By Dr. Richard A. Jones
George W. Bush, by missing many a golden chance at greatness that came his way, is almost certain to go down in honest history as mediocre rather than what he could easily have been. I personally liked what I saw of him on TV and could envision him as being a good neighbor or even a friend. His wife’s pleasant demeanor helped. He’s handled the terrorist crisis fairly well given how skilled the jihadists have become over the last 20 years as illustrated by multiple attacks leading up to 9/11 and beyond. I’m convinced most Americans are glad Bush persevered in Iraq and even the “we support the troops” mainstream media has surrendered! Another Viet Nam would have shaken our collective national soul in perilous ways. Neither war nor empires should ever be sought but there are Washington schemers who love spilling the blood of others for their own purposes. Beyond all that, however, no sane society can afford to be bullied by mad men, especially by religious extremists, fanatically and misguidedly dedicated to hopeless causes.
Bush’s most puzzling mistake was a failure to take advantage of a bully pulpit that he mysteriously shunned. He would have had major public support for vetoing all the pork, deficit spending, and green regulatory excesses thrown at him by Congress. Instead, he squandered his many opportunities, making most other presidents look like fiscal conservatives. I’ll never forgive him for that or for his cave-ins on political appointment after appointment. Mainly, he gave us more of the same types…more of the usual East and Left Coast suspects and apparatchiks just as did even the “great” Reagan.
But from all I can piece together, the one thing the unreasonably mega-hated Bush (as abetted mainly by major media) can’t be held accountable for is the current so-called fiscal “crisis.” (A crisis or a lesson?) First, this major blunder had its start and spectacular acceleration in the half century before Bush even took office. Second, he tried frequently to do what he could to bring oversight to the impending threat only to be rebuffed by dishonest Republicrats in Congress. But did he, last week, support Democrat treasury secretary Paulson’s bailout plan? Yes. Did Bush push for a quick fix that would have been worse than the current stalemate? Yes. But did he cause the crisis and is he the prime villain? No. Congress then and now was and is the true villain—as usual.
Let’s say “Bill” buys a house for 50K via a multi-year mortgage. It’s a general truism that Bill will ultimately pay the bank back three times the cost of the place, or 50K + 100K. After the seller gets his 50K, Bill’s bank instantly enters a theoretical 100K “profit” on its books. That’s because hardworking Bill seems likely to keep his job and has suddenly become a theoretical but trusted gold mine; someone who offers the bank “free” gold nuggets that are harvested annually. This intangible “trust” factor is the real collateral for the essentially fictitious 100K. The smaller, local banks take all the mortgage debts (i.e., “promises” to pay) and sell them to larger institutions (L.I.s) and this is where the trouble begins. Starting out as instruments of debt (and always risky ones at that) the L.I.s eventually bundle the mortgages together as assets. Overnight, by means of accounting smoke and mirrors, these “assets” become bonds and securities for sale to investors, even in many cases to the Bills of the world! Unbelievably and dishonestly, the L.I.s pretend to possess investments of non-fictitious value and investors pretend to believe them. Bill’s hard IRA or 401K investment dollars (separate from his mortgage payment) are then used by the banks to make even more crafty loans to Tom, Jim, and thousands of others.
In addition to our troubled mega-banks, among the biggies of the L. I.s, are Fannie Mae and Freddie Mac. In politically-correct speak, they’re private firms with stockholders, but in fact, they’re mere submissive extensions of D.C., specifically of the congressthings who run the committees and manipulate the votes needed to keep the 2FMs in business. Fannie Mae dates back to the socialist New Deal of FDR in 1938. Much of 2FM monies also come from foreign lenders who are granted rates substantially lower than what “gold mine Bill” must pay. The rate difference represents part of 2FM’s profit margin.
Congress plays the 2FM game in two ways. First, among would-be homeowners, there exist greater numbers of poorer, “blue collar” families than of the other sort. But guess where the most votes are? Thus a clever, vote-buying Congress lets the 2FMs promote millions of high-risk mortgages. If all these mortgage obligations were honored by the “blue collars” all would be well, but they aren’t. Foreclosures occur far more often the further beneath (subprime or “liar rate”) the prime rate that lending is allowed. Today’s crisis bubble came because many “affordable loans” were made to bad risk families; those who have lost their homes but not their eligibility to vote! Very clever indeed.
But this analysis is not snobbery against “blue collar America.” Tens of thousands of intelligent youth have been victimized and sentenced to “blue collar” status thanks to intentional dumbing-down by government schools. Edison and Ford began in blue collarville, but made it big anyway because the values of the day were better and folks were not so politically, economically, and often entrepreneurially dumb. My granddad farmed and cut cordwood for 25 cents a day before becoming a barber. And his son, my dad, worked his way through college in the 1920s, even skipping an entire year to deliver U.S. mail by horse on bad roads. I owe much to those two “blue collar” men. Even though today’s BCs are relatively innocent victims, they, nevertheless, are inept in too many ways. This “illiteracy” is why the 2FMs are able to trick and convince them to take out cheap mortgages and, most importantly, get them to vote “wrong” out of misplaced gratitude. Can anyone say homeschooling? Or that a mind is a terrible thing to waste?
The second 2FM-Congress scam is that legal PACs of the 2FMs, their big-salary CEOs and assorted employees give generously to support congress re-election schemes. (Yes, in a sense it’s your money they’re using.) Although some money goes to big government Republicans, most favor Democrats. From 1989-2008, Rep. Barney Frank received $42,350. The top recipient in that same time was Sen. Christopher Dodd (D-CT) with $165,400. Barack Obama, who’s only been in federal office since 2005, follows Dodd with $126,349. John McCain got $21,500. As of September 11, 2008, the 2FMs had gifted 354 of our public “servants” with a grand total of $4,844,572. Is it any wonder Congress is so willing to bail out these government-sponsored lending enterprises?
Bush can’t be blamed for starting this mess. Look instead to FDR in 1938; to Carter’s Democrat Congress in 1977 and the community-destroying Community Reinvestment Act; to Clinton’s 1999 repeal of the Glass-Steagall act; the Fed’s populist, inflationary monetary policies destroying the dollar’s value as we speak; and Barney Frank, Chris Dodd and their ilk during the past half dozen years. We can nail Bush for lots of serious errors, but not for starting this debacle. However, I do want to nail him if he doesn’t fire Paulson, but he won’t. As I said, he’s been mediocre at nearly every opportunity.