THIS POST IS A PRESENTATION OF THE HALEY ZAREMBA ANALYSIS OF THE FINANCE TRAP IN THE CLEAN ENERGY LOAN PROGRAM OF THE BIDEN ADMINISTRATION CALLED THE ” Property Assessed Clean Energy program or PACE“.

THE FULL TEXT OF THE ZAREMBA ARTICLE IS AVAILABLE ONLINE AT THE LINK BELOW. THE ESSENCE OF IT IS THAT GOVERNMENT INCOMPETENCE CREATES FINANCIAL CRISES, AS FOR EXAMPLE THE 2008 FINANCIAL CRISIS; AND THEY ARE ABOUT TO DO IT AGAIN IN THE OVERRIDING PRETENSE OF THEIR ASSUMED ROLE AS CARETAKERS OF THE PLANET AND THE CLIMATE. THE LOAN PLAN CONTAINS A CLIMATE CHANGE IMPERATIVE AND IMPLIES THAT IT’S AN OFFER YOU CAN’T REFUSE.

LINK: https://oilprice.com/Alternative-Energy/Renewable-Energy/The-Predatory-Green-Energy-Trap-That-Could-Spark-Another-Housing-Crisis.html

The Predatory Green Energy Trap That Could Spark Another Housing Crisis

Ten million people in the United States lost their homes in the 2008 financial crisis, a crisis that was set in motion by the housing crash caused a recession which destroyed over $30 trillion of the world’s wealth and is thought to hav caused more than 5,000 suicides.

About decade later in 2021, the the same finance industry that had created the 2008 financial crisis and a housing bubble is about to do it again having forgotten the lessons learned from that crisis. This time around it will be in the form of a government funded loan program for the green energy investments that low income home owners can’t afford but can’t refuse. THE BIDEN ADMINISTRATION’S Property Assessed Clean Energy program or PACE seems like a great deal built on the climate ideals of the day because it appears to allow th poor to participate in the green energy goodness of our time.

Their is a catch. The Catch22 here is that the government green energy loan program will be repaid with higher property taxes. It may sound good in the age of green energy goofiness, but the financial structure of the green energy plan contains just the kind of flaws that had given us the 2008 financial crisis when the subprime mortgage plan blew up. What we should have learned from 2008 is that the value of loans derives not from good intentions but only from the credit worthiness of the parties taking out these loans. In this case that means the good intention of giving green energy to the poor who can’t afford it will blow up simply because THEY CAN’T AFFORD IT.

The Zaremba article presents the case study of dozens of low-income home owners who were sucked into signing up for the green energy loan program without the risk of losing their house at auction if they were to default on loan payments. These payments take the form of increased property taxes, which in some cases ballooned astronomically as a product of PACE compliance. One Missouri woman, Diana Thomas, in exchange for a new furnace and four small basement windows, saw her taxes go from $247 to $1,465 and total loan payments, after interest, of $18,200 — more than the cost of her entire two-story home at the time that she took the loan, which was appraised at $16,226 by the county. Thomas is now years behind on those payments, which the professional setting her up for the loan would have been more than aware she could not pay, and at risk of losing her home. Thomas is not alone. Through PACE, homeowners in already marginalized or vulnerable communities across the nation were told, by door-to-door PACE salesmen, that they could make their homes more eco-friendly (a win-win for them and the government) without putting up any money up front, only to be hit later by taxes that they can’t pay — again, the whole point of this program is that it targets low-income individuals and families and then increases the probability that they will lose their homes. “By marketing their programs to people who need urgent repairs but have few options for credit, critics contend they have disproportionately burdened some of the state’s most vulnerable homeowners,” the Missouri Independent reported this week.

SIGNS OF REFORM: After these predatory practices gained attention in the media and about 3,000 other homeowners participated in PACE, we’re starting to see some signs of reform. Missouri Governor Mike Parson signed new legislation imposing much-needed consumer protections within PACE, which would set requirements for giving signees full information of the risks of the program as well as capping the loan amount based on the house’s appraisal value. This is too little too late for those who have already lost or are in the process of losing their homes, and those who are still vulnerable to predatory PACE practices in other states.

RLATED POST ON THE 2008 FINANCIAL CRISIS

LINK: https://tambonthongchai.com/2020/02/21/brianwesbury/

SUMMARY OF THE 2008 FINANCIAL CRISIS POST:

The 2008 financial crisis caused a complete meltdown of the American economy that showed no positive response to the intervention by the Federal Reserve and the government in general with regulatory innovations. It turned out that the financial crisis and economic collapse of 2007/2008 was a replay of similar events in 1929/1930. Both of these crises were the result of the mark to market accounting rule. In both cases, the government’s effort to solve the problem with regulatory intervention failed and possibly worsened the crisis – and in both cases, simply rescinding the mark-to-market rule (by Franklin Delano Roosevelt in 1938 and by Barney Frank on April 2, 2009) brought about a recovery from the crisis and healthy economic growth immediately followed. The lesson is that free market systems are not operated by the government but by innovators and risk taking investors in new ideas and the financial system that funds these ventures. The government’s job is not to operate the economy but to provide the right kind of regulatory infrastructure where innovators and investors can thrive.