Nearly all governments globally are fighting this recession and financial meltdown with colossal spending with their bailout and stimulus packages.
This crisis came about because people spent money they didn't have and lived beyond their means. Now governments everywhere are going to do the same living beyond their means using money they don't have (deficit spending) to fix it- how ironic. Thus they are mortgaging their country's future with huge debts. As a Christian, I see this debt spending as evil.
Government encouraged everyone to live beyond their means so they can grab votes by getting the credit from the economic boom that resulted because they gave everyone opportunity to spend like crazy. In the U.S. Attorney General Janet Reno and the Department of Housing came up with the Sub prime Authorization of 1995, which strengthened the 1977 Community Reinvestment Act (CRA). Ms. Reno threatened the banks with severe consequences if they didn't make mortgage loans to people who could not afford them.
It's a left-wing liberal obsession of rights, including a right to own a house. It was to satisfy the liberal obsession to look compassionate in order to buy votes. In the 1990s a poor black getting a house because of CRA means a vote for Clinton. This decade a poor Hispanic getting a house means a vote for the Republicans. That is why both American political parties pandering to minorities allowed the CRA sub prime farce to linger.
Federal Reserve Chairman Alan Greenspan early this decade lowered interest rates drastically only fueled more bad loans because people then could borrow more and the Bush administration allowed banks to increase their debt to capital ratio from 12 to 1, to 40 to 1. This economic boom of roughly 1994-2007 was a boom paid by going into debt, and as long as the boom lasted the politicians in office got the credit.
This was all living beyond ones means with government blessing. I ask, where is the protection of our property (our earnings) from being extortioned by the state (here in Canada too) to bailout everyone who lived beyond their means, being homeowners, businesses, unions and banks?
The main Biblical principle about money management is to not spend more money than you earn. It works for a homeowner, a teenager and even the federal government. Household debt among Americans was 50% of GDP in 1992, now at the end of 2008 it is 180%. With such debt, no stimulus will work and only adds to the national debt as well.
U.S. President Franklin Roosevelt in the Great Depression tried to spend his way into prosperity. Remember the following statement uttered in 1939 by Roosevelt's Secretary of the Treasury, Henry Morgenthau, “We have tried spending money. We are spending more than we have ever spent before and it does not work. I say, after 8 years of the (Roosevelt) administration, we have just as much unemployment as when we started, and an enormous debt to boot.”
When government launches deficits to fight the war on recession by promising that this is only temporary deficit spending, is it temporary, were told, like income tax was going to be?
Stanley Reitsma,
Carman, Manitoba
