The biggest Lie of the inaugural 2016 Presidential Debate Few People Noticed
Now that is a pretty good teaser, isn’t it? Someone, to be named in a moment, told a huge, or YUGE lie, and no one noticed. Well, I did hear one commentator call it out today. However at the actual debate the lie floated there completely unchallenged. Personally, I had to choke down a vicious expulsion. The thing about this lie is the liar didn’t come up with it. It isn’t even a second hand lie, or even a third hand lie. It is literally a joke made by a liberal comedian, who happened to have a very low opinion of politicians and government in general, made at the expense of a Republican president who was seeking to spur the economy by means of a massive stimulus package paid for, no doubt, by the extremely high taxes paid by the wealthy of that time. Needless to say that stimulus package succeeded just as well as the most recent ones seen in our country. More on that in a moment.
So, do I have your interest? Are you dying to know? Well here you go.
“Trickledown economics caused the financial crisis!” Hillary Clinton, September 26, 2016.
Uh…….no. That is complete BS of the purest sort. We all know the housing bubble collapse is what drove the Great Recession. That and the resulting waves that passed through the world financial markets and institutions who to that point had been cashing in. No, I am not going to go into this huge discussion on subprime loans and investments, hedge funds, and other things which are to me extremely opaque. I will say I was very much alive at the time, I was a home owner, and I have a very good memory. Tax cuts did not cause the crash folks. In fact, the economy was spinning along fairly well. As I remember it, unemployment after the Bush tax cuts had fallen to a point most economists said could not be improved upon. It was very close to 2%. Common wisdom at the time stated that at least 1% of the population was essentially unemployable.
As to why the housing bubble burst, well, you have to look at what caused it. I think I can give you some personal insights. First, let me give you a little background. At that time I was in my early 30’s, married, and the sole provider for my family. I was working at Redacted Inc., a manufacturer of lawn products. I was making $28,000 a year and living in a condo paying $375 a month for rent. I wanted to own a home, of course. So I went to work nights on a contract job programing CNC punch presses. I was paid $15.00 an hour for this work, and I did it for many months until I had enough money saved for a down payment on a house. Mind you, I had a one hour commute to work, meaning I had to leave before 6:00 am to make it by 7:00 am. Because my wife at the time had special needs, I often had to take care of her before I left, so I set my alarm for 4:30 every morning. My morning commute was not so bad, really, because traffic is pretty light before the sun rises. However, my evening commute could stretch out to two or even three hours. By the time I was in a position to buy a house I was pretty stretched out. As Grizzard (a great American) would say, I was “tard”. So began the long, painful, yet ultimately successful search for a home.
We ended up buying a trashed out rental home, for which I paid $49,900. Well actually, the bank paid that, minus my down payment of course. The bank, or at least bank number four, is still getting paid for that house. This all went according to my plan to buy a fixer upper. I figured to raise the value of my investment through “sweat equity”, as I really didn’t have the money to buy a really nice house. Or so I thought, the Realtors had really different ideas.
For some odd reason the Realtors all thought I could afford a house far more expensive than I thought I could. We are talking $180,000 to $250,000. I thought they were insane. “No, no, no!” they said, “you can afford it! Let me show you how!” See, they were pushing adjustable rate mortgages, that would only cost 3% to maybe 5%, and you only need to pay interest for the first however many years. I didn’t even need my down payment! Well, except for the earnest money that is. “You can buy it now, and in a few years sell it for big money! Prices are just going up and up! Everyone is doing it! On your next house you will be looking at half a million dollar houses!”
This did not sit well with me, it just didn’t make sense. For one thing the $180,000 to $250,000 houses they were showing me weren’t very nice. They were not worth that kind of cash. No freaking way. Besides, how could the prices just keep going up and up? How the hell could people afford that? Unless wages were going to get a hell of a lot better, which I wasn’t seeing, where the hell was all that money going to come from? As far as I could see the banks would have to run out of money at some point if “everybody” was doing it. Besides which, I did something apparently few people did. I read the fine print and it scared the hell out of me. No, and, well, just no. I had worked too hard get that far. No way was I going to wake up one day with payments ballooned to the point I couldn’t handle it and lose everything. Yet, that is what people were doing. As I said, I thought they were all certifiably insane.
So it looks to me the crash was pretty much inevitable. I wonder why others didn’t see it. It was a pyramid scheme. How much stupid is there in the world?
Back to trickledown economics, though. The phrase came into existence when Will Rodgers was making fun of Hubert Hoover during the great depression. Seriously, could you make this stuff up? And yes, that stimulus package failed to halt the great depression, just the same as Roosevelt’s new deal failed to do so. In fact the depression would linger on until after World War II. Later on Democrats copted the phrase to ridicule Ronald Reagan, who favored lowering taxes and reducing the size of government. Reagan never referred to his plan as “trickle down” anyway, as far as I can remember. The actual term was supply side economics. The idea is really pretty simple. You allow people to invest, to work, to invent, to innovate, and most importantly to keep the fruits of their labor with minimal government intervention. Government should be small and efficient. We certainly don’t have that do we?
I really have one last point to make on the Great Recession and the collapse of the housing bubble. We purchased our home in the early 90's. I really don’t remember the exact year. I am pretty sure Clinton was President at the time, though it could have been Bush the elder. I don’t think so, but really “what difference, at this point, does it make?” The point is the housing bubble was in full, destructive swing long before GW came to office. Whatever lingering Reagan era economic policies had pretty much evaporated under Bush the elder. Remember "Read My Lips, no new taxes!"? A pledge just as worthless as "If you like your plan, you can keep your plan...". No, the housing bubble was there, fermenting through nearly the entire Clinton presidency, just waiting to burst as it inevitably had to, as surely as water seeps through a bad foundation.
I do want to post a link to one of the many sources I reviewed before penning this rather long posting. It is, I think, very much to the point. http://www.nationalreview.com/article/367682/
For those who made it this far, thank you for the kindness you have shown!