Who is actually responsible for the economic meltdown?

[wuliheron]

I don't know in what fantasy land you live, but we don't get to vote for whomever we damn well please. Your proposition that every single voter abstain from voting is as unlikely as telling every single consumer to stop buying with credit.

Trust me, if Donald Trump can run for president so can you. If you want to start you own political party to promote the "Walt Disney Way of Life" you can do that too. All you need is enough people to support you and you're on the ballot.

I know all this might sound strange to someone convinced they are a slave, but take your anti-psychotic medicine and it will make more sense. You need money to survive, but the world won't end if you don't vote. I know that sounds shocking to some, but its true.

 

[Munky]

Trust me, if Donald Trump can run for president so can you. If you want to start you own political party to promote the "Walt Disney Way of Life" you can do that too. All you need is enough people to support you and you're on the ballot.

I know all this might sound strange to someone convinced they are a slave, but take your anti-psychotic medicine and it will make more sense. You need money to survive, but the world won't end if you don't vote. I know that sounds shocking to some, but its true.

Now here's the reality check - unless the economy goes completely down the toilet, or something drastic happens:

Donald Trump will not win president
Ron Paul will not win president
Any other third party candidate will not win president

Effectively, we are locked into the two-party system.

 

[wuliheron]

Now here's the reality check - unless the economy goes completely down the toilet, or something drastic happens:

Donald Trump will not win president
Ron Paul will not win president
Any other third party candidate will not win president

Effectively, we are locked into the two-party system.

They won't win because people choose to vote for someone else and we have a two party system because that's what the people demand! Nobody's locked into shit except maybe their bad head trips. How's that for a reality check.

 

[HomerJS]

Who is actually responsible for the economic meltdown?
The government.

Rough chain of events:

1. Clinton starts and Bush continues a well meaning policy promoting home ownership
2. The bursting of the Tech bubble and 9/11 result in an economic slowdown to combat this the Fed keeps interest rates lower to spur growth.
3. Low interest rates + governmental policies makes home ownership very attractive which starts the housing bubble as the bubble grows owning a house becomes even more attractive.
4. Growth in Fannie and Freddie take risk out of the housing market which causes the bubble to grow even more
5. Greedy banks take advantage of 3+4 and start building a house of cards with leveraged investments assuming that these investments are low risk because they are based on government backed mortgages.
6. Interest rates start to rise and every thing falls apart.

I say the government is to blame because they interfered with the housing market and removed it from the normal risk vs reward market system and instead turned it into a low risk vs high reward market which caused things to go askew.

Good list but I would insert a few more things...

1a. Deregulation of derivatives. Started under Clinton.
5a. Bush admin cuts SEC budget weaking their enforcement capabilities
5b. Greedy investment firms packaging known shitty securities took out side bets against them with AIG taking most of the action due to the high fees. When these securities collapsed AIG couldn't cover the bets.

 

[piasabird]

Government prohibits Banks from foreclosing on homeowners.

http://finance.yahoo.com/news/Foreclosure-limbo-Staying-cnnm-989137852.html?x=0

These people purchased a home for $135,000.00 then they refinanced it to $650,000.00 due to appreciation. So they just live in the home rent free. I say kick them out on the street. No freeloaders alowed.

 

[yllus]

Look in the mirror. It's you assholes who wanted to own your own home enabling the government and investors to make it easier which lead to the bubble.

That's only true to a certain extent. As a layperson seeking medication for an illness, I cannot be reasonably expected to understand medicine and physiology to the extent that I can contradict what the experts (doctors) whose advice I've sought on the matter say. Only a person whose career is in the field of medicine can provide a well-researched opinion.

Same with finance. Most people in banking were fooled into thinking those CDOs really were AAA investment quality. If they thought as much and they spend their 9-5 existence immersed in finance, what hope does the layperson have?

It's one thing to not do your own research into a company you buy stocks from - buy The Intelligent Investor, read the company's annual reports, do the math. Understanding what the hell a CDO is to begin with, and then what exactly the CDOs your money was spent on resides within - that's completely different. I still get fuzzy headed at the mention of tranches.

The CRA Argument has been very nearly swept from the board. But it does beg the question.

Why would bankers, even unregulated, make risky loans if they were interested in staying in business?

Bankers aren't interested in staying in business. Bankers (like the rest of us) are interested in increasing their personal fortune. They can do that while utterly bankrupting their firms - we saw it happen with Enron, with Bear Stearns, with AIG and with other banks that went down the tubes in 2008. There simply is no incentive for bankers to play it safe.

 

[JockoJohnson]

Government prohibits Banks from foreclosing on homeowners.

http://finance.yahoo.com/news/Foreclosure-limbo-Staying-cnnm-989137852.html?x=0

These people purchased a home for $135,000.00 then they refinanced it to $650,000.00 due to appreciation. So they just live in the home rent free. I say kick them out on the street. No freeloaders alowed.

As much as I hate the homeowners for being so fucking stupid for taking those loans out, it is also the banks fault for letting them refinance that much in the first place. Plenty of blame to go around--from stupid homeowners to greedy banks to the damn gov't.

 

[JockoJohnson]

That's only true to a certain extent. As a layperson seeking medication for an illness, I cannot be reasonably expected to understand medicine and physiology to the extent that I can contradict what the experts (doctors) whose advice I've sought on the matter say. Only a person whose career is in the field of medicine can provide a well-researched opinion.

Same with finance. Most people in banking were fooled into thinking those CDOs really were AAA investment quality. If they thought as much and they spend their 9-5 existence immersed in finance, what hope does the layperson have?

If you are at the grocery store and the food you are about to purchase smells funny, are you still going to buy it? You didn't make it but you know enough that something isn't right with it and should stay away from it.

 

[yllus]

If you are at the grocery store and the food you are about to purchase smells funny, are you still going to buy it? You didn't make it but you know enough that something isn't right with it and should stay away from it.

It's as easy as using your nose to sniff, then? Okay, explain to me in your next post what a CDO is, why the ones sold before 2008 should have been considered risky despite having AAA ratings, and how a layperson should have realized that they would lead to a devastation of the markets and wipe out half of their index stock/bond fund.

 

[JockoJohnson]

It's as easy as using your nose to sniff, then? Okay, explain to me in your next post what a CDO is, why the ones sold before 2008 should have been considered risky despite having AAA ratings, and how a layperson should have realized that they would lead to a devastation of the markets and wipe out half of their index stock/bond fund.

Ahh, but I am a good shopper. I know enough about food on what is good and what is bad. If I was in some form of finance, then I should know enough to know what is good or bad---if not, then I should stay away from it unless I was a greedy fuck looking to latch onto the popular gimmick of the day.

Edit: Also, whether I purchase something for my self or for my company, I make sure I know what I am buying. If I buy something for my company and it turns out to be such a shitty product, then I didn't do my job properly.

I am not in finance but when I was looking at houses back in 2002-2003, I thought most of the houses I looked at seemed to be valued too high. Instead, I bought a much smaller home and now own it free and clear. And for the price I paid back in 2003, it is still worth more today. I am not claiming to be a financial genius but I could tell something wasn't right with the housing market.

 

[soulcougher73]

Slaves don't get a vote, they don't get to abstain from voting, and they certainly don't get to vote for whoever they damned well please. Get a grip fool, if the American public walked down the street this very moment to protest they would be heard and something would be done. If they all abstained from voting they would be heard and something would be done. If they all started voting for the guy next door they would be heard and something would be done. They are not slaves to be summarily whipped or killed. Yes, we have a two party system, but that doesn't mean the people have to keep choosing the same two parties.

Yet we keep doing this. I wonder why. Maybe you should think about it and read up on why.

 

[soulcougher73]

Trust me, if Donald Trump can run for president so can you. If you want to start you own political party to promote the "Walt Disney Way of Life" you can do that too. All you need is enough people to support you and you're on the ballot.

I know all this might sound strange to someone convinced they are a slave, but take your anti-psychotic medicine and it will make more sense. You need money to survive, but the world won't end if you don't vote. I know that sounds shocking to some, but its true.

Are you still in high school? This is a pipe dream you are talking about.

 

[blackangst1]

I agree with you pretty much across the board. We have a two party system and rarely is one party solely in control. Blame must be spread across the entire system when looking at the situation we're in as a whole. BTW, until we throw every one of them out of office, nothing will change. Anyone who thinks this can be done through the election process is mistaken. Infer from that what you will. Politicians, over time have rigged the system so that the only folks that can afford to run are those that are well-heeled and connected. Who do these people look out for? Each other and their friends. The average Joe gets what's left. Too many of the progressive left want to attack the rich. That doesn't solve the problem. The problem lies in our electoral system and how it has been bastardized over the years. Snap the top off a dandelion and it grows back. You have to take it out at the root to get rid of it. Too many on the left, in their wide-eyed innocence, still think there is a difference between rich Democrats and rich Republicans.

Regarding your questions, I will answer those for which I have both answers and opinions.

1. Deregulation of the banks. Clinton signed it into law, passed by a Republican congress (55/45 and 223/211), but had a final vote of something like 92 to 5 in the Senate. This is more of a statement on your part than a question but I will share my thoughts. This was the start of the downfall. Regulations were put in place after the great depression to keep another one from happening. They're removed and voilà - another great depression. History will show this one to be greater. We have more social safety nets in place masking the severity of this one. We also don't report the indicators honestly anymore. Reporting them honestly paints politicians in a bad light so they made some changes in how they're calculated. AFAIK, the banks have not yet been re-regulated. Why is this?

2. Barney Franks. Is this guy solely to blame along with the Democratic party for the housing crisis? Why do they blame him for everything? Chris Dodd is in it up to his eyeballs with Frank. I hold these two totally responsible for the housing crisis. Progressive insanity brought about this crisis. In a different country they would both be brought up on charges, convicted and probably hung. This might throw a little fear into the rest of the Congress critters but it would be short lived. Oh, why do they blame him? Because he's the mastermind along with Dodd.

3. Who's fault is it that we let the banks get bailed out but they didn't loan money to anyone? Who let them get away with making all this money during this economic mess? Whose fault? Our Government. Both parties. There is no single individual although I'm sure some of our progressive friends here have a sole Republican they can blame - for this and everything else too.

4. Who let banks loan money to people with no docs, no money down, and no job? Frank and Dodd started the process. Our government is to blame. Deregulation more or less let the banks do whatever they wished.

5. Who wanted every American to own a home regardless of whether they could really afford it? Wasn't it both parties once again? Every bleeding heart liberal that makes decisions based on "feelings" instead of logic. Frank and Dodd made it happen.

6. Who allowed all these elaborate financial packages and repackages to be sold and resold despite them being worthless? Banks and the financial industry as a whole were deregulated. Who allowed it to happen? Our Government - that's us.

That's all I've got. The usual suspects, instead of providing additional constructive thoughts and opinions will soon tear apart what I've said by singling out individual words I've used. It's how it's done here.

The people of this nation still have the ultimate control over what happens. The power still resides with us. But don't get too complacent because that power has been and is being eroded. A group has emerged with taking back control of the government as their goal. They are being minimized and marginalized viciously by the progressive left and the media. I wouldn't say we're at the crossroads but we're damn close. Washington DC needs a thorough housecleaning. It can't be done through the election process. The bad apples remaining will spoil the new. We need all new apples.

I agree with all your points. With the housing issue, it's difficult to not lay alot of blame on Dodd and Frank. Watching their attitudes in senate hearings is all the proof you need.

And I dont say this in a partisan way, because Im fairly middle of the road. But some blame needs to be given to Clinton and Cisneros, and to Bush for continuing the madness. They created a strategy which was well intentioned, but backfired. A good article about it appeared in businessweek HERE.

Add President Clinton to the long list of people who deserve a share of the blame for the housing bubble and bust. A recently re-exposed document shows that his administration went to ridiculous lengths to increase the national homeownership rate. It promoted paper-thin downpayments and pushed for ways to get lenders to give mortgage loans to first-time buyers with shaky financing and incomes. It’s clear now that the erosion of lending standards pushed prices up by increasing demand, and later led to waves of defaults by people who never should have bought a home in the first place.

President Bush continued the practices because they dovetailed with his Ownership Society goals, and of course Congress was strongly behind the push. But Clinton and his administration must shoulder some of the blame.

which was rolled out in 1999

Fannie Mae Eases Credit To Aid Mortgage Lending
Published: September 30, 1999

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.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

And with almost a prophetic afterthought,

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

 

[Fern]

Who is actually responsible for the economic meltdown?

Bob Rubin, at least according to Matt Taibbi.

The irony of Bob Rubin: He’s an unapologetic arch-capitalist demagogue whose very career is proof that a free-market meritocracy is a myth. Much like Alan Greenspan, a staggeringly incompetent economic forecaster who was worshipped by four decades of politicians because he once dated Barbara Walters, Rubin has been held in awe by the American political elite for nearly 20 years despite having fucked up virtually every project he ever got his hands on. He went from running Goldman Sachs (1990-1992) to the Clinton White House (1993-1999) to Citigroup (1999-2009), leaving behind a trail of historic gaffes that somehow boosted his stature every step of the way.

As Treasury secretary under Clinton, Rubin was the driving force behind two monstrous deregulatory actions that would be primary causes of last year’s financial crisis: the repeal of the Glass-Steagall Act (passed specifically to legalize the Citigroup megamerger) and the deregulation of the derivatives market. Having set that time bomb, Rubin left government to join Citi, which promptly expressed its gratitude by giving him $126 million in compensation over the next eight years (they don’t call it bribery in this country when they give you the money post factum). After urging management to amp up its risky investments in toxic vehicles, a strategy that very nearly destroyed the company, Rubin blamed Citi’s board for his screw-ups and complained that he had been underpaid to boot. “I bet there’s not a single year where I couldn’t have gone somewhere else and made more,” he said.

Despite being perhaps more responsible for last year’s crash than any other single living person — his colossally stupid decisions at both the highest levels of government and the management of a private financial superpower make him unique — Rubin was the man Barack Obama chose to build his White House around.

There are four main ways to be connected to Bob Rubin: through Goldman Sachs, the Clinton administration, Citigroup and, finally, the Hamilton Project, a think tank Rubin spearheaded under the auspices of the Brookings Institute to promote his philosophy of balanced budgets, free trade and financial deregulation. The team Obama put in place to run his economic policy after his inauguration was dominated by people who boasted connections to at least one of these four institutions — so much so that the White House now looks like a backstage party for an episode of Bob Rubin, This Is Your Life!

Read more here: http://www.totalnoid.com/2009/12/14/rolling-stones-matt-taibbi-obamas-big-sellout/

Fern

 

[IceBergSLiM]

`What Mr. Arnott does is to subtract out the change in debt growth from GDP, and refers to this statistic as ‘Structural GDP.' He finds that, "the real per capita Structural GDP, after subtracting the growth in public debt, remains 10 per cent below the 2007 peak, and is down 5 per cent in the past decade. Net of deficit spending, our prosperity is nearly unchanged from 1998, 13 years ago. '

 

[wuliheron]

Yet we keep doing this. I wonder why. Maybe you should think about it and read up on why.

Are you still in high school? This is a pipe dream you are talking about.

We keep doing it because that's what people believe in and its what has worked for over 200 years. Calling it a pipe dream won't change the fact that your nightmare we are all slaves is patently absurd. There are still plenty of slaves in the world and perhaps you need to research the simple definition of the word and the reality.

 

[manimal]

six degrees of Bob Rubin!

 

[soulcougher73]

We keep doing it because that's what people believe in and its what has worked for over 200 years. Calling it a pipe dream won't change the fact that your nightmare we are all slaves is patently absurd. There are still plenty of slaves in the world and perhaps you need to research the simple definition of the word and the reality.

I never felt or said i was a slave to anything. Im just smart enough to understand how our political system "actually" works. Key word their is "actually". Not what was taught to you in school about our system.

 

[wuliheron]

I never felt or said i was a slave to anything. Im just smart enough to understand how our political system "actually" works. Key word their is "actually". Not what was taught to my in school about our system.

Dude, I don't believe the crap they teach in school either. But you did say everyone was a slave and that means yourself as well. It appears that English wasn't one of your favorite subjects either.

 

[soulcougher73]

Dude, I don't believe the crap they teach in school either. But you did say everyone was a slave and that means yourself as well. It appears that English wasn't one of your favorite subjects either.

You must have me confused with someone else that was telling you the truth. I never mentioned the word 'slave' anywhere in any of my posts. But at least you are correct about one thing. English was not my favorite subject in school. In fact, it was actually my worst subject grade wise. But i graduated in 91' so i could care less now.

 

[Munky]

They won't win because people choose to vote for someone else and we have a two party system because that's what the people demand! Nobody's locked into shit except maybe their bad head trips. How's that for a reality check.

You just confirmed what I said. Unless something drastic happens, people will continue to vote for the same assclowns as before.

 

[wuliheron]

You just confirmed what I said. Unless something drastic happens, people will continue to vote for the same assclowns as before.

They like the assholes! They have a lot in common not least of all the willingness to bend over and grease their asses for those wealthier then they are, go heavily into debt while living extravagant lifestyles, and blame everyone else in the world for their problems.

 

[werepossum]

Lately I've been discussing with friends how we got into this mess. I maintain that people just move their money into the next "get rich scheme" over and over again so we saw money move from Tech Stocks into Housing and when things started looking poorly there we saw heavy speculation in commodities such as Metals and Oil.

Personally I look back on all this and blame both parties. I personally think Congress is terrible no matter who is in charge. Those in power tend to succumb to greed. Our best times are when you have split power and nothing gets done. I'm not one to put the burden solely on the President either since Congress is the one that signs the checks and writes the bills.

However anytime I discuss this with a hardcore republican they blame democrats. Talking with a Democrat is a complete waste of time as well. I prefer people in the middle or who can be somewhat open minded and not divert the argument into something like abortion or the Iraq war.

So who did what? Who's fault is it? All I can really see are a few things and most are mixed.

1. Deregulation of the banks. Clinton signed it into law, passed by a Republican congress (55/45 and 223/211), but had a final vote of something like 92 to 5 in the Senate.

2. Barney Franks. Is this guy solely to blame along with the Democratic party for the housing crisis? Why do they blame him for everything?

3. Who's fault is it that we let the banks get bailed out but they didn't loan money to anyone? Who let them get away with making all this money during this economic mess?

4. Who let banks loan money to people with no docs, no money down, and no job?

5. Who wanted every American to own a home regardless of whether they could really afford it? Wasn't it both parties once again?

6. Who allowed all these elaborate financial packages and repackages to be sold and resold despite them being worthless?

I suppose I'm just curious what others think? Personally I think both parties are complete garbage and I have yet to vote in an election where I didn't feel like I was picking the lesser of two evils. To be perfectly fair I have always voted with my pocketbook (Republican) but consider myself Independent since I'm liberal on every non-monetary issue. I don't regret my votes, even after the fact, but I'm not afraid to admit that they're all terrible. It reminds me of that South Park episode with the giant douche and turd sandwich.

Spot on, it's both parties. Both parties (but especially the Democrats) pushed legislation forcing banks to loan money to people with no realistic way to pay it back. Both parties (but especially the Republicans) dismembered the tattered remnants of Glass-Steagall, allowing a crash in one sector to take down others just as in the Great Depression from whence Glass-Steagall sprang. Neither party did fuck-all to stop banks and mortgage companies from predatory lending, rein in Fannie Mae and Freddie Mac when they stopped requiring strict guidelines and no longer enforced "outdated metrics" like income verification and credit history, stop the bundling of worthless loans. Which means of course that it's us, the American electorate, that is really to blame.

Unless you are a mindless partisan schmuck, one of the rarest privileges in America is actually having someone to vote for rather than someone to vote against. Which is why one of the coolest tee shirts available says "VOTE SATAN - WHY KEEP SETTLING FOR A LESSER EVIL?"

 

[sandorski]

Republicans