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Cause and Effect
Dec. 23rd, 2010 11:11 amI'm near the end of the year and waiting for the Sat TV repair person, so I thought I'd check in dear old Rand Simberg to see what he made of the End of Year activities in the US government... Crickets as it turns out.
But I did come across this thread: http://www.transterrestrial.com/?p=31238
Where dear old Rand and his merry crew are explaining, again, how the 1977 Community Reinvestment Act caused the mortgage meltdown... this is a fascinating part of historical and economic incompetence and worth exploring the many logical fallacies you have to hold to be true for this to work..
Firstly, there's the CRA itself - a 30+ year old piece of legislation which, we are to believe, cause the meltdown by suddenly making lots of bad loans for political grounds after almost 30 years of sane operation?
Secondly, I'm struggling with how the CRA caused the collapse, of, say, Northern Rock in the UK whom I'm pretty sure were not lending money to poor Americans...
Thirdly, one would expect that the bulk of the bad loans would therefore be in poor, predominately black areas (the ones the CRA was designed to cover)... except, the really heinous loans appear to be generally in white middle class areas...
Fourth, one would assume that if you added up the CRA loan amounts you'd come up with a significant percentage of the mortgage catastrophe, rather than something like 15-20% or less...
Apart from that... as they say, how was the play Mrs Lincoln?
But I did come across this thread: http://www.transterrestrial.com/?p=31238
Where dear old Rand and his merry crew are explaining, again, how the 1977 Community Reinvestment Act caused the mortgage meltdown... this is a fascinating part of historical and economic incompetence and worth exploring the many logical fallacies you have to hold to be true for this to work..
Firstly, there's the CRA itself - a 30+ year old piece of legislation which, we are to believe, cause the meltdown by suddenly making lots of bad loans for political grounds after almost 30 years of sane operation?
Secondly, I'm struggling with how the CRA caused the collapse, of, say, Northern Rock in the UK whom I'm pretty sure were not lending money to poor Americans...
Thirdly, one would expect that the bulk of the bad loans would therefore be in poor, predominately black areas (the ones the CRA was designed to cover)... except, the really heinous loans appear to be generally in white middle class areas...
Fourth, one would assume that if you added up the CRA loan amounts you'd come up with a significant percentage of the mortgage catastrophe, rather than something like 15-20% or less...
Apart from that... as they say, how was the play Mrs Lincoln?
