"Mortgage Crisis," shouts the New York Times. The Times has used the term "subprime crisis" at least 11 times. Not in opinion columns -- in news stories.
The columns are worse. Paul Krugman writes: "A lot of the financial system looks like it's going to shrivel up and have to be rebuilt."
The "financial crisis," says Fortune's senior editor, "is threatening to bring down the entire system, with dire consequences."
When the current troubles aren't a "crisis," they're a "disaster". That's what John McCain called them, while Hillary Clinton prefers "crisis," saying, "This market is clearly broken, and, if we don't fix it, it could threaten our entire housing market."
Wait a second.
Where is this "credit crisis"? Did the supermarket reject your Visa card? I still see Ditech commercials offering fixed-rate mortgages at around 5.5 percent.
Sure, some lenders are skittish while things play out. Some investment banks and brokerage houses are sitting on shaky mortgage-backed securities. But why call that a "crisis"?
Do we have 25 percent unemployment, as we did during the Depression? Do we even have 7.5 percent unemployment, 12 percent inflation and 20 percent interest rates, as we did during Jimmy Carter's presidency?
There's a been a loss of jobs in the past two months, but that comes after years of strong job creation -- 25 million net jobs in the last 15 years . At 5.1 percent, unemployment is low by historical standards.
And are we really experiencing a mortgage-default "crisis"? No. The Mortgage Bankers Association's 2007 fourth-quarter survey reports that foreclosures came to 2.04 percent of all mortgages. Many of those were speculators seeking flip profits rather than homeowners losing a dream house. During the quarter, only 0.83 percent of homes entered the foreclosure process. It may get worse -- in March, "foreclosure filings, default notices, auction sale notices and bank repossessions rose 5 percent," Reuters reports. But let's keep things in perspective: Ninety-eight percent of borrowers are not in foreclosure. Only a small percentage of them are even late in payments.
Politicians love a "crisis." John McCain, Hillary Clinton and Barack Obama all think that the government should bail out homeowners who can't pay their mortgages. When they say the government should do this, they mean the taxpayers, including those who are paying their mortgages. They also think the government should regulate the lending and investment industries further.
Why?
Because "crisis" justifies making big government bigger.
It's why we now have a global warming "crisis" and in previous years we had "crises" over avian flu, the Y2K threat to computers, imaginary cancer spikes caused by pesticides, killer bees flying up from Mexico, and uncontrolled population growth leading to a "Population Bomb" that will bring "riots and mass starvation" by the year 2000.
This is not to say that lots of homebuyers aren't having a hard time. But the rapid rise and fall in housing values in some parts of the country -- and the rippling consequences at each stage -- do not justify scrapping what we know about economic success and turning to government control. Prosperity and stability come from people being free to innovate and produce -- and yes, fail. Bureaucrats, however well-intentioned, cannot know enough to manage that process. They are unqualified to give the green light to some innovations and the red light to others. Bailouts create irresponsibility.
I expect the silly people to say silly things. Here's Paul Krugman: "[I]t's puzzling that Democrats haven't been more aggressive about making the disaster an issue for the 2008 election. They should be."
Keith Olbermann even seems to find the "crisis" exciting. "You watch, this is going to make Enron look like the failure of a lemonade stand."
But the rest of us should get a grip. The best regulator of economic activity and source of knowledge is free competition.
Of course, government inhibits that in many ways. If we want to avoid disruptions like the current one, let's undertake a wholesale examination of government intervention in the economy. Freedom, not control, is the ticket to success.
This is precisely right! There are troubling indicators out there. No one denies it. But, keep things in perspective! The relative number of homes in foreclosure is very small: 2%! That's not a crisis at all, that's a correction for over-inflated prices. Unemployment is low, inflation is low, interest rates are low, the stock market is high. There's no crisis.
THERE'S NO CRISIS.
The only people who call it a crisis are those who rely on sensationalism - news outlets and politicians. The real problem here is that if the American people start acting like it's a crisis, it could really become one. That's why it's so important that you understand what's going on, and stay calm about it. Liberals are trying to leverage this 'crisis' into more government control over the lives of Americans, and we cannot allow that to happen. Keep your eyes open, and be aware of what's going on...but don't freak out. And don't, under any circumstances, allow more control to be given to a government that will never, ever give it back to the people.
There's my two cents.
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