There is no Free Market

[LegendKiller]

It's true.

Don't forget, he's a libertopian. He believes that personal property rights and utterly free markets would result in a human state of mind that hasn't existed since...well...ever.

 

[the DRIZZLE]

OK that is an awesome idea but I doubt it would occur in my lifetime with the inept Congress we have in the US.

I didn't say it was easy. But if we are going to fight we might as well fight about something that matters.

 

[ConstipatedVigilante]

A truly free market would be an unmitigated national and human catastrophe. It will never exist, and if it somehow did, god help us all.

It would force us to actually grow and adapt instead of babying ourselves with government hand-outs. Economic forces would be allowed to actually change prices, and equilibrium could be reached instead of a faux-equilibrium propped up by the government that leads to booms and busts.

 

[Ausm]

I didn't say it was easy. But if we are going to fight we might as well fight about something that matters.

Rationality won't work in DC but I agree with you

 

[LegendKiller]

It would force us to actually grow and adapt instead of babying ourselves with government hand-outs. Economic forces would be allowed to actually change prices, and equilibrium could be reached instead of a faux-equilibrium propped up by the government that leads to booms and busts.

You see, this is the utter bullshit that comes about from an econanarchist. You somehow think that the "market" knows exactly how to handle everything, yet, somehow, the market couldn't handle the housing bust. You may say "but...but...but, they knew they'd get bailed out", which is a bunch of bullshit. They didn't know that and not everybody got bailed out, that didn't stop them from making their money and fucking everybody else, which is exactly what would happen in a completely "free market".

In order for the "free market" to work, you'd have to reach a level of knowledge that cannot be reached, the pricing in of all available information to create perfectly efficient markets. That will never happen. Unless it did, those with capital would massively fuck those without until you ended up with a plutocracy or even a feudal situation.

 

[werepossum]

This indeed.
And i also agree with schadefroh that a government should not own companies. But as i have noticed with every day experience is that the government can start to act as a bully because it is the government that contracts companies. And that is another serious underestimated concern that can only be dealt with by use of proper regulation. Not only regulation for contracted companies, but also regulation about the duty the government must perform in order to maximize the efficiency of the contracted companies without having those companies in a strangle hold. A true gentlemen agreement but put on paper as a contract.

I can not go into full details for obvious reasons but for example, when there is a clause in a contract that allows a government to suspend payment to the company for delivered services for any reason the government official sees fit. Companies can get in serious financial problems. For example loans must be requested at banks to solve financial issues (Such as paying suppliers of parts) until the government official is satisfied and enables payment again for services already delivered although minor flaws( not life threatening but experimental phase projects to iron out flaws) have been found in those services. And i can safely say that those flaws where able to happen because that same government department to company contract has no clarity about how to cope with certain situations.

Important decisions must always be made in a democratic manner by means of democratic debate and negotiation between government officials and contracted companies. If a single person can make decisions that can put companies out of business then this is detriment for the economy in general. And it seems all to often that government officials rather enjoy their power and control over others also known as corruptive behavior. The solution is to spread the power over multiple officials.

If there is no proper way of executing a service from ground up, then first their must be negotiated how to implement features and how to set up a test course. By no means, the public in general must end up paying the bill by means of bad services or by means of taxes spend wrongly. Efficiency has always been the keyword. And especially a moloch such as a government looses efficiency over time

Intermezzo :
This can also be seen when companies get to big to function and becoming to slow and unable to respond to developments in technologies and there out forthcoming possible new markets.
End intermezzo :

This all has been recognized before by many people in the business. But these business people have the tendency to fully disintegrate the government departments what again results in loss of efficiency by means of the public paying the bill by bad quality services or by taxes spend wrongly.
For example because a single government service is now spread over several contracted companies, there is more administration, there is more miscommunication and there is less profit because the same amount of money payed by the responsible government department has now to be divided over multiple companies each with their own ceo who desire bonuses and shareholders who desire short term profit results. Also this will result in less vital maintenance to vital public services which again cause delays, for example people end up coming late at work, more traffic jams because people prefer to stay in traffic jams because they feel they cannot trust the public transport. It is a vicious circle. And it is not just happening in the US it is happening in any western country. Also the one where i am.

Good post. As a corollary, I'll point out that when companies get so large and ponderous that they have difficulty responding to changes in technology and the market, they are also large enough to buy favorable regulations and other government actions, provided the government is large enough and intrusive enough to intercede for them. It's much easier to predict the next big market if you are paying government officials to make it so.

One big problem that I'll reiterate is something that Sportage touched - our need for point-of-use solar. As a huge energy importer, the USA very much needs to be manufacturing solar cells and other forms of green energy on a very large scale. Yet once again, our domestic manufacturers are proving unable to compete with Chinese manufacturers, even with a state of the art, minimally labor intensive automated plant. This means that even switching to solar just means we pay a different overlord. This in turn should be a huge wake-up call to us all that we need to revise our basic economic system to either be more competitive, or to artificially make us more competitive.

 

[dmcowen674]

There is no Free Market

so stop fucking blaming the free market and free market principles for failures of the economy. someone is always dicking the fuck around.

Ayup, only way is to kill the head of the snake

 

[werepossum]

You see, this is the utter bullshit that comes about from an econanarchist. You somehow think that the "market" knows exactly how to handle everything, yet, somehow, the market couldn't handle the housing bust. You may say "but...but...but, they knew they'd get bailed out", which is a bunch of bullshit. They didn't know that and not everybody got bailed out, that didn't stop them from making their money and fucking everybody else, which is exactly what would happen in a completely "free market".

In order for the "free market" to work, you'd have to reach a level of knowledge that cannot be reached, the pricing in of all available information to create perfectly efficient markets. That will never happen. Unless it did, those with capital would massively fuck those without until you ended up with a plutocracy or even a feudal situation.

You have that exactly backward. In order for centralized planning to work, you'd have to reach that level of knowledge. The free market works just the opposite, on the concept that all of us are smarter than some of us, therefore some of us will always make the best decisions, and the rest of us will follow whomever made those best decisions. In the case of the housing bust, that happened 100% because of government. Government-sponsored entities made loan guarantees that removed the risk for banks and mortgage companies to loan money in excess of a house's worth to those unlikely or even unable to ever pay it back. At the same time, government pressured banks and mortgage companies to make home loans to low income buyers who, in most markets, simply cannot afford to buy a house.

You can make a case that government intervention has helped to bring homes to a lot of people who otherwise could never have afforded them, but when the GSEs abandoned such "outdated metrics" as employment and income verification and credit history, the housing bust was inevitable. This has nothing to do with the free market other than its perversion from being a free market.

 

[momeNt]

You see, this is the utter bullshit that comes about from an econanarchist. You somehow think that the "market" knows exactly how to handle everything, yet, somehow, the market couldn't handle the housing bust. You may say "but...but...but, they knew they'd get bailed out", which is a bunch of bullshit. They didn't know that and not everybody got bailed out, that didn't stop them from making their money and fucking everybody else, which is exactly what would happen in a completely "free market".

In order for the "free market" to work, you'd have to reach a level of knowledge that cannot be reached, the pricing in of all available information to create perfectly efficient markets. That will never happen. Unless it did, those with capital would massively fuck those without until you ended up with a plutocracy or even a feudal situation.

Is the government the little mother bird that drops the bits of worms into the squawking citizens mouths or something then?

In order for a free market to work you can't have government endorsed mischief with other peoples property (including money). This sort of mischief opens up the doors to a whole host of problems, you wind up with inflation in a nation with a dwindling manufacturing base thus causing their labor to be exceedingly expensive (USA). You also wind up with a lack of inflation in creditor nations and it does not allow their price of labor to inflate (China). Banks end up getting loads of money given to them through the Federal Reserve and all it ends up doing is runs up sectors of the market with a corresponding benefit towards the lower orders of production (middle and lower class get bent over and fucked on this one).

 

[PingSpike]

Regulations are a good idea. Or at least they were until corporations just starting paying politicians to create competition destroying "regulations" and then calling it the "Keeping American Babies Safe Act" or something.

 

[LegendKiller]

You have that exactly backward. In order for centralized planning to work, you'd have to reach that level of knowledge. The free market works just the opposite, on the concept that all of us are smarter than some of us, therefore some of us will always make the best decisions, and the rest of us will follow whomever made those best decisions. In the case of the housing bust, that happened 100% because of government. Government-sponsored entities made loan guarantees that removed the risk for banks and mortgage companies to loan money in excess of a house's worth to those unlikely or even unable to ever pay it back. At the same time, government pressured banks and mortgage companies to make home loans to low income buyers who, in most markets, simply cannot afford to buy a house.

Yes, because the "free market" for housing provided enough of a counterbalance that it prevented the housing bubble. Oops.

Which GSE's are you talking about? Countrywide? Litton? Wachovia (option-arm's aren't part of CRA)? New Century? The fact of the matter is that the GSEs couldn't even begin to touch the $14TR housing market, especially the option-arm no-doc loans. The "guarantees" were only for prime conforming loans, which went down as a % of all loans originated.

This is the problem with people like you, you point to the GSEs and say "Aha!" but you fail to even begin to acknowledge that prices, especially ones with uber-leverage, are set at the margins, not with prime conforming center loans. The fact you're still parroting this bullshit only highlights how little you know and how much of a "free market" dittohead you are.

You can make a case that government intervention has helped to bring homes to a lot of people who otherwise could never have afforded them, but when the GSEs abandoned such "outdated metrics" as employment and income verification and credit history, the housing bust was inevitable. This has nothing to do with the free market other than its perversion from being a free market.

The GSE's didn't abandon them. Only in 2007, to try to stem the tide of the credit bust, did the GSE's begin to accept Alt-A (NOT SUBPRIME!) loans with less-docs.

The FACT of the matter is that the vast majority of the shit was originated and passed through unregulated mortgage brokers.

 

[LegendKiller]

Is the government the little mother bird that drops the bits of worms into the squawking citizens mouths or something then?

In order for a free market to work you can't have government endorsed mischief with other peoples property (including money). This sort of mischief opens up the doors to a whole host of problems, you wind up with inflation in a nation with a dwindling manufacturing base thus causing their labor to be exceedingly expensive (USA). You also wind up with a lack of inflation in creditor nations and it does not allow their price of labor to inflate (China). Banks end up getting loads of money given to them through the Federal Reserve and all it ends up doing is runs up sectors of the market with a corresponding benefit towards the lower orders of production (middle and lower class get bent over and fucked on this one).

The government didn't cause labor to leave the US, the "free market" for labor did. Our open trade agreements in the face of every one of those countries fucking us is why we lost so many jobs. Our notion of "fair play" and "free markets" isn't mirrored by the likes of China. This is what you fools don't understand. They don't give a flying fuck through a rolling donut about "free markets", they care about "free lunches" that we hand them by being "Mr. Free Market".

This is why we'd be utterly raped by China if we went to a gold based currency. They'd simply devalue their currency more and flood our market with cheap shit while buying up our gold in payment of the debts.

China not having inflation? Are you fucking kidding me? You Libertopians are so clueless that it's amazing you can even manage to breathe.

The Fed's money was loans, the Fed didn't "give" them the money. It was all paid back.

 

[ConstipatedVigilante]

You see, this is the utter bullshit that comes about from an econanarchist. You somehow think that the "market" knows exactly how to handle everything, yet, somehow, the market couldn't handle the housing bust. You may say "but...but...but, they knew they'd get bailed out", which is a bunch of bullshit. They didn't know that and not everybody got bailed out, that didn't stop them from making their money and fucking everybody else, which is exactly what would happen in a completely "free market".

In order for the "free market" to work, you'd have to reach a level of knowledge that cannot be reached, the pricing in of all available information to create perfectly efficient markets. That will never happen. Unless it did, those with capital would massively fuck those without until you ended up with a plutocracy or even a feudal situation.

The housing bust was indirectly encouraged by the federal government. The .gov encouraged banks to make loans to people who couldn't pay them to put people in houses. There was also a ton of corruption in Fannie/Freddie. The people there were profiting from the bubble, not trying to gradually deflate it.

Of course, the bankers were at fault too, and the rating agencies were incredibly corrupt. The blame can be spread all round; the catastrophe was caused by a combo of government intervention and free market forces.

Also, the bankers and the Treasury/Fed are pretty close buddies. A lot of them did know they would get bailed out.

 

[LegendKiller]

The housing bust was indirectly encouraged by the federal government. The .gov encouraged banks to make loans to people who couldn't pay them to put people in houses. There was also a ton of corruption in Fannie/Freddie. The people there were profiting from the bubble, not trying to gradually deflate it.

Of course, the bankers were at fault too, and the rating agencies were incredibly corrupt. The blame can be spread all round; the catastrophe was caused by a combo of government intervention and free market forces.

Also, the bankers and the Treasury/Fed are pretty close buddies. A lot of them did know they would get bailed out.

What "encouragement" were you talking about? CRA? Lie.

Goddamnit, THE GSE's DID NOT WRITE NO-DOC OPTION ARM NINJA LOANS. Get it through your fucking thick head. The GSE's weren't nearly as well compensated as their private contemporaries.

The banks had no idea they'd get bailed out until shit hit the fan. Until that time they just took in fees and thought things were going to be fine. There may have been some at the top who really knew, perhaps Mozillo and his ilk, but by and large, the ones in the middle to upper (not top) didn't think too much was going to happen.

 

[fskimospy]

What "encouragement" were you talking about? CRA? Lie.

Goddamnit, THE GSE's DID NOT WRITE NO-DOC OPTION ARM NINJA LOANS. Get it through your fucking thick head. The GSE's weren't nearly as well compensated as their private contemporaries.

The banks had no idea they'd get bailed out until shit hit the fan. Until that time they just took in fees and thought things were going to be fine. There may have been some at the top who really knew, perhaps Mozillo and his ilk, but by and large, the ones in the middle to upper (not top) didn't think too much was going to happen.

It's another area where people continue an attempt at equivalence when none exists. It turns into a 'well I guess that everyone was at fault, so let's just drop it' that allows people to avoid confronting the uncomfortable truth that the free market, private banking entities are almost entirely to blame for the subprime meltdown.

I don't get why this is so hard for people to grasp, especially since our only chance of preventing this from happening again is understanding the roots of it. Maybe their ideology is more important to them than their wallets.

 

[momeNt]

It's another area where people continue an attempt at equivalence when none exists. It turns into a 'well I guess that everyone was at fault, so let's just drop it' that allows people to avoid confronting the uncomfortable truth that the free market, private banking entities are almost entirely to blame for the subprime meltdown.

I don't get why this is so hard for people to grasp, especially since our only chance of preventing this from happening again is understanding the roots of it. Maybe their ideology is more important to them than their wallets.

"Understanding the roots" isn't possible if fractional reserve banking goes completely untouched and we continue to let the federal reserve practice unsound monetary policy, because leaving those two shows no understanding of the roots!

Think about how it is possible that a nation like us with net trade deficits with just about every nation we do business with experiences a growth in its money supply. Well the only real answer is that we keep financing those deficits with debt and the only way to pay it is to give inflated dollars to those nations. The USA began heading down this road in 1971 when we couldn't settle deficits in gold anymore because it could not be created and nobody wanted our dollars when gold was an option. Now they have no better option than our green paper. Ever since then our manufacturing class of labor has been exported because we do not allow the fundamentals of a free market system to allow our labor wages to deflate and our labor to become cheaper against the nations that are net exported because they should be flooded with our gold/currency and experience wage inflation.

The problems we experience today stem from the simple fact that we have been fucking around with money on two fronts, a government monopolized currency, and fractional reserve banking causing inflationary expansion obscuring where the actual growth is.

 

[soulcougher73]

Our problem is that our corporations are really good at sending jobs overseas and concentrating wealth at the top and not so good at creating real meaningful jobs.

So when things get out of balance like they are now the corporations do more harm than good.

Fixed that for you.

Sort of. Both unregualted corporate greed and our government suck at doing anything meaningful that this country really needs.

 

[metalfacepc]

I agree with the drizzle and eskimospy. We need "good" regulation because a completely free market would definitely lead to human catastrophe (its only human nature). To this end, good luck to the world and the global economy (after all, aren't countries using regulation as a way to get ahead of other countries?)

 

[MooseNSquirrel]

In The Affluent Society Galbraith asserts that classical economic theory was true for the eras before the present, which were times of "poverty"; now, however, we have moved from an age of poverty to an age of "affluence", and for such an age, a completely new economic theory is needed. Galbraith's main argument is that as society becomes relatively more affluent, so private business must "create" consumer demand through advertising, and while this generates artificial affluence through the production of commercial goods and services, the public sector becomes neglected. He points out that while many Americans were able to purchase luxury items, their parks were polluted and their children attended poorly maintained schools. He argues that markets alone will underprovide (or fail to provide at all) for many public goods, whereas private goods are typically "overprovided" due to the process of advertising creating an artificial demand above the individual's basic needs. This emphasis on the power of advertising and consequent overconsumption may have anticipated the drop in savings rates in the USA and elsewhere in the developing world.[2]

Galbraith proposed curbing the consumption of certain products through greater use of consumption taxes, arguing that this could be more efficient than other forms of taxation, such as labour or land taxes. Galbraith's major proposal was a program he called "investment in men" – a large-scale publicly-funded education program aimed at empowering ordinary citizens.

 

[werepossum]

Yes, because the "free market" for housing provided enough of a counterbalance that it prevented the housing bubble. Oops.

Which GSE's are you talking about? Countrywide? Litton? Wachovia (option-arm's aren't part of CRA)? New Century? The fact of the matter is that the GSEs couldn't even begin to touch the $14TR housing market, especially the option-arm no-doc loans. The "guarantees" were only for prime conforming loans, which went down as a % of all loans originated.

This is the problem with people like you, you point to the GSEs and say "Aha!" but you fail to even begin to acknowledge that prices, especially ones with uber-leverage, are set at the margins, not with prime conforming center loans. The fact you're still parroting this bullshit only highlights how little you know and how much of a "free market" dittohead you are.



The GSE's didn't abandon them. Only in 2007, to try to stem the tide of the credit bust, did the GSE's begin to accept Alt-A (NOT SUBPRIME!) loans with less-docs.

The FACT of the matter is that the vast majority of the shit was originated and passed through unregulated mortgage brokers.

http://www.washingtonpost.com/wp-dyn/content/article/2008/06/09/AR2008060902626.html
This is long, but it's worth quoting because of the persistent lies from the left to try to recast the government as the savior rather than as part of the problem. This requires the Big Lie, even ignoring that there were fucking Congressional hearings on this matter in 2003/2004. Lord knows the Republicans aren't perfect - their abolishing the remains of Glass-Steagall allowed a housing crisis to crash the entire banking industry - but this impending crisis was unmissable by 2004 and the Pubbies did try to fix the problem. Barney Frank and Chris Dodd, along with a willing and compliant media, took the initiative to ensure that never happened.

In 2004, as regulators warned that subprime lenders were saddling borrowers with mortgages they could not afford, the U.S. Department of Housing and Urban Development helped fuel more of that risky lending.

Eager to put more low-income and minority families into their own homes, the agency required that two government-chartered mortgage finance firms purchase far more "affordable" loans made to these borrowers. HUD stuck with an outdated policy that allowed Freddie Mac and Fannie Mae to count billions of dollars they invested in subprime loans as a public good that would foster affordable housing.

Housing experts and some congressional leaders now view those decisions as mistakes that contributed to an escalation of subprime lending that is roiling the U.S. economy.

The agency neglected to examine whether borrowers could make the payments on the loans that Freddie and Fannie classified as affordable. From 2004 to 2006, the two purchased $434 billion in securities backed by subprime loans, creating a market for more such lending. Subprime loans are targeted toward borrowers with poor credit, and they generally carry higher interest rates than conventional loans.

Today, 3 million to 4 million families are expected to lose their homes to foreclosure because they cannot afford their high-interest subprime loans. Lower-income and minority home buyers -- those who were supposed to benefit from HUD's actions -- are falling into default at a rate at least three times that of other borrowers.

"For HUD to be indifferent as to whether these loans were hurting people or helping them is really an abject failure to regulate," said Michael Barr, a University of Michigan law professor who is advising Congress. "It was just irresponsible."

Congress is expected to vote before its Fourth of July recess on legislation that would strip HUD of its regulatory authority over Fannie and Freddie and give it to a stronger regulator.

Fannie and Freddie finance about 40 percent of all U.S. mortgages, with $5.3 trillion in outstanding debt. Owned by private shareholders but chartered by Congress, they are exempt from state and local taxes and receive an estimated $6.5 billion-a-year federal subsidy because they can borrow money more cheaply than other investors. In return, they are expected to serve "public purposes," including helping to make home buying more affordable.

HUD officials dispute allegations that the agency encouraged abusive lending and sloppy underwriting standards that became the hallmark of the subprime industry. Spokesman Brian Sullivan said the agency and Congress wanted to increase homeownership among underserved families and could not have predicted that subprime lending would dominate the market so quickly.

"Congress and HUD policy folks were trying to do a good thing," he said, "and it worked."

Since HUD became their regulator in 1992, Fannie and Freddie each year are supposed to buy a portion of "affordable" mortgages made to underserved borrowers. Every four years, HUD reviews the goals to adapt to market changes.

In 1995, President Bill Clinton's HUD agreed to let Fannie and Freddie get affordable-housing credit for buying subprime securities that included loans to low-income borrowers. The idea was that subprime lending benefited many borrowers who did not qualify for conventional loans. HUD expected that Freddie and Fannie would impose their high lending standards on subprime lenders.

Banks typically back prime loans with customers' deposits. But subprime lenders often rely on money from Wall Street investors , who buy packages of loans as investments called mortgage-backed securities.

In 2000, as HUD revisited its affordable-housing goals, the housing market had shifted. With escalating home prices, subprime loans were more popular. Consumer advocates warned that lenders were trapping borrowers with low "teaser" interest rates and ignoring borrowers' qualifications.

HUD restricted Freddie and Fannie, saying it would not credit them for loans they purchased that had abusively high costs or that were granted without regard to the borrower's ability to repay. Freddie and Fannie adopted policies not to buy some high-cost loans.

That year, Freddie bought $18.6 billion in subprime loans; Fannie did not disclose its number.

In 2001, HUD researchers warned of high foreclosure rates among subprime loans.

"Given the very high concentration of these loans in low-income and African American neighborhoods, the growth in subprime lending and resulting very high levels of foreclosure is a real cause for concern," an agency report said.

But by 2004, when HUD next revised the goals, Freddie and Fannie's purchases of subprime-backed securities had risen tenfold. Foreclosure rates also were rising.

That year, President Bush's HUD ratcheted up the main affordable-housing goal over the next four years, from 50 percent to 56 percent. John C. Weicher, then an assistant HUD secretary, said the institutions lagged behind even the private market and "must do more."

For Wall Street, high profits could be made from securities backed by subprime loans. Fannie and Freddie targeted the least-risky loans. Still, their purchases provided more cash for a larger subprime market.

"That was a huge, huge mistake," said Patricia McCoy, who teaches securities law at the University of Connecticut. "That just pumped more capital into a very unregulated market that has turned out to be a disaster."

In 2003, the two bought $81 billion in subprime securities. In 2004, they purchased $175 billion -- 44 percent of the market. In 2005, they bought $169 billion, or 33 percent. In 2006, they cut back to $90 billion, or 20 percent. Generally, Freddie purchased more than Fannie and relied more heavily on the securities to meet goals.

"The market knew we needed those loans," said Sharon McHale, a spokeswoman for Freddie Mac. The higher goals "forced us to go into that market to serve the targeted populations that HUD wanted us to serve," she said.

But because Fannie and Freddie were buying mortgage-backed securities rather than the actual subprime loans, their involvement came too late to require stiffer standards from lenders.

Fannie and Freddie "made no progress in civilizing the market," said Sandra Fostek, a senior regulator at HUD.

William C. Apgar Jr., who was an assistant HUD secretary under Clinton, said he regrets allowing the companies to count subprime securities as affordable.

"It was a mistake," he said. "In hindsight, I would have done it differently."

Allen Fishbein, who was Apgar's adviser at HUD and is now at the Consumer Federation of America, said the agency failed to use its regulatory power by refusing to credit Fannie and Freddie for loans that were "contrary to good lending practices."

"They chose not to put the brakes on this dangerous lending when they could have," Fishbein said.

Fostek said the agency had no practical way to comb through the tens of millions of individual loans contained in the subprime securities.

She said that Fannie and Freddie did not overwhelmingly rely on securities to meet the goals but added that she would not disclose the amount counted because it is considered proprietary.

Fannie and Freddie spokespeople say their partners had agreed not to sell them loans with several prohibited characteristics, including credit insurance, excessively high costs and prepayment penalties that lasted longer than three years. But experts say the volume of subprime foreclosures proves they were toxic to borrowers.

Judith Kennedy, president of the National Association of Affordable Housing Lenders, said that while Fannie and Freddie nurtured unregulated subprime lenders, an estimated 30 percent of subprime borrowers could have qualified for safe, lower-cost prime loans.

"The damage to homeowners, to neighborhoods, to state and local governments as the tax base erodes, and now to all American taxpayers, is almost incalculable," she said.

Sen. Jack Reed (D-R.I.), a member of the Senate banking committee who brokered some of the regulatory reform in the pending bill, said HUD's homeownership push ignored reality.

"We need to focus on putting families in homes they can truly afford, not just on getting a sale, packaging the loan into a sophisticated financial security and walking away to the next closing," he said. "Today, people are wondering, 'Why weren't the regulators and the industry probing these [loans] more deeply?' "

If we do not point out the Big Lie every time it is put forth, those willing to lie for political benefit will win, and they will transform this country into something unrecognizable. The GSEs have struggled to meet their low income loan targets every year since HUD took over their regulations in '92, and there have been numerous if boring and poorly reported Congressional hearings about this subject in almost every Congress. Now the people who want societal engineering want to blame the inevitable consequences of that societal engineering as justification for even more societal engineering.

 

[fskimospy]

http://www.washingtonpost.com/wp-dyn/content/article/2008/06/09/AR2008060902626.html
This is long, but it's worth quoting because of the persistent lies from the left to try to recast the government as the savior rather than as part of the problem. This requires the Big Lie, even ignoring that there were fucking Congressional hearings on this matter in 2003/2004. Lord knows the Republicans aren't perfect - their abolishing the remains of Glass-Steagall allowed a housing crisis to crash the entire banking industry - but this impending crisis was unmissable by 2004 and the Pubbies did try to fix the problem. Barney Frank and Chris Dodd, along with a willing and compliant media, took the initiative to ensure that never happened.

If we do not point out the Big Lie every time it is put forth, those willing to lie for political benefit will win, and they will transform this country into something unrecognizable. The GSEs have struggled to meet their low income loan targets every year since HUD took over their regulations in '92, and there have been numerous if boring and poorly reported Congressional hearings about this subject in almost every Congress. Now the people who want societal engineering want to blame the inevitable consequences of that societal engineering as justification for even more societal engineering.

Your link doesn't say what you think it says. Fannie and Freddie were a small part of the subprime fiasco, one that was overwhelmingly free market, private bank generated. If your point was that Congress forced Fannie and Freddie to act almost as irresponsibly as the private banks already were, uhmmm... ok.

Continued obfuscation seems to be the intent here, where if we muddy the waters enough we might think that the government was either the cause, or an equal party to private industry in what happened. It wasn't.

 

[ElFenix]

Your link doesn't say what you think it says. Fannie and Freddie were a small part of the subprime fiasco, one that was overwhelmingly free market, private bank generated. If your point was that Congress forced Fannie and Freddie to act almost as irresponsibly as the private banks already were, uhmmm... ok.

Continued obfuscation seems to be the intent here, where if we muddy the waters enough we might think that the government was either the cause, or an equal party to private industry in what happened. It wasn't.

44% of the market is a small part?

 

[fskimospy]

44% of the market is a small part?

And what percentages of the subprime market did they occupy in the following years as the subprime market exploded in size, you know... the years that really led to the crisis? That doesn't even mention the fact that they are MBSs, not the origination of the subprime loans.

 

[werepossum]

Your link doesn't say what you think it says. Fannie and Freddie were a small part of the subprime fiasco, one that was overwhelmingly free market, private bank generated. If your point was that Congress forced Fannie and Freddie to act almost as irresponsibly as the private banks already were, uhmmm... ok.

Continued obfuscation seems to be the intent here, where if we muddy the waters enough we might think that the government was either the cause, or an equal party to private industry in what happened. It wasn't.

The article is perfectly clear, as were the Congressional hearings. If you wish to continue the Big Lie and contend that all the warnings of what was going to happen are pure coincidence, well, it's still a free country.

 

[fskimospy]

The article is perfectly clear, as were the Congressional hearings. If you wish to continue the Big Lie and contend that all the warnings of what was going to happen are pure coincidence, well, it's still a free country.

Yes they were, so long as people understand the larger context. If you want to continue to try and muddy the waters, well, it's still a free country.