The Root of the Problem

2008-10-13 02:37:00

My Friends,

I have written an article for the local paper that I will post here. This was difficult to write because I am limited to 600 words and you really need a couple thousand to deal with the subject appropriately. I'll let you know if they publish it.

I did have another letter published a few days ago at:


The Root of the Problem

Henry David Thoreau made this famous statement:

"There are a thousand hacking at the branches of evil to one who is striking at the root."

When we look at any controversial political or economic situation we find that this principle definitely applies. The current economic meltdown is no exception and is a quintessential example of the truth of this provocative statement.

So what is the "root" cause of this problem we have before us as compared to the illusionary branches that the masses mindlessly blame?

First let us look at just a few of the branches.

  1. Greed. This seems to get the blame more than anything else, but self interest is built into the human psyche and has been ever with us in good times as well as bad.
  2. Capitalism and the free market. The free market built this country into the most prosperous nation the world had ever seen so it has been proven to work. Obviously, its negatives are only branches of evil.
  3. Lack of regulation. Minimal regulation generally helps rather than hinders the economy.
  4. Predatory Lending. Who's the predator here? The one making a low interest loan with nothing down or the consumer who has nothing invested with nothing to lose? A predator takes something. If the consumer has nothing to lose then the lender cannot be a predator.

These, and dozens of others are branches, but where is the root?

The sub-prime mortgage mess is close to the root. This would be the trunk and linked to the invisible cause at the root.

Do you think any sane lender would loan to someone who can't pay back?

Definitely not, and not if he has anything to lose. In other words, if any sane person has any sense of personal responsibility he will not give someone money who cannot pay back. Such a loan will only be made if one of two things occur.

  1. Pressure is put on him to make the loan.

Such pressure has occurred through the Community Reinvestment Act signed into law By Jimmy Carter in 1977. At first this act merely required that lenders make an effort to reach out to the poor and minorities but the 1995 revision under Bill Clinton added teeth in that it required more actual loans be made. This gave partisan organizations like ACORN [The Association of Community Organizations for Reform Now] power to decide who would obtain loans and, of course, many of these would not qualify under standard banking practices. Such groups also received protection money from banks to protect them from harassment.

  1. The lender is able to sidestep personal responsibility and suffer no injury from unqualified loans.

The nail in the coffin was set as political pressure increased toward Fanny Mae and Freddie Mac to buy sub-prime loans. When a bad loan is purchased by them from the mortgage broker then all responsibility is taken out of the broker's hands. The average guy in a situation like this would think:  "This is indeed a bad loan and I wouldn't touch it, but if Freddie [Mac] wants to buy it I'll take the commission."

In the past few years Democrats Chris Dodd and Barney Frank have been at the forefront pushing for unqualified loans to minorities.

To add insult to injury Judicial Watch [a non-profit, public interest, government watchdog law firm] reports HUD [Housing & Urban Development] figures telling us of government pressure resulting in 5 million mortgages that were granted to illegal aliens with no social security numbers who had little chance of making their payments.

The root of evil then is do-gooders in power, who have no common sense, resulting in an end that produces nothing but pain and bad fruit.

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