Did Bush tax cuts create the housing bubble?

[Fern]

How much is Apple paying these "engineers?"

More than the ones we DON'T have.

Fern

 

[Matt1970]

Most of the things Bush & the GOP put into place during his reign of false wars has caused the destruction of the U.S. we are now witnessing.

All kinds of deregulations such as Bank deregulation, Eminent Domain, Check 21 just to name a few.

Bush never passed any laws reguarding Eminent Domain to my knowledge. I think you are refering to the Supreme Court's decision (2005) in Kelo v. City of New London. Land can be taken for the purpose of increasing municipal revenue.

Bank Deregualtion? Once again blame Bush for something he had nothing to do with. The biggest hit to the banking deregulation came in 1999 with Clinton.

Check 21 is a law that allows banks to keep a digital image of a written check. What the hell does that have to do with Bush destrying the economy?

 

[theeedude]

More than the ones we DON'T have.

Fern

But enough to incentivize people to spend the money and time getting an engineering degree? I bet these Chinese "engineers" make less money than American accountants.

 

[ElFenix]

In a saner world someone approaching a lender with $30,000 income and zero down wanting to buy a $300,000 home would be shown the door. But hey, the lender made the money setting up the loan... fannie mae and freddie bought it... the $300,000 house went into foreclosure because everyone else was trying the same thing... and the taxpayer is on the hook.

was it lenders or mortgage brokers doing most of it, though? and how much fraud is in the applications from the brokers?

Even if they did invest it in the stock market, those companies he invested it in now has more capital to hire more people. That's how the market works.

99.9999999% of all stock transactions do not involve the traded company as the seller. so, no, they don't have more capital to hire more people.

 

[mshan]

Wasn't it "this is all the evil mortgage broker's fault" the original narrative the banks tried to disseminate in main stream media when subprime originally surfaced on tv?

To me, shady mortgage brokers, and unscrupulous borrowers, just took advantage of the look the other way system those who actually controlled the money put in place (All of these obviously falsified and don't make any sense applications would have been easily been picked up if investment banks and other initial investors had to actually keep these loans on their books, risking their own money).

They just bundled them up, sliced and diced them up, and sold them to institutional investors (pension funds, small towns in Europe, etc) who were drinking the cool-aid and were willing to believe that housing prices always go up from now on:

http://www.businesspundit.com/sub-prime/page20.php (click through slideshow to get the answer)

Investment banks made their money by churning these bundles of loans, not by keeping them on their books.

And they incentivized brokers to even put people who were qualified for better than subprime loan into subprime loan by giving them much greater profit on those loans (which obviously means these bundled subprime loans were really, really lucrative for those investment banks and others who created the market, arguably to later be able to short against it)...

I think they gave mortgage brokers and lenders 3% or more EXTRA profit by putting people into subprime loans, rather than less profitable, more conventional loans that they might have actually qualified for. (again, 3% or more extra profit, over and above what they would have got if they put qualified borrower into less risky, and less profitable, conventional loan that borrower might actually have qualified for. For actual borrower, itt's like paying 8 or 9% interest when you really qualify for say 6% mortgage rate. And even for those borrowers who knew teaser rate would expire in 2 or 3 years, they were told and believed that housing prices always go up and that they would be able to refinance into lower mortage rate 30 year fixed before teaser rate expired and rate skyrocketed as an predatory ARM mortgage.

 

[Fear No Evil]

How can he fix it if the Republicans in Congress refuse to work with him?

His own party won't work with him.

 

[momeNt]

Another empirically wrong Mises conjecture. If U.S. monetary policy was the driver of the speculative excess, you'd see the same run up and collapse in Canada (lockstep monetary policy), Panama etc.

http://www.clevelandfed.org/research/commentary/2009/0909.cfm

ceteris paribus mean anything to you when attempting to study economics empirically?

 

[blackangst1]

Yes, it did. It fueled a housing boom and a number of other 'booms'. Independent mortgage refinance firms sprang up everywhere, and they were making good money. Realtors were making out big time. Nurseries, landscapers, lawyers who do real estate closings, title insurance companies, the list of those benefiting directly is really quite long.

Without the housing boom I often wonder what our economy would've looked like once the tech/dot.com bubble ended in early 2000. Before the tech/dot.com bubble we had Intel/Windows/PC boom to drive productivity and our economy.

It's been one boom/bubble after the next for quite some time now, at least since the early-to-mid 80's. All masking our economic weakness.

ATM I'm rather depressed and frustrated. I disagree with almost everyone. I disagree with both parties in Washington. My sig seems more appropriate than ever.

Despite claims to the contrary, our economic problems are not caused by a few 100 ultra high income earners. Despite claims by the Left/Dems/Progressives, these people aren't stealing everyones' "piece of the pie". Hell, they're making the damned pie. Gates, Jobs, Whitman, Bezos, Grove, Spielberg, Katzenberg, Geffen et al made pie everyone got to enjoy. Yeah, they made a billion $'s, but so what? Even if they didn't pay themselves so well you wouldn't have noticed any more money in your bank account, nor would there have been fewer low income people.

Nor is there a lack of mobility as claimed. Many of the richest were NOT born that way.

Wall Street is not our problem either. Yeah, some make big bucks too. They're responsible for billions of $'s. It's no small responsibility either. They've got to earn trust. They've got to be trusted not to steal it like Madoff, not lose it with poor trading positions/bets, not get client money ripped off by others etc. I've got some as clients, they work hard. It's a stressful job. It's not like some TV commercial where they sit around in a fancy restaurant eating a big pile of lobsters. I've had personal friends who couldn't take it, had a severe breakdown and became unhinged from reality. Extremely unhinged. Suicide was the final destination. I bet a lot of people here think they could do it. That it's just not fair because then they could earn that kind of money too if they had the chance. But I bet you couldn't. I bet 99.9999% couldn't.

So they scrape a small percentage off the top of the billions they handle daily. What if they didn't? You'd never notice. You'd have no more money in the bank. There wouldn't be any few low income people either.

They're not the problem.

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

IMO, our problem is that businesses don't find the US an attractive place to do business. Oh, we look good as a spot to have corp HQ's. Execs like being here, working here. So we have the top execs here making big bucks in stock options and the like. This pisses people off too. But even those execs in the world-wide HQ's located here making big bucks aren't the problem. We should be glad they're here. They spend an invest a lot of money here.

The problem is the bulk of business, the manufacturing, the tech, engineering and even service jobs, has left. We either chased them away, or allowed them to be lured away. We've got to figure it out. Why/how it happened and fix it. I see very little hope here because everybody's blaming the wrong stuff. You cannot fix the problem if you don't understand it.

It's not a simple answer. Many say 'labor', but it's not that simple. E.g., most manufacturing has little labor costs. So it cannot be explained away so easily.

And be careful who you turn to to fix it. They may be ones who caused the problem in the 1st place.

Fern

Good post, Fern.

As far as the OP goes, no. Bush certainly didnt do anything to stop the bubble from growing, but Clinton worked pretty hard to get this bubble started with The National Homeownership Strategy.

 

[Ausm]

His own party won't work with him.

2 Bluedog Democrats means the whole Democratic Caucus won't work with him??