Why government advocates taking out loans you can



By Robert Romano

  On April 2, the Washington Post published an article entitled, “Obama administration pushes banks to make home loans to people with weaker credit.” The report cites a recent speech made by Federal Reserve Board Governor Elizabeth Duke advocating that more home loans be made to people with fragile credit scores.
  “The drop in purchase mortgage originations, although widespread, has been most pronounced among borrowers with low credit scores,” Duke noted. She suggested the drop in originations was leading to depressed household formation (i.e. the amount of new homebuyers entering the market), which was down 59 percent in 2006 to 2011 versus the five years prior. This, in turn, is slowing down the economic recovery.
  The solution, says Duke, is to start giving them loans. “I think the ability of newly formed households, which are more likely to have lower incomes or weaker credit scores, to access the mortgage market will make a big difference in the shape of the recovery,” she declared.
  Duke further predicted, “I expect the strongest impetus to recovery to come from pent-up demand for housing in the form of household formation.”
  So, there you have it. In order to foster a faster economic “recovery,” you, I, and everyone else need to take out more loans on houses we cannot afford. Never mind that the financial crisis, the ensuing credit contraction and recession were all caused by banks making loans to people who could not afford to repay.
  “To suggest that lowering credit standards is the solution to the financial crisis is to ignore the past 20 years of history,” Americans for Limited Government President Bill Wilson said, pointing to previous episodes of government intrusion into the housing market.
  “The same thing happened after the 1991 recession when credit slowed down. By 1992, Congress had agreed to institute and expand the GSE ‘affordable’ housing goals, which required an increasing percent of government-backed mortgages to be of lower quality,” Wilson noted.
  “By 2007, when the bubble popped, those goals had expanded from 30 percent of Fannie and Freddie’s portfolios to 55 percent,” Wilson added. Meaning, by the time it all came crashing down, the government was requiring that more than half of the mortgages purchased by Fannie Mae and Freddie Mac, government sponsored enterprises (GSEs), needed to be to individuals with lower incomes, which tend to have a higher risk of default.
  But why would the government do that? Wilson answers, “Since the economy is addicted to credit expansion, in order to grow, the incentive is for lending standards to become progressively weaker over time.”
  That is because whenever credit contracts or even slows down its expansion, as Americans for Limited Government has previously noted from data by the Bureau of Economic Analysis and the Federal Reserve, the economy tends to follow suit.
  In 1946, 1949, 1954, 1974, 1975, 1980, 1982, 1991, 2008, and 2009, real Gross Domestic Product (GDP) contracted. And in each one of those years, credit outstanding nationwide had either contracted or slowed down. Conversely, when credit expands, so too does the economy tend to grow.
  This feature of economic growth is slightly misleading, however, since GDP measures consumption. It does not measure whether such spending by individuals was borrowed or income-driven. Affordability is not included in the measure.
  The trouble is, the more debt borrowers take on, the more likely they are to default. In fact,as the percent of debt per household to median income rose from 93.5 percent in 1981 to 223 percent in 2005, so did non-business bankruptcies per 1,000 households, from 3.5 to 18, according to data from the Federal Reserve, the U.S. Census Bureau, and
  The outlier years are 2006 and 2007, when debt was still rising but the level of bankruptcies dropped, but these followed a record high year for bankruptcy filings.
  Nonetheless, the data shows that higher levels of debt versus income result in higher numbers of bankruptcies. So, if the Obama Administration gets what it wants, which are more loans for those with lower incomes, it will destroy more lives, leaving more people ruined. If too many defaults occur, it could get banks in trouble again, too, risk a credit contraction and put the economy right back into the tank.
  Wilson condemned the practice, saying, “This is what happens every time the government wants to facilitate credit expansion to bolster asset prices. After the stock of available borrowers based on current credit standards is exhausted, the only recourse left to policy makers is to weaken credit standards.”
  He concluded, “When this leads to asset bubbles and credit collapses, as it already has, then the American people are told that the banks that made the loans must be made whole through bailouts whether from Congress or the Federal Reserve. We’ve seen this movie before. It is a fraud and it will only lead to a repeat of the 2008 meltdown.”
  But at least the economy will “grow” for a little while, right?

Robert Romano is the Senior Editor of Americans for Limited Government.

Boston Marathon Bombing: We are all better than this

By Erin Niemela

  Americans will remember Monday, April 15, 2013 as a day in which unspeakable violence took the lives of three people and wounded at least 153 after bombs exploded at the Boston Marathon finish line.
  Thousands of miles away, Iraqis will remember this same Monday as a day in which violence claimed the lives of at least 31 people and over 200 injured after multiple car bombs detonated in Iraq’s capital, Baghdad, and several other areas.
  Afghans will remember this Monday as a day in which a ghastly roadside bomb in the Zabul province killed seven and wounded four other human beings. These are the headlines, only for this particular Monday, and we can be sure some lost lives have yet to be reported.
  We are better than this.
  Humanity is better than this. We are a resilient, adaptable species with a propensity towards community and kindness. Yet, we continually find ourselves locked in a dangerous spiral of retaliation, fueled and fanned by the winds of “justice” that creep into every speech, every condemnation, every epitaph, and every time responsibility is taken. We have the capacity for unspeakable violence, yes, but we also have a profound capacity for love.
  It makes little difference if we’re talking about terrorist bombings or state sanctioned war, neither type of violence composes our dominant nature. This is the very sentiment the 1986 Seville Statement tries to correct. “It is scientifically incorrect,” the founding authors write among five major propositions, “to say that war or any other violent behavior is genetically programmed into our human nature.” Anthropologist Douglas P. Fry celebrates peaceful, nonviolent human nature in his 2006 book The Human Potential for Peace, proclaiming compassionately, “Certainly, violence is part of the human species’ profile, but it is only part of the picture. A balanced view of human nature also recognizes the substantial capability that people have for limiting and dealing with conflicts without force.”
  This doesn’t mean there will come a time when human conflict ceases to exist; rather, we may see a day when we eradicate violent conflict. Famed psychologist Marshall B. Rosenberg explains violence as, “the result of people tricking themselves into believing that their pain derives from other people and that consequently those people deserve to be punished.” Such a statement seems inflammatory when you look at events in Boston, Iraq, and Afghanistan. Surely the pain was the direct result of another’s explicit actions. Yet, we are systematically conditioned to believe that more pain — more violence in the name of justice — is necessary to erase our own.
  In his address on the Boston bombings, President Obama plainly states, “And we will find out who did this; we’ll find out why they did this. Any responsible individuals, any responsible groups will feel the full weight of justice.” Americans, in fact the entire global community, already know what this means. We already know that with the “full weight of justice” comes violence, pain, suffering and destruction. Yet, we will allow this kind of justice to pass, despite and because of the fact that we believe violence is inevitable and hardwired in human nature, and despite the overwhelming evidence that we are capable of creating a world in which justice means fully repairing harm, restoring community health, and breaking the destructive, violent, painful cycle of retribution. Our pain will never heal on the back of another’s. Pain is healed through compassion, empathy, the kiss of a mother or father.
  Step outside today and bear witness to your community, to the world. Bear witness to pain and suffering, but also to pleasure and flourishing. Despite seeing violence, which many of us will unfortunately encounter, we’ll also experience the overwhelming evidence of the peaceful nature of human beings. The smell of food cooking, the sound of songs sung, the touch of a concerned friend, the sight of billions of people going about their day without harming any other. This invisible condition of human nature must be made visible. We must recognize that human beings spend the vast majority of our time actively avoiding violence — it is not in our nature to wish violence on others or ourselves.
  What would it take to create a world without violence? What would we give? The beauty of imagining such a world — a world in which we accept death as inevitable and violence as not — is that it already exists inside of each of us. In concluding their statement on human nature and violence, the signatories of the Seville Statement claim that it is possible for us to end war and the suffering it causes, but warn, “we cannot do it by working alone, but only by working together. However, it makes a big difference whether or not each one of us believes that we can do it. Otherwise we may not even try.”
  Go outside today and recognize the true nature of humanity. Recognize that together we have the capacity for unspeakable love. Recognize that our brains evolved to function in community not to tear communities apart. Recognize that there is no moral righteousness in violence so long as the very core of humanity is peaceful, and it undoubtedly is. I believe we can eradicate the horrific violence seen Monday in Boston, Iraq and Afghanistan, but to do so we must predominantly believe it is possible. We must believe in and bear witness to our human capacity for peace.

Erin Niemela is a graduate student in the Conflict Resolution program at Portland State University and a PeaceVoice syndicated journalist. @erinniemela

In Other Words: Empire Addiction

William A. Collins

By William A. Collins

Bribe and gun
And dagger lurk,
For us to make
Our empire work.

  Ruling the world, as our government does, is tricky. Uncle Sam can never relax. The moment resisters in some subservient country, like Pakistan, sense weakness, they test him. He can’t afford to be seen as soft and he’s got to keep his eye on previously uncontested lands, like Mali.
  Maintaining steady access to a bounty of natural resources is the major goal of this global control. The world is using them up at a heady clip. America dares not fall short of controlling its lion’s share, especially with China’s growing appetite for iron ore, oil, and other commodities.
  Happily, we have a helpful tool for getting what we want: conquest. Not necessarily through pitched battle or incessant bombing — though those remain important techniques to trot out from time to time.
  Thanks to WikiLeaks, we have a pretty good grip on how these operations work today. Our Special Forces have a manual that explains it. Recommended tactics focus on paramilitaries, surveillance, censorship, press control, limiting unions, limiting political parties, warrantless searches, arbitrary detention, employing terrorists, false charges of terrorism, false flag operations, and propaganda.
  In other words, all the usual stuff of empire. Our embassies, consulates, military liaisons, and army bases have been teaching these tactics for decades. They’re further supported by the State Department-financed National Endowment for Democracy and International Republican Institute. Having been deemed to actually constitute foreign agents, these groups have recently been expelled from Russia, Egypt, and a few other countries.
  Normally all these imperial activities go unremarked in the U.S. media. In part, that’s because there’s nothing new regarding the scale of our empire. The Obama administration may have sharply cut troop levels in Iraq and Afghanistan, but it has also vastly expanded America’s reliance on drone warfare and the scale of U.S. military operations in Africa.
  Plainly, there are other large world players in the empire game. Russia may be a hegemonic has-been, but it still possesses a slew of nukes. In response, we’ve got a massive wall ofanti-missile bases around that country — to which Moscow loudly objects. Likewise the Pentagon is surrounding China with bases to menace it militarily in case it gets too economically powerful.
  So that’s how the American empire goes in the 21st century. It’s an addiction. Uncle Sam is trying to control every country, propping up his dictator friends and subverting his antagonists, whether autocrats or democrats.
  And as our leaders cut Social Security and Medicare to pay the outlandish tab for ruling the world, they have to justify it by claiming that this blessed nation is somehow in mortal danger.

OtherWords columnist William A. Collins is a former state representative and a former mayor of Norwalk, Connecticut.

Inside the First Amendment : How not to protect religious liberty

By Gene Policinski

  Here’s a quick primer on a recent proposal by two North Carolina legislators to permit the state to designate a state religion:
  First, the North Carolina Speaker of the House effectively killed the proposal one day after it was filed, saying it “will not advance” to a committee hearing.
  Second, even if enacted, it would not survive constitutional scrutiny under existing Supreme Court decisions.
  And third, if it did overcome both legislative and legal barriers, it would have challenged the very underpinnings of the kind of religious liberty we have professed to the world since 1791, when the First Amendment was ratified, as part of the Bill of Rights.
  The argument by those who favor the proposed North Carolina designation combines “state nullification” with a constitutional concept expressed in recent years by some in Tea Party gatherings and by other conservative groups: That the First Amendment’s prohibition of “establishment” of an official faith and providing protection for “free exercise” in religious choice only applies at the federal level.
  The outcome of the Civil War would seem to have settled the whole nullification issue, though it arose again, without gaining traction in the courts, as Southern states attempted to fight desegregation orders and voting laws in the 1950s. The concept also went by the name “interposition.”
  The second idea — that the 45 words of the First Amendment only apply to federal laws and the federal government — actually was the practice until a series of U.S. Supreme Court decisions beginning in the 1890s, in which an action called “incorporation” applied to parts of the Bill of Rights to states.
  The “establishment” clause contained in the first 16 words of the First Amendment that protect freedom of religion was a late bloomer in this incorporation process. That clause was first applied to the states by the Supreme Court until 1947 — in a case having to do with use of public funds in support of private religious schools in New Jersey.
  Protection of the other clause of those first 16 words, “free exercise of religion” against contrary state laws came a just a bit earlier, in 1940 — generally impacting state laws requiring a declaration of some religious faith in order to run for public office.
  These kinds of proposals crop up periodically, often combined under the label of “states rights, citing the 10th Amendment, or in attacks on the reach of the “due process” provision provided by the 14th Amendment.
  While this latest legislative proposal did not specify what faith might be declared “official,” it was titled “Rowan County, North Carolina, Defense of Religion Act of 2013,” referring to a legal battle in that county over the use of only Christian prayers at public meetings.
  For much of the nation’s history, the use of Christian prayers were a matter-of-course in many places where other faiths were barely represented, if at all, or were subject to openly expressed bigotry.
  But freedom of religion — as with the other four freedoms in the First Amendment — is not defined, supported or validated by majority vote. Just the opposite: First Amendment freedoms protect our individual rights from being overridden by the “majority” of citizens working through the hand of government.

  The establishment and free exercise clauses are not present to restrain religion, privately practiced or expressed in the public square. They exist to shield religious faiths of all kinds from intrusion by the heavy hand of government — even if that hand purports to act benevolently.

  We alone are empowered, each of us — not elected officials, states, judges or Congress — to designate our own, personal “official” religion.

Gene Policinski is senior vice president and executive director of the First Amendment Center. Contact him at This email address is being protected from spambots. You need JavaScript enabled to view it. .

Inside the First Amendment - No flowers for gay wedding


  Imagine Robert Ingersoll’s hurt and humiliation last month when his local florist refused to do the flower arrangements for his wedding to Curt Freed, his partner of nine years.
  As longtime customers of Arlene’s Flowers and Gifts in Richland, Washington, Ingersoll and Freed had mistakenly assumed that shop owner Barronelle Stutzman would be happy to provide the service.
  But also imagine the pain Stutzman felt at having to turn down a friend and neighbor. Here’s how she described the awkward scene to KEPR-TV:
  “I grabbed his hand and said ‘I am sorry.’ I can’t do your wedding because of my relationship with Jesus Christ.’ We hugged each other and he left, and I assumed it was the end of the story.”
  As it turns out, the story was only just beginning.
  On April 9th, the state’s attorney general filed a consumer protection lawsuit against the florist and the ACLU, representing the gay couple, is now asking for Stutzman to apologize and agree to serve gay weddings in the future.
  This painful dispute confronts the courts — and all of us — with a cruel choice between two compelling values central to the American commitment to liberty:
  The right of citizens to be free from discrimination in places of public accommodation is pitted against the right of religious business owners to follow their conscience in matters of faith.
  Unfortunately, this is not an isolated incident. A small, but growing number of conflicts have already broken out in other states where bakers and photographers have balked at providing services to same-sex weddings.
  Stutzman argues that she is not discriminating against gay people. She points out that she has hired openly gay people and has many gay customers. In an interview with the Seattle Times, her lawyer framed Stutzman’s views this way:
  “This is about gay marriage, it’s not about a person being gay. She has a conscientious objection to homosexual marriage, not homosexuality. It violates her conscience.”
  But gay couples seeking wedding services see this argument as a distinction without a difference. When they enter a business that serves the public, they expect to be treated like every other couple — particularly in states like Washington where gay marriage is now legal.
  Although it upsets some gay rights advocates whenever they hear it, the First Amendment requires us to protect liberty of conscience as far as possible. That’s why, for example, many people on all sides support “conscience clauses” for houses of worship and religiously affiliated organizations in states that recognize gay marriage.
  Catholic charities, to cite a controversial example, should be not forced to provide adoption services to same-sex couples in violation of Catholic teaching, as long as those couples have ready access to other providers.
  But any business serving the public is obligated not to discriminate against customers on the basis of sexual orientation. And no matter how gay-friendly Stutzman claims to be, refusing to treat Ingersoll and Freed like other couples is treating them like second-class citizens because they are gay.
  If business owners were exempted from non-discrimination laws on religious grounds, where would the line be drawn? What about religious objections to inter-racial marriage — commonplace at one time and still held by some? If Stutzman wins her case, why can’t another religious florist refuse to serve a mixed race couple?
  I strongly support finding ways to protect religious claims of conscience whenever possible. But when it comes to places of public accommodation, our commitment to non-discrimination should trump religious claims for exemption from civil rights laws.
  Ingersoll and Freed, of course, can find another florist. But they shouldn’t have to suffer the humiliation of asking florists, bakers, photographers, or other providers if they’re willing to provide services for gay weddings.
  Business owners have a right to their religious convictions. But when they open their doors to the public, they have a civic and legal responsibility to uphold the civil rights of every customer.

Charles C. Haynes is director of the Religious Freedom Education Project at the Newseum in Washington, D.C. Web: Email: This email address is being protected from spambots. You need JavaScript enabled to view it. mailto: This email address is being protected from spambots. You need JavaScript enabled to view it. .