Wednesday, 3 April 2013

Latvia, Britain and the US have bagged the top three awards for worst economic policy of the year

I thought that the prize for dumbest economic policy of the year had already been bagged by Latvia on 4th March, when it applied to join the Eurozone within days of Cyprus finally hitting the financial fan. Then, exactly two weeks ago today, George Osborne used his budget to leap ahead of Riga by proposing a Help to Buy scheme, which would encourage house-buyers to purchase new-build houses that they can’t actually afford. Not to be outdone in the stupidity stakes, the Obama administration has now gone one better than Calamity George by urging banks and building societies to repeat the very mistakes that brought the world economy to the brink of collapse in 2008.

In a story from today’s Washington Post headlined “Obama administration pushes banks to make home loans to people with weaker credit”, we read:
President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession. 
In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.  
Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default. 
Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan and are seeking to make it easier for people who owe more than their properties are worth to refinance at today’s low interest rates, among other steps.
So, not only does the American government want banks to lend money to people to buy houses they can’t afford, the US taxpayer gets to pay the bill when the whole deranged plan goes tits up – as it most certainly will.

As Rick Moran sensibly suggested today in American Thinker, "...if consumers have "weak" credit as a result of the recession, let them build it back up by living within their means and paying their bills on time."

Latvia has an excuse: the country suffered under the deadening yoke of Soviet Communism for decades and may simply not realise that by adopting the Euro as its currency it would merely be exchanging one brutal, uncompassionate, economically destructive foreign tyranny for another. But that the country which invented laissez-faire capitalism and the country which turned itself into the most powerful economic force the world has ever known by adopting the system should actively seek to repeat the exact same mistakes which have left their nations owing, respectively, £1,180,988,418,315 trillion and $16,798,751,078, 630.49, is beyond comprehension.

If myriad science fiction authors should prove to be right and there really is a benign alien force watching over us waiting for a sign that earthlings have evolved to the level where they’re worthy of being admitted to the Interplanetary Trade Federation, our visitors might as well turn up the old warp factor dial and head for home – because we’re evidently becoming more stupid by the day!    

1 comment:

  1. I'm not sure the Latvians had much choice in their decision. Maastricht established the principle that all new EU member states have to join the single currency and the Schengen area. The lemming/cliff analogy doesn't work in Brussels, where the bible is the Acquis Commaunitaire. So form an orderly queue boys and kiss the right to govern your country goodbye. Or put off the inevitable by delay and obfuscation, in which case the Commission will infract you.

    It's worth bearing this in mind for the Scottish independence referendum. There is no legal base for part of an EU member state to secede and retain its EU member status. If Scotland chose to leave the United Kingdom, it would have to apply to join the EU, if it wished, and would then be obliged to join the Euro and the Schengen area. That would mean establishing an external border with England and Northern Ireland, with fences, passport controls and assorted paraphernalia. If Scotland chose not to join the EU, then England would be obliged to set up an EU external border with Scotland.

    Worth a punt on fencing, brick, barbed wire, border zone, duty free futures? I hereby give notice that I am registering the name Hadrian's Wallmart. Well possibly. Whatever Salmond might say about negotiating a special deal with the European Commission, the Spanish and others would veto it out of fear for the precedent it would set for Catalan-style secession.

    So maybe he should change the question to "Would you like Scotland to be a wee independent country the noo, behind a wall with no hand-oots from the wicked Sassenachs or those tumshee heeds in Brussels, och aye, and passport controls if ever you are stupid enough to want to go to Berwick?"