Radical: Jimmy Carter
Jimmy Carter was said to have been a better man than President. He is most known for his humanitarian efforts and his fight for the “so called” underdog. Like many typical Progressives, Carter ignored the possible repercussions of bad policy and pushed the policies on humanistic principle rather than American principle. Instead of empowering Americans to help themselves, he empowered the government.
What we must focus on mostly is on a perfect example of bad policy signed by Jimmy Carter. Although his intentions were pure at heart, the results were devastating. There have been many actions that Carter has taken that have negatively affected America like Carter’s handling of the Iran Hostage Crisis and Israeli / Palestinian relations. We will discuss those issues later in “The Machine” discussion. What I would like to focus this post on however is the Community Reinvestment Act.
Community Reinvestment Act (CRA) of 1977
The life of this act is historical in what it intended along with its systemic failure causing one of the biggest recessions in American history negatively effecting millions of people in this country along with billions around the world. What the Act intended to do was help lower income families and individuals receive loans without the banks using any financial discriminatory practices. With the energy of the civil rights movements still vibrant in America, government politicians pushed for banking institutions to lower its self preserving lending standards to these lower income people.
The way the bill was structure effected banks expansion into these lower income areas. Banks are always looking to put new bank branches in order to expand businesses. The federal government with CRA regulations forced banks to lower lending requirements in order to expand into new locations. With the lowering of their lending requirements, the banks took on new risks. Obviously there was another decision to be made by banks when moving into new markets. They had to measure the risk verses reward. Consequently big banks made those risks rather than smaller ones.
Gradually banks began making loans to people that didn’t have the credit to back up their past financial prudence. Once again the federal government, in the name of fairness and equality, forced businesses to take excessive risks as if those with bad credit or of lower incomes deserve the same benefits of those that have been more financially prudent and worked hard to achieve it. It was a new entitlement. In 1993 Bill Clinton doubled down on the regulations and made the banks even more vulnerable.
What many people don’t understand is the importance of leaving the free market as unregulated as possible. When speaking of the free market I often looked for a metaphor to explain it. One that I use most is that of the Mississippi River because I am originally from New Orleans and know the negative effects of this regulating the power of the river. One of the richest river basins is that of the Mississippi River. Many years ago, the Mississippi River was completely unrestricted or what I would like to say is unregulated. It would replenish the wetlands with sediment and kept wildlife and coastlines protected. When people began to populate the city and have wished to expand into the wetlands, they were faced with the unpredictability of the Mississippi River. So to battle this unpredictability, the people regulated the river by building levees to force the river to flow where they wished. So what were the results?
The natural deposits of soil at the mouth of the river and in the tributaries began to be depleted. With this came the depletion of the coastline which brought the Gulf of Mexico closer to the city of New Orleans and its suburbs. The salty waters of the gulf then began killing the vegetation around the inland areas which destroyed much of the protection from seasonal hurricane storm surges. Once the perfect storm had arrived, the house of cards that the US Corp of engineers had built collapsed. Katrina devastated the city and its outlining suburbs. Levees broke do to corrupt and inadequate maintenance practices and the inability to curb the inevitability of nature’s intentions.
Government regulation works the same way with the river of the free market. They put up regulations and road blocks in the name of helping the free market. This inevitably causes bigger and bigger financial storms in the form of massive recessions or depressions. CRA did just this. Free markets do go through recessions as it is the winter of the economic cycle. The winter of the free market economy kills off the bad businesses and empowers the good ones. This seasonal approach to the market is the essence of what makes it work. Government CRA regulations only made banks weaker. This intensified the recession when it arrived. We saw this in 2008. Bad business decisions were mandated by the government.
Banks needed to spread out their risks with these new CRA regulations so they built levees around the unpredictable risks. These came in the form of “Mortgage Backed Securities”. This would allow the banks to distribute the risks or levee the risks by spreading it out on the free market as an investment vehicle. Ginnie Mae, Fannie Mae and Freddie Mac are the biggest issuers of Mortgage back securities. In 2008, Fannie Mae and Freddie Mac collapsed due to the storm surge of risk that had built up since the creation of CRA. It was inevitable that the accelerated increase of loan defaults within the American mortgage system would collapse the entire system.
The proverbial levees of government regulation had collapsed. Once this occurred, banks around the world would see a completely disastrous failure. Hedge funds saw the collapse coming and short sold the securities which put further weight on an already crippled system. With the lack of cash to loan, the free market was strangled by the levee collapse which forced many companies to downsize and even close up shop. We then began to see massive unemployment. Instead of recognizing the true reasons of the collapse media and government officials politicized it to take advantage of the disaster. Many tried to simplify it by blaming Bush when in fact it was Carter that set the foundation for the house of cards. Here are some YouTube videos to show the beginning of the end.
So how does this tie into “The Machine”?
So what must be understood is that most of the people behind this crisis are not stupid people. By creating this crisis, massive bailouts would be easy to sell to the public with the fear and uncertainty of the crisis. This crisis then became and opportunity. It was a way to distribute wealth and implement new government regulations, issue new taxes and to fund radical political organizations to re build the economy to reflect a more Progressive socialist agenda. Everything them became a reason for the collapse. Healthcare, energy reform and immigration all became reasons for the collapse. The crisis was the dialectic means to the inevitable ends.
Healthcare Reform
Immigration Amnesty
Cap and Trade
Here is where we are being sold that government is the solution rather then freeing up the market to regulate itself by regulating risks rather than investing in civil rights issues. Business is blind. Jimmy Carter believed like many other Progressives that business isn’t blind. They believed that partnering government with business, they can spread the wealth or distribute wealth through the free market. Instead of rewarding success and prudence, the Progressives reward failure with bailouts or welfare. This is the Cloward and Piven strategy. Eventually the whole house of cards will collapse and the government will have to take over everything. As far as the civil rights issue in business, Progressives fail to believe that business is blind when in fact, a profit isn’t black or white… it is green.
