Blatant Reality

John Hawkins from Right Wing News conducted an interview with Thomas Sowell about his new book Economic Facts and Fallacies. Sowell is the author of such books like The Vision of the Anointed which discusses the incorrect views of those who view the world as just a series of problems and solutions and not one of variable trade-offs. In this interview, Hawkins asks several interesting questions concerning many of the modern “facts” about poverty and the economic disparity between races. Here is just one of the questions he asks and the answer he gets:

The subprime mortgage crisis has been in the news quite a bit of last. Tell us what caused the subprime mortgage problems and what we should do to fix them.

 

There were any number of things that contributed to it. One of the things was that the Fed lowered the interest rate by a tremendous amount, down to about 1% and under those conditions, many people thought that they could afford to buy a house and in fact, they could afford to buy a house so long as the interest rates remained low and the housing prices kept rising. (However), markets go up and down and have for centuries, so those who got themselves out on a limb, got themselves in deep trouble in part because of that.

 

The government was also, at the same time, leaning on lenders to lend to people they would not lend to otherwise, particularly under the Community Reinvestment Act, that empowered politicians to tell lenders that they ought to put so much money here rather than there — as if politicians know better, which they don’t.

 

Between those two things, you had a lot of people out there in very dicey situations and now the politicians are saying that they want to ride to the rescue. Well heavens, they created the problem and I can only imagine that they’re going to make it worse, the more they intervene.

It is a pretty interesting interview with a lot of the questions directly relating to current economic issues. I would definitely recommend reading the whole article.