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The economy - oops
#71
I'm not too terribly knowledgable about economics, but I know enough that this week's actions scared the shit out of me. If I'm reading it right, we're pretty damn close to the point where all banks will simply stop issuing credit in any way shape or form.
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#72
Quote:

Originally Posted by Muharulz
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This government has fucked up so bad and now we are slowly turning into a socialist state.

Ironically, up here in Canada, where we have a lot more actual socialism, we're going to be somewhat insulated from the coming downturn. Though having a big honking source of oil helps, too.
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#73
Quote:

Originally Posted by Alan "Nordling" Cerny
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I'm not too terribly knowledgable about economics, but I know enough that this week's actions scared the shit out of me. If I'm reading it right, we're pretty damn close to the point where all banks will simply stop issuing credit in any way shape or form.

In a nutshell, yeah.

Of course, after Thursday and Friday, you could say that we were pretty damn close to this happening. What they did stop doing (which resulted in the events of Monday and Wednesday) is stop lending money to each other...which is much more important than most people realize.
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#74
Quote:

Originally Posted by dynamotv
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I hate that we had to bail out all these companies but wouldn't the alternative have been worse? Wouldn't we be spiralling into an economic depression if the government didn't step in?

The problem is that, in my understanding, the GOP has been systematically reversing depression era regulatory laws that were enacted so we wouldn't be in this mess. Surprise, surprise, guess what happened as a result of that?

Yes, the alternative would have been much worse. We didnt bail out Lehman not because the amount of negative equity on their balance sheet grew to hundreds of billions (as I saw mentioned earlier), but rather because everybody on the street knew Lehman's demise was only a matter of time. Speak to anybody in the industry and chances are they will tell you the moment they heard of Bear Sterns the first thing they said was "Well, I'm sure Lehman will be next." AIG is really what did it...not only because it was a surprise but because AIG (or its numerous subsidiaries) has a hand in almost everything...everywhere.

And I wouldnt say that the GOP has been systematically reversing regulatory laws, it's just that folks in the finance industry are really good at coming up with alternative investments that (based upon currently regulatory laws) require very little if any actual oversight via Uncle Sam. Either the SEC cant keep up, or they dont really see the need to as (for the time being) everybody is making money off of these things and therefore nobody is complaining about them.


For a perfect example, see hedge funds up until March of this year.
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#75
Quote:

Originally Posted by dynamotv
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I hate that we had to bail out all these companies but wouldn't the alternative have been worse? Wouldn't we be spiralling into an economic depression if the government didn't step in?

The problem is that, in my understanding, the GOP has been systematically reversing depression era regulatory laws that were enacted so we wouldn't be in this mess. Surprise, surprise, guess what happened as a result of that?

Ron Paul made a great point about this whole crisis. He said that the bailouts of these banks is like giving a fix to a drug addict.

Sure, it's going to help the banks now... but it's going to hurt us later. And I would also argue that keeping the value of our currency and watching bank after bank fall is a lot better than what could and probably will happen with this.

Banks get money from the government that they will mass produce, thus inflating the dollar. The value plummets and the dollars that we own will be of lesser value. Not only the inflation threat, but our country will just continue to raise its debt and our kids' kids will be paying it off.
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#76
Politically, what do you guys see as happening? Are we going to see the Republicans go into the wilderness again just like we did during the Great Depression or will they survive this crisis? Best case scenario is that they will probably have to rebuild their brand for the next 10 years or so. Worst case they will be diminished to the point of being a third party. Am I overstating things or did George W just destroy the Republican party?
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#77
Quote:

Originally Posted by dynamotv
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Politically, what do you guys see as happening? Are we going to see the Republicans go into the wilderness again just like we did during the Great Depression or will they survive this crisis? Best case scenario is that they will probably have to rebuild their brand for the next 10 years or so. Worst case they will be diminished to the point of being a third party. Am I overstating things or did George W just destroy the Republican party?

Considering George W and the Republican party had little to nothing to do with the events of this week (and the past 12 months) I dont really see why the aforementioned would occur.
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#78
Quote:

Originally Posted by The Closer
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Considering George W and the Republican party had little to nothing to do with the events of this week (and the past 12 months) I dont really see why the aforementioned would occur.

Then again, I do realize that a lot of people in this country are stupid and would believe anything the TV tells them.
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#79
There are really two issues here. Stopping the blood-loss from the short term crisis, and recognizing the current and future systemic problems that the credit market needs to maintain stability moving forward. I don't know nearly enough about the economy to say what those pieces might be, but neither of those things alone is going to be enough. Both pieces have to be well written, clear pieces of legislation.

Quote:

Originally Posted by The Closer

Considering George W and the Republican party had little to nothing to do with the events of this week (and the past 12 months) I dont really see why the aforementioned would occur.

Huh? How can you say that with a straight face? Being the leader of a party that has vociferously pushed a flawed ideology (in this case laisse-faire, free market capitalism) on the American people, and they had little to do with it? Not trying to attack, but some clarification is needed. Or... you can call it stupid. I mean, doesn't everyone have a certain amount of blame to take? Being president while all this stuff is going on certainly means that more blame can be placed onto one's shoulders. [/edit]
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#80
It's amazing. Once upon a time, the US was so well off it could send a man to the moon just to see if they could do it. Think we'll ever get back to that sort of prosperity?
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#81
Quote:

Originally Posted by Pop Zeus
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Huh? How can you say that with a straight face? Being the leader of a party that has vociferously pushed a flawed ideology (in this case laisse-faire, free market capitalism) on the American people, and they had little to do with it? Not trying to attack, but some clarification is needed. Or... you can call it stupid. I mean, doesn't everyone have a certain amount of blame to take? Being president while all this stuff is going on certainly means that more blame can be placed onto one's shoulders. [/edit]

You can't blame the current administration because the problems began before their time. IMO at the end of the day it would make more sense to blame:

Mrs. Cupp - The 5th grade teacher making $40,000/year who is leveraging the equity in her home to purchase a $500,000 investment property.

Diego Sanchez - The 19 year old high school dropout turned loan officer who told Mrs. Cupp the aforementioned would be a great idea and pushed for her approval knowing her financial situation so he could get his $10,000 commission check.

And

Henry William Prentice III - The CFO who kept having his I-bankers purchase the phant securities the mortgage was applied to.

*The above contains stereotypes.

If you absolutely must point your finger at one person, point it towards Alan Greenspan...but again even then its not as simple as we want to try to make it.
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#82
Closer, you can't blame Mrs. Cupp, but you're right to blame Greenspan for at least part of it.

I know it's convenient to blame ordinary Americans for this crisis from the Republican point of view, but I would like you to take a good, long look at the history of the conservative aka neoliberalistic aka free market philosophy, first proposed as an economic theory in the 1920s, popularized decades later by Milton Friedman, practiced by Greenspan and embraced wholeheartedly as policy by every Republican in power since Reagan.

This philosophy dictates that the market will take care of the market. The unfortunate side-effect is that it strips away the majority of profits from the supply-side and places the majority of profits into the financial market. This philosophy is what has given Republicans, from Reagan to the likes of Phil Gramm and John McCain, their passion for deregulation. It's what gave Grover Norquist the hubris to say that he wanted to reduce the size of government to such a degree that it can be drowned in a bathtub. The problem is that, like Communism, this philosophy sounds good when you're sitting around discussing it as a theory, but in practice is a total, catastrophic failure.

What it does is shift wealth from the middle class created by FDR, the New Deal and the WWII/GI Bill era to the richest 1% of the country, who make their money by playing with money and sitting on wealth. The difference between the era following the Great Depression and the era that will follow this collapse is that we don't have the manufacturing base we had then to help get the country back to a paying basis again.

This crisis could be seen, and was seen, from a mile away. The reason is that it's like a Ponzi scheme writ large, with the government sufficiently de-fanged by regulatatory enemies like Phil Gramm.

Where Bush figures into the situation is that he has a total and complete lack of interest or background in any of this. He has appointed cronies to every position he could. He has rubber-stamped every effort to deregulate this country into oblivion, plunge the country into debt (quoth Cheney, "We learned from Reagan that deficits don't matter."Wink and send every manufacturing job he could overseas. He has proved to be the world's best cheerleader for laissez faire economics. Part of his 2004 pitch for reelection was how great the real estate market was doing -- this was at the height of the bubble created by these sub-prime loans that were being bundled and sold overseas. Instead of being a leader at a time when a leader could have helped, he was working on gaining control of Iraqi oil, the only thing he has been single-minded (if incompetent) about accomplishing.

So, back to your analogy, Mrs. Cupp may have been sitting on a perfectly sound home loan when her broker called her and told her to take advantage of these low rates, without pointing out to her that buried in the small print was the crucial information that everything would balloon out in a handful of years. Mrs. Cupp, for being inadequately informed about the latest white collar criminality being blessed by people who were supposed to watch out for her best interests in Washington, probably lost her home in the bargain and is living with her kids now. I just hope Mrs. Cupp has since learned enough about this disaster to not vote for John McCain, who loves deregulation and relies on people like Phil Gramm for his economic advice.
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#83
Personally I would blame any politician who wanted loan companies and banks to provide sub-prime mortgages. This is what really started the dominoes to fall.

Getting people to own homes is a great thing for our economy. I just think no one really realized how bad it could have (and, it did get) gotten if a mass of people who could not afford those mortgages couldn't really pay them.

I think it all boils down to people wanting to own homes who had no business owning a home. They either did not make enough income to pay for the mortgage they received or they were too ignorant or lazy to read the fine print.

The banks and loan companies are also to blame for this because they preyed on those people and gave out mortgages like it was fucking candy. They didn't really tell these people how serious the shit could be if they didn't pay them. And, if they did tell them, they certainly didn't tell them the specifics of payment.
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#84
Muhalruhz, the reason the banks wanted to give out as many of these loans as they could is that the greater volume of loans they had, the more they could profit from speculation with foreign investors. It's not about people being too stupid or lazy to read the fine print. It's about CEOs and shareholders being so greedy that they willfully ignored the lessons of the Great Depression to get rich quick while they could -- aided, of course, by cronies like Phil Gramm, who went from being the Senator that stripped away the Depression-era insurance against a catastrophic fall like this -- to being on the board of French super-bank UBS and one of its heaviest-hitting lobbyists, to being John McCain's economic adviser while still drawing a paycheck from UBS.
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#85
Quote:

Originally Posted by yt
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Muhalruhz, the reason the banks wanted to give out as many of these loans as they could is that the greater volume of loans they had, the more they could profit from speculation with foreign investors. It's not about people being too stupid or lazy to read the fine print. It's about CEOs and shareholders being so greedy that they willfully ignored the lessons of the Great Depression to get rich quick while they could -- aided, of course, by cronies like Phil Gramm, who went from being the Senator that stripped away the Depression-era insurance against a catastrophic fall like this -- to being on the board of French super-bank UBS and one of its heaviest-hitting lobbyists, to being John McCain's economic adviser while still drawing a paycheck from UBS.

I don't disagree with you, I just think that (especially after taking a contract law class) people should read what they are signing and be informed as to what they are doing.

I know many people have dreams about owning a house, but those people have got to think sensibly about the major investment/risk they are taking on when paying off a mortgage.

The banks and loan companies played a much larger role in this debacle than the little guy... that I agree with you on vt. But, I cannot ignore the fact that it was the choice, and not coercion, of these people to sign their lives over to those banks who preyed on them.
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#86
But it was coercion. We also live in a society in which the same people who are pushing to give people with money and power more money and power are pushing to wreck education and consolidate media to such a degree that four mega-companies own the majority of newspapers, news networks and radio stations. In other words, people at large are not as sophisticated as they were even 30 years ago, and worse, they've been conditioned into this consume-at-all-costs-to-solidify-your-identity mentality by the over commercialization/over-advertised world.

At the height of the housing bubble, I kept hearing these ads on the radio and hearing about how easy it was to get these loans. Everyone was telling me to refinance my house, etc., etc., but luckily my loan broker has been a friend of my family's for a long time and she told me straight up that these were bad loans and that I should stick with the loan I'm currently paying off. Everyone wants to have a better life and give a better life to their kids. You get lulled into this fantasy that you can grasp things previously unavailable to you and your family, and you take the bait. I didn't take the bait because I had someone trustworthy to throw me a line. A lot of people didn't. And here we are.

But that's where I see where good governance comes into it. These are the people that we pay to look out for our society and the commons we all share. If they're only working for the millionaires and billionaires that lobby them every second of every day, then the smart laws that would have prevented something like this from happening -- laws put into place as a direct result of something like this happening -- get stripped away, and as a result, we get screwed. But those at the top who profited from this get to keep their money thanks to the Bush tax cuts for millionaires and billionaires and now those profits are safely tucked away in the Caymans while Americans get thrown out on their asses.
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#87
Because things aren't dismal enough, allow me to chime in with something else this financial catastrophe ruins: social reform. Even if Obama wins the election, I don't see how he'll be able to afford reforms like universal health care or full college tuition. Is he going to have to spend his whole time in office cleaning up the mess that the Bush administration made all over the rug?
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#88
Quote:

Originally Posted by Snaieke
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For the record, Cox put an end to short selling after McCain called him out on it and we rebounded today because of it.

um Mccain said that he wanted Cox fired. He didn't call him out to "stop short selling" that was Cox's own idea. On top of that, ending short selling is the most anti-capitilism thing the government could do and damages the free market system. Finally, just because the stock "rebounded" for 1 day doesn't mean squat. Any little glimmer of hope will cause the market to rally but then any little sign of weakness will bring it back down the next day its a bipolar system and does not represent the health of our economy.

Mccain has no understanding of the financial system and if he is elected you can expect big business and wall street to walk all over him.
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#89
Quote:

Originally Posted by yt
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But it was coercion. We also live in a society in which the same people who are pushing to give people with money and power more money and power are pushing to wreck education and consolidate media to such a degree that four mega-companies own the majority of newspapers, news networks and radio stations. In other words, people at large are not as sophisticated as they were even 30 years ago, and worse, they've been conditioned into this consume-at-all-costs-to-solidify-your-identity mentality by the over commercialization/over-advertised world.

At the height of the housing bubble, I kept hearing these ads on the radio and hearing about how easy it was to get these loans. Everyone was telling me to refinance my house, etc., etc., but luckily my loan broker has been a friend of my family's for a long time and she told me straight up that these were bad loans and that I should stick with the loan I'm currently paying off. Everyone wants to have a better life and give a better life to their kids. You get lulled into this fantasy that you can grasp things previously unavailable to you and your family, and you take the bait. I didn't take the bait because I had someone trustworthy to throw me a line. A lot of people didn't. And here we are.

But that's where I see where good governance comes into it. These are the people that we pay to look out for our society and the commons we all share. If they're only working for the millionaires and billionaires that lobby them every second of every day, then the smart laws that would have prevented something like this from happening -- laws put into place as a direct result of something like this happening -- get stripped away, and as a result, we get screwed. But those at the top who profited from this get to keep their money thanks to the Bush tax cuts for millionaires and billionaires and now those profits are safely tucked away in the Caymans while Americans get thrown out on their asses.

It's not coercion if you are being bombarded with media persuading you to do something that may not be in your best interest.

Coercion is when the banks put a gun to your head and force you to do something you don't really want to do.

I bet that 90% of those homeowners who got foreclosed on really wanted to own a home. There's nothing wrong with that, but I want a yacht to sail in the Pacific. Yet, I'm a measly law student with no income. I'm not going to take a huge loan to pay for a yacht with the knowledge that I can't afford to pay that loan off.

EDIT: I think the banks committed their crimes by hiding facts from these people as well as telling half-truths and lying to people. I do think that people have to understand what they are doing however. If something is too good to be true, chances are it is.
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#90
Muharulz, I see where you're coming from but I think that perspective -- one many people share -- is missing the forest for the trees. If you want to know more about how this happened, watch this Frontline about Cleveland's attempt to deal with this crisis and what kind of reception that effort got. Now read about Elliot Spitzer's attempt here and here, to deal with predatory lending. Guess what kind of back-up he got from Washington.

This is not just a case of Joe Schmoe being stupid and taking out a loan without reading the fine print. Not every borrower in this market got a subprime loan. "73% of HIGH INCOME Black and Hispanic borrowers were given sub-prime loans versus 17% of similar-income Whites." They were steered to these loans.

All I'm saying is it's a much deeper issue than can be explained away by what common sense might dictate. There are good guys and bad guys in this story. The Republicans are seeking to muddy the waters right now because it's looking a little too much like McCain was hanging out with the bad guys.
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#91
Quote:

Originally Posted by yt
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Muharulz, I see where you're coming from but I think that perspective -- one many people share -- is missing the forest for the trees. If you want to know more about how this happened, watch this Frontline about Cleveland's attempt to deal with this crisis and what kind of reception that effort got. Now read about Elliot Spitzer's attempt here and here, to deal with predatory lending. Guess what kind of back-up he got from Washington.

This is not just a case of Joe Schmoe being stupid and taking out a loan without reading the fine print. Not every borrower in this market got a subprime loan. "73% of HIGH INCOME Black and Hispanic borrowers were given sub-prime loans versus 17% of similar-income Whites." They were steered to these loans.

All I'm saying is it's a much deeper issue than can be explained away by what common sense might dictate. There are good guys and bad guys in this story. The Republicans are seeking to muddy the waters right now because it's looking a little too much like McCain was hanging out with the bad guys.

That video really scared me. I actually live in Cleveland and I live very close to many of those suburbs. I just moved here, so I didn't realize how devastated the city was. Since I live close to Downtown, I haven't really seen the great impact this crisis has done to my new city. Thanks for sharing.
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#92
It looks like a similar argument was had on Bill Maher's show last night between Naomi Klein and Andrew Sullivan:

Quote:

Klein: The disaster is far from over. They’ve actually just relocated. The disaster was on Wall Street and they have moved the disaster to Main Street by accepting those debts and you said they didn’t have to bomb, the bomb has yet to detonate. The bomb is the debt that has now been transferred to the taxpayers so it detonates when, if John McCain becomes president in the midst of an economic crisis and says look we’re in trouble, we have a disaster on our hands, we have to privatize social security, we can’t afford health care, we can’t afford food stamps, we need more deregulation, more privatization. The thesis of the Shock Doctrine is you need a disaster to rationalize these very unpopular policies so the real disaster has yet to come.The real disaster is the debt that is going to explode on the American taxpayers. And then they do economic shock therapy.

They had to step in, but I don’t think they had to step in in the way they did. The reason why the stock market went up on Wall Street today is because it’s Christmas morning. Imagine waking up and being told your credit card debits have been wiped out, your mortgage has been erased. There’s a fairy godmother that has taken care of you. A guardian angel. But actually that’s the tax payers.

Sullivan: You’re favoring nationalizing the other companies.and most industries?

Klein: No, I’m just saying. This is socialism for the rich.

Maher: Why are you so hostile towards this?

Sullivan: Because I think the fundamental thesis that she is proposing is wrong. I think the reason why we’re in this situation is not demonizing a few individual companies, it’s systemic. And part of the reason we have this is the American People. The American people since the 70’s have had stagnating income, so they decided to get something for nothing. And the government never told them they couldn’t. So we have the stock bubble of the 90’s and now we have the real estate bubble in the 2000’s.

Klein: That’s not why we have this.

Sullivan: And the government never told them they couldn’t. Wall Street is to blame for giving these people these loans, but no one is ever forced to take out a bad load they cannot pay.

Klein: The reason why this bubble was allowed to inflate was not that the American people demanded it, it was spectacularly profitable for Wall Street. Just in bonuses last year, they handed out 33 billion dollars in bonuses… The problem is we have crybaby capitalism where when the times are good they are preaching deregulation and when the times are bad they want the bail-outs. The problem I have with your argument is where is this ideal capitalism of which you speak?

Source.
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#93
Quote:

Originally Posted by Muharulz
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That video really scared me. I actually live in Cleveland and I live very close to many of those suburbs. I just moved here, so I didn't realize how devastated the city was. Since I live close to Downtown, I haven't really seen the great impact this crisis has done to my new city. Thanks for sharing.

Sorry. The reason this is being couched the way it is is that our corporate media does not report the news as it should and therefore most people have no way of internalizing why and how this happened. But people need to know that the Republican framing of this crisis is deliberately misleading.
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#94
It's cool.

I actually watched that Maher show and I kinda side with both Sullivan (which I normally do on other topics) and Klein.

I guess I just stand by my notion that this crisis is mostly the financial industry's fault, then the government's, and then the American people's.
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#95
I hate to quote myself but in another thread I described the social pressures people here in Northern CA (And probablly most other parts of the US) were under. Go into a supermarket and you'll see ads for realators on the little rubber bars they use to seperate people's orders at the checkout stand. An airbrushed realtor's face stares out at you from bill boards, bus stops etc. All of these people are competing with each other to sell you a home. Are you more likeley to listein to the guy telling you should get a smaller home at a reasonable interest rate, or the guy telling you you can get that house in the good neighborhodd near the good schools and pay a lower interest rate?

(Behind the realator's are the banks who had the same problem. The profits were huge and the risks minimal becuase risk was transferred to someone else.)

And at parties, work, baseball etc. all your friends and neighbors brag about the vacations to Europe they took by refinancing their home. Also how much they made by buying and flipping that investment property in Vegas or Phoenix.

America is by and large a materilaistic society (even the fundamentalists really believe a weird "religion of prosperity" ) and this is a huge blow to that way of looking at the world. Owning stuff is of primary importance and that whole outlook on life just took a huge kick to the nuts. Maybe we will see a change in the way Americans view themselves and the world. I hope.
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#96
Quote:

I know it's convenient to blame ordinary Americans for this crisis from the Republican point of view

Im not a republican and have voted for only 1 in my entire lifetime (and it was a local election) so Im not sure what "viewpoint" you would be referring to.


Quote:

Closer, you can't blame Mrs. Cupp

Yes, I can blame Mrs. Cupp. There is nothing wrong with people taking responsibility for their actions. At least a little bit. Should all the blame be placed on her? No, and I never suggested as much. We got into this mess via a team effort, but Mrs. Cupp was an integral part of that team. We should make sure she knows that, too. That way there is less of a chance of something like this happening again.


Quote:

This crisis could be seen, and was seen, from a mile away.

Indeed it was. Yet nobody...republican or democrat...did anything to deal with it.

Quote:

Where Bush figures into the situation is that he has a total and complete lack of interest or background in any of this.

As does Obama. As does McCain. I assume that is not going to stop you from voting for at least one of them, so lets set that aside as a non-issue.

And what people fail to realize is that there are literally hundreds if not thousands of alternative investments that you could, in one way or another, compare to CMOs and CDOs. The events we are pulling ourselves out of have little or nothing to do with the current administrations desire for a deregulated market. You can prove me wrong by naming one piece of regulation or legislation that was removed by Dubya during his retarded tenure that contributed to this.

I despise Dubya as much as the next man, but blaming him for this is akin to blaming the dot com bubble burst on Clinton.

Quote:

So, back to your analogy, Mrs. Cupp may have been sitting on a perfectly sound home loan when her broker called her and told her to take advantage of these low rates, without pointing out to her that buried in the small print was the crucial information that everything would balloon out in a handful of years. Mrs. Cupp, for being inadequately informed about the latest white collar criminality being blessed by people who were supposed to watch out for her best interests in Washington, probably lost her home in the bargain and is living with her kids now. I just hope Mrs. Cupp has since learned enough about this disaster to not vote for John McCain, who loves deregulation and relies on people like Phil Gramm for his economic advice

And unfortunately, at the end of the day it is Mrs. Cupp's fault for not reading the small print. I know that the "democratic view" is that really nobody is responsible for the mistakes they make (perhaps her city councilman should have accompanied her to her loan closing to review things?) but again, there is nothing wrong with telling Mrs. Cupp that its her fault she signed off on something she didnt fully understand.

And when you say "blessed by people who were supposed to watch out for her best interests in Washington" I can only assume you are referring to folks like Obama, correct? Seeing as how he was a big supporter of lax lending standards.

As I mentioned a few posts above, no matter what piece of regulation is put into place you have to remember that folks on Wall Street are a lot smarter than folks in Washington and they are masters and finding loopholes in the rules that end up making lots of people a ton of money. I would know, seeing as how I work for one of the firms left standing.

I'm black though, so you cant call me racist for not supporting the idea of mortgages for people who can barely afford a car. Just a heads up.
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#97
Quote:

Originally Posted by Matt Goldberg
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Because things aren't dismal enough, allow me to chime in with something else this financial catastrophe ruins: social reform. Even if Obama wins the election, I don't see how he'll be able to afford reforms like universal health care or full college tuition. Is he going to have to spend his whole time in office cleaning up the mess that the Bush administration made all over the rug?

Uh, he wouldnt be able to afford any of it anyway.

Im sure that the events of the past few months wouldnt stop him.
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#98
Quote:

Originally Posted by Cylon Baby
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I hate to quote myself but in another thread I described the social pressures people here in Northern CA (And probablly most other parts of the US) were under. Go into a supermarket and you'll see ads for realators on the little rubber bars they use to seperate people's orders at the checkout stand. An airbrushed realtor's face stares out at you from bill boards, bus stops etc. All of these people are competing with each other to sell you a home. Are you more likeley to listein to the guy telling you should get a smaller home at a reasonable interest rate, or the guy telling you you can get that house in the good neighborhodd near the good schools and pay a lower interest rate?

(Behind the realator's are the banks who had the same problem. The profits were huge and the risks minimal becuase risk was transferred to someone else.)

And at parties, work, baseball etc. all your friends and neighbors brag about the vacations to Europe they took by refinancing their home. Also how much they made by buying and flipping that investment property in Vegas or Phoenix.

America is by and large a materilaistic society (even the fundamentalists really believe a weird "religion of prosperity" ) and this is a huge blow to that way of looking at the world. Owning stuff is of primary importance and that whole outlook on life just took a huge kick to the nuts. Maybe we will see a change in the way Americans view themselves and the world. I hope.

This post > Everything.
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#99
I think blaming working people for signing onto reckless loans is a little like blaming gravity for a plane crash. Yes, its obvious to those who are smart and well-rounded with their personal finances that they shouldn't be naively signing a sub-prime. Same goes for these corporate conmen who took all the cash and ran. Its well-known (or at least it should be) that corporations are inherently amoral so to expect them to behave like angels in an environment of relaxed regulatory oversight is also totally ridiculous. But government is supposed to know better.

Also, not a huge fan of Greenspan. I'm surprised that he's gotten away with not taking any heat for a lot of what happened during his tenure. Some of this can be blamed on Clinton, but then if that's true, some of it can also be blamed on the Republican Congress that set the legislative agenda. The bottom line is that there is plenty of blame to go around. The roots of this crisis really go back decades. Although I do take particular fault with the "government is the problem" ideology. Its very destructive and leads to nothing but bad ineffective government. If you can't have a small amount of faith that government can do some good, then you've already lost so to speak.
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Quote:

Originally Posted by Pop Zeus
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I think blaming working people for signing onto reckless loans is a little like blaming gravity for a plane crash. Yes, its obvious to those who are smart and well-rounded with their personal finances that they shouldn't be naively signing a sub-prime. Same goes for these corporate conmen who took all the cash and ran. Its well-known (or at least it should be) that corporations are inherently amoral so to expect them to behave like angels in an environment of relaxed regulatory oversight is also totally ridiculous. But government is supposed to know better.

Also, not a huge fan of Greenspan. I'm surprised that he's gotten away with not taking any heat for a lot of what happened during his tenure. Some of this can be blamed on Clinton, but then if that's true, some of it can also be blamed on the Republican Congress that set the legislative agenda. The bottom line is that there is plenty of blame to go around. The roots of this crisis really go back decades. Although I do take particular fault with the "government is the problem" ideology. Its very destructive and leads to nothing but bad ineffective government. If you can't have a small amount of faith that government can do some good, then you've already lost so to speak.

Yup.

And I dont really fault the "working persons" ignorance as much as his blind greed.
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Originally Posted by The Closer
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And unfortunately, at the end of the day it is Mrs. Cupp's fault for not reading the small print. I know that the "democratic view" is that really nobody is responsible for the mistakes they make (perhaps her city councilman should have accompanied her to her loan closing to review things?) but again, there is nothing wrong with telling Mrs. Cupp that its her fault she signed off on something she didnt fully understand.

And when you say "blessed by people who were supposed to watch out for her best interests in Washington" I can only assume you are referring to folks like Obama, correct? Seeing as how he was a big supporter of lax lending standards.

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And here is the heart of the problem. Did you read all the small print on your mortgage? How about the "Terms and Conditions" that come with every single piece of software you buy or download?

Combine the lack of education of most Americans with the complex process of buying a home and you get...the current situation!

I really despise this "Every man for himself" society we've created in the US: where you must expect/assume that everyone is out to get you and will lie to you to attain their aims. And it is your responsibility to double-check everything everyone represents to you.

And remember that in this mortgage situation we are not talking about "Duke Fleed's Fly by Night Mortgage Co" . We are talking about Washington Mutual, IndyMac etc.

Ask yourself if this is the society you want to live in. Not the society to DO live in, the one you want?
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Originally Posted by Cylon Baby
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Combine the lack of education of most Americans with the complex process of buying a home and you get...the current situation!

Studies have consistently shown that Americans ranks among the least (if not THE least) financially educated nations in the western world. Now, in a situation like this, there are unquestionably numerous factors invovled, but this lack of financial understanding only serves to make a bad problem worse.

In my town, there are no shortage* of families that make about 70k a year living in $200,000 houses. Obviously, part of that can be blamed on the fact that housing prices were inflated beyond any rational sense, but at a certain point isn't it incumbent on the buyer to say "You know, I shouldn't do this. Long term, it isn't a financially responsible decision." Yeah, home loans were being handed out like candy at Halloween and everyone wanted to get a piece of that pie. But the buyers didn't stop and ask themselves "You know, this adjustable rate mortgage looks great now, but is it going to stay that way?"

And I don't want to sound like one of these "BLAME THE CONSUMER!" people. I realize the preasure on people in, as you pointed out, an incredibly materialistic society. I also understand the desire to give one's family a nice home and good standard of living. And I understand that it was things like that that made it all the easier for the economy to take the turns that it did. Most people are well meaning and were simply grabbing the opportunity that was presented to them, but they never once considered that they make be making a deal with the Devil.

And, to be honest, my sympathy starts to deteriorate when I look at the financial decisions of some of these people. For example, I have a family member that lives in a $500,000 home. She doesn't work, and her husband works in Real Estate. He does ok for himself, but they live in a resort town, so his business is VERY seasonal, meaning that there are long stretches with no money coming in. So, what do they do? Take out any and every loan they can find, with no means to pay them back, of course!

The thing that blows my mind is that they COULD still live a very comfortable lifestyle with the money he brings in. They aren't content to live that life, though. They've got a house they can't afford, vehicles they can't afford, and on top of that they owe several thousand dollars in back taxes. Sure, they had these offers dangled in front of them, but they abused the system and now the reality is that they'll probably be losing the house in the next 9 months.

So, in a situation like that, am I REALLY supposed to lay all the blame on the financial end? Believe me, I know that there are plenty of well-intentioned people being fucked over because of all this, but there are also a ton of people that knew damn well, or at least had an idea, that they were milking the system without care of the long term implications.

*Well, there wasn't. That's changing now.
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Originally Posted by Matt Goldberg
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Even if Obama wins the election, I don't see how he'll be able to afford reforms like universal health care or full college tuition.

TAX CUTS FOR THE RICH, obviously.
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Originally Posted by Matt Goldberg
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Because things aren't dismal enough, allow me to chime in with something else this financial catastrophe ruins: social reform. Even if Obama wins the election, I don't see how he'll be able to afford reforms like universal health care or full college tuition. Is he going to have to spend his whole time in office cleaning up the mess that the Bush administration made all over the rug?

Unfortunately, he--and the next few administrations--will be doing just that. Prior to this, everyone knew the next few presidents were going to have to clean up the mess Bush has made of the Middle East, the Bill of Rights, our standing in the international community, the already historically massive federal debt and weak dollar, the raping of the Army and so on and so forth. Then, just before the election, the credit crisis finally came to a head and compounded and multiplied the problems that the policies the Republican Party in general and the Bush Administration in particular have enacted over the last fifteen years. Prior to that, it was reasonable to think that Obama could fund his reforms if we simply stopped underwriting the energy industry's cost of doing business, got the insanely wealthy to pay their fair share in taxes for the first time in a few decades, started to downscale the War in Iraq, stopped throwing money at foolish DoD programs that are just financial black holes and nothing more (Star Wars and the like) and got back to "pay as you go" federal spending. Now, that's all out the window. The next few administrations are going to be able to do nothing but clean up the mess the current administration has made of things. This is just plain depressing.

The thing that's more depressing is everyone is buying this "Do Nothing Congress" bullshit. What most people don't know--because the mainstream media won't tell them--is that the entire strategy of the Republican Party leadership since 2006 has been to make the GOP's slim minority in congress an albatross around the majority party's neck in order to--in Delay's own words--make them look like a "do nothing congress" by 2008. If the public buys that and elects McCain and/or reverses the trend of 2006, I'm going to be of the opinion that this electorate gets everything it deserves.
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Great article today in the FT about Greenspan's hand in this. Kinda goes over some of the stuff a few of us have said so far in this thread:

http://www.ft.com/cms/s/0/32b85c72-8...0779fd18c.html
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