With the unfortunate lack of opposition in the legislature of Alberta (left or right) we can look forward to many ill-conceived schemes sliding under the radar.
Anybody who has even peripherally been watching the news has observed that we are in the midst of a global disaster in the financial markets. One of the key elements in the financial collapse was the American sub-prime fiasco. Under the misconception that home ownership is a right for all individuals. With the government subsidized entities of Fannie Mae and Freddie Mac buying and guaranteeing mortgages from lenders, lending institutions were encouraged to expand into the market of people who normally would not qualify for mortgages.
Lengthy terms, low interest and a low bar for qualification encouraged by these entities led to a boom in the real-estate market that lasted for years. Alas, what goes up must come down.
Reality came crashing down and the USA financial market discovered what lending institutions sort of always knew; there is a reason that some people do not qualify for mortgages. Some people simply do not make enough money to properly repay a mortgage, some people are too irresponsible to pay other bills and thus their credit is too poor to qualify for a mortgage. With Fannie Mae and Freddie Mac buying and backing these high-risk loans however, banks were encouraged to keep lending this money out.
Low and behold, a tremendous number of people began to default on these mortgages that they never should have had in the first place. Foreclosures skyrocketed, real-estate values plummeted and banks were left owning a great deal of real-estate with negative equity. This of course has rocked the entire American market which in turn has rocked the entire world market.
The sub-prime fiasco is not the entire reason for this massive world market correction, but it is the main factor involved with it. It really does not seem that complex. Leave lending institutions alone. They want to make money. In order to do so, lending institutions create their own standards for loan qualifications so that they reduce the risk of people defaulting on their loans and the banks can continue to enjoy profits from loan interest. Due to that, some people will simply not qualify for credit. Get over it!
Even while we are in the midst of such a brutal lesson in basic economics, one idiot in our legislature has cluelessly proposed that we walk down the same disastrous path.
Progressive Conservative MLA for Lethbridge West Greg Weadick has tabled Bill 208; the Alberta Affordable Mortgage Protection Act. This bill explicitly states that the government should guarantee mortgages for people who would not normally qualify for one. WTF!!!!!!
Even without the current world financial crisis as an example to learn from, this concept is so stupid it should not even hit the legislature floor. Government is good enough at finding business losers to back financially an piss our money away (Magcan, Nova-Tel, Gainers). Greg Weadick wants the government to actively seek out losers with low incomes and bad credit so that the government can back their loans. If ever I have seen a recipe to waste Alberta tax dollars this is it.
The real frightening part of this is that while Weadick is clearly utterly clueless as to basic finances, this has not stopped him from taking on economic roles in government. Weadick is currently chair of the Cabinet Policy Committee on the Economy and sits on the Standing Committee on the Economy (the duplication of committees in the PC cash-cow committee system is fodder for another post). I almost fear that Ed Stelmach is gearing this twit for a position as finance minister considering his committee appointments.
Weadick is an alumni of Alberta civic politics. Few people are better at wasting tax-dollars and showing less grasp on reality than municipal politicians. Nuts like Tooker Gomberg and Brian Pincott come to mind.
Weadick came from Lethbridge city council, the place that spawned the Queen of crazy councilors: Dar Heatherington I know many are trying to forget Dar and her imaginary kidnappings and such. Heatherington should still be held up as an example that the voters can be rather mistaken in their choices of representatives at times.
Perhaps Weadick and Dar rubbed off on each other a bit during their years on council. There has not been any proof yet that insanity is contagious, but I see this as evidence.
With any luck, this bill will die a swift death on the legislature floor as MLAs recoil from such an idiotic idea. We had best watch closely though. if Bill 208 passes, we may look forward to our provincial government absorbing billions in bad-debts.
Greg Weadick had best be watched closely as well. Clearly he should not be near any position where our tax-dollars or economy are involved (though that is already too late) and should be relegated to the deepest of back benches.
There is a reason for such things as credit ratings. Home ownership is not a right. If more people had grasped those two simple concepts in the last decade or so, we would not be seeing the current financial mess. It is almost unbelievable that some elected officials can’t read that rather stark writing on the wall.