This being a national election year, with the presidency "up for grabs" has A LOT to do with the instability. The "talking heads" and the lamestream media "hyping" a bad economy for the past year and a half has not helped, either!

Does anyone remember, when President Bush was running for the presidency in 1999/2000? ALL the media were accusing him of "talking down the economy" when he foretold of the coming (mild) recession. However, the past year to year and a half the media has incessantly been doing just that!! I, personally, think it is their "desire" to have a somewhat bad economy to "talk up" the democrat "leaders" in congress and whoever turns out to be the democrat nominee, FWIW (for what its worth).

UNFORTUNATELY, for the TAXPAYERS, ALL of them (the leaders of the House and Senate as well as both "wanna be" Dummocrat presidential nominees) have stated unequivocally, they are going to RAISE TAXES ("on the rich" of course) even before they let the "Bush tax cuts" (on/for "the rich") EXPIRE (just ANOTHER tax increase).

They have sooooo many (socio-communist) mega-programs/policies they WANT to enact, they will, in effect, STAGNATE an already SLOWING economy!!

The housing crisis/bubble was brought on by congressional policies that insisted people that were not able to put up a down payment on a major purchase (a home), should not be "shut out" of the housing market. Loans were given to people that therefore had NO equity in a residence on loans that had to be refinanced in 4 to 6 years. When they tried to refinance, the equity was NOT there, the mortgage payments increased and people who were barely able to keep up on payments could no longer do so! This led to massive foreclosures because people tried to buy homes they could not afford. New home sales stagnated so building slowed/stopped. The housing crisis will eventually correct itself, and I think it is starting a slow recovery. Those with good credit that have a sizeable down-payment will be purchaseing the "bargains" the banks and other lending institutions need to liquidate. Hopefully, the lending institutions have been bitten hard enough they will NOT lend to those with no history of maintaining good credit.

Energy prices are a MAJOR factor in the slowing/stagnating economy. When energy prices rise, ALL goods and services are affected.

With the Enviro-NAZI's STOPPING our ability to be self reliant, we will FOREVER be DEPENDANT on foreign sources of energy and the WORLD SUPPLY AND DEMAND!!

IF we would open up our known oil reserves to drilling, even though it would take 8 to 10 years to get the FULL benefits of those wells, it would be a stabilizing influence on the world market. We also need to start building more mega-refineries to ease the burden on the current ageing ones that are operating at near-full capacity, which increases the problems if a breakdown or fire occurs.

I see NO relief if a Democrat is elected to the presidency, and very little relief if we don't remove the control of the House and Senate from the Socio-communist TERRORIST ENABLERS that are now in control (Harry "the war is lost" Reid and Nancy Pelosey)!!

Posted by FReRydr on March 26, 2008 at 8:44 PM

Here is information from an article in "Investor's Business Daily" March 27, 2008, by Jeffery Hummel and David Henderson about how the federal government and laws contributed to the credit/lending "crisis" :

.....

"To see how the government contributed to the subprime mess, we must look at the feds, not the Fed. The feds helped create the problem in three main ways.

First, the federal government contributes to what economists call moral hazard  that is, people taking risks because they know that if things turn out badly, someone else will bear a large portion of the cost.

The federal government's semiautonomous mortgage agencies  Fannie Mae, Freddie Mac and Ginnie Mae  all buy and resell mortgages. Of the more than $12 trillion in mortgages in existence, one-third of them are owned by, or were securitized by, Fannie Mae, Freddie Mac, Ginnie Mae, the Federal Housing and Veterans Administration, plus other government agencies that subsidize mortgages.

Although Fannie Mae and Freddie Mac are no longer government agencies, their status as government-sponsored enterprises causes people who buy their repackaged loans to assume an implicit federal government guarantee. Also, to the extent government views large lending companies and banks as "too big to fail," it contributes to moral hazard.

For the market economy to function well, it needs to be a profit system and a profit-and-loss system, with the losses being the penalty for bad decisions.

The second way the feds contributed to the subprime mess was with a little-noted change in regulations by the comptroller of the currency in December 2005 that acted as the trigger.

Financial planner Less Antman has pointed out that the comptroller started requiring banks to require minimum payments on credit card balances, causing increases of at least 50% for most cards and as much as 100% on others. Many people who hold subprime mortgages are people for whom a higher monthly payment on a credit card would be a problem.

Imagine that you're such a person and that before you always made sure you made your mortgage payments. With the new regulation, you instead make your credit card payment but miss your mortgage payment, a widely observed transformation in the traditional American delinquency pattern.

Thus the comptroller's apparently small change in regulations had the unintended effect of causing some mortgage borrowers to default.

The third federal contributor to the subprime crisis is the Community Reinvestment Act. This act, first passed in 1977 and beefed up in 1995, requires banks to lend to high-risk areas that they otherwise would avoid. Those banks that fail to comply pay fines and have more difficulty getting approval for mergers and branch expansions.

As Stan Liebowitz, a University of Texas economist, has pointed out, a Fannie Mae Foundation report enthusiastically singled out one mortgage lender that followed "the most flexible underwriting criteria permitted." That lender's loans to low-income people had grown to $600 billion by 2003.

Its name? Countrywide, the largest U.S. mortgage lender and one of the lenders in the most trouble for its lax lending practices.

How ironic, then, that the same federal government, and many of its boosters, now attack Countrywide for following the very policies the government wanted earlier."

Posted by FReRydr on March 28, 2008 at 10:18 PM