The Dems must be cheering this morning. That is the ones that don’t have a nickel in the Market. You see, there has been a “redistribution of wealth” for the past few years and now payback is happening. Lehman Brothers is in bankruptcy, B of A has taken over Merrill Lynch and AIG is looking for a suitor. But not to worry, Barack will make it all better, once he is President.
And what happened to a few hundred billion dollars? Well, it got trickled down in the form of bad loans to people, some who had neither the means nor others any intention of paying them back. The real estate bubble generated huge amounts of cash that trickled down to mortgage brokers, RV and car dealerships, jewelry stores, furniture stores, liquor stores, South American drug lords and yes…Wal Mart.
Money was extracted during refinancing that went just about any place you can imagine except back into paying the mortgages. And when the bottom fell out of the market, there was really no good reason to make payments on a property that was not worth anywhere near the mortgage. This could be euphemistically referred to as a “correction“.
And who’s to blame? Well, you could blame Herr Greenspan, who kept the prime interest rate low, low, low for far too long. Also, cheap money fueled a housing boom that none but the naïve could imagine would be without end. And add to that, predatory practices that resemble fraud far more than any responsible lending behavior.
So for those who think “redistribution of wealth” is a good idea, take a close look at your 401k, your pension plan, your stock portfolio or the current worth of your uncle Bubba, who held most of your inheritance in Lehman Bros. If you want to imagine what an Obama give-a-way government would look like, think 100 times the hit’s the Market took today. Now let’s see how that “taxing the rich” is working for ya.