You want economic insanity, I’ll show you economic insanity

This story from The Washington Post is reprinted in this article at The American Thinker. Really, there are no words that can quite capture this at all:

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.

President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.

In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.

Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.

Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan and are seeking to make it easier for people who owe more than their properties are worth to refinance at today’s low interest rates, among other steps.

Obama pledged in his State of the Union address to do more to make sure more Americans can enjoy the benefits of the housing recovery, but critics say encouraging banks to lend as broadly as the administration hopes will sow the seeds of another housing disaster and endanger taxpayer dollars.

‘If that were to come to pass, that would open the floodgates to highly excessive risk and would send us right back on the same path we were just trying to recover from,’ said Ed Pinto, a resident fellow at the American Enterprise Institute and former top executive at mortgage giant Fannie Mae.

Did you get that? “Critics say encouraging banks to lend as broadly as the administration hopes will sow the seeds of another housing disaster and endanger taxpayer dollars.” These critics! Why are they always so negative. Just never willing to give Obama a chance to show just how much smarter than the rest of us he really is.

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42 Responses to You want economic insanity, I’ll show you economic insanity

  1. Leigh Lowe

    The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.

    Oh shit!
    This has to be a piss-take, right?
    Did I dream it or didn’t the GFC largely arise because of NINJA loans?

    NINJA = No Income, No Job or Assets

  2. John A

    Sowing the seeds of Home Loan Overhang Disaster version 3.

    That’s after Japan version 1, and USA version 2, courtesy Mr Clinton.

    “Yes, Mr President.” “No, Mr President.” “Three Bags Full, Mr President.”

  3. Infidel Tiger

    Usually it takes about 20 years to forget history. This is a new record.

  4. Leigh Lowe

    Usually it takes about 20 years to forget history. This is a new record.

    I think that is what caused my eyebrows and lower jaw to move apart rapidly.
    And twenty years is kind of the minimum for a minor cock-up like, say, giving Tim Flannery a Gumment job.
    Something like the whole syndication of dog turd loans that was the cause of the GFC should have a half-life of 32.8 years.
    The worst thing is, that if (when) it goes pear shaped again, Uncle Sam will be less well placed for a bail-out.

  5. Dave of Cossack

    Money does not grow on trees but their Govt and ours think it does.

    Soon China will control the world’s finances, if they do not now, because of inept Govts and Rulers around the world that have no idea of finance/money or economics.

    Banks never go bankrupt any more.

  6. thefrollickingmole

    Was this announcement preceded by “I have a cunning plan M’Lud“?

  7. Jannie

    Yep that’s what the WAPO says alright.

    Words fail me.

  8. Cato the Elder

    First the gummint blamed all those nasty greedy banks for not lending to broke people on the (racist) excuse that they couldn’t service the loans. So the gummint twisted the banks’ arms and Lo, the loans were made!

    Then the credit market collapsed and the gummint blamed the nasty stupid banks for lending money to people who couldn’t pay it back. So the gummint imposed “responsible lending” rules on the nasty stupid banks and all was well.

    Except now the nasty greedy racist banks won’t lend to poor people no more!

    So yet again we have gummint interference to attempt to modify the effect of . . . gummint interference!

    It goes beyond stupid policy and into the realm of willful refusal to see the logical and obvious consequences of their actions.

  9. Pickles

    Am I mistaken Baldrick or are the words I have a cunning plan marching their way with ill deserved confidence toward this conversation?

  10. Poor Old Rafe

    Well if they keep printing money they have to find some way to get rid of it. We are really in Orwell’s 1984 territory.

  11. tbh

    Good grief, there are no words for this stupidity.

  12. Amused

    The Democrats will then blame the next Republican President who will be in power when it all his the fan again.

  13. H B Bear

    Those who do not learn from history are doomed to repeat it.

  14. Brian of Moorabbin

    Pickles (@11.24pm)

    They marched through exactly 24 minutes before you raised them, in a parade lead by the frolicking mole..

  15. Keith

    So relaxed lending standards – this is what Obama means by more banking regulations.

  16. The Democrats will then blame the next Republican President who will be in power when it all his the fan again.

    IMO this is their (and the ALP’s) strategy for re-election in the following term – rape and sodomize the nation so thoroughly on the way out the door that the harsh measures needed to fix things become vote-buying fodder in the next electoral cycle.

  17. Blogstrop

    Architects Of Ruin II.
    The media blamed the banks last time, and will do it again next time.
    Turn them all over to Monsignior Fisk for the meting out of justice.

  18. Louis Hissink

    It seems the Dutch are going to discover they too have PIGS disease, as will the Germans later on.

    Excerpt:

    Economic Crisis Hits the Netherlands … The Netherlands, Berlin’s most important ally in pushing for greater budgetary discipline in Europe, has fallen into an economic crisis itself. The once exemplary economy is suffering from huge debts and a burst real estate bubble, which has stalled growth and endangered jobs. – Der Spiegel

    Dominant Social Theme: Northern Europe is doing really well because they are … better.

    Free-Market Analysis: Gradually, the nonsense about North and South Europe will fall away. It is true the cultures are different and no one would accuse Greeks, in aggregate, as valuing the kind of efficiencies and detailed order apparently dear to many German hearts (or so we are told).

    In any event, ironically enough, the Netherlands has been diagnosed with the “Greek disease.” Too much sovereign debt and not enough revenue. Yes, it’s true. Sovereign insolvency is not the exclusive property of the South after all. Not when the Netherlands, a virtual paragon of Germanic efficiency, is threatening a Greek-style meltdown.

    Of course, this was not supposed to happen because the reason for Southern fiscal dysfunction revolves around character issues: The Greeks are lazy, the Spanish are disorganized, the Portuguese feckless, etc. We always had issues with this.

    The Greeks, after all, got along just fine in their own way before the advent of the euro, a ruinous currency that the average Greek allowed its elites to adopt on their behalf. Could it be the system was at fault rather than the “national character”?

    It bears repeating that those at the top were likely bribed by massive bank loans to promote both the EU and the euro, and that those loans were recklessly spent on unnecessary infrastructure, etc. Those who received the loans are no longer in charge and perhaps not even in the country. And it is citizens themselves who are paying them off, or trying to.

    What should come into clearer focus over time is that it is not laziness that has caused Southern European economies to collapse but systemic flaws in the euro (and the European economy) itself.

    The paradigm of top-heavy governments inefficiently providing everything from health care to roads to a broad ambit of social services and education is simply unsupportable. And now it is Netherlands turn to pay. Here’s more from the article excerpted above:

    “Underwater” is a good description of the crisis in a country where large parts of the territory are below sea level. Ironically, the Netherlands, once a model economy, now faces the kind of real estate crisis that has only affected the United States and Spain until now. Banks in the Netherlands have also pumped billions upon billions in loans into the private and commercial real estate market since the 1990s, without ensuring that borrowers had sufficient collateral.

    Private homebuyers, for example, could easily find banks to finance more than 100 percent of a property’s price. “You could readily obtain a loan for five times your annual salary,” says Scheepens, “and all that without a cent of equity.” This was only possible because property owners were able to fully deduct mortgage interest from their taxes.

    Instead of paying off the loans, borrowers normally put some of the money into an investment fund, month after month, hoping for a profit. The money was to be used eventually to pay off the loan, at least in part. But it quickly became customary to expect the value of a given property to increase substantially. Many Dutch savers expected that the resale of their homes would generate enough money to pay off the loans, along with a healthy profit.

    More than a decade ago, the Dutch central bank recognized the dangers of this euphoria, but its warnings went unheeded. Only last year did the new government, under conservative-liberal Prime Minister Mark Rutte, amend the generous tax loopholes, which gradually began to expire in January. But now it’s almost too late. No nation in the euro zone is as deeply in debt as the Netherlands, where banks have a total of about €650 billion in mortgage loans on their books …

    Even €46 billion in austerity measures are apparently not enough to remain within the EU debt limit. Although Dijsselbloem has announced another €4.3 billion in cuts in public service and healthcare, they will only take effect in 2014.”Sticking the knife in even more deeply” would be “very, very unreasonable,” Social Democrat Dijsselbloem told German daily Frankfurter Allgemeine Zeitung, in an attempt to justify the delay. It’s the kind of rhetoric normally heard from Europe’s stricken southern countries.

    There are several themes to note in the above reporting, the first being that the central bank of the Netherlands supposedly tried to sound a warning about negative financial trends. This would be an appropriate statement except that the purpose of central banking is to print money and act as a lender of last resort.

  19. Louis Hissink

    Source for above is this

  20. Ellen of Tasmania

    “There have been 70,291,049 background checks for gun purchases since President Obama took office, according to data released by the FBI.”

    Which suggests not a few nervous Yankies.

  21. John A

    It seems the Dutch are going to discover they too have PIGS disease, as will the Germans later on.

    …and you are surprised by this??

  22. Irving J

    gillard backdoor censoring of twitter exposed @tadlette & @twitterAU

    http://polliter.com/2013/04/04/twitter-censors-exposed/

    @tadlette on avoiding getting caught

    Apparatchik Tads [email protected]
    @deepthought4 I’m not going to any of their sites. They want IPs they can match back to various institutions as they did APH comment scandal

  23. MartinGAtkins

    Insanity: doing the same thing over and over again and expecting different results.

    Albert Einstein

  24. Louis Hissink

    John A,

    Actually no, not at all – it’s the predictable end of socialist policies. The real danger is the mob now expecting government to solve it, which they will, by implementing a totalitarian system as they did after WW I. It’s not widely known by the Germans and others in Europe freely adopted national socialism in preference to Bolshevism that was class based. WWII was a continuation of the 1917 revolution in Russia, followed by the Spanish civil war, etc, etc. The fight was between the nationalists and the classists, with the Fabians siding with the nationals. The Fabians won, and unlike the Bolsheviks who had an immediate economic collapse, the Fabians will have a much slower one, as we are finding out now as the various fabian economies start to collapse.

    France will be next.

  25. Jarrod

    The fun part is that once this blows up and the housing crisis two hits the US in a few short years, the left will again heap the blame on greedy capitalism, again make significant political capital out of doing so and again be uttlerly fucking wrong.

  26. Louis Hissink

    Jarrod,

    This leads to the observation that those who ignore history will tend to repeat it. Are the left that intellectually dense? Unfortunately it seems so, because most of us tend to learn from experience. The left seem incapable of that.

  27. Token

    Usually it takes about 20 years to forget history. This is a new record.

    The Sun King knows he will never be held account by the MSM so he can unleash his inner leftard to wreak great vengence upon US society with inpunity.

  28. Token

    The Democrats will then blame the next Republican President who will be in power when it all his the fan again.

    Why not? They got away with it last time.

    At the same time DNC representitives like Chris Dodd received “benefits” from the same organisation like Countrywide.

  29. ben

    Irving: why isn’t the opposition raising this during question time?

    at a minimum that need to find out if the government is making requests to twitter to censor tweets and what part of the government is doing this. you would think ACMA would be doing this but if it is directly coming from the Prime Ministers Office then something is seriously wrong.

  30. Chris M

    Moslem wants to destroy America.

    Unprecedented news, I tell you.

  31. Irving J

    its all very very intersting.

    here is the full conversation with tadlette saying she doesnt want a scandal if her IP address is exposed visiting Pickering post.

    https://twitter.com/irving_berlin/status/319933686797709313

    who refers to gov as APH?

    her conversations with Oakshot are even more incriminating. since when does Oakshot take directions from a random twitter user?

    serious questions need to be asked

  32. Irving J

    what to make of this stream??

    https://twitter.com/irving_berlin/status/319937544190038016

    to @OakeyMP “The ALP will already know if they have asked Twitter to censor -anything- it doesn’t need to be asked at a formal meeting”

    her Northwood reference is JFK cuban crisis, the national archives she refers to must be the US nat archives.

    seems she knows a lot about US political history.

  33. Alfonso

    Hee. hee…Oby has a short term memory problem and a new Community Reinvestment Act for the banks investing pleasure.
    The only question is how quickly the loans get packaged in creative CDOs. More fresh meat.

  34. Uber

    Swan Song has just capped our super savings at $2M. The man is a genius I tell you.

  35. .

    So, up the super rate, entrench the union industry funds, and cap what people can accumulate?

    These people are just disgusting bloody thieves.

    As for Obama – my sentiments are the same as Alfonso.

    Any attempt to make a credit market more equitable will result in economic calamity.

  36. The disaster snowball rolls on, gathering speed and mass.
    We are sooo rooted.

  37. Jazza

    Once upon a time it took a generation for such disasters to resurface with a newly adult younger set pushing the old barrows in their “latest lingo” ways.
    Now it seems all it takes is a President bereft of ideas and policies but full of the urge to “seem” responsive no matter the cost to the country and many of its people down the track
    After all ,no doubt his lifetime pension will be secure won’t it just like our awful PM’s and Treasurer’s????Grr!

  38. Louis Hissink

    It’s Obey the puppet president. He, like Julie, obey their strings.

  39. sdfc

    It’s nutty. From what I’ve read nine out of ten new home loans are essentially funded by the FHFA.

  40. Watch America fall down.

    The non-gun-owners, panicked as the looters rampage, will have to go banging on the doors of the gun owners they despised and tried to dispossess as they seek protection and armament.

    Those who have made it their business to shit on Christianity in public will look to a future where all there is, is Church-based charity: the people they have shat on for so many years and must now beg for help from.

    I wonder whether they will choose to humble themselves or die of shame. Either way, the Schadenfreude will be all that keeps us watching as the horror unfolds.

  41. .

    Yes sfdc you are correct and it is utterly insane.

  42. The worst thing is, that if (when) it goes pear shaped again, Uncle Sam will be less well placed for a bail-out.

    You mean they will go from being up shit creek without a paddle to burning the floorboards to keep warm.

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