posted by St Udio
the USD currently has a confidence-value rating of ~76.5, (.076 cents) which is somewhat lower than immediately before the monetary turmoil of the
USAs credit/mortgage/overrated derivative paper 'crisis' when the USD enjoyed a 82-80.5 value...Not So Much of a Devaluation... yet.
Very few people understand HOW
the meltdown ever happened. Here’s the skinny. The US Civil Service Commission - now abandoned
- was created in the late 1880s. By the 1928 election of Herbert Hoover it is my memory the entire Federal Civil Service numbered fewer than 50,000
bureaucrats (excluding the Post Office. See Note 1).
Beginning in 1933, the US Federal government underwent a sea change in its internal structure. See Note 2. Among dozens of agencies, the US created
the FDIC - Federal Deposit Insurance Corporation - which was funded by a 0.5% once a year tax on deposits paid by the banks. Membership in the FDIC
was optional, but 100% of our banks have joined. No one would dare deposit his or her money in an uninsured bank. Since 1933, no depositor in the US
has ever lost one penny in an insured bank.
The FDIC audited banks monthly. It examined loans, and strictly controlled the number of bad loans a bank could make or carry. If the number rose to a
certain critical level, the FDIC would take over the bank and reform it then turn it back to the original owners. Back then, you did not monkey
with the money.
Another 1933 creation was the FHA. Federal Housing Authority. Created to assist employed but low income people become home owners. Prior to 1933, the
standard banking practice required home buyers to make a 50% down payment. The FHA allowed 10% down payments. It insured the mortgages. To cover any
defaulted loans, the FHA added 0.5% “insurance” fee to all of its insured home loans. A 4% home loan cost 4.5% under FHA. The borrowers paid the
cost of insurance. This guaranteed payback greatly encouraged lenders.
Aside: Of equal consequence, for the first time in America, the FHA set national construction standards for houses. Number of rooms, inclusion of
closets, inside bathrooms, dedicated kitchens, the number of electric outlets and the capacity of the wiring, quality of materials and site locations
were all under Federal regulations. Again, it was optional with builders, but if you wanted your house to qualify for an FHA loan, you had to do it
And more. Although FDR did not invent neighborhood savings and loans, it was under his aegis they prospered and grew. Because the FDIC set bank
deposit interest rates, the Federal government allowed S&Ls to pay 0.5% more interest than banks. Also insured by the FSLIC. Federal Savings and Loan
Insurance Corporation. I will not explain the 1980-1990 Savings and Loan (S&L) debacle here only to remark it was a failure of regulations. Its
estimated the taxpayers will lose $30 b. a year for 30 years. Corporate welfare. But not one dime for the homeless? Hmm? God Bless America. Land
of the Free and Home of the Brave.
In 1943, the GI Bill of Rights was enacted by Congress, arguably the single most significant law ever passed. The Armed Forces of the US numbered 13
million in 1945, but we had already discharged 3 million men. Total served: 16 million. Every man (or woman) with more than 90 days honorable service
was eligible to attend schools of every type, trade, academic or professional including seminaries and received monthly government assistance.
Colleges in America grew 5 fold to 10 fold. See Note 3. A 4 year baccalaureate is de rigeur for all upwardly mobile Americans whereas before War 2,
fewer than 5% of Americans had a college degree.
But, equally important for the topic here, the GI Bill allowed every veteran to buy a house for NO money down! Show your discharge papers in the
morning and by nightfall, you and your family were sleeping in your own home! Perhaps 20 million GI/FHA homes were built altogether. Not one dime was
lost in defaulted mortgages. Thanks, New Deal, you did right by America.
The suburbs were born! And with them, shopping malls and limited
access highways. And for once, the much overworked announcement is true, “Things were never the same again.”
But we’ve changed all that. We now have self-auditing banks, local building inspectors, and slick talking “mortgage brokers” who have hoodwinked
the all so willing public. We LET IT HAPPEN. We gave up the BEST large government in the world for the MARKET. And now you can see what the market
will do for you. Remember this:
the builders got paid. Probably in many cases, OVERPAID. The original loan makers got paid. Undeservedly as it
turned out. The so-called "mortgage bundles” of 100s of mortgages were SALEABLE overseas because they, like Americans, thought “the US
government” was watching over them. IF we had kept the 1933 regulations in effect, neither the first nor the second mortgage debacles would have
occurred. But alas, thanks to you Mr. Reagan, that was not so.
Americans think GOD
regularized housing in the country and have not the slightest notion why or how a house in Maine came to be constructed to
the same standards as a house in Oregon. And etc. All of that has now been abandoned by the ANTI regulation phenomenon that swept America with the
election of Ronald Reagan in 1980. We’re back to the starting line. Who first said “If you don’t know your history, you are doomed to repeat
The Post Office was the major source of political patronage from its founding 1792 until 1971 when it was re-organized as the USPS -
United States Postal Service - and made into a quasi-governmental organization. All employees are now fully covered by merit plans or unions and it is
OUT of politics.
By 1945, the Civil Service numbered about 3 million. Republicans were mad then and are mad now because 80% of the new hires were
Democrats. Hey, one hand washes the other?
I attended EKSC - Eastern Kentucky State College - in 1956 when it was proudly announced the enrollment had exceeded 2,500. Today’s EKU
- Eastern Kentucky University - has over 20,000 enrollment. In 1941 the school had 700 students.
[edit on 1/8/2008 by donwhite]