Newt Gingrich vs Ron Paul On Predicting The Economic Collapse

Newt Gingrich, April 24, 2007, at a meeting for Freddie Mac employees:

"Certainly there is a lot of debate today about the housing GSEs [government-sponsored enterprises], but I think it is telling that there is strong bipartisan support for maintaining the GSE model in housing. There is not much support for the idea of removing the GSE charters from Freddie Mac and Fannie Mae. And I think it's clear why. The housing GSEs have made an important contribution to homeownership and the housing finance system. We have a much more liquid and stable housing finance system than we would have without the GSEs. And making homeownership more accessible and affordable is a policy goal I believe conservatives should embrace. Millions of people have entered the middle class through building wealth in their homes, and there is a lot of evidence that homeownership contributes to stable families and communities. These are results I think conservatives should embrace and want to extend as widely as possible."

Ron Paul, July 16, 2002, before the House of Representatives:

"Mr. Speaker, I rise to introduce the Free Housing Market Enhancement Act. This legislation restores a free market in housing by repealing special privileges for housing-related government sponsored enterprises (GSEs). These entities are the Federal National Mortgage Association (Fannie), the Federal Home Loan Mortgage Corporation (Freddie), and the National Home Loan Bank Board (HLBB)...

"One of the major government privileges granted these GSEs is a line of credit to the United States Treasury. According to some estimates, the line of credit may be worth over $2 billion. This explicit promise by the Treasury to bail out these GSEs in times of economic difficulty helps them attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital...

"Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges of Fannie, Freddie, and HLBB have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing...

"However, despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policies of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing."

(Note the dates of these quotes — Gingrich was speaking shortly before the mortgage meltdown, while Ron Paul's remarks were made in 2002, when very few people even knew there was a housing bubble.)

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[kolgar]

If you want.

[dmoneyas24]

A reporter would have countered newt's claim that were very few who could see the magnitude of the collapse by saying "actually your opponent Ron Paul predicted exactly what would happen."

[xphire]

Newt clearly knew Ron Paul saw it. He's heard him say it with his own ears. Newt Gingrich is a liar.

[diogeneslaertius666]

when #RonPaul makes a sandwich, even the bread is meat

[BetweenUnemployment]

Kolgar: I would suggest re-cutting this video with the actual footage of Ron Paul in 2001 predicting this very thing: YouTube: "Ron Paul 2001 Housing Bubble".

[Error934]

Dr. Ron Paul 2012

[HopeForPeaceNow]

Brooksley Born also predicted the collapse when she tried to regulate derivatives.

She was fired.

Then the 100% UNregulated derivatives market, which STILL exists in a black box, blew up to 10X the WORLD GDP. Swaps alone were contracted by US firms leverages at 30/1 for a total of $60 TRILLION!

100% FREE MARKET UNregulated.... did no rules make derivatives safer? Did the pure free market keep the $ of the American taxpayer safe?

What a farce.

[bigglyguy]

Nicely put together, thanks

[QuartuvLarry]

There is clearly no other choice. In fact, kolgar, may I mirror this and entitle it that?

[FritzProductions27]

@sellsjeeps Rofl, you basically just summed it up! ;)

[sotthapana]

Many in the news world have said that Ron Paul has had more influence on the 2012 election than anyone else.

He's surely got the most independent support of any republican candidate, and its a fact that active-duty military personnel overwhelmingly support him.

He's the only candidate who takes the big problems in America seriously and his positions on the issues have been rock solid since before we were all born...

Give the American dream a second chance. Ron Paul 2012 !!!