It was determined a long time ago, that hot money from all over the world would fund big business and mortgages. Forget small business, that had to continue to rely on bank deposits.
Mortgages and Big Business are funded by hot money. Hence, housing bubbles and momentum trading on Wall Street. The average investor has no clue that all this is going on.
One of the pioneers of this strategy was George Romney, Mitt’s dad.
This funding through the securitization of mortgages resulted in the first subprime lending machine. Mitt Romney believes in this, even though small business is the key to prosperity. Jobs are the key to prosperity, not housing. Yet, government has found it easy to fund a quick boom in housing, creating a false sense of prosperity.
Housing jobs should be a result of foundational jobs, not the end all and be all of prosperity planning!
As it turns out, Mitt Romney has hired two advisors that advised George Bush, wanting a housing bubble with hot money that did come to pass. Even though the subprime escapade of the early 1970’s failed, and the subprime fiasco of the 2000’s failed, Mitt believes in this method of stimulating the economy, on the backs of the middle class, because of who he has hired and because attempts to fund small business seems to have a high rate of failure or bad press, as Obama found out in trying to fund green companies.
It is very clear to me what the Republicans want, as they seek other stimulus rather than QE. That in and of itself would not be a bad idea, except for this: I have maintained that there is too much money and credit at the top of the financial food chain. The temptation to fund easy money housing bubbles and call that prosperity is great. It is easy. It can be maintained through at least one term, and in Bush’s case, two terms in office.
Hedge funds are crucial to funding this hot money, and they are seeking to repeal the Volcker Rule, and are seeking to stay off any list that would make them systemic zombies.
The problem, of course, is that it becomes difficult for the average person to price stocks and houses because of all the hot money interference that is swooping down on these assets. These assets become commodities in and of themselves, and massive buying creates scarcity, even though demand from all but the 1 per cent is down.
Gambling in the housing market by the 1 per cent, not as Rick Santelli says, the average buyer, is just wrong. Shelter should not be subject to this game. Mitt Romney is a predator just like his dad, who had to terminate subprime programs because of predatory lending and flipping. Sound familiar?
Just remember, George Romney punished job creators, small business, when he helped to allow big business and mortgage originators access to global capital markets (hot money), but not small business. Small business owners should be under no false illusion. Mitt Romney will be his dad, and will not be in the camp of small business owners.
The difference between George Romney’s time and Mitt Romney’s time, of course, is that back then, the US was a sovereign nation able to put a quick stop to easy money shenanigans. That is no longer the case, as the capital markets are now sovereign, or nearly sovereign. Nothing will stop the easy money once the bankers determine the time for another financial attack.
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