Richard Spencer

December 22, 2008

This weekend the New York Times reported, tepidly and dishonestly but with an air of definitiveness, on a lot of the things Steve Sailer has been writing about for the last six to eight months: 

From his earliest days in office, Mr. Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone.

He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent?and with the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards.

In other words, Bush led a movement to get more minorities into homes, which was made possible by government-sponsored entities using artificial lending standards, which was all part of Karl Rove’s plan to expand the Republican base, and which led to swaths of foreclosures and wealth destruction in minority neighborhoods once those ARMs reset, teaser rates expired, and the big bubble began to burst. 

The Times, of course, felt the need to add in that the real culprit was Bush’s “conviction that markets do best when let alone”—nodding to the “neo-liberal” bugbear of the Naomi Klein retro-Left. But as the Gray Lady’s report makes clear, the markets weren’t lacking in any “supervision.” Any organization can get caught up in “irrational exuberance”; however, the mad dash to make home owners of everyone, and offer all those “no money down” loans that no reasonable persona could possibly expect to be paid back, was led by Fannie and Freddie, whose operatives were either bowing to political pressure or else willing to take insane financial risks due to their knowledge that if they failed, they’d be bailed out by Uncle Sam (which they were.)

It’s also worth considering whether in one of those wicked, unsupervised free markets, homes would ever be considered real “investments” at all—that is, expected to rise indefinitely and become the basis of personal credit. Residential homes are consumption items, and as we’ve learned, it’s folly to think that a market for them can be the basis of a sound economy.