Friday, May 13, 2016

Sanders is Cashing In on the Sanders Economy

Why is Bernie Sanders’ strength concentrated primarily among the young? The New Jersey Star-Ledger’s Mark Di Ionno doesn’t think it’s socialistic idealism so much as that Sanders' student followers saw economy collapse on their parents. Di Ionno writes:

Let's get one thing straight. These kids at Bernie Sanders rallies aren't idealists. They're realists.

They fully understand their debt and their job prospects. They see the inevitable deferment of their American dream.

Before they were "Feeling the Bern," many felt the burn of the latest recession, through their parents' eyes.

They saw their parents' "529s" tank with the market and their homes go "underwater."

They grew up hearing about rising healthcare contributions for diminishing coverage, and pay cuts and pension freezes.

They know people who were downsized, or took early retirement, or all the other euphemisms for getting laid off. Or outright lost their homes in the bundled mortgage calamity.

That’s interesting. I left these comments:

What’s interesting is that the economic frustrations that are allegedly drawing Sanders supporters to him are happening just as the big-spending regulatory welfare state has grown to its largest ever, accelerating at an increasing rate over the past 15-20 years. Yet capitalism, not socialism, gets the blame. It's exactly backwards.

There are many aspects to this. But one only need to consider the headline of this article to see it. The housing boom and bust and related financial crisis, Great Recession, and slow recovery were the direct result of the politicians affordable housing crusade. It’s simply unfair, the politicians thought, that poor people couldn’t afford homeownership under the time-tested standards of mortgage lending.

So, starting with the so-called “GSE Act” of G.H.W. Bush, the politicians used a variety of mechanisms embedded in government’s array of economic controls to push lenders to lend in ways they’d never have done on their own. Some lenders jumped wholeheartedly onto the affordable housing bandwagon, while all others were forced along by the 8 big bank regulatory agencies, the FHA and HUD, the CRA, and GSE’s Fannie and Freddie, who were ordered by Clinton and G.W.Bush to expand subprime lending to nearly 60% of its loan portfolio. Given the market-dominating position of the GSE’s due to their exalted status as government (i.e., taxpayer) guaranteed lenders, the disease of irresponsible subprime lending came to spread beyond the poor to all mortgage sectors. Add to this fire the fuel of an easy-money federal reserve, and you’ve got a housing bubble far greater than any previous bubble.

When the unfree, politically rigged housing finance market inevitably collapsed, the result was the Obama Administration’s deliberate misidentification of the causes of the crisis in order to facilitate another huge regulatory power grab of the economy (Dodd-Frank). In other words, blame the private sector, including the economically successful, for the problems caused by the perfect storm of government intervention (see Thomas Sowell, John A. Allison, and Peter J. Wallison), and then push more of the same poison that caused the crisis.

And all because of the affordable housing crusade that was allegedly designed to help the very people that Sanders claims to champion—the “little guy,” to use the Left’s derogatory term for average people. We don’t have to speculate about what the Bernie Sanders economy will look like. We just have to look back at the affordable housing crusade of the 1990s and 2000s to know. Feel the Bern? We already did.

Related Reading:

Liberty-Loving Americans Understand Bernie Sanders a Lot Better Than This Australian Thinks

No comments: