The End of Bush's "Ownership" Society: Now It's On-Your-Ownership

All presidents' have encouraged (at least to some extant) home ownership. Some more than others. Some more recklessly than others. None has ushered in policies as dangerous to our economy as has George W. Bush.

Newsweek columnist,Zachary Karabell writes for Newsweek here:

Such a country would be more stable, Bush argued, and more prosperous. "America is a stronger country every single time a family moves into a home of their own," he said in October 2004. To achieve his vision, Bush pushed new policies encouraging home ownership, like the "zero-down-payment initiative," which was much as it sounds—a government-sponsored program that allowed people to get mortgages without a down payment. More exotic mortgages followed, including ones with no monthly payments for the first two years. Other mortgages required no documentation other than the say-so of the borrower. Absurd though these all were, they paled in comparison to the financial innovations that grew out of the mortgages—derivatives built on other derivatives, packaged and repackaged until no one could identify what they contained and how much they were, in fact, worth.

And now we see the result. And as we see it, we also hear absurd claims by McCain campaign and the RNC that Democrats caused this. It's no secret that the Clinton administration hoped to enable more Americans to won homes. As indicated in the article linked above, all US presidents have. However, despite the revisionism of the radical cons, and the McCain campaign, during the Clinton era, people still had to have the financial creditworthiness (as manifested by their net worth and a good credit history) to get a loan. And they still had to report honestly their financial status. Some instruments ushered into the mix During the Bush years, and with the encouragement of the Bush administration, have not required any financial stability on the part of the borrower. And the lunacy of zero down mortgages, which assure that the borrower is even more "upside down" (in this case owing more than the home is worth) than with a down payment speaks for itself. And this, ultimately, has reaped havoc with credit markets now falling from the weight of all the bad debt.

And so, here we are, pending the reopening of the credit markets this week, we still don't know the effect of the European banks (and our own) infusing liquidity into the banking system. We still don't know whether interbank lending and the vital letters of credit needed to move goods around the world will get capital and goods moving again. World trade depends on it. And so does the health of economies all over the world.

http://www.newsweek.com/id/163451/page/2