The Diversity Recession
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Steve Sailer, Taki’s Magazine, June 22, 2008
Uncovering the roots of the disastrous home mortgage bubble that popped last year will keep economic historians busy for decades. Yet, one factor has so far been largely overlooked: the bipartisan social engineering crusade to drive up the rate of homeownership by handing out more mortgages to minorities.
{snip}
About half of all mortgages for blacks and Hispanics are subprime, versus roughly one-sixth for whites. Not surprisingly, the biggest home price collapses have occurred in heavily Hispanic cities such as Las Vegas, Miami, Phoenix, and Los Angeles.
The mortgage bubble was essentially a bet on the purportedly increased creditworthiness of the bottom half of the American population. After three decades of the home ownership rate stalling at around 64 percent, a series of federal initiatives to increase minority and low-income ownership helped push the rate up to just below 70 percent.
{snip}
Economist William T. Gavin, a vice president at the St. Louis Fed wrote in 2006:
One of the stated goals of current and past administrations since the Great Depression has been to increase home ownership. After remaining relatively stable around 64 percent, the rate of home ownership has risen to 69 percent in the past decade. This uptrend has been driven by a sharp rise in the rate of home ownership among young, minority and low-income households.In contrast, at least the previous bubble, the Internet stock boom of the 1990s, had a bit of prima facie credibility. It was a largely a wager on a three-phase business plan:
1. The smart fraction of American society would invent amazing new online services.
2. ?
3. Profit!
As it turned out, bright young people really did start up lots of websites that did things that almost nobody in 1994 had imagined. The problem turned out to be getting from Phase 1 to Phase 3. So many of them became competent at website creation that few (with the huge exception of Google) ended up with the kind of lucrative quasi-monopoly of which investors dreamt.
The housing bubble, on the other hand, never made much sense. The lower half of American society, where the new homeowners had to come from, isn’t getting better educated, is not settling down to more stable family structures, and is not developing a more rigorous code of honor about paying debts.
Nor was the government doing much of anything to help the bottom half earn more in order to afford home ownership. Indeed, by not enforcing the laws against illegal immigration, the Clinton and Bush Administrations were flooding the country with unskilled workers who competed down the wages of blue-collar Americans.
The home construction industry lured in Mexicans to build new exurban houses for Americans trying to get their children away from public schools overrun by the children of illegal immigrants—in effect, a Ponzi scheme that had to break down eventually.
It turned out, not surprisingly, that contrary to the assurances of the Great and the Good of both parties, many of these marginal homebuyers should have continued to rent.
{snip}
Yet, pointing out that expanding credit to minorities was likely to lead to a debacle is not the kind of thing a prudent corporate manger would put in an email—too great a chance it would be discovered in a discrimination lawsuit.
For four decades, political leaders have viewed subsidizing minority home buying as insuring social peace. {snip} time).
Whether home ownership actually precludes riots is uncertain. In the Florence-Normandie neighborhood in South Central Los Angeles, where the 1992 race riot broke out, five of every eight residences were owner-occupied.
Still, “if they own it, they won’t burn it” provides a hardheaded-sounding excuse for a complex web of policies that please real estate developers, who contribute so much to local campaigns. (For instance, Barack Obama has admitted to receiving a quarter of a million dollars from developer Tony Rezko, recently convicted on 16 counts).
Republicans theorized that raising the rate of home ownership would create more conservative voters, as Margaret Thatcher was said to have done in Britain by selling public housing flats to their tenants. Thus, George W. Bush campaigned in 2004 under the rubric “the ownership society.” {snip}
{snip}
Long before Bush came up with the phrase “ownership society,” Democrats had gleefully been using this justification to funnel vast sums of mortgage money to their base voters among minorities through the liberal-dominated quasi-state institutions Fannie Mae (once run by former Obama adviser Jim Johnson) and Freddie Mac and via leftwing NGOs such as ACORN (to which Obama had long and close ties). The government both devised de jure quotas and leaned on lenders with discrimination lawsuits to get them to impose their own de facto quotas.
The strong growth in the homeownership rate from the early Forties into the early Sixties was a symptom of an economically and socially healthy society in which good-paying jobs were widespread and human capital was rising. The high school dropout rate, for example, fell steadily from early in the century until the end of the Sixties.
In the mid-Sixties, however, the fraction of households owning their residence plateaued at around 64 percent, where it more or less remained into the mid-1990s, as the collateral damage of the Sixties cultural revolution hit the lower half of the population hard. The upper reaches of American society flourished under the new customs that emerged in the Sixties … but they already owned their own homes. To boost homeownership beyond 64 percent would require millions of people in the bottom half of society to convert from renting to owning.
In retrospect, this post-Sixties stagnation of the ownership rate stagnation was hardly surprising. American society began fragmenting in the Swinging Sixties, reducing the number of grown-ups per household. For example, the percentage of babies born to unmarried women has risen from six percent in 1963 to 39 percent in 2006. The 22 percent black illegitimacy rate that so alarmed LBJ’s advisor Daniel Patrick Moynihan in 1965 has grown to 71 percent. The percentage of babies born to unmarried white women hit 27 percent in 2006, and the illegitimacy rate of Latinas, a category that barely mattered in the 1960s but now accounts for a quarter of all babies, is now 50 percent.
After 1973, economic inequality grew steadily as well.
Moreover, the human capital of the bottom half of society stopped improving. According to a 2007 study by Nobel laureate economist James Heckman, the high school dropout rate has risen from around 20 percent in 1969 to about 25 percent in 2000.
Rather than make the fundamental reforms needed to help the bottom half actually become economically productive and domestically stable enough to afford to buy a home, the government tried to juice the home-ownership rate directly. Indeed, without ever-increasing government efforts, such as the 1977 anti-redlining Community Reinvestment Act (CRA), to artificially boost minority housing purchases, the rate would have naturally fallen due to the increasing number of single parent homes.
The CRA enables leftist lobbies like ACORN to shake down big financial firms whenever they tried to merge. Economist Thomas J. DiLorenzo observed that the Community Reinvestment Act:
compels banks to make loans to low-income borrowers and in what the supporters of the Act call ‘communities of color’ that they might not otherwise make based on purely economic criteria. … These organizations claim that over $1 trillion in CRA loans have been made …The law is set up so that any bank merger, branch expansion, or new branch creation can be postponed or prohibited by any of these four bureaucracies if a CRA ‘protest’ is issued by a ‘community group.’ … They use this leverage to get the banks to give them millions of dollars as well as promising to make a certain amount of bad loans in their communities.
To avoid the Community Reinvestment Act hassles, more than a few respectable institutions avoided doing business in minority communities. A lender could define its “community” as, say, stretching only five miles north and south from Mulholland Drive along the top of the Hollywood Hills.
Then, who’s more likely to offer mortgages to Compton and Pacoima? Why, high-pressure bucket shop operations that have no skin in the game—they’re just sales outfits that immediately repackage often fraudulently documented subprime mortgages and sell them to Wall Street.
Two events in 1992—a much-publicized study and a new piece of legislation—ratcheted up mortgage affirmative action.
{snip}
As Peter Brimelow noted in Forbes on January 4, 1993, blacks had the same default rates as whites, suggesting racial fairness. After all, if current financial institutions were really discriminating irrationally against minorities, it would be highly profitable for a non-discriminator to enter the market, just as the Brooklyn Dodgers won six National League pennants in the decade after they became the first team to sign black baseball players.
In reality, as Insight on the News reported in 1999:
A recent study by Freddie Mac, the federally chartered Federal Home Loan Mortgage Corp. that buys mortgages from banks to resell to investors, documents the shaky financial standing of minorities. The study found that nearly half of black borrowers and a third of Hispanics have “bad” credit records—that is, they have a record of delinquent loans or bankruptcy—compared with a quarter of whites. Moreover, income does not explain the disparity, according to the study. Among people with incomes of $65,000 to $75,000, 34 percent of blacks have bad credit, compared with 20 percent of whites.
Today, however, non-Asian minorities (NAMs) have much higher default rates, suggesting racial bias has entered the system of judging creditworthiness.
{snip}
No sooner had the ink dried on its discrimination study than the Boston Fed, clearly speaking for the entire Fed, produced a manual for mortgage lenders stating that: ‘discrimination may be observed when a lender’s underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants.’
{snip}
Banks that got poor reviews were punished; some saw their merger plans frustrated; others faced direct legal challenges by the Justice Department.
Also in 1992, Congress passed the Government Sponsored Enterprises bill, which set “targets” (i.e., quotas) for Fannie Mae and Freddie Mac, which are quasi-governmental publicly-traded for-profit thing-a-ma-bobs, to encourage “affordable” and “underserved” (more or less minority) home loans.
Both the Clinton and Bush departments of Housing and Urban Development raised the quotas repeatedly. For example, initially, the Clinton Administration required 21% of these quasi-governmental mortgages must go to “underserved areas” (which are officially defined as “low-income census tracts or in low- or middle-income census tracts with high minority populations”), but the quota for 2008 established by the Bush Administration is 39 percent.
{snip}
In September, Freddie Mac launched a new lending program, based on research done in collaboration with five black colleges, to bring more African-Americans into the market.
The federal government in the meantime has increased pressure on lenders to seek out minorities, as well as low-income groups and borrowers with poor credit histories.
Fannie Mae recently reached an agreement with the U.S. Department of Housing and Urban Development to commit half its business to low-and moderate-income borrowers. That means half the mortgages bought by Fannie Mae would be from those income brackets.
Now, even the head of Freddie Mac has protested that the quotas have become “perverse.” On March 12, 2008, Bloomberg News reported:
Freddie Mac Chief Executive Officer Richard Syron said he’s urging changes in federal rules that enabled too many low- and moderate-income Americans to buy houses they can’t afford. It’s ‘perverse’ that Freddie Mac and Fannie Mae, the two biggest providers of money for U.S. home loans, have been encouraged ‘to put people into homes that they end up losing,’ Syron said at a meeting with analysts and investors in New York.{snip}
Similarly, the Clinton Administration used the Community Reinvestment Act and Fair Housing Act to set, in effect, racial quotas for private lenders. {snip}
The Fed pumped so much money into the system after 9/11 that, with stocks in disfavor after the Internet bubble burst, the liquidity flooded into the home market, postponing the day of reckoning in housing until now.
Straightforward tax-and-spend programs were out of favor in the 1990s, but lean-on-lenders for the benefit of your political constituents is always in season.
{snip}
During the 1990s, Fannie Mae pledged $1 trillion in capital over seven years to boost home ownership among underserved populations. Last spring, said Raines, the commitment was completed ahead of schedule, and Fannie Mae pledged a further $2 trillion to assist 18 million families during the next decade.
{snip}
Bush called for, “Creating new mortgage products to meet the unique needs of recent immigrants.”
{snip}
In 2004, President Bush promoted his Zero Down Payment Program for FHA insured loans, thus giving Presidential respectability to the ruinous trend toward no money down deals. MSNBC reported in a March 27, 2004, article subtitled “President wants to add new minority home owners:”
He also proposes to make zero down-payment loans available to first-time buyers whose mortgages are guaranteed by the Federal Housing Administration.
{snip}
None of this was controversial at the time, in part because being oblivious to the obvious about minorities is the hallmark of authority these days.
Thus, the home ownership increased over the 1994-2004 period by 8.6% for non-Hispanic whites, but by 16.1% for blacks and 16.7% for Latinos. I calculate that ethnic share changes alone between 1994-2004 would have driven down home ownership rates by 1 to 2 points. Instead, they went up 4 points.
Similarly, from 1994-2004, the ownership rate for married couples went up 7.8%—but by 15.2% for female-headed families.
One mystery remains: Why was Wall Street was so credulous about all these dubious mortgages?
Obviously, greed and fear are always at war on Wall Street. Perhaps, though, one reason greed outgunned fear while phony subprime mortgages were running amok in recent years was that so many were going to non-Asian minorities and that Wall Streeters assumed that the federal government would bail them out rather than see so many NAMs turned out on the street.
Further, lots of immigrants actually do have more income than they report to the IRS—illegal immigrants often get paid in cash under the table. {snip}
Quite a few of the legal immigrants in Southern California are from mercantile minorities in West Asia who consider paying taxes something that only chumps do. The presence of all these immigrants who work in a grey market cash economy gives a mortgage company like Countrywide a rationalization for believing loan applicants when they put down an income figure that’s far above what they can document from their 1040: Who knows? Maybe Uncle Adnan’s import-export business really does generate enough cash to cover the loan. Who can tell for sure?
As Fred Dickey showed in his 2003 Los Angeles Times Magazine article “Undermining American Workers,” immigration has driven a large fraction of California’s economy underground. Not only can’t it be taxed, but it can’t be documented either.
And the problem is not just that “undocumented workers” get “undocumented mortgages.” It’s also that so many others get drawn into the “undocumented income” racket. For example, many of the highest rates of foreclosure are in fast-growing boomtowns like Las Vegas and exurbs like Palmdale, CA, where so many people are in the contracting business building and upgrading housing.
When some of these contractors get a mortgage for their own homes and the bank asks them to document their income, they wink and imply: “My employees don’t want me to keep a lot of documents on them, so I pass my savings on to my customers who don’t want me to keep a lot of documents on them either. Just trust me.”
And many contractors were getting rich in the housing boom, so they were safe bets as long as the boom went on even if they wouldn’t document their income. But a lot of the people applying for mortgages by claiming to be successful cash-only businessmen weren’t successful, and were just staying afloat by refinancing their mortgages as interest rates dropped and home prices went up. Ultimately, even the ones who were raking in the cash during the Bubble got hammered when the housing construction boom ended.
Finally, a compounding factor in the subprime debacle was that these complicated exploding adjustable rate subprime mortgages were disproportionately handed out to people who aren’t very good with numbers. For example, the Washington Post profiled the fraudulent straw-man mortgage received by a Honduran immigrant cook named Glenda Ortiz, who paid “triple what the house had sold for the year before, and $5,000 more than the asking price . . .”:
{snip}
In contrast, a list of the ten places with the lowest ratio of subprime to normal mortgages consists of sophisticated San Francisco and nine classic college towns, such as Ithaca, NY.
In summary, while blame for this economic fiasco is deservedly widespread, multiculturalism bears a much larger share of the shame than it’s gotten so far.
As Brimelow wrote in National Review in 1993:
Classical socialism called for direct state ownership of the means of production, distribution, and exchange. Neosocialism just aims at political control. Socialism claimed to be more efficient. Neosocialism claims to be more equitable. Above all, neosocialism professes to combat ‘racism,’ since this magic word cows all opposition.
(Posted on June 24, 2008)
Comments
What’s interesting is that an AmRenner could have identified this and avoided the housing bubble. What’s even more interesting is that we, as possessors of knowledge that the general public fails to recognize, are well-positioned to predict future trends and profit from them.
Posted by at 7:08 PM on June 24
This is a very good article, and hits almost all the bases in this matter.
I paid off my mortgage in 2004, 8 years into it. I’m back in school again, but we could last about 15 years on savings even if my wife lost her job. We don’t need a McMansion and we don’t need a new BMW.
I made her a “new” swivel chair for her desk out of parts of two different broken ones a friend had given me. I put the top of one onto the bottom of the other, using four screws I already had, throwing everything else in the trash. I also scrounged a monitor, a wine-chiller and a Santa-Fe style pine cabinet. The cabinet is really nice, and in the dining room now. It’s just what we needed, as our kitchen is short of cabinet space. Being back up to three spare monitors again makes me feel better, since I gave one to one of the neighbors last spring.
The only additions I would make to the article would be a criticism of the people who signed up for really crazy mortgages. The “interest-only” loan is one. That’s where you pay only the interest for the first five years while (probably) continuing to overextend yourself on other consumer items. The second is the negative-amortisation loan. In the first of these, the “buyers” were betting that the housing bubble would swell faster than the interest rates. In the second, they were betting that the bubble would swell faster than the interest rate plus their negative-am rate. I would ask these folks, if I knew any of them, if they would have risked their savings buying bags of magic beans, because a negative-amortization home mortgage is clearly in “magic beans” territory.
If you can’t think for yourself, and won’t even research a serious financial matter like buying a home, to catch up things you don’t already know, you simply have no business doing it. That would be like me becoming a day-trader, based on what I know about chemistry and history, and having the schoolteacher my mother originally was, instead of the banker she is now to advise me on financial matters.
Posted by Michael C. Scott at 8:16 PM on June 24
LewRockwell.com used to publish articles like this all the time before they quit libertarianism and embraced the state and political correctness.
Murray Rothbard must be rolling over in his grave!
Posted by Swizzlestick at 8:22 PM on June 24
One thing that amazes me pulling checks out of envelopes for the lousy Bank for $10/hour is that companies need to have an IRS form from the company they are purchasing from or ELSE they MUST withhold money from the payments! So the government enforces financial reporting or else.
Posted by at 9:33 PM on June 24
“In summary, while blame for this economic fiasco is deservedly widespread, multiculturalism bears a much larger share of the shame than it’s gotten so far.”
Well, that is the unspoken axiom for every socially “engineered” failure of the last 50 plus years. I often try to avoid speaking in terms of outright absolutes, but when it comes to issues racial balance and social stability, I have found that often what can be considered “too rigid” a position at first is normally far too malleable in the long term.
Ideologically, I am normally inclined to libertarian and free market solutions to most socioeconomic problems, but I am seasoned enough to see that government can play a positive role in some areas; particularly in: criminal justice, military, and space exploration.
However, with regard to past versus modern “race relations,” I have come to the conclusion that governmental interventions have only been effective when they are actively aimed at strictly regulating nonwhites’ social pathologies, not solving them. There is a difference, and I will attempt to make the distinction below.
1.) Strict regulations toward moderating nonwhites’ social pathologies, seem to be best described as limiting their “rights” in favor of a stable white society. While allowed limited political and social freedoms, certain behaviors were deemed fully unacceptable and as requiring “extraordinary” corrective measures. For example, a nonwhite becoming aggressive toward a white for any reason was once seen as necessitating a greater punishment, than an intra-racial conflict. Or living arrangements were once strictly controlled from the neighborhood level via segregation, straight through to the national level in terms of immigration restrictions and such.
2.) Solving the social pathologies of minorities, has in the somewhat recent past and continues to this day, to revolve around disrupting a stable white society in favor of “corrective” uplifts for nonwhites. Here, a slow but also aggressively intrusive governmental encroachment upon whites’ political and socioeconomic wellbeing, is utilized to “improve” the lot of nonwhites and compensate them for past “injustices.” Thus, whites are reduced to a dispossessed or even oppressed majority that exists almost solely for providing a host upon which nonwhite parasites feed, and their “elite” white counterparts contaminate and exploit.
A case in point, are these “subprime” mortgages which were designed not just to increase minority “home ownership,” but to also allow for an increased “integration” of whites with nonwhites. As is noted above by Mr. Sailer, most socio-politically “savvy” financial gurus and the financial bodies they headed, expected that only good would flow from this. They of course would also reap both favorable governmental sanctioning and security, irregardless of the outcomes of any kind.
For nonwhites, the case is the same:
“The study found that nearly half of black borrowers and a third of Hispanics have ‘bad’ credit records—that is, they have a record of delinquent loans or bankruptcy—compared with a quarter of whites.”
Why might that be?
Well, much like the “elite” swine who facilitated this (be they in either the public or private sectors) feel-good debacle, minorities seem to think that money is something that can fall from the sky or off a printing press, so long as a timidly complacent white majority willingly allows it without any consequences whatsoever foreseeable. It is there or can be “made to be there,” so spend it without any regard to commonsense or sanity.
Ironically, this has never been the case in human history beyond momentary hubris and long term horror. Post-Imperial/Soviet Russia, Weimar Germany, Cuba, Zimbabwe, the Roman Empire and so on, all exemplify this. Doubly, if also grimly ironic, is how the subsequent desperation of utopianism and incompetence merging produces “salvation?”
Today, for some that would be Saint Obama, and for others McMoreofthesame?
As always, God help us all!
Posted by John PM at 9:36 PM on June 24
There are three reasons for this:
1. “Fair lending” laws that basically require lenders to give mortgages to nonwhites;
2. The Fed’s easy-money policy that provided lots of money for those nonwhites to borrow;
3. Greedy loan officers who want to meet their monthly quota, qualify for a big Christmas bonus etc.
Sound economics and the right to free association went out of vogue a long time ago.
Posted by Diversity is WeaknessThe at 10:00 PM on June 24
There is no question that government meddling in housing credit markets was a contributing factor to the present collapse in real estate values, but it was probably pretty insignificant in the overall scheme of things. Sub-prime loans, in terms of the total outstanding obligations, are a very small component of total national residential mortgage debt.
The simple fact is that there was a completely irrational exuberance in all sorts of credit extension in the past decade, based largely on the belief that real estate could only appreciate and that even loans based on phony appraisals would ultimately leave the borrower in a strong equity position.
Anytime one hears the sentiment, “You can’t lose!” it’s time to bail. And we’d been hearing that cry from 1999 to perhaps 2006, when reality began to set in.
We’ll be a long time digging out from this mess.
Posted by john at 11:15 PM on June 24
Great article. Hits all the major points and quite a few minor ones as well.
The biggest problem here is being single and trying to buy your first house. When the average price of a home is over 600k and you’re making 58k and getting taxed 1/3 of it: the numbers just don’t work out.
So you end up running areas of responsibility in management and living in apartments. Before you know it 20 years is gone and then finally your company restructures.
I suppose you would have to be a statistic like me to understand why it was a bad idea to allow a real estate bubble to develop in the first place.
Posted by Unemployed WASP at 12:25 AM on June 25
So the government won’t hesitate to destroy the economy, debase the dollar and put people out of work in order to continue worshiping at the altar of political correctness.
Posted by at 6:06 AM on June 25
Just about every negative thing in America today has some kind of ethnic or racial angle to it. The sub-prime mess is just the latest example.
Posted by at 7:43 AM on June 25
This bailout will end up being nothing more than a roundabout way of giving away even more white taxpayer dollars to minorities.
Posted by Robert at 12:07 PM on June 25
Being single and buying your first house isn’t part of the problem. I was the first single person my age I knew to buy a house. I was making $39,600 a year at the time, of which I kept about $2200 a month after taxes. I bought a $120,000 townhouse, which cost me $692 a month for the mortgage and $125 for HOA dues. This $817 a month was only a slight step up from the $740 I had been paying for my previous apartment, with only 1/3 of the space and no enclosed garage. Note that without HOA dues, my old mortgage was actually less than the rent I had been paying.
What else did I need to live on? I budgeted $60 a week for gas and groceries and incidentals, so $240 a month. Utilities were about $100 a month, averaged across the year. Car insurance was $100 a month from State Farm (I now pay less than $60 to ESurance for the same level of coverage). My clothing budget came out of gas & groceries: two pairs of jeans a year (one black and one blue), one pair of shoes - loafers or atheletic shoes on alternating years and maybe three new polo shirts.
That left me about a thousand dollars a month I could save, less the occasional rifle. An early expense was furniture, but I had a free sofa from a friend’s employer until 1999, the bed and bookcases I had growing up, and so-on, so that wasn’t a big expense.
The first furniture I bought was a dinette set, knocked-down solid oak, and I discovered I liked building furniture from kits, so my second, two years later was an oak rolltop computer desk.
Being married now, things work out nearly the same. I can’t buy rifles anymore, and have to pay someone to store them for me, but the last time I spent anything major on clothing was having my boots resoled in 2004. I would have continued wearing my 25 year-old Hulubar parka, but my wife made me a sheepskin coat last autumn. We have computers, but I can keep those running for nearly nothing. Cider and honey mead cost less than $3 a gallon to homebrew. Having a daughter changed the budget, but one of my friends died and his wife gave me a bunch of his clothes.
A year ago, I spent $1000 on a crown to replace a 30 year-old filling that had cracked.
I got married relatively late, at 40. Buying a first home alone isn’t expensive. Getting married too young, financially overextending and then getting divorced is expensive. I went to my 10-year high school reunion. Everyone who had gotten married before the age of 25 was already divorced by 28.
One of my old high school friends kept next-to nothing after his second divorce, though he has been making over $80,000 a year as a software engineer for the last decade. When he was separated two years ago, he stayed with us for three months. As a convicted felon who can’t go shooting anymore, I had been feeling sorry for myself, but he was stunned at what we had.
It is not even remotely about how much one makes. It is spending habits. Habits are always what will save you or sink you. I’d like a 35 acre ranchette with a new house and an old barn and old trees, and my gun rights back, but I don’t actually need any of those things.
Distilled down, this credit crunch is the result of folks buying things they don’t need.
Posted by Michael C. Scott at 12:10 PM on June 25
Congress continues to reward stupidity as it guarantees $300 billion to $400 billion in new home loans for borrowers. The Federal Housing Administration will allow homeowners to refinance their existing mortgages at lower rates.
Non-whites didn’t get the loans for credit problems: alleged “racism”. They got the loan but couldn’t pay for it after all: alleged “racism”. The feds oppress us White taxpayers to foot the bill: real “racism”
Posted by truthbetold at 1:11 PM on June 25
Behind the mortgage crisis is post-1965 non-white LEGAL immigration. A lot of these bad loans were made to post-1965 hispanics and african immigrants. If these people weren’t, here the probability of the suprime mortgage meltdown occuring would be very close to 0.
The mortgage meltdown reveals something very important about the physical world of America and it is this:America’s resources are scarce Space and housing are scarce resources in America. If America magically became three times bigger than it currently is with three times as many trees availble for being choped down for housing, housing would cheap and mortages wouldn’t consume such a large portion of income. Native Born White Americans are in direct competion with post-1965 non-whites for space and housing. Another good reason to shut all non-white LEGAL imigration down to 0.
Ask lefttist,liberals and environmentalists if they would like to see the Native Born White fertility increase to four White Children per White Woman. I do this all the time.
Land is in fact scarce in America. Don’t forget the nutty Left/Liberal environmnetalists are simultaneously calling for a massive increase in non-white LEGAL and illegal immigration and a halt to all sprawl. Insane aren’t they. If the day ever comes that the Left/Liberal environmentalist got their way and brought all sprawl to a complete halt, in a very short period time, all non-white post 1965 LEGAL immigration would be brought down to 0.
Posted by Jupiter at 2:24 PM on June 25
I think it’s worse than a Ponzi scheme. It’s just a theft (or a government sponsored risk-free speculation).
Here is how it works.
A Mexican “immigrant” buys a home with 0% down, backed by FHA. (Just last year, FHA required a 5% down on “qualified” home mortgages without PMI, but provided the borrower with an additional loan for half of the down payment, and allowed him to borrow the remaining half from elsewhere.)
After two years, if the prices of homes went up, he sells his home and cashes the “profit”, usually in the range of $ 100,000’s, from the pocket of the next buyer. (I know several cases in this scenario.)
If, however, the prices go down then he walks away from the loan and FHA (the taxpayers, that is) foots the bill.
I strongly believe that all government workers that were participating in this rip-off should be tried and jailed. I hope they will, one day.
Posted by A Reader at 2:40 PM on June 25
[…] government meddling in housing credit […] was probably pretty insignificant in the overall scheme of things. Sub-prime loans, in terms of the total outstanding obligations, are a very small component of total national residential mortgage debt.
Posted by john at 11:15 PM on June 24
Well, John, it all started from the subprime mortgage market meltdown, without which - most likely - we wouldn’t not have had this whole mess, today (at least there is no credible evidence that we would).
Your argument is invalid. Primer is “a very small component” of a gun cartridge as well, and yet no one at his right mind would claim that its effect on shooting is “pretty insignificant”. One needs to remember that financial markets, very much like computer programs, do not have the continuity property that we learned in classic physics (where small changes of the conditions of the experiment cause small changes in its results) and a relatively “insignificant” disturbance there may lead to a large-scale catastrophe.
Posted by A Reader at 5:20 PM on June 25
I find it ironic that when I applied for a loan to buy our current house I had to open a vein for the loan officer, but illegals with no credit history, no Social Security number, no proof of legal residence, no copies of income tax papers and no proof of employment that pays enough to qualify them for the loan they are applying for are granted mortgage loans on the spot. Can we say the word “conspiricy” against Americans? We can…
Posted by at 5:59 PM on June 25
Thanks to the minorities, they have to ruin it for everyone. A former co-worker in the bank I used to work at, said they had issues with blacks when applying for loans.
A couple of blacks ladies were turned down for a loan. They tried to sue the bank, saying they were turned down because they were black. My friend & her branch had to go back so many years & account for every loan application that was filled out by blacks. Then they had to see how many were approved when applying. The bank caved in & gave the loan to these black women. These black women ended up defaulting on the loan.
I used to work with a black women that had defaulted loans at the same bank we worked at. It made me mad, because the bank never said nothing to her or her mother that co-signed for them.
So much more White privledge. It is more like colored priviledge.
Posted by Dixie Land Doll at 7:09 PM on June 25
I confess to not having read the entire article, just the opening paragraphs…others have published similar pieces lately, but this one appears exceptionally exhaustive and thorough—I promise to devour it later.
But I wanted to chime in by saying that Rush Limbaugh made this same case on his show a few months ago. The federal government will put real estate people in jail for “redlining” and/or “blockbusting”, or heavily fine them if they do not bend over backwards to cater to, and enable, minorities to purchase property—even if the financials are dubious.
This all was coming to a head right as I was taking a real estate licensing course last summer, so I heard it from the horses mouth: The veteran instructor went to great pains to warn us, very sternly, of the harsh penalties against agents who would dare even agree to show prospects homes in neighborhoods with ANY ethnic character upon request. The feds even send out undercover “buyers” and/or make phony phone calls to try to catch agents who might cooperate with someone wishing to avoid a minority neighborhood, or find a property in, say, a predomninantly Russian community, etc…agents are told merely to say “I can show you a property anywhere you like”—and to say nothing more.
This Orwellian situation of course permeates the entire industry, and we’re now seeing the disastrous fallout in the financial realm.
Posted by VigilantAmerican at 8:01 PM on June 25
When blacks and hispanics don’t get loans, people whine about racism. THEN….once they get loans, the liberals complain that they were “taking advantage of them”
Posted by at 10:11 PM on June 25
Maybe, just maybe, this script was written a long time ago. The idea that people on Wall Street didn’t see this coming is pure bunk. They just knew the bailout fix was already in just like it was that last time they ran wild when that other POTUS moron Reagan let them rip off that tax payer. All they had to do was use their media mouthpieces to keep saying the sky would fall if a billionaire lost a dollar to provide cover for their organ grinder monkeys in Congress.
In Ronnies gift to us, Wall Street and the banks made money and bonuses on the way up in commercial real estate and LBOs and money one the way down as well connected people bought RTC property for pennies on the dollar in tax lien sales.
In this one, Wall Street knew there had to be a bust. Thats why they got their Bernanke to use the FEDS capital to bail out Bear Sterns and make sure nobody had to give back all those bonuses in bankruptcy court. Now we have a bailout where the banks will take a small loss and the taxpayer the rest. Wait till this passes and the banks recognize all the forclosures that are NOT filing on to make sure it stays off the books for now. This will dwarf the S&L losses when it is done.
The Republicans have done more to destroy the middle class and transfer its wealth to the super rich than any Democrat plan ever could.
Posted by Mark in LA at 11:15 PM on June 25
The presence of Blacks and Mexicans in any nighborhood will always drive Whites out, thus driving down property values. Property owners have always known this. That is why they used to have laws in this country on a local level to ensure that nighborhoods remain 100% White. Anyone who was alive before the 70s can attest to this fact.
Selling to Blacks and Mexicans was suicidal in terms of the long term property values in these nighborhoods.
Posted by Mick at 11:49 PM on June 25
Excellent article! USA has racial/discrimination phobia and has lost its’ focus as a nation. Discrimination is a daily normal mental process everyone partakes. I am discriminated against everyday and no law was passed for short old white females! To outlaw discrimination is ridiculous and I am surpriZed no one has questioned the absurdity of the idea. The USA has been reduced/deprived to a nation chained to an idea that restricts its designated equality for everyone. It is Un constitutional to take away rights of some for others based upon so-called race,religion,&sex. This has always been a monetary extortion shakedown. V
Posted by at 1:25 AM on June 26
I find it ironic that when I applied for a loan to buy our current house I had to open a vein for the loan officer, but illegals with no credit history, no Social Security number, no proof of legal residence, no copies of income tax papers and no proof of employment that pays enough to qualify them for the loan they are applying for are granted mortgage loans on the spot.
Posted at 5:59 PM on June 25
Don’t blame bank or a loan officer for that. The difference between you and the illegal “immigrant” was that his loan was backed by the federal authority, so it was a really low-risk (for a lender) to loan him money, while yours was - most likely -not.
I would not call it “conspiracy”. It was just a form of wealth redistribution (from Americans to illegals etc.) in the plain view that the federal government, controlled by the bleeding-heart liberals and compassionate neo-conservatives has been systemically implementing for several decades now. And all this absurdity that pushes the U.S. backwards is a logical consequence of the draconnian laws passed during the President Johnson’s tenure in the White House. I consider it an insult to the injury that some call it “progress”.
Posted by A Reader at 10:55 AM on June 26
The collapse of the housing bubble was predicted on the American Nationalist Union’s site by multiple contributors about two years ago. The same speculation that bid up housing prices, and which had bid up stock prices ten years ago is now bidding up commodities prices; there’s no good reason why a dozen eggs has gone up from 99 cents a year ago to $1.98 today (forget diversion of corn to biofuel production - that’s not part of the problem).
Right now, the worst thing the government could do is actively intervene in the housing meltdown, since it was partly government-produced distortions in the lending market that caused the problem in the first place. Prolonging a speculative bubble usually just makes the collapse worse.
The government is pointing the blame at lenders, and now wants all “loan originators” fingerprinted as if they were child-molesters. In the meantime, the Federal Reserve Bank is talking about “increasing the money supply”, which really just means printing more money. All this will do is inflate prices across the whole economy, while giving speculators more money to bid up whatever commodity constitutes their current mania.
A smart man named Charles McKay wrote a book titled “Extrordinary Popular Delusions and the Madness of Crowds” in 1841, in which he documented history’s first major speculative bubble, the 1636 tulip craze in Holland.
Remember also that someone will benefit. A new round of inflation would help anyone with a fixed-rate mortgage, since their income and the price of everything else would rise, while their mortgages remained the same. Since banks are required to keep a certain percentage of their assets liquid, they’ll have to offload forclosed property quickly, once mortgage defaults kick into high gear, so it will benefit young first-time home-buyers with good enough credit to qualify for fixed-rate loans, as they will be entering a depressed buyer’s market. It will prolong the recession in the construction industry, which will benefit the US taxpayer, since most construction workers were Mexicans who have large numbers of children for whom the taxpayer is expected to provide education and medical care. Many of these construction workers have already returned to Mexico.
It even benefitted the homebuyers who took subprime loans. They would have remained renters had these loans not been available. Instead, while they were really just renting from the banks, they got to take the mortgage-interest deduction on their federal income taxes that renters don’t get. The homes they are going to lose to forclosure are homes they would never had otherwise had: easy-come, easy-go.
It benefits long-term homeowners like me who do not like living in neighborhoods filled up with renters in homes purchased by the speculators who are currently getting clobbered. I would be delighted if every single real-estate speculator in the US lost every single piece of rental property.
Posted by Michael C. Scott at 1:52 PM on June 26
A Reader: “Don’t blame bank or a loan officer for that. The difference between you and the illegal “immigrant” was that his loan was backed by the federal authority, so it was a really low-risk (for a lender) to loan him money, while yours was - most likely -not. I would not call it “conspiracy”.
My home loan was a VA mortgage, ergo it too was backed by a federal authority.
Granting Hispanic illegals any of the rights and privilages enjoyed by American citizens and legal residents is indeed a conspiricy. Giving Hispanic illegals a free pass to break our laws, steal our our jobs, and flood our schools, hospitals and social services is indeed a conspiricy. And refusing to stop these parasitic colonizing invaders at the border is indeed a conspiricy…
Posted by at 2:06 PM on June 30