I keep hearing everyone say either, “Deregulate!” or “Re-regulate!”  What do I not see them saying?  I don’t see them offering any rational reason why one is better than the other.  I don’t see them telling the people why they will personally benefit from either.  When I see this happening, I again, go to the root of the problem and offer you solutions.

The housing market crashed.  The derivative market that traded toxic assets helped obliterate our economy.  The question is why and what do we do now?

Throughout history going back a century, the value of real estate has only seen growth equal to inflation which basically puts home values flat for most of the 1900’s relative to your personal income.  The only reason you would make little money back from selling your house and moving is because you lived there for so long you had enough equity that inflation did compensate you some.  Some are going as far back as the Carter administration to place blame because of the Community Reinvestment Act; while others go to their “fail-safe” mode of blaming the Bush administration.  After all, even our current President keeps using that card over one year later.  While I’m not going to point blame on any one administration, what I do know is that government regulation and policy caused this crash.

You can see what happened starting 1999.  Property prices stopped following the historical trend, which is based on data from 1987 through 2000.  Other charts dating back decades follow the same trend.  While I’m not entirely blaming this recession on the Clinton administration, this was a time that there was a big push in the government to get every American in a home (think; Government Interference in Our Economy).  Janet Reno began enforcing the Carter Community Reinvestment Act and Fannie and Freddie were told by government officials to start lending and loosening their credit standards.  This created a very lucrative derivative market that was ENCOURAGED and SUPPORTED by GOVERNMENT POLICY.  Regulation and government backing caused all of our homes to see incredible gains in value that we’ve never experienced in the US.  During the Bush administration, there were plenty of warnings that this artificial increase was wavering.  Individuals called for change in regulation but Congressional leadership (both Republican and Democrat) refused.  It was just a year or so prior to the crash that Maxine Waters and Barney Frank saw nothing wrong with Freddie and Fannie while the problems were blatantly obvious.

The minute the government got involved things went wrong.  That’s why those yelling “Re-regulation!” are wrong.  That’s why we need the government out of our lives and they should just start doing ONLY what the Constitution has outlined for them to do.  Another recent example that isn’t quite as severe as this would be the biodiesel industry here in Iowa.  The Congress has been offering tax credits and subsidies that made it possible for these companies to be profitable and produce a service.  Now that Congress has not extended the tax credit, these companies are facing financial ruin.  Government is NEVER the answer in our financial lives.  They have over-stepped the boundaries.  So when you’re sitting at home having lost a significant portion of your home’s equity look no further than the hand that’s trying to force feed you higher taxes, higher energy costs and terrible healthcare.  When I get to Washington I will never support policy that oversteps Congressional Constitutional powers.  They’ve been doing it for years and it’s time we put them in their place and told them – “Know Your Role!”