The Current Financial Crisis — and After
invite response
2010 Apr 10, 6:38pm 3,155 views 21 comments
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tatupu70
2010 Apr 10, 11:30pm
Looks to me like someone was trying to sell his book...
Not impressed with his ideas though---they are clearly oversimplified and impactical.
Good read, even though it's depressing. Government has spent trillions to delay the inevitable, recklessly bailing out financial institutions, auto companies and other massive pork spending. Those bills must be paid.
What about putting a few of the bankers in jail and having them return some of the money to our broken system?
I like your sentiment. Except there needs to be complete acknowledgement of the government interventionist policies that enabled these bankers to "break" our system with full cooperation, endorsement and backing of the US governement. Here is a start http://ur.lc/foq
Excerpt from the 1999 NY Times article:
WASHINGTON, Sept. 29— In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring
Government mandated lowering of credit standards... now what harm could ever come from that?
The system must "inevitably" collapse, eh? How do you define collapse? Wasn't the great depression a collapse? Why is the current financial mess not a collapse?
Sounds like the same vague fear mongering that people have been peddling ever since ordinary people stopped being executed for speaking their mind.
PeopleUnited
2010 Apr 11, 6:08pm
The latest I heard the interest on the national debt will become the largest portion of the budget within 3 years. More than even "defense" which as we all know is too much to begin with.
tatupu70
2010 Apr 11, 10:12pm
Excerpt from the 1999 NY Times article:
WASHINGTON, Sept. 29— In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring
Government mandated lowering of credit standards… now what harm could ever come from that?
A problem with your theory there--Fannie Mae wasn't a government entity in 1999. And it didn't mandate anything. Fannie just said that it will begin a pilot program to buy loans from people with reduced credit. It wasn't forcing or mandating anything. Not sure how that explains all the other banks/Wall St. firms holding subprime mortgages...
tatupu70
2010 Apr 11, 10:16pm
tatupu70 says
they are clearly oversimplified and impactical.
please do elaborate
Well, the article doesn't acknowledge what will happen when all this bad debt is just written off for one. It's like it will just go away and then we can move on--no harm done... Unfortunately, the amount of money that would be drained from the system would be staggering. I don't think our economy could handle it.
tatupu70
2010 Apr 12, 12:33am
What about putting a few of the bankers in jail and having them return some of the money to our broken system?
I like your sentiment. Except there needs to be complete acknowledgement of the government interventionist policies that enabled these bankers to “break†our system with full cooperation, endorsement and backing of the US governement. Here is a start http://ur.lc/foq
Excerpt from the 1999 NY Times article:
WASHINGTON, Sept. 29— In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring
Government mandated lowering of credit standards… now what harm could ever come from that?
From one of Patrick's links today: (the question is how responsible were Freddie and Fannie in housing bubble and collapse)
ANDREW JAKABOVICS, director of housing and economics, Center for American Progress: They were actually not as responsible as a lot of people would think.
And I know that Ed disagrees with me. I think that the real problem here was the creation of an unregulated mortgage market. Wall Street was funneling trillions of dollar through unregulated channels into private-label securities. These were largely where the subprimes were.
And what ultimately happened was the GSEs, Fannie Mae and Freddie Mac, were losing market share. They are government-chartered, but they were also shareholder-owned. And so they basically put short-term profits ahead of long-term safety and soundness responsibilities. And they basically sort of followed everybody else down the rabbit hole.
RayAmerica
2010 Apr 12, 1:31am
AdH .... I honestly think we are wasting our time in here. These people simply do not have the capacity to understand reality. What you are posting is beyond their limited comprehension. Unfortunately, I believe this site represents a microcosm of this nation. That explains why we had such lousy candidates in McCain and Owebama.
PeopleUnited
2010 Apr 12, 4:25am
tatupu70 says
they are clearly oversimplified and impactical.
please do elaborate
Well, the article doesn’t acknowledge what will happen when all this bad debt is just written off for one. It’s like it will just go away and then we can move on–no harm done… Unfortunately, the amount of money that would be drained from the system would be staggering. I don’t think our economy could handle it.
Exactly. What will happen if they write it off? (civil unrest, or worse your guess is as good as anyone's). How will it affect the masses and how will they react? It will likely depend on what the media tells them and if they can still buy a big mac.
PeopleUnited
2010 Apr 12, 4:27am
Unfortunately, I believe this site represents a microcosm of this nation. That explains why we had such lousy candidates in McSame and Owebama.
Sad isn't it.
PeopleUnited
2010 Apr 12, 4:42am
free markets
America's national debt was not created by "free markets." Neither was the housing bubble. In a free market interest rates are set based on actual risk, and there is no promise of bailouts when things go bad.
tatupu70
2010 Apr 12, 5:04am
America’s national debt was not created by “free markets.†Neither was the housing bubble. In a free market interest rates are set based on actual risk, and there is no promise of bailouts when things go bad.
The housing bubble was created by free markets. There is no doubt about it.
Before the collapse, there was no promise of any bailouts--look at Lehman Bros. Were they bailed out?
Exactly. What will happen if they write it off? (civil unrest, or worse your guess is as good as anyone’s). How will it affect the masses and how will they react? It will likely depend on what the media tells them and if they can still buy a big mac.
First off--you give the media way too much influence. People have shown time and again that they do what is in their self interest. The media has limited influence. Look at your best friend, our current Commander in Chief. The media had all but given the nomination to Hillary..
On the bad debts due to the housing bubble. It's all about how it is written off. If it is done in a systematic, controlled manner, then it will be a drag on the ecoonomy for a long time, but it won't lead to the Armageddon that you seem to predict. If it all had to be written off immediately, then the results would be more severe.
PeopleUnited
2010 Apr 12, 5:21am
The housing bubble was created by free markets. There is no doubt about it.
First off–you give the media way too much influence.
Did the media tell you it was the free market? And you believed them? Nice work Sherlock. If the housing bubble was created by a free market where did you find that free market? It certainly wasn't in America where the Federal Reserve controls money supply and interest rates. Where government policy was deliberately set to encourage (at virtually all cost) home debtorship. With implied (and later delivered) bailouts.
our current Commander in Chief
Unless you are in the military the president is not your commander in chief. He is the commander in Chief of the Armed Forces. Not of America or Americans. Did the media tell you that too, and you believed it?
Before the collapse, there was no promise of any bailouts
Did the media tell you that? And you believed it?? Think savings and loan crisis. Apparently in the 1980's and 1990's the government bailed out investors to the tune of nearly $125 billion, using borrowed money that must be repaid by taxpayers and/or dollar holder through debasement of the currency.
But please go on living in your dreamworld Winston. Big Brother is watching out for you.
tatupu70
2010 Apr 12, 5:55am
If the housing bubble was created by a free market where did you find that free market? It certainly wasn’t in America where the Federal Reserve controls money supply and interest rates. Where government policy was deliberately set to encourage (at virtually all cost) home debtorship. With implied (and later delivered) bailouts.
You're still wrong about the effect of government policy, of course, as I and others have shown again and again. And you didn't address Lehman? Why weren't they bailed out? I thought it was implied that everyone would be...
The failures that caused the housing bubble were free market failures. Poor understanding of risk largest among them.
But please go on living in your dreamworld Winston. Big Brother is watching out for you.
Wait--I thought Nomo was Winston. I guess in my dreamworld we can both be Winstons.
PeopleUnited
2010 Apr 12, 6:01am
And you didn’t address Lehman? Why weren’t they bailed out? I thought it was implied that everyone would be…
Nope, you won't get one either.
RayAmerica
2010 Apr 12, 6:21am
The housing bubble was created by free markets. There is no doubt about it.
Was it the "free market" when Congress pressured Greenspan to keep rates lower? Was it the "free market" when Congress pressured Fannie & Freddie to lower the bar for underwriting? Was it the "free market" that caused the "moral hazard" for Fannie & Freddie because they were deemed by the Feds to be "too big to fail?" Was it the "free market" when both the Clinton and Bush administrations pressured lenders to loan to more minorities, in spite of their loan qualifications? The housing bubble had numerous causes, but to say it was entirely due to the free market is way off the mark.
tatupu70
2010 Apr 12, 6:53am
Was it the “free market†when Congress pressured Greenspan to keep rates lower? Was it the “free market†when Congress pressured Fannie & Freddie to lower the bar for underwriting? Was it the “free market†that caused the “moral hazard†for Fannie & Freddie because they were deemed by the Feds to be “too big to fail?†Was it the “free market†when both the Clinton and Bush administrations pressured lenders to loan to more minorities, in spite of their loan qualifications? The housing bubble had numerous causes, but to say it was entirely due to the free market is way off the mark.
If any of what you wrote there were true, then you might have a point....
The housing bubble was created by free markets. There is no doubt about it.
Was it the “free market†when Congress pressured Greenspan to keep rates lower? Was it the “free market†when Congress pressured Fannie & Freddie to lower the bar for underwriting? Was it the “free market†that caused the “moral hazard†for Fannie & Freddie because they were deemed by the Feds to be “too big to fail?†Was it the “free market†when both the Clinton and Bush administrations pressured lenders to loan to more minorities, in spite of their loan qualifications? The housing bubble had numerous causes, but to say it was entirely due to the free market is way off the mark.
There is of course government culpability in the housing bubble, but the bulk of the blame lies with wall street aka the free market. You also seem to forget about government passing enabling legislation that was sold as free market like repealing glass/stengle or the rollback of bank leverage requirements in 2003. Read a very good book called "Fools's Gold" by Tett about the subject. It really gives the inside story of what happened on the Wall street level.
PeopleUnited
2010 Apr 13, 10:16am
Zlxr-
We have a modern example of what happens when a "superpower" goes bankrupt. USSR meet USSA!
Obviously it won't happen exactly the same, but it does give us ideas about the possibilities.
http://mises.org/daily/4218
When you have the time, this is worth your attention.
a short excerpt from the summary:
"So the system must inevitably collapse. The younger you are, the more you stand to lose. And the longer the scam goes on, the more it will cost you.
To you youngsters, I say: it's your choice how long you choose to put up with this. I say it's your choice because — with a bit of luck — those of us who are older will have departed the scene when these particular chickens come home to roost.
It's your choice.
You can play by the rules your elders would impose on you. You can expect to pay higher and higher taxes, work harder and harder to stand still, and get less and less back in return for yourselves — a life little different from slavery — and then the system will collapse anyway."
Greece may be in trouble now, but we are just behind them in the line on the road to ruin.