The Democrats can sit back and claim that they have no hand in this problem till they are blue in the face, but that still won’t absolve them of their involvement.  There is no doubt that this problem is deeply seeded, going back “at least a decade” as President Bush said in his speech at the end of last week.  Almost everyone has pointed out that the problem has come because of the housing crisis, and the fact that too many people simply cannot pay their mortgages.  The democrats have been vocal, blaming this problem on a lack of oversight in businessess like Freddie Mac and Fannie May.  But, the problem has not been a lack of oversight, but the requirements (imposed by the Carter and Clinton administrations) placed upon them.  You see, the democrats decided that it was not fair that only people who could actually pay for a house should be allowed to buy a house.  So, they forced financial institutions to make high risk loans to people who could not provide proof that they could pay the loan.  Freddie Mac and Fannie May then started buying up these loans to boost their own books, claiming that they held these great assets, when in fact the people paying on those assets weren’t going to be able to pay.

These bad loans are one of the main causes of the problem.  But, the problem has been compounded by the companies granting these loans going just as far as they can go (since they are trusting that they will be bailed out by the government).  There have been far too many loans that have been granted on Adjustible Rate terms that have skyrocked due to the current financial situations.  These companies allowed people to take out more money in loans than they can afford to pay–they buy more house than they can afford.  People have been enticed by “interest only loans”, where they don’t have to pay anything but the interest on a house for several years.  These, along with other poor lending/borrowing practices have ensured taht we end up where we are today.

So, what is the solution?  Let the market correct!  That sounds harsh, I am sure, but those who have been involved in these poor business practices don’t deserve to be bailed out.  The government needs to get out of the market, and let it run itself.  If that had been the case, companies that made decisions like those listed above would simply go out of business (and rightfully so) instead of standing in line to get bailed out by the government.  The government needs to stop placing requirements on lending companies that go against good business practices (like forcing companies to loan to low income families).  Let private investors step in and buy up the same faltering resources that the government will be bying out, and let them make the profit on them instead of the government.  Both parties claim that if this is successful they will see to it that the money gets back to the tax payers…yeah right.  When the markets rebound the government will be holding a huge amount of assets and make a huge amount of money which (if history is any indication with both parties) will simply fund more socialist programs.

Government, get out of our business!

For an interesting take on this bail out nonsense, check out Glenn Beck’s interview with Newt Gingrich from this morning...