Depressions differ from recessions in duration and intensity. At some point, the length of a recession coupled with the severity of its economic downturn justifies calling it a depression. Whether we are in the throes of a recession or depression, the current depressed level of economic activity is the direct result of government actions aimed at creating diversity. Progressives’ operational definition of the term diversity is government-enforced redistribution of resources.
Taki’s Magazine describes our current state as a Diversity Depression.
Artificial demand for housing—demand contrived by government fiat rather than by the desires of creditworthy buyers—inflated property values well beyond any costs recoverable through resale. Essentially, three factors caused this unsustainable bidding war. As part of creating his Great Welfare Society, Lyndon Johnson and his cronies changed Fannie Mae from a government agency into a Government Sponsored Entity to hide their intentions and to give themselves plausible deniability concerning their control of Fannie’s actions.
Jimmy Carter and company invented the Community Reinvestment Act that made lenders forgo opening branch banks unless they issued mortgages to people who were incapable of repaying their loans. The CRA forced them to choose between needlessly increasing losses on bad loans or being fired by stockholders for making less money than competing institutions.
Bill Clinton and his cohorts greatly increased the required ratio of noncollectable loans to profitable mortgages, and lenders bundled these high-risk loans together as securities in an attempt to offset some of the anticipated losses, creating the sub-prime mortgage industry. As long as borrowers repaid these high interest rate mortgages, everything was peachy; only, this financial house rested on an unstable foundation.
In 2003, then President George W. Bush, members of Congress, and other officials began to warn that this Ponzi scheme was going to unravel. Barney Frank, Chris Dodd, and other Theftocrats argued that it was financially sound and socially justified—this is the diversity aspect of this debacle—offering their usual crutches-for-little-Timmy-Cratchet arguments. Before long, Corruptocrats’ constituents began to live down to their credit histories and to default on their mortgages in droves.
The securities made up of these financially unjustified mortgages lost billions of dollars in value, housing supplies greatly exceeded demand, real estate values plummeted, lending institutions collapsed, businesses closed, unemployment skyrocketed, and investors stopped investing. So thanks to the Theftocrats’ vast expansion of the theft-welfare state, we are in the midst of a Diversity Depression. It is the direct result of progressives’ redistributive policies and laws.
Having created this dreadful mess, Team O-buma’s response has been:
- To borrow another $2 trillion from the Chinese and squander it on ineffectual programs
- To nationalize industries that are vital to economic recovery and give them to bureaucrats who are so ignorant of business matters that they cannot successfully operate a for-profit entity
- To apply excessive regulations to strangle the life out of the energy sector, knowing that the US economy runs on oil
O-buma and the other progressives caused the current crisis, and they are exacerbating it by intentionally pursuing the same failed experiment. They are bankrupting the nation and breaking the back of the greatest economic engine in the history of the world. Anyone who still fails to recognize that they hate America has not been paying attention.
May your gods be with you.