Number of people living below the poverty level saw a massive increase in the US over the past two years

Stimulating poverty

By Klaus Rohrich
Friday, September 17, 2010

It isn’t surprising to learn that the number of people living below the poverty level saw a massive increase in the US over the past two years. Given that successive administrations, both Republican and Democrat, have continually promulgated policies that have had the opposite of their intended effect for the past quarter century, it is surprising that the poverty figures aren’t higher! What’s more these policies keep getting more radical with each successive administration and their shortcomings are evident to everyone but the policy makers.

Politicians are quick to blame others: Wall Street, bankers, greed, corporate incompetence, doctors, lawyers and all the usual suspects. But few policymakers look at themselves and their contributions to the economic malaise currently gripping the nation.

The housing bubble was created as a direct result of government policies that began with Jimmy Carter and survive to this day. The US government is still making it possible for individuals to purchase a home with no money down by underwriting a mortgage through guarantees from Fannie Mae or Freddie Mac. Of course, both Fannie and Freddy will then attempt to minimize their exposure by packaging these junk mortgages into Byzantine financial instruments and pawn them off to institutional investors. But hey, who cares whether Fanny or Freddie is injecting poison into the veins of the American economy, so long as everyone gets to realize the American Dream of home ownership, regardless of whether or not they can afford it.

When this bubble bursts, Uncle Sam will be there with his bailout money making sure that entities “too big to failâ€