Follow money trail — straight to Congress

To the editor:

As we're going through this economic correction/recession, blame is being laid everywhere. Banks are blamed. Fannie Mae and Freddie Mac are blamed. Greedy investors are blamed. And Congress is doing most of the blaming.

Curiously, nonetheless, the run-up in housing prices in the new millennium resulted largely from a 1995 amendment to Congress' Community Reinvestment Act, allowing relaxed subprime lending guidelines and granting banks the ability to market packages of high-risk loans as low-risk securities. This presented a recipe for a speculative bubble in real estate (housing, commercial buildings and land).

A classic tool to find the cause of any financial upheaval, or to find the criminal in a finance crime, is to "follow the money." Who profited from this bubble? Obviously, speculators profited on the way up, but they lack political clout. Lenders may have shown balance sheets with increased prospective profit on that debt through the gross interest to be paid on a far broader package of loans. But these were high-risk loans with obvious pitfalls to classically trained bankers.

These are the culprits (lenders and speculators) according to Congress, but Congress inexcusably fails to follow the money in one additional direction. To steal a phrase from Pogo, "We've seen the enemy, and he is us." Congress needs to look at itself and evaluate the profit made for its main constituent: the federal government and its bureaucracy.

Looking to the bursting of the bubble, in 2005 the IRS collected $102 billion in taxes on capital gains. In 2004, collections were $73 billion. Collections in capital gains tax increased by $29 billion, a 40 percent annual increase in tax receipts in one year. Incidentally, the annual tax receipts on capital gains over the course of the false rise in real estate prices exceeded 100 percent from 2002 through 2005, according to the U.S. Treasury.

In short, Congress created the circumstances churning the real estate market, thus creating the real estate bubble. Through this churning market, the government realized $29 billion in extra tax collections in one year. If 2002, rather than 2004, is used as the baseline, the increase in capital gains taxes paid rises to about $80 billion. It's easy to see who profited from this bubble.

The taxpayers -- us -- are out the current bailouts. The banks are going bankrupt. More than a half-million homes are delinquent on mortgages and at risk of foreclosure. And Congress pulled tens of billions of dollars out, free and clear.

That's where the money went, but there is no one available to "follow the money."

Bob Nersesian

LAS VEGAS

A housing fix

To the editor:

In view of everything that is happening in the housing markets and the financial houses behind them, I wonder how much of this is related to easy speculation. One of the major reasons for the 1929 crash was people buying stocks and bonds on margin. This is a nice term for buying something with money you do not have. One of the things that stabilized that market was limiting this margin buying.

On the other hand, our FHA and VA systems have enabled millions of people to afford homes that they probably could not have afforded otherwise. We need to continue this type of help but find some way to cut off the easy-credit speculators from using the system for greedy gambling. There may be an easy way to do this.

Provide this kind of home ownership help only to those people who are actually going to occupy the homes. Make any additional real estate investment have much higher minimum down payments -- probably 25 percent, or even higher. This has to be rigidly enforced, and every buyer made to prove it is his income base and not a sham pushed through a friend or relative. Even here in Nevada, a frightening number of foreclosures are on houses that were never lived in even for one day.

I have little sympathy for the speculators, whether it is in housing, oil or pork bellies. Every time these crap-shooters scream for a government bailout, I hope that all the hearing aids are turned off.

Maybe this is a unique concept, only buying what you can afford and, particularly, not buying things you have no intention of ultimately paying for.

It is only a dream that someone will take it off your hands very shortly at what you hope to be an outrageous profit. Usually a bad dream.

BOB SWADELL

PAHRUMP

Middle-class losers

To the editor:

Remember the days when you bought stock in a company, assumed the company would produce and grow, and you would make a profit? That is what built America. Of course there were gambles -- maybe the company was not poorly conceived, maybe there was too much competition, etc.

Today, the stock market has become merely a crap shoot. Probably more than half of investors don't have any idea what the stock they bought is supposed to produce.

The thing they want is instant profit. Then they go on to the next crap shoot, hoping for a hard seven.

Wall Street and corporate America have become another Las Vegas, where the American middle class provides the bankroll. In other words, the losers.

John Turkovich

LAS VEGAS

Clean-energy future

To the editor:

When an oilman and environmentalists agree, you know the momentum for real change is building.

Yet that is just what is happening. Oil billionaire T. Boone Pickens and Sierra Club Executive Director Carl Pope talked about the "Pickens Plan," which calls for huge increases in investment and production of wind power and using American natural gas as a transition in transportation fuels.

Americans should take notice. While more drilling for oil might enrich big oil companies trying to wring every drop out of oil profits before the inevitable, the real economic opportunity lies, not with the failed ideas of the past, but with real investment in the transition to a clean-energy economy.

T. Boone Pickens and Carl Pope realize this. Now it's time we all follow that path.

EMILY GUINAN

LAS VEGAS

What reforms?

To the editor:

In a current McCain/Palin TV ad, the voice-over states, with a picture of McCain on the screen, "He reformed Washington." This implies a fait accompli.

Therefore, how does he explain why the country is in such a terrible state of affairs while the Republicans have been in control of the White House for the past eight years and in control of the Congress for 12 out of the past 14 years?

NORMAN NERO

LAS VEGAS

Troopergate

To the editor:

The folks at MSNBC are obviously hopeful the Alaska Democrats who are investigating "Troopergate" will be able to discredit and pull the rug out from under Republican Gov. and vice presidential nominee Sarah Palin.

Maybe the Democrats can get some mileage out of that issue, but it is difficult to believe the public is going to be too concerned about the fate of a state trooper who is alleged to have used a Taser on his 10-year-old stepson.

It seems to be that man needed a vocation other than that of a law enforcement officer.

VERLON BERKEMEYER

NORTH LAS VEGAS

Nice shot

To the editor:

I have been consistently impressed by the high quality of photojournalism published in the Review-Journal, but Friday's photo by Jessica Ebelhar on the front page of the Nevada section was particularly praiseworthy.

Ms. Ebelhar thrusts the reader into the midst of this moving family tragedy with an artistry reminiscent of Picasso's "Guernica." Thanks for the great work.

Richard Davis

LAS VEGAS