{"id":5011,"date":"2008-10-16T09:23:56","date_gmt":"2008-10-16T16:23:56","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=5011"},"modified":"2008-10-16T09:25:16","modified_gmt":"2008-10-16T16:25:16","slug":"peter-schiff-our-leaders-irrationally-promoted-home-buying-discouraged-savings-and-recklessly-encouraged-borrowing-and-lending-which-together-undermined-our-markets","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/5011\/peter-schiff-our-leaders-irrationally-promoted-home-buying-discouraged-savings-and-recklessly-encouraged-borrowing-and-lending-which-together-undermined-our-markets\/","title":{"rendered":"Peter Schiff: “Our leaders irrationally promoted home-buying, discouraged savings, and recklessly encouraged borrowing and lending, which together undermined our markets”"},"content":{"rendered":"

Peter Schiff in the Washington Post:<\/em><\/a><\/p>\n

Amid the chaos of recent days, as the federal government has taken gargantuan steps to stabilize the financial markets, realigning the U.S. economic system in the process, comes a nearly universal consensus: This crisis resulted from government reluctance to regulate the unbridled greed of Wall Street. Many economists and market participants who were formerly averse to government interference agree that a more robust regulatory framework must be constructed to cage the destructive forces of capitalism.<\/p>\n

For the political left, which has long championed the need for such limits, this crisis is the opportunity of a lifetime.<\/p>\n

Absent from such conclusions is the central role the government played in creating the crisis. Yes, many Wall Street leaders were irresponsible, and they should pay. But they were playing the distorted hand dealt them by government policies. Our leaders irrationally promoted home-buying, discouraged savings, and recklessly encouraged borrowing and lending, which together undermined our markets.<\/p>\n

Just as prices in a free market are set by supply and demand, financial and real estate markets are governed by the opposing tension between greed and fear. Everyone wants to make money, but everyone is also afraid of losing what he has. Although few would ascribe their desire for prosperity to greed, it is simply a rose by another name. Greed is the elemental motivation for the economic risk-taking and hard work that are essential to a vibrant economy.<\/p>\n

But over the past generation, government has removed the necessary counterbalance of fear from the equation. Policies enacted by the Federal Reserve, the Federal Housing Administration, Fannie Mae and Freddie Mac (which were always government entities in disguise), and others created advantages for home-buying and selling and removed disincentives for lending and borrowing. The result was a credit and real estate bubble that could only grow — until it could grow no more.<\/p>\n

Prominent among these wrongheaded advantages are the mortgage interest tax deduction and the exemption of real estate capital gains from taxable income. These policies create unnatural demand for home purchases and a (tax-free) incentive to speculate in real estate.<\/p>\n

Similarly, the FHA, Fannie and Freddie were created Read more<\/a><\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Peter Schiff in the Washington Post: Amid the chaos of recent days, as the federal government has taken gargantuan steps to stabilize the financial markets, realigning the U.S. economic system in the process, comes a nearly universal consensus: This crisis resulted from government reluctance to regulate the unbridled greed of Wall Street. Many economists and […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[251,8,26,6,5],"tags":[],"class_list":{"0":"post-5011","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-big-mother","7":"category-investment","8":"category-lending","9":"category-marketing","10":"category-real-estate","12":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":4908,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4908\/you-dont-always-get-what-you-want-but-if-you-try-sometime-you-might-find-you-get-what-you-need\/","url_meta":{"origin":5011,"position":0},"title":"You Don’t Always Get What You Want, But If You Try Sometime, You Might Find, You Get What You Need","author":"Sean Purcell","date":"October 13, 2008","format":false,"excerpt":"If you are a mortgage holder who is either struggling with crushing payments, bitter for having overpaid for your home during the bubble, or who has extravagantly refinanced when prices were rising, the government's landmark $700 billion bailout package has an important message for you: stop making your mortgage payments.\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":5638,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/5638\/thus-does-big-mother-make-gonophs-of-us-all-how-to-keep-your-house-by-taking-taxpayers-for-a-ride\/","url_meta":{"origin":5011,"position":1},"title":"Thus does Big Mother make gonophs of us all: How to keep your house by taking taxpayers for a ride","author":"Greg Swann","date":"November 16, 2008","format":false,"excerpt":"This is choice, from the San Francisco Chronicle:To qualify, you must be at least 90 days delinquent and live in the home as your primary residence. You must owe at least 90 percent of the home's value. It's fine if you owe more than it's worth. Your mortgage must be\u2026","rel":"","context":"In "Big Mother"","block_context":{"text":"Big Mother","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/big-mother\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":10558,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/10558\/manufacturing-inflation-how-art-laffer-got-it-wrong\/","url_meta":{"origin":5011,"position":2},"title":"Manufacturing Inflation (How Art Laffer Got It Wrong)","author":"Brian Brady","date":"December 15, 2009","format":false,"excerpt":"If you've wondered where that inflation was, you might start seeing signs of it today.\u00a0 Economic data released today are a great example of why inflation is a monetary consequence and not an economic one: New York metro manufacturing activity slowed WAY less than expected: Factories in the New York\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":4582,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4582\/bloodhound-blog-radio-interviews-matt-padilla-author-of-chain-of-blame\/","url_meta":{"origin":5011,"position":3},"title":"Bloodhound Blog Radio Interviews Matt Padilla, author of Chain of Blame","author":"Brian Brady","date":"September 22, 2008","format":false,"excerpt":"We interviewed Matt Padilla, author of Chain of Blame- How Wall Street Caused the Mortgage and Credit Crisis.\u00a0 This book, released in May, 2008, details a history of non-prime lending, the S&L crisis, securitization of mortgages, and what went wrong. Download and Listen to the 45 minute interview here An\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2064,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2064\/sub-prime-mortgage-crisis-caused-by-unexpected-success\/","url_meta":{"origin":5011,"position":4},"title":"Sub Prime Mortgage Crisis Caused By Unexpected Success","author":"Brian Brady","date":"October 19, 2007","format":false,"excerpt":"Sub prime mortgage are defaulting at record proportions.\u00a0 Lenders are closing their doors and confidence is waning on Wall Street. Greed, corruption, and irresponsibility have all been cited as the reasons for this contraction and collapse. While these factors might be contributing reasons, they are all byproducts from the underlying\u2026","rel":"","context":"In "Investment"","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1794,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1794\/congressional-leadership-on-lending-policies-what-is-crisis-itis\/","url_meta":{"origin":5011,"position":5},"title":"Congressional “leadership” on lending policies: What is “crisis-itis?”","author":"Greg Swann","date":"August 13, 2007","format":false,"excerpt":"The Conspiracy to Keep You Poor and Stupid, which should be in your feed-reader -- especially right now:What is \u201ccrisis-itis?\u201d It is my own diagnosis. It is a form of dementia where the inflicted believes his or her own self worth rises as the situation he monitors worsens. 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