Deregulation Big Lie Getting Scary

[corplinx]

Okay, the "deregulation is the cause of the finance mess" at first I thought was a just predictable untruth. However, it is getting more pervasive. Obama keeps repeating this. It is the classic Big Lie technique.

At first I thought nothing of it. Sarah Palin has her Bridge to Nowhere exaggeration Little Lie. However, I got to thinking about it more. After 911, we had some people ringing the alarm bells over what they perceived as an executive branch power grab. It seems like this de-regulation Big Lie seems to be the fuel for fire for another government power grab.

Am I off base here? Is Obama being dishonest about this crisis to fuel more government interference in financial markets? Or is this simple empty campaign rhetoric?

[Francesca R]

Well I think you have to conclude that the incentives were poorly rigged in some way or another, or else just shrug and think there is nothing to change, right?

I have no knowledge of what your POTUS candidates are saying but would not assume their remedies are sensible unless they address the incentive to take on huge financial leverage (which is in any case much reduced right now, but would not necessarily stay that way for the "survivors" once competitive pressures re-assert. .

[UserGoogol]

I don't really see how it's a big lie or even a little one. Yes, government intervention helped contribute to the housing bubble and its aftereffects, (incentives to encourage home ownership, low interest rates by the Fed, etc) but so did lack thereof (lack of oversight to prevent investment banks from taking on too much risk, for instance). If one of your doctors poisons you and then other doctors fail to figure out what's wrong with you, that does not mean that you need less medical care.

[Cain]

Okay, the "deregulation is the cause of the finance mess" at first I thought was a just predictable untruth. However, it is getting more pervasive. Obama keeps repeating this. It is the classic Big Lie technique.

At first I thought nothing of it. Sarah Palin has her Bridge to Nowhere exaggeration Little Lie. However, I got to thinking about it more. After 911, we had some people ringing the alarm bells over what they perceived as an executive branch power grab. It seems like this de-regulation Big Lie seems to be the fuel for fire for another government power grab.

Am I off base here? Is Obama being dishonest about this crisis to fuel more government interference in financial markets? Or is this simple empty campaign rhetoric?

This is the sort of classic big lie Corplinx post.

First enunciate some allegedly predictable fact, specifically one indicting everyone left-of-center. Then try to cover one's otherwise naked conservative ideology by conceding Republican sorta do the same thing- "Hey, this side does it too but I'm just tryin' to be reasonable here. Ease into your accusation: "It seems like this de-regulation Big Lie seems to be the fuel for fire for another government power grab." Exhibit self-doubt in an effort to remind the reader you're trying to at least appear reasonable: "Am I off base here?" Conclude by reiterating the cynical but readily acceptable "it's all politics" meme, but associate it with your political ideology, as if to say, "Well, obviously deregulation was not the problem, but regretfully they gotta, you know, play politics, ramp up the rhetoric." The next step is to pretend to be surprised by how partisan others are, not to mention gullible for actually believing deregulation may have been a serious problem.

I think leftists can make a more convincing big lie argument in the case of this financial deregulation, one that preserves all the truth of cynicism and rhetoric. Democrats constantly promote the idea that they can tame the beast, that they possess the technocratic know-how to engineer to capitalism to work for Wall Street and Main Street*. Who did I see Obama having lunch with in the paper? He made sure to get his picture taken with Larry Summers, Robert Rubin, and Paul Volcker. Of course he's using rhetoric when talking to crowds. He's a politician. Of course what he's saying to crowds is mostly meaningless. He's a politician.

Democrats are generally more convincing to people who actually bother thinking about these issues because they are not as wedded to an ideology. Sometimes government is a problem ("the era of big government is over") and sometimes not enough government is a problem. For Republicans and Libertarians, government is the problem. If deregulation succeeds, then it's more evidence government stands in the way. If deregulation fails, then it was not actual deregulation (see California energy deregulation -- ahem "deregulation"), at which point market fundamentalists say, "see, government can't even get deregulation right!" If regulation fails, then obviously that's still more evidence government louses things up. If regulation succeeds... hahahahaha.

*If Democrats say Wall Street and Main Street are parallel, Republicans say they're one and the same.

[corplinx]

You got me Cain. I am part of the propaganda machine.

[Francesca R]

Is this derailed already?

Who thinks the remedy to reduce future financial crises is less regulation of them? Who thinks more and exactly what? Or are regs fine the way they are and this is just one of dem things?

[Beerina]

Democrats are generally more convincing to people who actually bother thinking about these issues because they are not as wedded to an ideology.

Uhhh...right.


Sometimes government is a problem ("the era of big government is over") and sometimes not enough government is a problem.

The latter was old-school Democrat, which started failing as a meme to gain them power in 1980.

The former was adopted as an evolution of their platform the meme serving to gain them power. Clinton espoused this, and lo! it worked.

By "worked", I mean "got people elected".


For Republicans and Libertarians, government is the problem. If deregulation succeeds, then it's more evidence government stands in the way. If deregulation fails, then it was not actual deregulation (see California energy deregulation -- ahem "deregulation")

Telling the state utilities they may not raise prices while throwing in roadblocks to more domestic production combined with, of course, no state control of power imported from other states didn't look like possible trouble...to those with blinders on.


So a government corporation that's been lying about its independence for 15 years when it suits (http://www.sacbee.com/will/story/1251439.html), and "guarantees" things will not go bad, ran into trouble.

To pull another quote from Casablanca, "I'm shocked! Shocked!"

It's more about the massive pension funds (watched by millions of voters with a vested interest) not seeing their FNM go worthless than it is about "needing" to save a company like that.

And I'm sure we're all shocked! Shocked! at that.

[marksman]

To say the crisis was caused by deregulation would require one to demonstrate 1) that the industry was regulated, 2) that some of those regulations were removed (i.e., deregulated) and 3) that those removed regulations were a substantial cause of the current crisis.

It seems to me that people are really saying that this industry never sufficiently regulated. That's different than saying deregulation is the issue.

The S&L crisis in the early 1990's could be blamed in part on deregulation because there was an actualy deregulation of S&L's to loosen credit and make them more competitive with large banks. But the regulation was done badly, essentially removing oversight while maintaining the safety net, thus encouraging people to take outrageous risks knowing the government would always step in.

Is that what happened here? It seems to me that the problem was that the government encouraged (i.e., regulated) more home ownership, banks created new financial devices (in the form of bundling risky mortgages) and, over time, as the risks changed, nobody went back to change the way things were bundled to reflect these changes in risk, which meant institutions were overexposed.

So the issue to me isn't "deregulation" but "oversight" (or lack thereof). But I'm not terribly educated on the underlying causes of this crisis. So if there was some deregulation that was a factor here, I'd love to know what that was.

[Upchurch]

You got me Cain. I am part of the propaganda machine.
You are hardly have reputation as an objective observer/commentator.

[plumjam]

On this and other threads some people keep hinting at govt. regulation being the source of the problem. More specifically that some 1994 amendment to a particular law forced banks to offer risky loans to the poor/minorities.
If the banks were indeed so forced I'm curious as to whether any banks were prosecuted for not complying with this change in the law.. or if not prosecuted at least censured in some way. And what forms would such censure take?

If no banks were prosecuted, censured.. or maybe even warned, then the argument of forcing doesn't seem to add up.
I don't know the answer, maybe some of the econoboffins can help.

[plumjam]

dp

[WildCat]

On this and other threads some people keep hinting at govt. regulation being the source of the problem. More specifically that some 1994 amendment to a particular law forced banks to offer risky loans to the poor/minorities.
If the banks were indeed so forced I'm curious as to whether any banks were prosecuted for not complying with this change in the law.. or if not prosecuted at least censured in some way. And what forms would such censure take?

If no banks were prosecuted, censured.. or maybe even warned, then the argument of forcing doesn't seem to add up.
I don't know the answer, maybe some of the econoboffins can help.
http://www.allbusiness.com/north-america/united-states-california-metro-areas/302235-1.html

Note this was before the law was toughened.

[ZenFountain]

To say the crisis was caused by deregulation would require one to demonstrate 1) that the industry was regulated, 2) that some of those regulations were removed (i.e., deregulated) and 3) that those removed regulations were a substantial cause of the current crisis.

I don't find it coincidental that as soon as the S&L's were deregulated (http://en.wikipedia.org/wiki/Garn-St._Germain_Depository_Institutions_Act), they quickly made billions of dollars in risky loans for quick profit. Likewise, as soon as commercial lenders were deregulated (http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act) they quickly made billions of dollars in risky loans for quick profit and to make matters worse (this is the deregulation part), underwrote them as financial instruments that were traded throughout the global financial sector.

[corplinx]

You are hardly have reputation as an objective observer/commentator.

You've had one independent thought since I joined this forum. And that was to change your avatar.

[Malerin]

To say the crisis was caused by deregulation would require one to demonstrate 1) that the industry was regulated, 2) that some of those regulations were removed (i.e., deregulated) and 3) that those removed regulations were a substantial cause of the current crisis.

The industry was regulated by the Glass-Steagall act, until that was overturned in 1999 by Phil "mental recession" Gramm and others. The repeal allowed commercial and investment banks to consolidate. There's a debate about whether the repeal led directly to the crisis, or was just one of the many factors involved.

[plumjam]

triple post.. what's going wrong with my internet connection?

[plumjam]

http://www.allbusiness.com/north-america/united-states-california-metro-areas/302235-1.html

Note this was before the law was toughened.

Thanks for the link, Wildcat.

You've had one independent thought since I joined this forum. And that was to change your avatar.

Although slightly on the cruel side I have to admit that this is one helluva putdown :D

[boloboffin]

This belongs here, too.

Three Times Is Enemy Action (http://www.dailykos.com/storyonly/2008/9/21/9322/74248/245/602838)

The expansion of unregulated Savings and Loans in the 1980s brought on the collapse of that industry, a crippling of the economy, and left taxpayers holding the bag. Maybe that was only happenstance. Those pushing for the Garn-St. Germain Depository Institutions Act may not have known what they were doing.

The deregulation of the California electricity market, along with the protections provided to Enron through Phil Gramm's lobbyist-written legislation brought blackouts, fiscal and political chaos, and left taxpayers holding the bag. But the people who engineered that event -- people like Gramm and Greenspan -- had already seen what happened with the S&Ls. They should have known better. Still, perhaps that was only coincidence.

The sub-prime mortgage crisis that has not only come so close to utterly destroying the markets, but has ruined the value of many people's homes and left millions with mortgages they can't pay, was also the outcome of the deregulation created by these men. The very predictable outcome. When taxpayers are left holding the bag for $1 trillion this time around, it's hard to believe it's any sort of accident.

This is enemy action. This is a bullet deliberately fired into the economy by men willing to exercise their ideology regardless of the cost to taxpayers. Men who have every expectation that they can plunder the system again and again, while the public picks up the tab. John McCain may not have had his finger directly on the trigger, but he was there. He assisted. These were his personal friends and philosophical comrades. He may not be the high priest, but he has been a loyal acolyte in the cult of deregulation.

[marksman]

I don't find it coincidental that as soon as the S&L's were deregulated (http://en.wikipedia.org/wiki/Garn-St._Germain_Depository_Institutions_Act), they quickly made billions of dollars in risky loans for quick profit. Likewise, as soon as commercial lenders were deregulated (http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act) they quickly made billions of dollars in risky loans for quick profit and to make matters worse (this is the deregulation part), underwrote them as financial instruments that were traded throughout the global financial sector.

Now, that's the evidence I was looking for. Based on this, I think it's fair to say (or at least argue) that deregulation contributed to the current crisis. Thanks!!

[technoextreme]

To say the crisis was caused by deregulation would require one to demonstrate 1) that the industry was regulated, 2) that some of those regulations were removed (i.e., deregulated) and 3) that those removed regulations were a substantial cause of the current crisis.

Obama makes a pretty rational case. Bush Jr. removed any power the state governments had in going after predatory lending.

[Upchurch]

You've had one independent thought since I joined this forum. And that was to change your avatar.
Yes, you illustrate my point nicely. Thank you.

[marksman]

Obama makes a pretty rational case. Bush Jr. removed any power the state governments had in going after predatory lending.

Wait... what? What statute did that? Nothing about the Gramm-Leach Billey Act seems to affect the State's ability to prosecute predatory lending. What Congressional Act pre-empted State efforts in that regard?

[dudalb]

What is scary is that a lot of people where just don't get that it is possible to have a rather jaunidced view of both political parties and their candidates this year. They assume if you criticise one, you must be a strong supporter of the other.
I am voting for Obama, but in a "Hold your nose and vote" kind of way,since I am sketpical about his level of experience and have a huge dislike for the Obama personality cult.

[corplinx]

Obama is still hammaering "years of wild de-regulation" as being the cause of the Hud/Mae/Mac creating a bad loan boom market.

Change. After I win, I promise to get around to it. Trust me.

[BenBurch]

Regulation brought about by the Great Depression prevented another one from happening until we deregulated. Welcome to the Second Great Depression. It will make the first one look tame.

[WildCat]

Regulation brought about by the Great Depression prevented another one from happening until we deregulated. Welcome to the Second Great Depression. It will make the first one look tame.
There you go, the bumper sticker mentality of a political hack.

[BenBurch]

There you go, the bumper sticker mentality of a political hack.

I'd rather be thought a political hack than a traitor to this country as those who support the Repub's looter bailout are.

[marksman]

I'd rather be thought a political hack than a traitor to this country as those who support the Repub's looter bailout are.

I'm pretty sure those aren't your only two choices. (Well, they're not my only two choices, anyway.)

[leftysergeant]

There you go, the bumper sticker mentality of a political hack.

There you go again, pretending there is no emergency.

We had no major international debt in 1929. We do now.

We had a manufacturing base in 1929. We don't now.

People still wanted our luxury goods in 1929. We don't have any to sell now.

How are we going to pull out of this one?

[corplinx]

There you go again, pretending there is no emergency.

We had no major international debt in 1929. We do now.

We had a manufacturing base in 1929. We don't now.

People still wanted our luxury goods in 1929. We don't have any to sell now.

How are we going to pull out of this one?

So is the consensus of the commies and hippies on this board that we are doomed? Burch, Leftie, etc?

What happened to all that hope?

[Dr Adequate]

Okay, the "deregulation is the cause of the finance mess" at first I thought was a just predictable untruth. However, it is getting more pervasive. Obama keeps repeating this. It is the classic Big Lie technique.

At first I thought nothing of it. Sarah Palin has her Bridge to Nowhere exaggeration Little Lie. However, I got to thinking about it more. After 911, we had some people ringing the alarm bells over what they perceived as an executive branch power grab. It seems like this de-regulation Big Lie seems to be the fuel for fire for another government power grab.

Am I off base here? Is Obama being dishonest about this crisis to fuel more government interference in financial markets? Or is this simple empty campaign rhetoric? Funny, I must have missed the bit where you prove it's a lie. Which I guess you would if you could. Just saying so isn't really a substitute, 'cos your words don't have magical powers to alter reality.

[BenBurch]

Funny, I must have missed the bit where you prove it's a lie. Which I guess you would if you could. Just saying so isn't really a substitute, 'cos your words don't have magical powers to alter reality.

He seems to think that his DO have that ability.

[joobz]

Obama is still hammaering "years of wild de-regulation" as being the cause of the Hud/Mae/Mac creating a bad loan boom market.

Change. After I win, I promise to get around to it. Trust me.

It seems to me that Obama has made some definitive statements on how he would do this.

http://politicalticker.blogs.cnn.com/2008/09/22/happening-now-obama-talks-economy-in-wisconsin/

I'm just reading it now.
In fact, I'm a bit disappointed in his Jumping on the earmark band wagon. However, some of his solutions are quite interesting, and definitely shows a progressivist slant.


These are the types of reform I will pursue beginning on my very first day in office as President of the United States – political reform, government reform, and regulatory reform.
...
I’ll make our government open and transparent so that anyone can ensure that our business is the people’s business. As Justice Louis Brandeis once said, sunlight is the greatest disinfectant. As President, I will make it impossible for Congressmen or lobbyists to slip pork-barrel projects or corporate welfare into laws when no one is looking because when I am president, meetings where laws are written will be more open to the public. No more secrecy.

When there is a bill that ends up on my desk as President, you will have five days to look online and find out what’s in it before I sign it. When there are meetings between lobbyists and a government agency, we will put as many as possible online for every American to watch. When there is a tax bill being debated in Congress, you will know the names of the corporations that would benefit and how much money they would get. And we will put every corporate tax break and every pork-barrel project online for every American to see. You will know who asked for them and you can cast your vote accordingly.
This all seems quite possible with current technology and I like the idea.

but more related to this thread

Finally, the third set of reforms I will pursue are the updated, common-sense regulations of the financial market that I’ve been calling for since March; rules of the road that will make Wall Street fair, open, and honest; that will ensure a crisis like this can never happen again.
I’ve outlined six principles that such reforms should follow.
First, if you’re a financial institution that can borrow from the government, you should be subject to government oversight and supervision. Taxpayers who have now been called upon to spend nearly a trillion dollars to save our economy from the excesses of Wall Street have every right to expect that financial institutions are not taking excessive risks.
Second, we need to reform requirements on all regulated financial institutions, investigate rating agencies and potential conflicts of interest with the people they are rating, and establish transparency requirements that demand full disclosure by financial institutions to shareholders.
Third, we need to streamline our overlapping and competing regulatory agencies that cannot oversee the large and complex institutions that dominate the financial landscape.
Fourth, we need to regulate institutions for what they do, not what they are. Over the last few years, commercial banks and thrift institutions were subject to guidelines on subprime mortgages that did not apply to mortgage brokers and companies. This regulatory framework failed to protect homeowners, and made no sense for our financial system.
Fifth, we need to crack down on trading activity that crosses the line to market manipulation. We need regulators that actually enforce the rules instead of overlooking them. The SEC should investigate and punish all market manipulation.
Sixth, we must establish a process that identifies systemic risks to the financial system like the crisis that has overtaken our economy. We need a standing financial market advisory group to meet regularly and provide advice to the President, Congress, and regulators on the state of our financial markets and the risks they face. It’s time to anticipate risks before they erupt into a full-blown crisis.
These are the principles that should guide the reforms we need to establish a 21st

That seems to be as definitive as I've heard any politician ever be. Certainly there's a lot of "How" questions, but it's definitely not a nebulous change message. It's a clear change message.

[DavidJames]

There you go again, pretending there is no emergency.Have some sympathy. Not only do Republican have to continue justifying McCain, but now they are back in the same rut they've been in for the past 8 years, apologizing for Bush. It's taking it's toll.

Corps - commies and hippies???? man, get a grip.

[corplinx]

Government was encouraging the subprime market for years. Congress was all for it. The HUD was for it. Presidents Clinton and Bush pushed home ownership as the solution to all sorts of social ailments.

So would someone fricken explain to me how the foxes would have been good overseers of the henhouse?

Beam me up Mr. Speaker.

[Upchurch]

Funny, I must have missed the bit where you prove it's a lie. Which I guess you would if you could.
I won't pretend to understand all, or even most, of the factors involved in this situation. The best I can do is listen and read what various people have said to try to get an overall picture.

The thing I've heard that makes the most sense is that there essentially needs to be a balance between excessive regulation and no regulation. Where that balance point lies is, obviously, a matter of contention and perspective. I have no doubt that regulations must naturally build over time and much occasionally be culled back to a more reasonable level. I also have no doubt that deregulation efforts probably target inconvenient, yet necessary, regulations.

It seems to me that there is a legitimate argument that the removal of certain regulations allowed this situation to occur. Whether or not it caused this situation to occur may be a question of semantics and how much faith you have in your fellow man to behave themselves when no one is looking.

If Obama's position is that certain deregulation caused this mess, he may very well be correct. If his position is that any deregulation would have caused this mess, I don't think that necessarily follows.

[BenBurch]

Upchurch; I have faith that my fellow man will exploit anything that is exploitable.

[Upchurch]

So would someone fricken explain to me how the foxes would have been good overseers of the henhouse?

Beam me up Mr. Speaker.

I think WildCat put it best:

There you go, the bumper sticker mentality of a political hack.

[corplinx]

Upchurch; I have faith that my fellow man will exploit anything that is exploitable.

Yes, which is exactly how we got into this mess. The overseers were cheerleaders for the housing boom since it played well politically.

Did you even bother reading the Village Voice piece?

And here is an article where I actually agree with one of my least favorite politics and economics hacks, Paul Krugman.
http://www.nytimes.com/2008/06/23/opinion/23krugman.html?hp

Its a 3 month old piece, but very timely.

ETA:
You will notice that the Voice and Krugman aren't exactly world net daily.

[corplinx]

I think WildCat put it best:

Using his quote to zing me, the flailing fail of the passive aggressive partisan who thinks he's independent.

[not_so_new]

It seems to me that Obama has made some definitive statements on how he would do this.

http://politicalticker.blogs.cnn.com/2008/09/22/happening-now-obama-talks-economy-in-wisconsin/

I'm just reading it now.
In fact, I'm a bit disappointed in his Jumping on the earmark band wagon. However, some of his solutions are quite interesting, and definitely shows a progressivist slant.

These are the types of reform I will pursue beginning on my very first day in office as President of the United States – political reform, government reform, and regulatory reform.
...
I’ll make our government open and transparent so that anyone can ensure that our business is the people’s business. As Justice Louis Brandeis once said, sunlight is the greatest disinfectant. As President, I will make it impossible for Congressmen or lobbyists to slip pork-barrel projects or corporate welfare into laws when no one is looking because when I am president, meetings where laws are written will be more open to the public. No more secrecy.

When there is a bill that ends up on my desk as President, you will have five days to look online and find out what’s in it before I sign it. When there are meetings between lobbyists and a government agency, we will put as many as possible online for every American to watch. When there is a tax bill being debated in Congress, you will know the names of the corporations that would benefit and how much money they would get. And we will put every corporate tax break and every pork-barrel project online for every American to see. You will know who asked for them and you can cast your vote accordingly.

This all seems quite possible with current technology and I like the idea.

but more related to this thread

Finally, the third set of reforms I will pursue are the updated, common-sense regulations of the financial market that I’ve been calling for since March; rules of the road that will make Wall Street fair, open, and honest; that will ensure a crisis like this can never happen again.
I’ve outlined six principles that such reforms should follow.
First, if you’re a financial institution that can borrow from the government, you should be subject to government oversight and supervision. Taxpayers who have now been called upon to spend nearly a trillion dollars to save our economy from the excesses of Wall Street have every right to expect that financial institutions are not taking excessive risks.
Second, we need to reform requirements on all regulated financial institutions, investigate rating agencies and potential conflicts of interest with the people they are rating, and establish transparency requirements that demand full disclosure by financial institutions to shareholders.
Third, we need to streamline our overlapping and competing regulatory agencies that cannot oversee the large and complex institutions that dominate the financial landscape.
Fourth, we need to regulate institutions for what they do, not what they are. Over the last few years, commercial banks and thrift institutions were subject to guidelines on subprime mortgages that did not apply to mortgage brokers and companies. This regulatory framework failed to protect homeowners, and made no sense for our financial system.
Fifth, we need to crack down on trading activity that crosses the line to market manipulation. We need regulators that actually enforce the rules instead of overlooking them. The SEC should investigate and punish all market manipulation.
Sixth, we must establish a process that identifies systemic risks to the financial system like the crisis that has overtaken our economy. We need a standing financial market advisory group to meet regularly and provide advice to the President, Congress, and regulators on the state of our financial markets and the risks they face. It’s time to anticipate risks before they erupt into a full-blown crisis.
These are the principles that should guide the reforms we need to establish a 21st

That seems to be as definitive as I've heard any politician ever be. Certainly there's a lot of "How" questions, but it's definitely not a nebulous change message. It's a clear change message.

I could not agree more with joobz here. This seems to be as definitive as we can ask for. Obama's plan has a roadmap and a clear message. Even if he can't get it done in the end I am sure willing to try instead stepping on the same old hamster wheel yet again with McBush.

[ponderingturtle]

Government was encouraging the subprime market for years. Congress was all for it. The HUD was for it. Presidents Clinton and Bush pushed home ownership as the solution to all sorts of social ailments.

What regulation forced the market to buy all the morgage backed securities it could get its hands on?

If the banks had to hold onto the morgages they would never have made them as risky as they got. It was the market buying all the morgage backed securities no matter how bad they where that seems to be one of the main problems.

How did the regulations force banks to buy these things?

[Dr Adequate]

This all seems quite possible with current technology and I like the idea. You're not the only one. A few words from the opposing camp on the subject of "transparency":

We’re going to do a few new things also. For instance, as Alaska’s governor, I put the government’s checkbook online so that people can see where their money’s going. We’ll bring that kind of transparency, that responsibility, and accountability back. We’re going to bring that back to D.C.

What an excellent idea, Governor Palin. The site is called USAspending.gov (http://www.usaspending.gov/). It is the result of a bill sponsored by Senator Tom Coburn and, er, whatsisface ... that black guy with the weird name ...

[Upchurch]

Using his quote to zing me, the flailing fail of the passive aggressive partisan who thinks he's independent.
And yet, entirely appropriate to the cliche's you are spouting.

Like others in this thread, I have yet to see how Obama's position is a lie. You may disagree with him, but that doesn't, itself, make him wrong.




"flailing fail"? :rolleyes::D

[joobz]

"flailing flail"? :rolleyes::D
No. It's "Flailing Fail."
Quite a humorous tounge twister that He created as a result of the internet turning Fail from verb to noun.

[not_so_new]

You're not the only one. A few words from the opposing camp on the subject of "transparency":

We’re going to do a few new things also. For instance, as Alaska’s governor, I put the government’s checkbook online so that people can see where their money’s going. We’ll bring that kind of transparency, that responsibility, and accountability back. We’re going to bring that back to D.C.

What an excellent idea, Governor Palin. The site is called USAspending.gov (http://www.usaspending.gov/). It is the result of a bill sponsored by Senator Tom Coburn and, er, whatsisface ... that black guy with the weird name ...

I'll take Barack Hussein Obama for $1000 Alex....

[dudalb]

I'd rather be thought a political hack than a traitor to this country as those who support the Repub's looter bailout are.


So anybody who does not vote for Obama is a traitor.
Nice going, guy.
I uses to respect you. Now you are just another over the top political hack who will say or do Anything to win an election.
And I notice that the Dems don't seem to be fighting against the bailout very much. They will tack on a few symbolic ,sound good, measure to show they "punishing" the coporations,and then pass it.

[Upchurch]

No. It's "Flailing Fail."
Quite a humorous tounge twister that He created as a result of the internet turning Fail from verb to noun.
I know. The "flail" was a typo from my fat fingers. I fixed it almost immediately, but not almost immediately enough. :mad:

;)

[joobz]

What an excellent idea, Governor Palin. The site is called USAspending.gov (http://www.usaspending.gov/). It is the result of a bill sponsored by Senator Tom Coburn and, er, whatsisface ... that black guy with the weird name ...
A politician planning to do something that he has experience doing.
I wonder if that is desirable or not?

[not_so_new]

So anybody who does not vote for Obama is a traitor.
Nice going, guy.
I uses to respect you. Now you are just another over the top political hack who will say or do Anything to win an election.

Let's not throw the message out with the bathwater regardless of the fact that the person who drew it was or was not a "hack."

And I notice that the Dems don't seem to be fighting against the bailout very much. They will tack on a few symbolic ,sound good, measure to show they "punishing" the coporations,and then pass it.

Because any logical person knows that this bailout is our only option at this point.

1) Let the whole market collapse and head for uncharted territory that could make the Great Depression look like a simple market correction.

2) Bail the bastards out and eat it like good tax payers and citizens.

We Americans are not ALWAYS stupid.

What we are complaining about (yes even us independents) is how we got INTO this mess in the first place and how do we avoid it in the future. THAT is worth fighting about, the rest is just water over the damn at this point.

[Upchurch]

the rest is just water over the damn at this point.
I know that was probably a typo, too, but it is a strangely appropriate one.

[not_so_new]

I know that was probably a typo, too, but it is a strangely appropriate one.

LOL

Pretty funny... typo yes but I think it works so well I am going to take credit for it as an original idea. Palin would approve I am sure.

:p

[leftysergeant]

I won't pretend to understand all, or even most, of the factors involved in this situation. The best I can do is listen and read what various people have said to try to get an overall picture.

The thing I've heard that makes the most sense is that there essentially needs to be a balance between excessive regulation and no regulation. Where that balance point lies is, obviously, a matter of contention and perspective.

1939

I have no doubt that regulations must naturally build over time and much occasionally be culled back to a more reasonable level. I also have no doubt that deregulation efforts probably target inconvenient, yet necessary, regulations.

Sorry, but new technologies, new natural disasters and means of communication just mean that there are going to have to be more regulations. Any related to the buggy whip industry can, of course, be deleted without harm to the over-all system.

It seems to me that there is a legitimate argument that the removal of certain regulations allowed this situation to occur. Whether or not it caused this situation to occur may be a question of semantics and how much faith you have in your fellow man to behave themselves when no one is looking.

The regulations were put in place precisely because capitalists were doing then what they are doing today. You know what they say about people who do the same thing over and over and expect a different outcome.

[not_so_new]

1939



1929?

[leftysergeant]

2) Bail the bastards out and eat it like good tax payers and citizens.

We Americans are not ALWAYS stupid.

What we are complaining about (yes even us independents) is how we got INTO this mess in the first place and how do we avoid it in the future. THAT is worth fighting about, the rest is just water over the damn at this point.

There is, of course, the option to assume all those risky loans for whatever price, and then just collect the payments, perhaps re-negotiate them to a level that the middle-class borrowers can afford.

It would probably produce a reasonable money stream.

And let's go find the CEOs who walked away with golden parachutes and cut their shroud lines.

[Upchurch]

Sorry, but new technologies, new natural disasters and means of communication just mean that there are going to have to be more regulations. Any related to the buggy whip industry can, of course, be deleted without harm to the over-all system.
Again, I won't pretend to know all the factors involved, but it sounds what you are talking about are different regulations rather than necessarily more.

[Puppycow]

Okay, the "deregulation is the cause of the finance mess" at first I thought was a just predictable untruth. However, it is getting more pervasive. Obama keeps repeating this. It is the classic Big Lie technique.

At first I thought nothing of it. Sarah Palin has her Bridge to Nowhere exaggeration Little Lie. However, I got to thinking about it more. After 911, we had some people ringing the alarm bells over what they perceived as an executive branch power grab. It seems like this de-regulation Big Lie seems to be the fuel for fire for another government power grab.

Am I off base here? Is Obama being dishonest about this crisis to fuel more government interference in financial markets? Or is this simple empty campaign rhetoric?

So what was the real cause of the finance mess?

Are you really saying that, absent regulation, that nobody will try to cheat investors? That companies will be transparant about their finances? That nobody will put their private interests above the public good? Do you think that Wall Street can be trusted with widows' and orphans' nest eggs, without any oversight?

We just saw an example where, everyone did what was logical from their own point of view, and it led to disaster.

Also, are you for or against the current bailout? If you are for it, are you seriously saying that the government should stay out of companies' business, but come riding to the rescue when they need to be saved?

Jim Pinkerton (a republican) wrote something interesting recently, that no company should be allowed to get to be "too big to fail," so that the government has no choice but to bail out such a company. AIG was such a company. It was too big to fail (its failure would have major second-order and third-order consequences for innocent bystanders), but it made risky business decisions.

The Subprime Primer (http://forums.randi.org/showthread.php?t=107053)

[Upchurch]

This Modern World (http://www.salon.com/comics/tomo/2008/09/23/tomo/index.html)

[corplinx]

So what was the real cause of the finance mess?

Are you really saying that, absent regulation, that nobody will try to cheat investors? That companies will be transparant about their finances? That nobody will put their private interests above the public good? Do you think that Wall Street can be trusted with widows' and orphans' nest eggs, without any oversight?

We just saw an example where, everyone did what was logical from their own point of view, and it led to disaster.

Also, are you for or against the current bailout? If you are for it, are you seriously saying that the government should stay out of companies' business, but come riding to the rescue when they need to be saved?

Jim Pinkerton (a republican) wrote something interesting recently, that no company should be allowed to get to be "too big to fail," so that the government has no choice but to bail out such a company. AIG was such a company. It was too big to fail (its failure would have major second-order and third-order consequences for innocent bystanders), but it made risky business decisions.

The Subprime Primer (http://forums.randi.org/showthread.php?t=107053)

The regulation pushed the bad loan boom. You have to remember, before the Mae/Mac changes under Cuomo, mortgage debt wasn't as risky an investment to buy.

What's wrong with taking the risk of buying someone's mortgage debt? There is nothing inherently wrong with that.

Now you had all the inventment entities buying up this debt since its a safe investment, now you have countrywide and other firms doing flips to get more loans out the door since there is a big resell market, and all the while Clinton/Bush are dancing with pom poms out saying "look at them there home ownership numbers".

It was a failure up and down the chain. I think the Voice was right however in that the catalyst for this was the Cuomo HUD and that Krugman was right in that the home ownership patronism was ultimately wrong.

However, isntead of going after these bad ideologies that the regulators and overseers bought into and trying to fix HUD/Mae/Mac, we're trying to villianize the bankers who bought the debt to try to make a profit. Its the typical anti-money, anti-wealth crowd trying to piggyback their agenda onto a crisis.

Countrywide and other lenders should burn in hell for what they did. Investment banks who didn't investigate their purchases with more scrutiny should be allowed to fail. Andrew Cuomo should be relegated to servicing Slurpee machines in a 7-11. Bush and Clinton should appear on TV hugging each other and say "about the home ownership thing, our bad". All the people who applied for risky loans under no false pretenses (and there were quite a few upper middle class McMansion owners getting risky loans) should be sent to a tent village.

What part of failure up and down the chain do people not get.

That's my perfect world and it ain't gonna happen. The pragmatic reality is, Countrywide and other junk loan dealers will get off the hook with a slap on the wrist. The hippies and commies will be successful in pinning all the blame on investors and impose new useless regulations that will make us less competitive, however, they will probably get their butts saved with taxpayer guaranteed loans. Cuomo will be given some new office he's unqualified for again in an Obama or McCain administration. Bush and Clinton will go around for years talking about how they helped poor people and minorities buy homes.

That's the kind of messed up world we live in.

[Upchurch]

The regulation pushed the bad loan boom. You have to remember, before the Mae/Mac changes under Cuomo, mortgage debt wasn't as risky an investment to buy.
Could you please elaborate on these two points, please?

[corplinx]

Could you please elaborate on these two points, please?

You ignored it the first 8 times. I'm not posting the stupid Voice article again.

[Upchurch]

You ignored it the first 8 times. I'm not posting the stupid Voice article again.

I have seen you reference it several times, but I've never actually seen where you posted it.

[not_so_new]

corplinx, while you are spending your time on this and other threads berating me and everyone else for not being skeptical enough you are overlooking the points that others are making.

According to Moody's John Lonski 21 percent of all mortgages between 2004 and 2006 were subprime. You are blaming Clinton for his hand in this (which I agree, he DOES share a small part of the blame) but from 1996 to 2004 subprime mortgages accounted for 9 percent of the mortgage market.

http://www.usatoday.com/money/perfi/columnist/waggon/2007-03-15-subprime-woes_N.htm

9% wasn't a huge problem, Fannie and Freddie could absorb that loss but when it reached 21% of the market there was a problem.

It ramped up and then reached 21% while the GOP held Congress and the White House. There is a good reason why the public blames the GOP for this.

[corplinx]

c You are blaming Clinton for his hand in this (which I agree, he DOES share a small part of the blame) but from 1996 to 2004 subprime mortgages accounted for 9 percent of the morgage market.

What changed in 2005? We had 4 years of Bush and the K-Street Corrupt GOP Congress up until 2004. In 2006 congress changed hands. Did the 2004 congress suddenly take up side jobs as loan agents and investment bankers before they were booted out 2 years later?

I ask that rhetorically. Mind you, 10 percent was a big chunk of market. Even before the spike. The explanations I have seen were that investment companies were eager to buy the debt, so companies like Countrywide pushed ARMS heavily under the guise of sweetheart refinances pushing the numbers even higher in the later years.

In any case, I haven't seen an evidence based root-cause for that spike and would appreciate clarification if you have it.

[BenBurch]

SOME sub-prime mortgages are always going to be OK. And the Clinton-era rate was likely a good rate. You see, if, as a lender, you are doing your job with such a mortgage you look at circumstances.

Some people are in the sub-prime category because of things like a medical emergency; Little Billy needed a heart transplant, and then tragically died, so mom & dad went bankrupt.

That sort of thing is not going to happen to mom & dad again and so you loan them money at a sub-prime rate because they are a good risk no matter what the credit score says.

So, I am not sure AT ALL that there is much blame to be laid on lenders prior to the Bush Looting that loaned at sub-prime rates, and I think if you look at the loans that have failed you will find only the average rate of failures in those earlier loans!

[not_so_new]

What changed in 2005? We had 4 years of Bush and the K-Street Corrupt GOP Congress up until 2004. In 2006 congress changed hands. Did the 2004 congress suddenly take up side jobs as loan agents and investment bankers before they were booted out 2 years later?

I ask that rhetorically. Mind you, 10 percent was a big chunk of market. Even before the spike. The explanations I have seen were that investment companies were eager to buy the debt, so companies like Countrywide pushed ARMS heavily under the guise of sweetheart refinances pushing the numbers even higher in the later years.

In any case, I haven't seen an evidence based root-cause for that spike and would appreciate clarification if you have it.

Please keep in mind that I place the blame on the inaction of Congress not on any one single action they took. I also don't mean to imply that the Dems are absolved of all responsibility, they are all a bunch of meat heads in my eyes. But the Congress and presidential administration with the most power to keep this from getting out of hand were both in Republican control at the time.

The sub prime debacle boils down to a simple case of cooperate greed coupled with an almost perfect storm of conditions.

At the root of the problem in my eyes was the inflated home prices around the nation. Any commodity is worth what someone is willing to pay for it and for a while there people were willing to pay 100% or more above the market value of the same home just a few years before. This is no new news to anyone on this board.

The problem became a circle jerk between the appraisers, the real estate sales people and companies, the mortgage companies, the sellers and the buyers.

The appraisers where just slapping any old price on a house because they knew that the mortgage company would still buy the loan and the higher the appraised value the more call backs they got from the real estate companies.

The real estate companies were eating it up because their commissions were through the roof.

The sellers were happy because they made huge money off the sale.

The lenders were happy because they were getting a large amount of mortgages written with high interest rates (and they were just turning a blind greedy eye toward what made these risky loans in the first place). Plus they could hedge their bets with private mortgage insurance from companies like AIG.

The buyers thought they were happy because they got a house but often they were unaware of the mortgage they were entering in.

Yes I too believe in buyer beware but there are predatory lenders out there that capitalized on unsuspecting buyers and or didn't inform others of the full details of their loan terms. For example...

Wall Street Journal reported in 2006 that 61% of all borrowers receiving sub prime loans had credit scores high enough to qualify for prime conventional loans.

http://en.wikipedia.org/wiki/Subprime_lending

In the end the buyers hit a wall when their balloon payments were due and they realized they could not make their monthly mortgage. Not a big deal, sell your house and get out from the mortgage... until buyers starting waking up to the truth that the houses on the market were not worth the asking prices because of the original inflated sales values.

That meant the original buyers were locked in to a mortgage they could not afford on a house that is not worth anything near what they bought it for.

The only option is to surrender the house. Not a big deal for the market as a whole unless the amount of foreclosures goes up drastically.

In the third quarter of 2007, subprime ARMs only represented 6.8% of the mortgages outstanding in the US, yet they represented 43.0% of the foreclosures started. Subprime fixed mortgages represented 6.3% of outstanding loans and 12.0% of the foreclosures started in the same period.

http://en.wikipedia.org/wiki/Subprime_lending#Subprime_lenders

By this time the cat was out of the bag, the chicken had left the roost and the ball was rolling down hill.

So back to your question.

Did the 2004 congress suddenly take up side jobs as loan agents and investment bankers before they were booted out 2 years later?

No, of course not.

What happened is that an idea that started out as a way to get a few risky people into affordable home loans turn into a stampede. It took a while for the mortgage companies to come up with strategies to make subprime morgages work in their favor. Nothing wrong with a little of that, they are in business to make money, good for them.

The problem came when they all started looking at each other and based their risk footprint on the risk their peers were willing to take. When they saw how much money the other guys were making they jumped on board, without regulation this was easy. It was compounded when the money in refinance deals started to slow down to some turned to predatory lending, again with very little oversight.

http://money.cnn.com/galleries/2007/real_estate/0704/gallery.paly_the_subprime_blame_game/index.html?section=money_real estate

The writing was on the wall years ago that home prices were inflated and the predatory lending complaints took a little while to come in but they were numerious enough that they should have raised a red flag.

Again YES the Democrats didn't make much of a stink about this at the time but as far back as 2003 there were calls for updating the regulations on the subprime world. The Republicans holding Congress and the White House did nothing, didn't even call for any reforms outside of the shell game Bush wanted to play by moving the regulatory body into the Treasury Department.

Turn to today.

Even McCain, always the most vocal opposition to any government regulation is now on the regulation bandwagon. That could be a political ploy but I don't think so... let me clear that up a little. He is not doing this because it is what people want to hear, if he were he would keep his mouth shut because he is doing a 180 degree turn from the rest of his entire career. I think he is willing to risk a flip flop because his advisers are telling him this is the best course of action now and not turning to this course of action would look worse.

If regulation is the best course of action now it was the best course of action then as well and the GOP had every opportunity to make that happen, the Democrats had their hands tied as the minorty in Congress and with the veto power of Bush.

[FaisonMars]

The big deregulation lie is how quickly McCain can say he was never for deregulation change his position on deregulation:
0ycPJr7YWmQ

[joobz]

The big deregulation lie is how quickly McCain can say he was never for deregulation:
0ycPJr7YWmQ
In that video, where did McCain say he was never for deregulation?

[FaisonMars]

He doesn't in that video... that's the point. It's only lately that he's started running away from that position.

http://www.cnn.com/2008/POLITICS/09/23/mccain.bailout/?iref=mpstoryview

ETA: You are right... I implied that that's what was in that video... I've edited the post above to more accurately reflect what I meant.

[Puppycow]

Andrew Cuomo should be relegated to servicing Slurpee machines in a 7-11.

Are you aware that John McCain wants to fire SEC chairman Chris Cox and give his job to Cuomo?

It's true! (http://www.slate.com/id/2200580/#cuomosec)

[boloboffin]

More opinion (http://online.wsj.com/article_email/SB122221440058969313-lMyQjAxMDI4MjIyNDIyMTQ0Wj.html).