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Voter Initiatives and Bailouts

Two columns in the Los Angeles Times caught my eye. The second one is on a "student loan bailout". In this first one, though, Tim Rutten bandwagons with his bemoaning of California's voter initiative process. He cites Chief Justice Ronald M. George's statements before continuing...

Serious political historians also agree...

So you are a moron if you disagree, you see.

that, as currently utilized, the California initiative process is a perversion of what the Progressives intended when they inserted these direct-democracy provisions into the state Constitution.

Let us, for the sake of argument, grant that as true. So freakin' what? We all have to play by the same rules. Maybe the "Progressives" were hoping that only their pet initiatives would pass a direct vote, but that's not the way law works. Ain't equality great?

Just because it isn't being used the way those folks wanted way back then is not a good reason to scrap it now.

Moreover, Californians are not particularly unhappy with the initiative process.

Ah, but we’d better find a way to chuck it anyway, right (but only after using it to repeal the California Marriage Amendment, of course)? I'm open to refining the initiative process, but only if California is broken up.

David Lazarus has a column entitled, "How About a Bailout for Student Debtors?"He cites rising fees/tuition costs for higher education. Doesn't he realize that more government involvement, especially in the form of bailouts, will raise those costs? The institutions note that people "have more money to spend" and so they will charge them more. It is called supply and demand.

The Student Aid and Fiscal Responsibility Act (HR 3221) passed the House last month pretty much along party lines. It's now working its way through the Senate.

The bill would eliminate the Federal Family Education Loan Program, thus making student loans much riskier (and hence unattractive) for banks. The Education Department would continue offering direct loans and would presumably dominate the market.

Democrats say the legislation would free up more funds for Pell Grants and other financial aid. Republicans say the federal government would be playing too large a role in higher education.

The Republican’s are wrong. The federal government already is playing too large a role in higher education.

I have no problem with the government, rather than banks, deciding who gets a college education and who doesn't, just as it's the government's responsibility to ensure that everyone gets at least a high school education.

Gotta love incrementalism. Maybe it is time for government to get out of high school education? Banks don't decide. Students and admissions staff decide.

I'm sympathetic, but only because the government has already shown itself to be a soft touch for banks, insurers, carmakers and especially for homeowners, who in many cases had no business taking out loans they couldn't repay.

In that context, I think it's perfectly reasonable for college students and recent grads to seek a little bailout of their own.

Of course! It's a version of the domino theory at work. Government intrusion into one area justifies having it intrude into others. "They got paid!" means everyone else should get "paid", too.

So what about recent grads who did what I did and purposely choose an institution they can afford? Are they just suckers? They sure are, if they could have gone to a more expensive (and thus, more prestigious) university, and had taxpayers pay the entire bill. Boy, I went to school at the wrong time. I bought my house at the wrong time. I bought my car the wrong time. In each case, I missed handouts from other taxpayers. I guess I’m a sucker.

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Maybe He Can Take Economics?

Caren Bohan reports in this Reuters piece that Obama is criticizing banks for being against further government involvement in financing higher education.
President Barack Obama criticized the largest U.S. banks on Monday for trying to thwart legislation that would overhaul federal student loan programs.
Of course businesses are going to seek to protect their interests. This is part of a larger problem. The more power the central government has, the easier it will be for the elite to manipulate the system to their advantage. This is why we need limited government with separation of powers.
He singled out in particular banks that have received bailout money from the federal government, saying they want to maintain the status quo on student loans because they get an "unwarranted subsidy" from it.
So what if that is true? Welfare-dependent crackhead Democrat voters do the same thing.
The U.S. House of Representatives last week approved legislation that would cut major banks and student loan giant Sallie Mae out of a large slice of the $92 billion university student loan business, shifting most lending into a program run by the U.S. Education Department.
Where is the Constitutional justification for the federal government being involved in any of this?
"The large banks -- many who have benefited from taxpayer bailouts during the financial crisis -- are lobbying to keep this easy money flowing."
He says that like it was wrong for the banks to take the bailout money, but that's not what he seems to believe, if the rest of his actions are taken into account.
Many U.S. students take on crushing debt loads to pay university bills that can total $50,000 a year or more at the country's private universities.
Why? We are paying so much for public universities and community colleges. Why should we make it easier for private universities to increase tuition rates? Maybe if the federal government wasn’t providing loans and outright grants, the universities would have to keep tuition rates lower or risk not getting enough students. I just don't see the justification for any kind of federal involvement in higher education, except when it comes to military academies and scholarships for military veterans.
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Two Things On Which Our Financial System Should Rely

1. Voluntary interactions.  We should not be using taxpayer money to employ anyone (except government employees), pay anyone for their non-government job, to prop up companies, to back up loans, or to give people housing beyond their own means.  The risks and rewards of taking a job, employing someone, buying a home, taking out a loan, or making and investment should be suffered and enjoyed by people who have entered into those agreement voluntarily.  Only when there has been coercion or some form of theft of fraud or true monopolization should the government get involved.

2. Decentralized Power.  This means that individuals and voluntarily associations (such a companies, where people voluntarily work and voluntarily invest) should engage in voluntarily exchanges of goods and services, including capital and loans.  They should make decisions for themselves, enduring the risks and rewards.  It should not be up to the President (or anyone in his cabinet) or Congress to tell people what to do with their resources, as long as those resources aren’t being used for fraud or some other coercive crime.

An economy may thrive temporarily in a house of cards, but an economy that grows based on actual value and productivity will be more sound in the long run.

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Spread the Word About Fiscal Stupidity

The current financial situation is a perfect example of how government-mandated "compassion" leads to problems. It isn't the job of the government to make sure that you can live in the house you want. Spread the word using tools like this video. Make sure your family and friends know the truth.
 
 
UPDATE: Not sure what happened to the video.  Try here or here.
Tags: economy   loans  
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It's Not Congress' Concern How Much a CEO is Paid

I find it infuriating that some on Congress are questioning and criticizing lender CEOs about their salaries.  It is NONE of their business.  Don't bail the companies out.  Let them either succeed or fail.  What their CEO makes is up to the company owners.

Then there's the drive-by media, getting sob-story comments from people who took out home loans they couldn't afford to live in homes they can't afford, bashing the CEOs of these companiess for "taking food out of the mouths of" their children.

ENOUGH!  These people WILLINGLY entered into these loan agreements.

These companies WILLINGLY offered these agreements.

NEITHER group should be bailed out, and Congress shouldn't meddle!


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When "Victims" Volunteer

When I hear a Dem POTUS candidate bash “predatory” lenders because someone is going to be “forced out of their home” it makes my blood boil.  Those lenders are the people who have allowed those people to live in those houses.  Without those lenders, those people wouldn’t be in those houses in the first place.  Those people willingly took out loans they could not afford.

I used to get calls every day offering me refinance deals.  I would hang up.  Do I have some magical power that these other people don’t have?

Yes, those lenders should not have given loans to those people.  But what would we be hearing if they didn’t?  We’d be hearing about how the poor and “minority” populations were being denied loans!

In this case, the “victims” volunteered to participate in these loans, because it got them into a home they couldn’t really afford.  Some of them hoped that their home’s value would continue to increase at a rate that would allow them to replace the loan with another one.  Others just didn’t think about it.  Either way, it wasn’t a sound financial decision.

Both the companies that offered these loans and the people who signed on for them are responsible for driving home prices up too much too fast, leaving people like me to live more modestly than I’d like, because I refuse to upgrade into a better home until I can truly afford one.

Above all else, it isn’t the President’s job to get involved whether someone can make their mortgage payments or not.  Government should not bail out the lenders, and it should not bail out the people living in the homes.

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