James Taranto's more-or-less daily column in the WSJ is one of my favorites, so it was nice to see a theme I've espoused before echoed in his latest offering. To wit, I wrote this entry back in 2008...
http://dontcomeinhere.blogspot.com/2008/09/no-big-surprise-bailout-of-freddie-and.html
Congress and the Administration have teamed up to cover the losses of these mortgage behemoths. They essentially took them over as government operations, kinda like Hugo Chavez did for many industries in Venezuela.
Now, between the three of them (Fannie, Freddie, Ginnie), US taxpayers are on the hook for about half of the existing $12T in mortgage debt.
...
The student loan industry is a mirror image of the mortgage industry and is likely to face a similar explosion. Government creates a perverse incentive (usually in the name of diversity) to loan money to people who cannot pay it back. As a government supported program, private lenders are willing to take more and more risk, pocketing the profits and turning to the Government to cover to losses....
Our Government is a classic enabler and we are all codependent. An enabler is a person who by their actions make it easier for an addict to continue their self-destructive behavior by rescuing the addict. The codependent party exhibits behavior that controls, makes excuses for, pities, and takes other actions to perpetuate the obviously needy party's condition, because of their desire to be needed and fear of doing anything that would change the relationship.
http://online.wsj.com/article/SB10001424127887324688404578545523824389986.html?mod=WSJ_Opinion_MIDDLETopOpinion
Oakley defines pathological altruism as "altruism in which attempts to promote the welfare of others instead result in unanticipated harm." A crucial qualification is that while the altruistic actor fails to anticipate the harm, "an external observer would conclude [that it] was reasonably foreseeable." Thus, she explains, if you offer to help a friend move, then accidentally break an expensive item, your altruism probably isn't pathological; whereas if your brother is addicted to painkillers and you help him obtain them, it is.
As the latter example suggests, the idea of "codependency" is a subset of pathological altruism. "Feelings of empathic caring . . . appear to lie at the core of . . . codependent behavior," Oakley notes. People in codependent relationships genuinely care for each other, but that empathy leads them to do destructive things.
Ostensibly well-meaning governmental policy promoted home ownership, a beneficial goal that stabilizes families and communities. The government-sponsored enterprises Freddie Mac and Fannie Mae allowed less-than-qualified individuals to receive housing loans and encouraged more-qualified borrowers to overextend themselves. Typical risk–reward considerations were marginalized because of implicit government support. The government used these agencies to promote social goals without acknowledging the risk or cost. When economic conditions faltered, many lost their homes or found themselves with properties worth far less than they originally had paid. Government policy then shifted . . . the cost of this "altruism" to the public, to pay off the too-big-to-fail banks then holding securitized subprime loans. . . . Altruistic intentions played a critical role in the development and unfolding of the housing bubble in the United States.
The same is true of the higher-education bubble. As we've argued, college degrees became increasingly necessary for entry-level professional jobs as the result of a well-intentioned Supreme Court decision that restricted employers from using IQ tests because of their "disparate impact" on minorities.
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