The underlying reason for the fall is bad investments, unwisely made. The banks decided, directly and indirectly, to loan money to homebuyers who had no visible way of paying the money back. No matter what the paperwork might say, that is not a loan. It's a property speculation: the only way for the bank to get back its money (much less show a profit) would be for the property values to rise. As we all know, they didn't; they've instead been plummeting.
It is right for people who cannot pay the mortgages that they themselves signed to be foreclosed on and thrown out of their homes. It is right for banks to lose money, or even to be bankrupted themselves, because they unwisely made loans to people who could not pay for houses that are not worth the money spent on them. It is right for the tycoons of Wall Street who speculate in the hundreds of billions where ordinary folks might speculate in the thousands, to lose equally vast fortunes - all based on the results of their own free decisions.
Wealth is not a ratchet, and in a free economy, it's not supposed to be. The American dream says that every American has the opportunity to better themselves, and if they work hard and are lucky, to become rich. But for this to be possible, it is an absolute requirement for the converse to be true: if you are lazy, unlucky or unwise, you can become poor even if you start out wealthy. An investment with no risk is not a path to wealth; where it is, as with the executives of Fannie Mae and Freddie Mac who donated heavily to Democratic politicians in order to obtain and retain their cushy posts, it's a fraud; their newfound wealth is actually stolen from your pocket.
Read the rest...
No comments:
Post a Comment