Thursday, September 25, 2008

The Mind-Numbing Effects of Political Correctness

Uncovering the roots of the disastrous home mortgage bubble that popped last year will keep economic historians busy for decades. Yet, one factor has so far been largely overlooked: the bipartisan social engineering crusade to drive up the rate of homeownership by handing out more mortgages to minorities.

More than a negligible amount of the blame for the mortgage meltdown can be traced back to multiculturalism: government-mandated affirmative-action lending, demographic change, illegal immigration, and the mind-numbing effects of political correctness.

The chickens have finally come home to roost.

About half of all mortgages for blacks and Hispanics are subprime, versus roughly one-sixth for whites (see chart above). Not surprisingly, the biggest home price collapses have occurred in heavily Hispanic cities such as Las Vegas, Miami, Phoenix, and Los Angeles.

The mortgage bubble was essentially a bet on the purportedly increased creditworthiness of the bottom half of the American population. After three decades of the home ownership rate stalling at around 64%, a series of federal initiatives to increase minority and low-income ownership helped push the rate up to just below 70%.

Link.

HT: Juandos

9 Comments:

At 9/26/2008 1:09 AM, Anonymous Anonymous said...

Goldman’s top alumni wield White House clout
By Stephanie Kirchgaessner in Washington and Ben White in New York
Published: December 4 2006 00:42 | Last updated: December 4 2006 00:42
America’s corporate elite has long upheld a tradition of joining Washington’s corridors of power for a new career. JPMorgan executives gave counsel to President Woodrow Wilson during the first world war. President John F. Kennedy asked Robert McNamara, a war veteran who had risen to the top ranks of Ford, to become secretary of defence in 1960.
But the appointment last week of Goldman Sachs’s William Dudley to head the Federal Reserve Bank of New York market’s group raised to an unprecedented level the number of top positions in public service that former executives from any one company have held during a White House administration.
Today, former Goldman Sachs executives control or influence the oversight of key aspects of the US financial system and hold prominent positions throughout the Bush White House.
They include: Hank Paulson, the Treasury secretary and former Goldman chief executive; Reuben Jeffrey, a former Goldman managing partner who is the chief regulator of commodity futures and options trading; Joshua Bolten, White House chief of staff who served as a Goldman executive director; Robert Steel, the former Goldman vice-chairman who advises Mr Paulson on domestic finance; and Randall Fort, the ex-Goldman director of global security who advises Condoleezza Rice, the secretary of state.
The composition of President George W. Bush’s working group on financial markets demonstrates the clout of the company’s former executives on policy.
The panel – which is composed of Mr Paulson, Mr Jeffrey, Ben Bernanke, the Federal Reserve chairman, and Christopher Cox, chairman of the Securities and Exchange Commission – would be Mr Bush’s first port of call in the event of a financial crisis.
Mr Dudley would also play a crucial role in stabilising the markets in the event of a meltdown, as one of his predecessors, Peter Fisher, did following the near collapse of Long Term Capital Management, the hedge fund. The former executives will also be influential in issues ranging from the regulation of Fannie Mae and Freddie Mac, the housing giants, to tax policy, to how heavily the energy markets should be regulated; all issues that Goldman Sachs lobbies heavily on in Washington.
“I don’t think anybody else even comes close [to holding the number of top positions in Washington],” says Charles Geisst, a Wall Street historian and professor at Manhattan College, who points out that Goldman’s reach is even more impressive because it comes at a time when there is no single dominant bank or brokerage in the US.
Unlike other companies that are targeted for being too cozy with the White House, neither Mr Bush nor Goldman have been criticised by Democrats for holding too many powerful jobs, in part because the investment bank also has deep ties to Democrats.
Goldman represented the biggest single donor base to the Democratic party ahead of this year’s mid-term elections, according to the Center for Responsive Politics, and at least two Democratic political heavyweights Jon Corzine, the New Jersey governor, and Robert Rubin, the former Treasury secretary, are Goldman alumni.
Goldman says it is proud of its long record of public service, but does the company yield too much power in Washington?
Alex Knott, political editor at the Center for Public Integrity, says that while there is no doubt that former Goldman executives have the experience to hold their posts, they also have close ties to a company that benefits from their public policy decisions.
“It does create a potential conflict of interest because so much regulation is doled out by administrators who could be looking out for their former employees and co-workers,” he says.
Whatever potential conflict of interest may exist, however, neither Mr Knott nor executives at competing banks have substantive complaints about the influx of former Goldman leaders.
“I’d love to point out a smoking gun in their direction but I can’t,” said one senior executive at a rival bank. “They’ve created this tradition of public service and it does accrue benefit to the Goldman brand. That’s not a conflict. It’s just what it is. It’s something people are envious of.”
Orin Kramer, chairman of the New Jersey State Investment Council and a close friend of Mr Corzine, says life can sometimes be made more difficult for Goldman because of its ties to public life. Mr Paulson, for example, has vowed to recuse himself from any matter that pertains specifically to Goldman over his tenure. Last month, he removed himself from the national security review of Lucent’s merger with Alcatel, which was being advised by Goldman

Uh-Huh

 
At 9/26/2008 2:05 AM, Anonymous Anonymous said...

Hey anon #1, wanna give some context or lead-in to the giant article you've just dumped here?

Anyway, MP, how to cite these statistics without sounding racist...

 
At 9/26/2008 8:29 AM, Anonymous QT said...

Anon. 1:09,

While there is definitely a strong contingent of former Goldman employees, they have been doing a fairly decent job to this point.

"Uh-Huh"

If you have evidence to support the assertion that former Goldman employees are favoring their friends in the industry, by all means share it. The deals on AIG & Bear Sterns had extremely tough terms hardly sweetheart deals.

To prove collusion, you need to provide more than taint by association and innuendo.

 
At 9/26/2008 2:04 PM, Anonymous Anonymous said...

Well Mark, it looks like someone has come up with a great idea to solve these problems. I also think we ought bring back the Black Star Line while we're at it. Clearly returning this country back to its white racial roots will be the first step in a recovery from the damage the libtards have done.

 
At 9/26/2008 3:35 PM, Blogger juandos said...

Yet another anon saw fit to post a neo marxist propaganda bit from the Financial Times...

So what's it good for and what are you trying to say?

I second qt's comment: "If you have evidence to support the assertion that former Goldman employees are favoring their friends in the industry, by all means share it"...

anon @ 2:04 PM says: "Well Mark, it looks like someone has come up with a great idea to solve these problems"...

Hmmm, is that tongue in cheek sort of comment or are you trying to say something else?

Personally I think this method of deportation has more entertainment value...

BTW anon @ 1:09 AM, what do you have to say about Franklin Raines and Jim Johnson?

 
At 9/27/2008 1:18 AM, Blogger skeptic said...

I hate to point out the elephant in the room...but how do you get 117%.
I don't know...maybe its just me?

 
At 9/27/2008 6:50 AM, Blogger holeydonut said...

Skeptic -- The chart is not cumulative across all mortgages. Instead, each race is placed in its own bucket, so each race can range between zero and 100%.

 
At 9/27/2008 11:41 AM, Blogger Shawn said...

what would be infinitely more useful would be a similar chart showimg the percent that defaulted on their mortgages. is it comparable across races?

 
At 9/28/2008 12:22 PM, Blogger skeptic said...

holeydonut:
Thanks for the clarification.

 

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