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Stealth Socialism
By SnowMonster | September 19, 2008
Socialism is the notion that the Government is the arbiter of people’s needs and excesses. It’s Robin Hood, as a philosophy, take from the rich and give to the poor. But what happens in a society where the rich have an equal say in things? Socialism cannot prevail in such an environment because the other side has a persuasive argument that socialism will drag down the economy and ruin people’s lives, often the ones it is intrinsically trying to help.
The problem is that, while the intentions are good, it’s terribly inefficient. For every $100 of money taken from the rich, maybe $1 gets to the poor, the other ninety-nine dollars gets chewed up by the bureaucracy. That’s why the rich prefer to help the poor by charity. They can size up the most efficient charity or, failing that, start their own.
So what is a good socialist to do? Taking the Robin Hood analogy to its logical conclusion, the only option left is to steal it. But how? And how does one do it without being caught? The first point of business is to identify who is ‘rich’ and find where they keep their money. That part was easy. The rich keep their money on Wall Street. Never mind that granny also keeps her money there, she shouldn’t be so selfish.
So clearly the way to go is to give the poor access to the cash on Wall Street. But Wall Street only gives money to things that will turn a profit and the lowest common denominator, when it comes to investing, is the loan. Banks loan money to the simple folk all the time. The big money is in mortgages. But banks don’t loan money to the poor because they can’t pay it back. This outrages the socialist.
So the Socialist passes a law. Let’s call it the “National Affordable Housing Act.” (S-566 to be exact) No one will argue with that. The idea is to give people, who wouldn’t normally be able to buy a home, the ability to do so. It seems downright noble. As a part of that law, you find a mortgage company, or two, that you have in the government pocket already. That would be Fannie Mae and Freddie Mac. You tell them they have to loan to these poor people or they’re racist. No one wants that. It ruins your street cred at parties. But there is that little problem of risk. “No problem,” says the Socialist, “we’ve got your back.”
So Fannie and Freddie get to work and loan out all the money the government loaned them to the poor people. Then the Socialist tells them to package up all the loan papers and bundle them up into securities to sell on Wall Street. This way the Socialist doesn’t have to go back to the rich people and ask them for more money in Congress. This works out for Fannie and Freddie because they aren’t holding the paper any more and besides, it’s profitable. The government is on the hook for every piece of paper they write, so it’s no skin of their nose.
Greed sets in and they realize that they could push more poor people through the system if they could just get past that 20% down hurdle. So they go to AIG and ask them if they can underwrite a policy for each loan that will pay the banks back if the poor guy can’t pay up. “Loan’s backed by the government, you say?” asks AIG. “Sure count us in.”
Now the whole operation is humming. The poor people are getting the money and Wall Street is giving it to them by taking it from the rich people. “Excellent,” says the Socialist, rubbing his hands together.
A few observant conservatives start to notice. They say something, but Fannie and Freddie pay off the other socialists to look the other way. They overrule the conservatives. They may even call them racist for thinking about putting a stop to it.
Then the inevitable happens. The prices of homes rise because demand is up. Still Fannie and Freddie steal money from Wall Street. Now people buy houses that they can’t afford at all, with no money down. Eventually, the prices go too far and less and less people are demanding homes. Prices stall.
Now the people who bought too high for their income start defaulting. At first, no big deal thinks the Socialist, we’ll cover it. But then that pesky law of supply and demand kicks in. As people get kicked out of their homes, they get put up for sale. Now there’s a glut on the market. Prices start falling. Too many of the poor start to lose the money they surreptitiously got from Wall Street. The Socialist schemes some more and gets the tax payer to re-negotiate those loans so the poor can stay in their new homes. A nice little bail-out package is put together and the conservatives are forced to accept it because it is really the only way to avert disaster.
The house of cards crumbles. AIG and Wall Street are left holding the bag. But AIG insures everything. If they fold, every bank holding the paper on these loans and other legitimate loans will go under. This cannot happen. So the government has to step in and save the day. But we pay for it.
At the end of all this, there has been a huge transfer of wealth from the rich to the poor. The money has been legally stolen from Wall Street and given to people who couldn’t afford homes in the first place.
Robin Hood smiles.
More on it at Michelle Malkin
Topics: Political |
September 19th, 2008 at 10:19 pm
Nice Site layout for your blog. I am looking forward to reading more from you.
Tom Humes
September 19th, 2008 at 11:44 pm
Good write-up of the whole escapade.
Democrats go home because there’s “nothing they can do”. Wow.
September 27th, 2008 at 1:16 pm
[...] Stealth Socialism [...]