… stones and Molotov cocktails at police, while police responded with rubber bullets, batons, tear gas, and stun grenades. Hundreds were injured or arrested and three were found dead inside a bank building set ablaze by protesters.
Is there anyone alive who fails to see that, with Obama in the White House and Democrats in control of Congress, what is Greece today is the United States of tomorrow? Is there anyone alive who cannot see that the neo-fascist storm troops of the left are already in our streets? Their protests against Arizona’s decision to enforce our immigration laws… laws that Obama refuses to enforce… are a mere dress rehearsal for the coming economic meltdown.
At the close of 2009, Greece’s annual deficit stood at 13.6% of Gross Domestic Product (GDP), while the total national debt reached 115% of GDP. So how does Obama’s America compare to Greece?
The authoritative website www.usfederalspending.com tells us that the U.S. federal deficit, which averaged 2.13% of GDP during the eight years of the Bush presidency, has grown to 9.91% for fiscal year 2009 and to 10.64% for fiscal year 2010, the first two years of the Obama regime. The U.S. federal debt, which averaged 62.2% of GDP during the eight years of the Bush presidency… down from an average of 63.9% during the Clinton Administration… has grown to 83.29% of GDP for fiscal year 2009 and to 94.27% of GDP for 2010. Comparing those numbers to those of Greece, is it possible see a dangerous trend developing?
Is there anyone still in possession of their senses who fails to understand that it is impossible for any nation to consistently spend more than it takes in… year after year, decade after decade… without eventually suffering the economic consequences? The answer is, yes, there are a great many people who fail to grasp that concept. In Europe they are called socialists or communists; in America they are called liberals and Democrats.
In the aftermath of the Great Depression, the propagandists of the left to laid blame at the feet of Herbert Hoover and the Republicans. It happened on Hoover’s watch, so he took the blame. And when Americans took to the roads and the rails, looking for the basic necessities of life, Democrats quickly branded their track-side hobo camps as “Hoovervilles.”
If conservatives and Republicans are capable of learning anything at all from past experience… and there is scant evidence that they are… they will not allow Democrats to assign them part of the blame for the economic difficulties precipitated by the collapse of the “housing bubble. If most of our major cities are to become like Detroit… “Obama-nations” might be an apt term for them… then the blame must be placed where it belongs: at the feet of liberals and Democrats. And that requires each and every American to have a clear and concise understanding of how we arrived at this sad place and who it was that was calling the plays.
Had the great economic boom of the Clinton years been allowed to continue… an economic boom generated by Ronald Reagan’s economic policies of the 1980s… the United States today would be a debt-free, inflation-free nation with full employment. But that was not to be. A cancer was growing within our economic system that would ultimately threaten the onset of a second Great Depression. The economic “carcinogen” that grew into a near-fatal disease by 2008 was known as the Community Reinvestment Act (CRA) of 1977, passed by a Democratic Congress and signed into law by Jimmy Carter.
The primary purpose of the CRA was to end the practice of “red-lining” in the real estate market. In the wake of the civil rights legislation of the 1950s and ‘60s, African American home buyers were not shown homes in certain neighborhoods and, in spite of their ability to pay, they found it difficult to obtain home mortgages in neighborhoods that were then all-white, or otherwise segregated. To end the practice of “red-lining,” the Carter Administration proposed the CRA, a law designed to encourage commercial banks and other mortgage lenders to meet the needs of borrowers at all levels of society, including low- and moderate-income buyers.
Who could argue that any American with a good credit history, a steady income, and the means to make a substantial down-payment on a residence should not be allowed to do so… regardless of race, creed, color, or national origin. Accordingly, the Reagan and Bush (41) administrations saw to it that the law was enforced, according to the letter and spirit of the law.
However, in 1995, the Clinton Administration hit upon a novel idea. Having done little since the 1960s to keep the black vote firmly committed to the Democratic plantation, the Democrats decided that, by expanding the scope of the CRA, they could make “affordable mortgages” available to almost anyone who wanted one… whether or not they had a credit history or the ability to repay the loans. And since banks and other private lending institutions were not run by board-certified fools, the Democrats had to find a way to force banks to make uneconomic loans to non-credit worthy home buyers… loans that came to be known as “sub-prime” mortgages.
The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Association (Freddy Mac), both run by major Democratic cash cows and patronage hacks, were the perfect answer. So long as mortgage lenders had a safety net… i.e. Fannie Mae and Freddie Mac… to purchase their riskiest loans, what was to stop them from approving such loans?
To accomplish this, the Clinton Administration made significant changes to the CRA. The new regulations de-emphasized long-standing mortgage lending criteria. Instead, bank examiners were told to use federal home-loan data, broken down by neighborhood, income group, and race, to rate banks on their lending performance. According to a Winter 2000 report by Howard Husock in the City Journal, “There would be no more A's for effort. Only results – specific loans, specific levels of service – would count…” Examiners wanted to know where and to whom home loans were made, whether the banks invested in all neighborhoods within their assessment area, and whether or not they operated branches in those neighborhoods. These were the new criteria and mortgage lenders were afraid not to adhere to them.
It was a recipe for corruption that only Democrats could envision. As Husock explains, by intervening – or threatening to intervene – in the CRA review process, left-wing nonprofit groups (such as Obama’s former client, ACORN) were able to gain control over huge pools of capital, which they in turn parceled out to low-income mortgage seekers. For example, a group called ACORN Housing received a $760 million commitment from the Bank of New York…
It was all a very cozy setup. With leftists such as Barney Frank (D-MA), Chairman of the House Financial Services Committee, and Sen. Christopher Dodd (D-CT), Chairman of the Senate Banking Committee running interference in Congress, preventing any sort of meaningful reform, Obama’s close friends and political allies were given free rein to loot Fannie Mae and Freddie Mac. And who did they pay off? Would anyone be surprised to learn that Senators Obama and Dodd were the two largest recipients of campaign cash from Fannie Mae and Freddie Mac?
Finally, on December 18, 2006, U.S. regulators filed a 101-count civil suit against Fannie Mae CEO Franklin Rains, CFO J. Timothy Howard, and former Controller Leann G. Spencer. The three were accused of manipulating Fannie Mae earnings reports in order to maximize their bonuses. Under the scheme, Fannie Mae recognized only $200 million in losses, allowing the executives – whose bonuses were linked to earnings-per-share – to meet the target for maximum bonus payouts. The target earnings-per-share for maximum bonus payout was $3.23, and Fannie Mae reported earnings of exactly $3.2309 per share.
This earnings “coincidence” was worth $1.93 million to then-CEO James Johnson (later appointed to head Obama’s vice presidential search committee), $1.19 million to then-CEO-designate Franklin Raines, and $779,625 to then-Vice Chairman Jamie Gorelick… all close friends of and major contributors to Barack Obama.
(This is the same Jamie Gorelick who served as Bill Clinton’s Deputy Attorney General and who was responsible for creation of the infamous “Gorelick wall,” prohibiting the sharing of intelligence information between foreign and domestic agencies.)
All of these shenanigans were taking place in Congress and in Fannie Mae and Freddie Mac during George W. Bush’s days in the White House, so why didn’t Bush blow the whistle on all that Democratic fraud? The answer is, he did. According to a September 11, 2003 report in the New York Times, “The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.”
So what happened to the Bush reform effort? As the Times explained, Cong. Barney Frank, then the ranking Democrat on the House Financial Services Committee, argued, “These two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
With powerful enemies such as Barney Frank, Chris Dodd, and Barack Obama shamelessly playing the race card, the Bush administration and congressional Republicans were forced to back down on their demands for reform in Fannie Mae and Freddie Mac.
The Obama regime is now preparing to borrow additional billions from the Chinese so that we can assist Germany and other EU nations in their effort to save Greece from utter collapse. It would be a nice gesture if we were a wealthy nation, but we’re not. So when Obama and his Democrat friends in Congress have turned the United States into the Western Hemisphere’s version of Greece, who will come to our aid? Sadly, we’ll be on our own.