Part of the answer came in the mail yesterday. Something called “Quicken Loans” (“Engineered,” the letter promised, “to Amaze™”) arrived with the rest of the junk mail offering me an “excellent refinance opportunity.” It turns out that I’m “pre-qualified” for gobs of cash at a special low, low interest rate. Apparently, all I need to do is call their 800 number to discuss my “specific situation” and then toddle around and help myself to the lucre.
This attractive offer is made possible by the outfit’s “partnership” with the Federal Housing Administration, “the largest insurer of mortgages in the world.” The loan would be, the flyer explains, a “great choice in today’s market.” And why? Because FHA loans “offer less strict credit and qualifying guidelines than other mortgages.” That’s right folks, Quicken Loans can offer
* Minimal credit requirements
* Refinance up to 97.75 of your home’s value
* Cash-out refinance up to 85% of your home’s value
And who underwrites the risk? Why you do, chump. You, the taxpayer, pay for the indemnification. You take the bath in case of default and foreclosure. (In 2010, by the way, banks repossessed 1 million homes.)
Now, class, why did the 2008 economic collapse happen? You there, waving your teleprompter: Mr. Obama: what say you? George Bush? Wrong answer.
I’ve been over this before. Review an earlier reading assignment: “Who caused the global economic crisis (Hint: it Wasn’t George W. Bush“). Here’s the formula:
1. Make $1.5 trillion of risky loans to people you know are unlikely to repay them;
2. Allow financial instituions to slice, dice, and repackage the loans, leveraging them up to 30-1;
3. Require financial institutions to value their assets according to strict “mark-to-market” rules, thus denying businesses needed flexibiity during a crisis;
4. Impose onerous new regulations not only on financial institutions but on U.S. business across the board;
5. Keep talking about raising taxes so people and businesses pay their “fair share,” even though 43.4 percent of those who file pay no income tax at all;
6. Create an economic leviathan in the form of health care legislation that will simultaneously worsen health care in the U.S. while also making it wildly more expensive;
7. Keep emphasizing “green” jobs and “green” energy production at a time when unemployment is above 9 percent and energy costs are skyrocketing;
8. Invest billions of dollars of the taxpayers’ money into failing private businesses with huge union obligations to keep the business going for a while longer so that the unions can squeeze more money out of the taxpayers.
9. Ignore the warnings of credit-rating agencies when they warn you are spending too much money and do not have a credible plan to address your skyrocketing deficits and then blame them when, months later, they downgrade your credit rating.
I’m sure there are other elements needed to complete the picture. But those 9 steps are a good start for anyone wishing to wreck the mighty U.S. economy. And here’s the thing: my letter from Quicken Loans shows that we haven’t learned a thing. The FHA, part of the Department of Housing and Urban Development (another albatross brought to you by Lyndon Johnson’s cruelly named “Great Society”) , smiles broadly as companies actively seek out risky loan prospects to whom they can dispense their, i.e., your largess.
Meanwhile, President Holiday (AKA “President Downgrade“) has abandoned his shiny new Canadian built luxury bus in order to eat ice cream and play golf on Martha’s Vineyard. He’ll be back, though: the bus is idling, just like the U.S. economy, and so long as there is any hint of wealth creation in America, his work is not done.