The current mortgage crisis which has shaken American confidence in our economy, and sent the financial markets on a rollercoaster ride the last few weeks really should have been no surprise to anyone paying attention. Over the last decade the housing market nationwide has seen one of the biggest booms in history, and much like the booming internet stocks of the 1990’s, the potential for huge profits was enough to convince individuals to leverage themselves to the hilt in an effort to reap the rewards.

Once again we find ourselves in the age old battle of rich against poor, as hundreds of thousands of low income Americans find themselves facing a foreclosure do to unscrupulous business practices of rich mortgage lenders. At least that is what the Democrats will have you believe.

“President Bush believes that the market will just correct itself,” Sen. Barack Obama of Illinois, who is second in the Democratic national polls, said in a statement. “We need a president who will help families afford to own homes rather than how to help the lenders that got us into this problem in the first place.”

Ironically, the recent mortgage crisis has helped push home values down, thereby opening up the market to those who could not afford to purchase a home last year. This is what is known as supply and demand, and it is the basic underlying principle that drives our economy. The early part of this decade saw low interest rates, and loose lending practices, with mortgage lenders taking chances on those with poor credit histories and/or low incomes. Those same individuals took chances themselves, taking out a mortgage which stretched their budget to its capacity in the hope that a future interest rate drop, or increase in home value would ease the burden.

With the current state of affairs in the mortgage market, many lenders are now being more restrictive with whom they will lend money to. This has led to a decrease in potential buyers in the marketplace. As the rules of supply and demand dictate… less buyers will inevitably equal lower prices. This is good news for potential homebuyers who for the last 3 or 4 years sat on the sidelines in what was widely considered a sellers market. It appears their patience may now be rewarded.

Not so fast! Leading Democrats are proposing the Government step in and bail out those who purchased a home they can longer afford to the tune of $2 billion. Pointing the finger squarely at President Bush and other Republicans, Democrats feel the borrowers should not bear the burden of their own financial failures. The solution is to Democrats is obvious:

1. New government regulations
2. Tax payer funded grants to those who can no longer afford to keep their homes

But what of those still sitting on the sidelines, exercising fiscal responsibility in the hopes their dream home would come down in value to the point it was affordable? They will now watch the government take their tax dollars and use them to artificially prop up the housing market. Democrats will have you believe this is for the good of the economy, and necessary to help those who were “swindled” by lenders, but the truth is, this is a vote buying scheme.

Obama and company plan to convince these people who are facing foreclosure that their economic problems are not self inflicted, they are due to a governmental failure. In some respects I would agree with that theory, but not in the manner the Democrats wish us to believe. The only failure on the part of the government in the case of the sub prime mortgage crisis was in the form of government education, or lack thereof. Math scores have dropped considerably in the last 50 years, and economics courses in high school are almost non existent any more. The sad truth in our country is the majority of people do not even understand how to balance a checkbook, much less understand how the mortgage process works.

Bailing out hundreds of thousands of people who took out a loan they could not afford to repay is not the answer.

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Congress, Election 2008, Politics, Taxes