This Is Me

Jessie Bee
I am a seeker of God, a help-meet to my husband and a mother to my 3 children. I love hot lattes, good books, cold weather and anything that inspires me to be creative. I desire simplicity and authenticity, but often have to remind myself to seek those .
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Saturday, October 22, 2011

My thoughts on occupying ANY street.

First of all, Occupy Wall Street confuses me.  Can some tell me EXACTLY what the goal of the movement is?

I read on the Occupy Wall Street website that this movement is"fighting back against the corrosive power of major banks and multinational corporations over the democratic process, and the role of Wall Street in creating an economic collapse that has caused the greatest recession in generations."


How much power can major banks, multinational corps and the so-called "Wall Street" possess if not first granted by our friend, Mr. Government?  None.  

Let's consider, for instance, the housing market crash.  Thanks to my real estate classes, I've learned quite a bit on the subject:

In 1977, Congress passed the Community Reinvestment Act which required lending companies to quit discriminating against credit requests from people in low-income neighborhoods.  Up until the year 2000, the percentage of lending devoted to low-income living was at or around 30%.  

In 2000, during the Clinton Administration, that percentage was raised to a whopping 55%, and in 2007 (during Bush's administration), was raised again to 55%.  

So herein lies Problem #1:  Subprime mortgages.  More than half of all mortgages being given out by financial institutions were what we call "subprime", which literally means "less than prime." 

Problem #2:  Fannie Mae and Freddie Mac were busy buying up these loans.  Banks lend buyers the money, then turn around and sell those loans (more specifically the interest) to larger companies (e.g. Freddie Mae, et al) so that they have the cash to keep giving mortgages to borrowers.  That's fine and dandy, and it worked great, unless it's the government insuring most of these mortgages, and most of these mortgages are subprime.

Problem #3: Investors stopped investing.  How is it that Fannie Mae and Freddie Mac could keep buying up these mortgages from the banks?  It's because investors would invest their money for what are known as Mortgage -Backed Securities (MBS).  I'm not going to go into the details of those.  When the interest rates jumped up on the subprime mortgages, the borrowers could no longer afford them so they stopped paying them, which obviously made investors worry about their investments and stop investing.  With no more money coming into Fannie Mae and Freddie Mac and no money being paid on the mortgages, it only makes sense that the entire system crashed.  

But wait.  Who started the problem?  (Answer:  the government)

In a study regarding lottery winners, published in The Review of Economics and Statistics, results showed that more money does not solve a spending crisis.  Essentially people who cannot handle a budget rarely do any better when more money is handed over to them.  So while I am in 100% agreement with the OWS movement in that large corporations (big banks, etc) should not be bailed out of financial hardships as a result of stupidity, I also don't believe they should be paying more in taxes than is already required.  Teach the government to work on a budget, and then reevaluate the tax percentages.  

I suppose watching my husband run a business gives me a bias in this situation.  He is incredibly fiscally responsible when it comes to running his business and our family willingly takes a smaller income just so he can pay off his business debts faster (e.g. truck leases). 
My husband and I pay for our own health insurance, we are funding our own retirement (and don't anticipate taking in Social Security, although we pay it dutifully), my husband lowers the unemployment rate via his business, and we give to charities monthly.  We are definitely part of the 99% who work hard.  However, I refuse to see the economical problems we're facing originating from the (much too stereotyped) 1%.  I'd argue that it's a two-fold problem resulting from a) the lack of morals we are seeing throughout our country's leadership, both government and corporate and b) yes, I'll say it - our government is too big.


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