Economic "crisis," cause and effect

[Crash Daily]

alright, I don't want to play, but I'll play, you lazy bums. Y Can't even go get your own facts, geez!

No, not kind of like an associate of John McCain, kind of like Obama himself, taking the second largest pay off/hush money of any Senator in congress, even though he's new to the game.

quote: Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.

quote: The collapse this week of Lehman Brothers' is traced back to Fannie Mae and Freddie Mac, the two big mortgage banks that got a federal bailout a few weeks ago.  It turns out that the Freddie Mac and Fannie Mae used huge lobbying budgets and political contributions to keep regulators off their backs, and the #2 recipient of these funds was Barack Obama, according to Center for Responsive Politics.  It's jaw-dropping that Obama has collected such a sum in his short four years in office, as this tally covers all of contributions to politicians over the past 20 years.

[Hoss]

quote:Originally posted by Crash Daily

alright, I don't want to play, but I'll play, you lazy bums. Y Can't even go get your own facts, geez!

No, not kind of like an associate of John McCain, kind of like Obama himself, taking the second largest pay off/hush money of any Senator in congress, even though he's new to the game.

quote: Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.

quote: The collapse this week of Lehman Brothers' is traced back to Fannie Mae and Freddie Mac, the two big mortgage banks that got a federal bailout a few weeks ago.  It turns out that the Freddie Mac and Fannie Mae used huge lobbying budgets and political contributions to keep regulators off their backs, and the #2 recipient of these funds was Barack Obama, according to Center for Responsive Politics.  It's jaw-dropping that Obama has collected such a sum in his short four years in office, as this tally covers all of contributions to politicians over the past 20 years.

Obama quit taking contributions from those donors once the problems came out.  Davis STILL took that money from the company he was vested in UP UNTIL AUGUST.

You do your own searching.  I'm not talking about past.  We're talking about damn near right now.

McCain is sinking, and sinking fast.  Unless he's got a helluva October Surprise, he'll be back in the Senate chamber come November.

[Crash Daily]

I almost forgot to mention his ties to ACORN.

http://noquarterusa.net/blog/2008/07/05/obamas-acorn/

Now let's put a neat little bow on it! Must see TV.

http://hotair.com/archives/2008/09/30/video-stanley-kurtz-on-obama-acorn-and-the-cra/

[Crash Daily]

quote: Obama quit taking contributions from those donors once the problems came out. Davis STILL took that money from the company he was vested in UP UNTIL AUGUST.

So what? Obama quit taking hush money, once that cat was out of the bag? Give me a freak'n break. Davis may be associated with McCain, but HE IS NOT MCCAIN, get the difference? Probably not.

[Hoss]

quote:Originally posted by Crash Daily

I almost forgot to mention his ties to ACORN.

http://noquarterusa.net/blog/2008/07/05/obamas-acorn/

Now let's put a neat little bow on it! Must see TV.

http://hotair.com/archives/2008/09/30/video-stanley-kurtz-on-obama-acorn-and-the-cra/

[}:)]

McCain supporters are scared....keep on spinnin!

[shadows]

Was not the intent of the Federal Housing Authority created to aid home purchases under very controlled conditions.

Hasn't the National Debt increased for 57 trillion to now 10.7 trillion under the present administration?

Is it not true that much of the National Debt is held by foreign Governments, Banks, and foreign individuals?

Is it not true that large bundled mortgages, on our overpriced houses, is owned by these foreign government functions?

How would one like to see the sheriff carry your belonging to the curb and turn  your home over to a foreign investor who had one half the investment that you had in the home.  (remember the interest on the loan is collected first)

We have laws that require the value of the homestead be increased yearly.  At the same time divide 350,000,000 live bodies into the now $10.700,000,000,000 authorized and you will see the need from each millions of dollars in hard cash, not Federal Notes, We need it today not a payday loan tomorrow.   Listen closely as the other shoe to drops.

Can you see why our allies in the mid-east war are packing up to go home.

(Information comes from this highway of learning)

[USRufnex]

quote:Originally posted by Conan71

Here's my take, Wevus:

Lending and credit is important to the healthy  GROWTH of the economy.

When it's needed for the smooth operation of our economy, that's an indicator it's been over-used for expansion and/or we've over-expanded.

Why?  Lending and credit have always been important to the "smooth operation" of the economy....

I've had tough financial times in my life when  the economy was "strong."  I've had better  economic times personally when the economy was "in recession."  Those people who consistently endorse laissez-faire capitalism really don't care too much for the innocent victims who lose the power to borrow/invest when banks pigeon-hole powerless people in times of economic stress.... far too many ivory-tower  economists have traditionally stressed  efficiency at all costs... over matters of simple fairness....

During "tough times," companies like Express Personnel Services will prosper.... discount retailers will prosper over the more "upscale."

France: Laissez-Faire Capitalism is Over
President Nicolas Sarkozy declared the theory that the market "always knows best" is finished

http://www.businessweek.com/globalbiz/content/sep2008/gb20080929_019959.htm?campaign_id=rss_eu

Examining the candidates
Oct 2nd 2008 | WASHINGTON, DC
From The Economist print edition
In our special report on the election we analyse the two candidates' economic plans. Here, we ask professional economists to give us their views
http://www.economist.com/world/unitedstates/displaystory.cfm?story_id=12342127

The economists also prefer Mr Obama's tax plans. Republicans and respondents who do not identify with either political party see Mr McCain's tax policies as more efficient but less equitable. But the former prefer Mr McCain's plans—43% of Republicans say they are good or very good—and the latter Mr Obama's. Of non-affiliated respondents, 31% say Mr Obama's are good or very good.

------------------------------------------------

Blaming Barney Frank for the crisis of Freddie and Fannie when there was a Republican House of Representatives from 1994 to 2005 is giving the man too much power either way... maybe O'Reilly should have Phil Gramm on his show sometime and subsequently browbeat him and call him a coward... it'd make more sense...

Give him hell, Barney...

http://www.youtube.com/watch?v=yrfPMa3lONU

[Double A]

Our economy is built on a flimsy foundation of debt, that is the cause of the economic crisis. As long as this is the case, we will have to bailout future mutations of the cannibalism that is credit market capitalism to keep this shell game going. The longer we keep playing this game the deeper the hole we are digging for ourselves is going to get.

[we vs us]

There was an excellent article in the NYT this weekend about Fannie and Freddie Mac, describing in more detail its pivotal role in inflating the real estate and credit bubbles, but also laying out in clearer terms the pressures it faced both from within and without.

quote: Dozens of interviews, most from people who requested anonymity to avoid legal repercussions, offer an inside account of the critical juncture when Fannie Mae's new chief executive, under pressure from Wall Street firms, Congress and company shareholders, took additional risks that pushed his company, and, in turn, a large part of the nation's financial health, to the brink.  

Between 2005 and 2008, Fannie purchased or guaranteed at least $270 billion in loans to risky borrowers — more than three times as much as in all its earlier years combined, according to company filings and industry data.  

"We didn't really know what we were buying," said Marc Gott, a former director in Fannie's loan servicing department. "This system was designed for plain vanilla loans, and we were trying to push chocolate sundaes through the gears."

The article also points out how Democratic lawmakers, newly in power after 2006, sought to keep Fannie and Freddie buying mortgages in order to help absorb the exorbitant amount of subprime loans already out there.  This was a contributing factor to Fannie and Freddie's insolvency, but by no means the only factor.  

What seems to also have been the problem was it's quasi-governmental status, leaving it accountable to its shareholders but also vulnerable to the commands of Congress, not to mention being pummelled by the businesses that had come to rely on its unique function as the securitizer of these mortgages (in the article, Countrywide is especially aggressive with the Macs).

[Gaspar]

quote:Originally posted by USRufnex

quote:Originally posted by Conan71

Here's my take, Wevus:

Lending and credit is important to the healthy  GROWTH of the economy.

When it's needed for the smooth operation of our economy, that's an indicator it's been over-used for expansion and/or we've over-expanded.

Why?  Lending and credit have always been important to the "smooth operation" of the economy....

I've had tough financial times in my life when  the economy was "strong."  I've had better  economic times personally when the economy was "in recession."  Those people who consistently endorse laissez-faire capitalism really don't care too much for the innocent victims who lose the power to borrow/invest when banks pigeon-hole powerless people in times of economic stress.... far too many ivory-tower  economists have traditionally stressed  efficiency at all costs... over matters of simple fairness....

During "tough times," companies like Express Personnel Services will prosper.... discount retailers will prosper over the more "upscale."

France: Laissez-Faire Capitalism is Over
President Nicolas Sarkozy declared the theory that the market "always knows best" is finished

http://www.businessweek.com/globalbiz/content/sep2008/gb20080929_019959.htm?campaign_id=rss_eu

Examining the candidates
Oct 2nd 2008 | WASHINGTON, DC
From The Economist print edition
In our special report on the election we analyse the two candidates' economic plans. Here, we ask professional economists to give us their views
http://www.economist.com/world/unitedstates/displaystory.cfm?story_id=12342127

The economists also prefer Mr Obama's tax plans. Republicans and respondents who do not identify with either political party see Mr McCain's tax policies as more efficient but less equitable. But the former prefer Mr McCain's plans—43% of Republicans say they are good or very good—and the latter Mr Obama's. Of non-affiliated respondents, 31% say Mr Obama's are good or very good.

------------------------------------------------

Blaming Barney Frank for the crisis of Freddie and Fannie when there was a Republican House of Representatives from 1994 to 2005 is giving the man too much power either way... maybe O'Reilly should have Phil Gramm on his show sometime and subsequently browbeat him and call him a coward... it'd make more sense...

Give him hell, Barney...

http://www.youtube.com/watch?v=yrfPMa3lONU

Herb Moses  Remember the name.  He was an Assistant Director at Fanny May from '91 to '98.


He was also Barney's boyfriend. . .

[carltonplace]

quote:Originally posted by waterboy



It took me a while to understand but it highlights that this was not the result of loosened lending requirements, was not the result of a Clinton/Bush era focus on an "ownership" society. It is the reflection of how a weak economy was masked with a hot mortgage market that was being grown and exploited by unsupervised bandits. These guys were smart but lacked any self restraint.

Actually President Clinton has recently verbalized his regret that he did not apply more focus to energy to balance out his housing initiatives. But you are right that the desire for increased home ownership was not the culprit in and of itself. For the most part it wasn't that the mortgage industry made loans to inherently risky potential home owners, its that they approved them for more house than the applicant could afford and then pushed risky loans that set them up to fail. Why would any sane person agree to an ARM? Because the lender on the other side of the desk was leading them that way.

[Conan71]

quote:Originally posted by carltonplace

quote:Originally posted by waterboy



It took me a while to understand but it highlights that this was not the result of loosened lending requirements, was not the result of a Clinton/Bush era focus on an "ownership" society. It is the reflection of how a weak economy was masked with a hot mortgage market that was being grown and exploited by unsupervised bandits. These guys were smart but lacked any self restraint.

Actually President Clinton has recently verbalized his regret that he did not apply more focus to energy to balance out his housing initiatives. But you are right that the desire for increased home ownership was not the culprit in and of itself. For the most part it wasn't that the mortgage industry made loans to inherently risky potential home owners, its that they approved them for more house than the applicant could afford and then pushed risky loans that set them up to fail. Why would any sane person agree to an ARM? Because the lender on the other side of the desk was leading them that way.

We are an aquisition society in the U.S.  So many people are willing to hedge their bets that their financial condition will improve year after year so that they could afford their house as interest rates increased.  Either that, or they figured they'd lock in when the loan eventually started adjusting, never realizing that it could get more difficult to "qualify" for the lock-in.  

They also use a dizzying array of indices for ARM rates, that no one seems to be able to understand, including foreign fund indices.

This is nothing new.  The question for me is, will lenders learn anything this time?  There were tons and tons of foreclosures in the fall out of the S & L crisis in the mid to late 1980s.  There was a lot of over-valued real estate in that debacle as well.  I predict there will be another bubble as investors rush to snap up bargains on the FCL market, it will "correct" again in 10 years and within another 12-15 years this carnage will be but a memory.  Next major real estate upheaval in another 20 years.

[rwarn17588]

Anyone who didn't see this coming wasn't paying attention.

Hell, I qualified for a house loan in 2004 that was way out of whack from what any person with my income could reasonably pay. We were hearing stories all over the place, about how mortgage companies were giving out crazy-expensive loans willy-nilly without any regard of what would happen if the breadwinner was laid off, switched to a lower-paying job, suffered a catastrophic illness, etc.

We stuck to our guns and stayed with a small house.

I saw a study back in 2006 that warned about the housing bubble for this reason alone -- rental rates were not keeping pace with the skyrocketing housing values. That raised a red flag right there.

[we vs us]

Mortgages weren't keeping pace with incomes, either. That was another HUGE red flag.

When mortgage offers started showing up in the mail along with credit card offers, I knew something was seriously awry.

Here's the problem with bubbles, and Conan you even said it: "Will lenders learn anything this time?" And if bubbles down through the centuries are any guide, the answer is an emphatic, "no they absolutely will not." (tulip mania, anyone?)

And so we're back to the old arguments.  How do we protect ourselves from this kind of thing?  Or are we at the mercy of idiots every time the Masters of the Universe get a bug up their donkey to go chasing easy money in tulips, or bad real estate loans, or what-have-you?

It's precisely this kind of thing that has made me a big Keynesian, and to appreciate the kind of economic politics that Roosevelt played during the New Deal. It's no accident that some of the tools created back in that era are the ones that Paulson, Bernanke and Co. are using today.

[Conan71]

Oh, for a second, I could have sworn your post referred to Paulson and Bernanke as tools. []

The unintended consequence anyone could see coming (it's now all the editorial and pundit fodder) is with the gov't stepping in to snap up a bunch of "toxic paper", that removes the entire concept of risk.  Ergo, lenders learn nothing except that:  if you keep sweeping a problem under the rug and do it collectively as an entire industry, and keep it concealed for long enough, the government will have no choice but to jump in and save your donkey.

No penalty- no lesson to be learned.

RW- Too bad many other people don't have your sense of restraint.  That would have helped keep the real estate market from becoming so falsely-inflated in addition to so many other problems it helped create.