to rise.
The artificial housing bubble popped, financial institutions began to struggle and fail and home foreclosures, consisting of about 5% of bad loans, continued to increase. The fraudulent book keeping and bad loans made by Fannie and Freddie resulted in a financial meltdown, which was followed by significant decreases in the stock market. Things were bad but would have corrected, as they always do, if the government that created the mess would have stayed out of it. Then Bush acting like a liberal and implementing tax payer bail outs did not help.
The year long presidential campaign caused more uncertainty which caused continued anxiety in the financial market and economy. Economist predicted if McCain won the economy would struggle but stabilize and slowly improve, because McCain was known and his policies more certain. They predicted if Obama won the stock market would “crash” and the economy would tumble even more because he was unknown and his campaign promises are economy killers. The Marxist messiah won and the stock market crashed and the economy tumbled.
Even as the coronation of the new messiah is taking place, the uncertainty of his regime is continuing the economic crisis. How long will it continue? No one really knows. If he keeps his Marxist campaign promises and implements his FDRish new deals he will repeat history and create another “great depression.” If that happens, not to worry, the navel-gazing liberals and intellectually vacant democrats will just claim it’s “all” George Bush’s fault.