The Overeducated Idiots: Is Socialism the Way to Fix America?


It never ceases to amaze me at how many over-educated idiots actually believe the “free market” was responsible for the 2008 mortgage market meltdown. The perpetually parroted meme that ‘deregulation’ and ‘greed’ were the causes of the mess is about as rational and powerful explanation for what happened as saying that Justin Bieber songs cause double rainbows and that suspicious Nigerian emails make the moon go around the sun.

The admixture of intellectual arrogance and abject economic ignorance in our self-professed elite is a heady toxin that is poisoning our politics. The lucid and sane are no longer able to communicate meaningfully with a gaggle of self-styled braniacs whose beliefs about market economics border on Dark Age-era superstition. Many seem to believe corporations earn money by witchcraft, and use dark necromancy to “force” governments to bail them out. Bankers apparently slaughter goats in boardrooms, praying for the upcoming year’s dollar harvest, whose seeds must be watered with the blood of suffering workers in order to grow.

Oh blather, these people are obtuse!

The reason the market tanked was because the bankers’ unfettered “greed,” the left’s unified theory of all that is wrong with the world* ™, caused them to give mortgages to people who could not afford them. Now why on earth would they do that? Because they are stupid and like losing time and money on loans they assumed would be paid off at interest? No, they were told by The Federal Reserve and the Democrats to make the loans to subprime borrowers who happened to be ethnic minorities or else be brought up on charges of redlining! Does this sound at all familiar to you left-wing eggheads out there?

Oh yeah, now you remember.

And then, claiming the mortgages were assets, the banks leveraged new investments on the securities in a pyramid structure doomed to collapse. Everyone knows that if you leverage outstanding obligations on assets at more than ten-to-one, you risk default. And what were the MBS’ leverages? Often thirty-to-one, and even forty-to-one!

Why would these greedy, nefarious, downright evil and nasty bankers concoct such a precarious scheme? Had these avaricious financiers gone mad? Had they been shooting heroine out back behind the Chase Manhattan with the future occupy crowd?

No. The assets were insured and the holder of most of the mortgages were none other than Fannie Mae and Freddie Mac, two gargoyle GSEs crafted by the government to bundle mortgages and sell them to banks.  So would the banks have made the loans, or bought the MBS if the government had not guaranteed the assets? Are you out of your mind, lefties?

This only explains what went wrong mechanically, it doesn’t even begin to explain the nationwide scale. The reason why it was a country-wide problem requires a discussion of how The Fed toys with the money supply, but I don’t want to blow a brain hemorrhage explaining how it works or why it’s bad. But isn’t it a bit ironic that Moody’s gave the subprime assets a AAA rating, since real estate markets are notable for being localized, thereby dispersing risk in mortgage bundles? But if the causes of a real estate crash aren’t local, and instead are due to ridiculously stupid national policy, it should be little surprise when the entire country is knee-deep in shit.

In the free market, the government does not loan money, set interest rates, arrange mortgages, insure assets, or bail-out failed enterprises. This is so blatantly obvious that a properly educated five-year old can figure it out.

So if it’s obvious that the free market is not to blame, since there is only a phantasm of the system present in the US of A, then why don’t the lefties acknowledge it? Do they seriously want to say that capitalism is responsible for all the evils in the country, even if they know that the economic system we have now in no wise resembles capitalism, and is still bestrewn with glaring faults?

Instead, we are supposed to suspend our disbelief, abandon capitalism, and throw in lot together on an economic system that has never proven to be worth a tinker’s damn. Like a bunch of stoned lemmings deciding to give the economic and sometimes literal suicide pact of socialism one more try.

The left does not care if capitalism works. It does not care if socialism works. Its fanatical adherents will criticize the world as it is, name it whatever they like, just to gin up dissatisfaction enough to change the free country of the United States into the utopian kleptocracy of their dreams.

But a lot of us Americans, we feel the rising temperature of the bubbling cauldron of socialism that we’ve been immersed in and we’re hopping mad. And telling us that it’s soothing and refreshing is not going to adjust our internal thermostats to like it.

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9 thoughts on “The Overeducated Idiots: Is Socialism the Way to Fix America?

  1. Great Article and remember there is also the little matter of dirivitives and the insurance backing totalling about 1.6 quadrillion in U.S. Dollars. With only about 15 to 16 trillion total dollars in the money supply, ya’ think this could be a probelm if they keep defaulting?

  2. Yes, great article. Not many can understand it but you gave a very clear explanation. I’ve heard not only was the redlining threat given but also was the threat of cutting them off from Fannie mtg. purchases. They would have went out of business if they did not comply and so to cinch the deal uncle sam insured the liability. Now you can’t lose and you can’t compete so you got to play ball. It’s all part of ‘The Plan’. Agenda 21 calls for sovereignty?? Just a small monkey wrench in ‘the plan’ we’re 1.6 QTrillion in the red or is it just a decoy………. How much money do these ‘people’ have? Geezz.

    1. Thomas was right. according to my last check we’ve got about $16 trillion in “money supply,” about $15 trillion in national debt, our yearly GDP is about $15 trillion, and our future liabilities total around $100 trillion. The derivatives – he cites over a QUADRILLION in “liabilities.” I don’t even know what that means. Bankruptcy, in a perfect world.

  3. P.S. You know, it is still happening. 90+% of all mortgages going out today are FHA. No money down high risk people. The 3.5% required as a down payment w/FHA is written up into the sales price and called a seller concession in the sales contract to justify the overage. It’s exactly the same as before the burst except now they can’t get a 20k check in addition at closing…only because there is no more equity in property. Some loans are even waiving the PMI, so there is no ins. but the government, and Fannie is like how many billions in the red. How does this even occur? I’ve even seen Fannie making profits on resales from lenders REO piles. Fannie lately is buying the REO from the bank and then Fannie, now the owner of the home puts it up for sale at near twice the price as the lender foreclosure selling price was to them. BUT, if you are an investor ( own more then one property ) and you contract to purchase a Fannie property you have a 15 day waiting period ( from 1st day on the market ), meaning you offer Fannie 100k cash on day 2 of listing becoming active, Fannie will not consider or answer your offer for another 13 days while they must wait to see if a first time home buyer comes along instead of the investor. ………………………………………………The Fannie property for sale also comes with it’s own mortgage financing package for the first time home buyer. Some of them won’t allow any other lending programs to the buyer, they have to use Fannie’s. Today the first time HB is running out ( no jobs – but they only need a 560 score to qualify ) so if none come along then Fannie will answer your investors offer. Upon their counter which is usually final, no negotiating, they deliver a 32 page disclosure for the buyer ( investor ) to sign with the offer contract. In this disclosure one of the conditions to the buyer is the buyer may not resell the property for up to 90 days and if they do they may not profit more then $1,000. ……………. So………You & I can not sell or make a profit for 90 days on a Fannie property, but Fannie can.We can not deal with Fannie for 15 days after an offer and if a FTHB did come along and offered a contract for 100k but w/financing instead of cash, Fannie would accept the FTHB. ??? Turns down cash over a high risk mtg. buyer. This can not be any clearer. They really must want it to all collapse. No one in their right minds would do business like this. I still can’t get past the 90k profit on the Fannie flip. A REO property bought by Fannie from Wells Fargo for 79K. Days later Fannie puts it on the market for 175k as ‘owner of record- Fannie Mae’. I thought the gov. could not make a profit because …….. well, then they are a business…??? No one does anything, just sell ‘um.

  4. The Government knows exactly what its doing, the public thinks its to complicated so ignores it. This is where a simple talking point becomes the narrative as in ” deregulation / greed ” is the cause thanks to you and others the truth is not that complicated.

  5. Where to start? So much misinformation, so little time. The government attempt to stop red-lining led to a very small percentage of the total loans made. It did demonstrate to the industry how profitable predatory lending could be and the unscrupulous jumped on board to mine the home equity of the gullible. The problem was compounded by the securitization of mortgages which were in turn sold to investors around the world as safe investments.

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