From who did Obama "inherit" the economic mess?

[Jim in CT]

Originally Posted by Slipknot

I don't care who broke it!
all i want to know is who's gonna fix it?
THAT'S all the matters

i'm tired of getting the chit end of the stick

I think it's important to figure out "what" broke it, so that we don't repeat the mistake. And "what" broke it is subprime mortgages (which in many cases banks were pressured to write by liberal social engineering policies) and a de-regulated financial sector that came up with crazy ways to rate those mortgages as "safe" investments, and then sell them and leverage them.

As for who will fix it? Not the liberals that the idiots in CT and MA elected to keep doing more of the same. In CT, the liberals have been running the show forever. Between income tax of the gazillionaires in Fairfield county, as well as the revenue we get from the 2 most profitable casinos in the world, CT has PLENTY of revenue. Revenue shortfall is not our problem...crazy spending is our problem.

When my state income tax is 10% (currently 5%), and my property taxes are $10,000 (currently $7700), that's when I move. And that day is coming.

[RIROCKHOUND]

Originally Posted by Jim in CT

which in many cases banks were pressured to write by liberal social engineering policies

Damn liberal mindset
"Over 75 percent of white Americans own their home, and less than 50 percent of Hispanos and African Americans don't own their home. And that's a gap, that's a homeownership gap. And we've got to do something about it." —George W. Bush, Cleveland, Ohio, July 1, 2002

[spence]

Originally Posted by RIROCKHOUND

Damn liberal mindset
"Over 75 percent of white Americans own their home, and less than 50 percent of Hispanos and African Americans don't own their home. And that's a gap, that's a homeownership gap. And we've got to do something about it." —George W. Bush, Cleveland, Ohio, July 1, 2002

The "ownership society" was a big plank in the 2000 Bush platform. I remember reading a Bush speech from then praising all the efforts of the financial institutions to provide loans to low income borrowers.

What seems to be getting lost is the issue wasn't necessarily low income housing (i.e. where liberals -- and President Bush -- might want to defend populist interests) but also people with moderate to high income who took out massive ARMs to buy into housing they simply couldn't afford. I know first hand of some friends who were making at least 250K a year and blew it because of their own recklessness...ultimately loosing their house.

As has been discussed at length in older threads, this was a massive and systemic problem largely driven by sub prime and prime loans being bundled together without adequate regulation.

Plenty of blame to go all around...

-spence

[scottw]

Frances Fox Piven Rings in The New Year By Calling for Violent Revolution
Posted on December 31, 2010

She’s considered by many as the grandmother of using the American welfare state to implement revolution. Make people dependent on the government, overload the government rolls, and once government services become unsustainable, the people will rise up, overthrow the oppressive capitalist system, and finally create income equality. Collapse the system and create a new one. That‘s the simplified version of Frances Fox Piven’s philosophy originally put forth in the pages of The Nation in the 60s.

Now, as the new year ball drops, Piven is at it again, ringing in 2011 with renewed calls for revolution.

In a chilling and almost unbelievable editorial again in The Nation (”Mobilizing the Jobless,” January 2011 edition), she calls on the jobless to rise up in a violent show of solidarity and force. As before, those calls are dripping with language of class struggle. Language she and her late husband Richard Cloward made popular in the 60s.

“So where are the angry crowds, the demonstrations, sit-ins and unruly mobs?” she writes. “After all, the injustice is apparent. Working people are losing their homes and their pensions while robber-baron CEOs report renewed profits and windfall bonuses. Shouldn’t the unemployed be on the march? Why aren’t they demanding enhanced safety net protections and big initiatives to generate jobs?”

“Before people can mobilize for collective action, they have to develop a proud and angry identity and a set of claims that go with that identity,” she writes. “They have to go from being hurt and ashamed to being angry and indignant.”

“The out-of-work have to stop blaming themselves for their hard times and turn their anger on the bosses, the bureaucrats or the politicians who are in fact responsible.”

she says, the “protesters need targets.”

[Jim in CT]

Originally Posted by spence

The "ownership society" was a big plank in the 2000 Bush platform. I remember reading a Bush speech from then praising all the efforts of the financial institutions to provide loans to low income borrowers.

What seems to be getting lost is the issue wasn't necessarily low income housing (i.e. where liberals -- and President Bush -- might want to defend populist interests) but also people with moderate to high income who took out massive ARMs to buy into housing they simply couldn't afford. I know first hand of some friends who were making at least 250K a year and blew it because of their own recklessness...ultimately loosing their house.

As has been discussed at length in older threads, this was a massive and systemic problem largely driven by sub prime and prime loans being bundled together without adequate regulation.

Plenty of blame to go all around...

-spence

Spence, just because you know some well-fto-do folks that bit off morethan they could chew, means NOTHING. The problem, as everyone who can think rationally knows, was subprime mortgages. I'm not saying that wealthy folsk had no foreclosures. But what brought the system down was mortgages to poor folks who had no business getting those loans.

You keep telling yourself that it was something else. That way you'll make the same exact mistake.

This is why liberalism is a mental disorder. The complete, willful unwillingness to recognize irrefutable fact, unless those facts serve your current agenda. Unbelievable.

You are right, trhere is plenty of blame on both sides. But I have never, ever heard Obama suggest that liberal policies played any role. All he ever says is that the republicans drove the car into the ditch. Or am I wrong Spence?

[Jim in CT]

Originally Posted by RIROCKHOUND

Damn liberal mindset
"Over 75 percent of white Americans own their home, and less than 50 percent of Hispanos and African Americans don't own their home. And that's a gap, that's a homeownership gap. And we've got to do something about it." —George W. Bush, Cleveland, Ohio, July 1, 2002

That's very intellectually dishonest, either that or you're an idiot. George Bush never suggested that the way to increase minority homeownership was to throw out all known guidelines for deciding who gets mortgages.

Conservatives, like me, want minorities to own their own homes. We believe the way to accomplish that is for them to get off welfare, work hard and get good jobs.


I cannot stand that kind of dishonesty, suggesting that Bush liked the idea of subprime mortgages.

[scottw]

CLOWARD - PIVEN STRATEGY

Strategy for forcing political change through orchestrated crisis

First proposed in 1966 and named after Columbia University sociologists Richard Andrew Cloward and his wife Frances Fox Piven (today Piven is an honorary chair for the Democratic Socialists of America), the "Cloward-Piven Strategy" seeks to hasten the fall of capitalism by overloading the government bureaucracy with a flood of impossible demands, thus pushing society into crisis and economic collapse.

The key to sparking this rebellion would be to expose the inadequacy of the welfare state. Cloward-Piven's early promoters cited radical organizer Saul Alinsky as their inspiration. "Make the enemy live up to their (sic) own book of rules," Alinsky wrote in his 1972 book Rules for Radicals. When pressed to honor every word of every law and statute, every Judaeo-Christian moral tenet, and every implicit promise of the liberal social contract, human agencies inevitably fall short. The system's failure to "live up" to its rule book can then be used to discredit it altogether, and to replace the capitalist "rule book" with a socialist one.

[Fly Rod]

Originally Posted by Jim in CT

I think it's important to figure out "what" broke it, so that we don't repeat the mistake. And "what" broke it is subprime mortgages (which in many cases banks were pressured to write by liberal social engineering policies) and a de-regulated financial sector that came up with crazy ways to rate those mortgages as "safe" investments, and then sell them and leverage them.

When you say banks, you make it sound like all banks when it was the big banks.

Local banks were not pressured to write sub prime loans. Most local banks would not write a loan without twenty per cent down. Mortgage companies were the biggest culprit writing hundred percent loans or eighty-twenty percent loans, holding two mortgages.


If you want to know the root cause of the current subprime crisis, there are
three things you need to understand:
First, the problem was caused by politicians (primarily Democrats) pushing
their "entitlement" agenda in to the free market. It started with "The
Community Reinvestment Act" (CRA) which required banks to make high risk
loans to minorities and others who could not have qualified for a home loan
or business loan under normal circumstances.

Second, Bill Clinton further liberalized the CRA and signed a bill to repeal
the Glass-Stengal Act. This Act was put in place in the 1930s following the
bank failures during the Great Depression. It was designed to keep banks
out of the speculation business.

Third, George Bush proposed major changes in the CRA, FMAE and FMAC in 2003
that would have tightened requirements for these business loans and subprime
home mortgages. The vote went along party lines, the Democrats won and the
proposed changes were defeated.

Why does Spence want to keep blaming Bush?

[Jim in CT]

Originally Posted by Fly Rod

Why does Spence want to keep blaming Bush?

Because he's aliberal, and liberalism is a mental disorder. I cannot provide better evidence than his last post.

[RIJIMMY]

Originally Posted by Fly Rod

When you say banks, you make it sound like all banks when it was the big banks.

Local banks were not pressured to write sub prime loans. Most local banks would not write a loan without twenty per cent down. Mortgage companies were the biggest culprit writing hundred percent loans or eighty-twenty percent loans, holding two mortgages.


If you want to know the root cause of the current subprime crisis, there are
three things you need to understand:
First, the problem was caused by politicians (primarily Democrats) pushing
their "entitlement" agenda in to the free market. It started with "The
Community Reinvestment Act" (CRA) which required banks to make high risk
loans to minorities and others who could not have qualified for a home loan
or business loan under normal circumstances.

Second, Bill Clinton further liberalized the CRA and signed a bill to repeal
the Glass-Stengal Act. This Act was put in place in the 1930s following the
bank failures during the Great Depression. It was designed to keep banks
out of the speculation business.

Third, George Bush proposed major changes in the CRA, FMAE and FMAC in 2003
that would have tightened requirements for these business loans and subprime
home mortgages. The vote went along party lines, the Democrats won and the
proposed changes were defeated.

Why does Spence want to keep blaming Bush?

You're missing the biggest piece. There was a market for the bunding of these loans. Global cash needs to go somewhere and the US housing market was the place to be. The more demand for mortgages resulted in more demand to sell mortgages and it created a vicous cycle. Big banks were packaging and selling, but sophisticated investors were BUYING. Everyone should have known better but, its like fishing in an endless bluefish blitz, eventually you lose all your plugs. Funs over.
Was it Bush's fault? Not directly, but he was the president at the time so he'll get the blame. Was it republican policies? I have seen NO reregulation initiated by repubs that had any impact to the recession. None.

[spence]

Originally Posted by Fly Rod

Mortgage companies were the biggest culprit writing hundred percent loans or eighty-twenty percent loans, holding two mortgages.

I thought liberal ideology was to blame?

If you want to know the root cause of the current subprime crisis, there are three things you need to understand: First, the problem was caused by politicians (primarily Democrats) pushing their "entitlement" agenda in to the free market.

Oh good lord...

It started with "The Community Reinvestment Act" (CRA) which required banks to make high risk loans to minorities and others who could not have qualified for a home loan or business loan under normal circumstances.

The CRA was meant to keep banks from blindly discriminating against poor communities, but did not legally mandate they take actions that would harm their own operations. I believe studies have shown that lending in poor or minority communities isn't inherently any more risky when proper standards are in place.

I also remember reading a study that showed lending enhanced by CRA wasn't found to be any more risky than prime.

Second, Bill Clinton further liberalized the CRA and signed a bill to repeal the Glass-Stengal Act. This Act was put in place in the 1930s following the bank failures during the Great Depression. It was designed to keep banks out of the speculation business.

The repeal of parts of the Glass-Sengal Act was sponsored by three Republicans. I think Clinton struck a deal that he would sign it, and the Republicans agreed to let Clinton expand the reach of the CRA. I'm not sure how this is further liberalizing the CRA though, unless you think discrimination based on where someone lives is a good thing for development.

Third, George Bush proposed major changes in the CRA, FMAE and FMAC in 2003 that would have tightened requirements for these business loans and subprime home mortgages. The vote went along party lines, the Democrats won and the proposed changes were defeated.

I think you're mixing the 2003 and 2005 proposals. In 2003 given the scandals Bush wanted to move oversight to the Treasury department. Democrats didn't think there was economic risk and therefore didn't see the value. Being politicians I'm sure they didn't want to loose their oversight privileges as well. Frank has openly said this was a mistake.

I do question how serious Bush was about reform though. Considering in 2003 and 2005 the GOP was in control of Congress you'd think they could have gotten something passed if they really wanted.

Additionally, you can't ignore other regulatory changes to the SEC made in 2004 under Bush that allowed all the giant banks to increase their leverage as well. From everything I've read, this pretty much created a pump between F/F and the banks to crank out loans, obfuscate all the risk and make a hell of a lot of money in the process.

Why does Spence want to keep blaming Bush?

Because you just read what you want to hear. I've been pretty consistent that this was a systemic problem. Both sides have pushed for more lending to poor and minority communities. Both sides have opposed regulation and reform.

-spence

[RIJIMMY]

Originally Posted by spence

The repeal of parts of the Glass-Sengal Act was sponsored by three Republicans. I think Clinton struck a deal that he would sign it, and the Republicans agreed to let Clinton expand the reach of the CRA. I'm not sure how this is further liberalizing the CRA though, unless you think discrimination based on where someone lives is a good thing for development.



-spence

Phil Gramm, a democrat, was responsible for pushing this through. See my link above.

[spence]

Originally Posted by RIJIMMY

Phil Gramm, a democrat, was responsible for pushing this through. See my link above.

Huh? He switched parties in 1983.
Posted from my iPhone/Mobile device

[fishpoopoo]

Guess I am late to the thread.

In my opinion, which I'd be happy to back up with a !@#$load of facts , President Obama did indeed inherit this mess.

Culprits: Jimmy Carter, Bill Clinton and Alan Greenspan.

[scottw]

Originally Posted by fishpoopoo

Guess I am late to the thread.

In my opinion, which I'd be happy to back up with a !@#$load of facts , President Obama did indeed inherit this mess.

Culprits: Jimmy Carter, Bill Clinton and Alan Greenspan.

great article:

January 11, 2011

Let Them Eat Widescreen TVs and I-Phones
Monty Pelerin

The disparities in income between the lower and middle income Americans and those doing well continues to widen. In addition to the debt time-bomb, these income disparities represent another potential explosion.

Ambrose Evans Pritchard provides some data:
The retail data can be quirky but it fits in with everything else we know. The numbers of people on food stamps have reached 43.2m, an all time-high of 14pc of the population. Recipients receive debit cards - not stamps -- currently worth about $140 a month under President Obama's stimulus package.

The actual number of jobs contracted by 260,000 to 153,690,000. The "labour participation rate" for working-age men over 20 dropped to 73.6pc, the lowest the since the data series began in 1948. My guess is that this figure exceeds the average for the Great Depression (minus the cruellest year of 1932).

The US Conference of Mayors said visits to soup kitchens are up 24pc this year. There are 643,000 people needing shelter each night.

Jobs data released on Friday was again shocking. The only the reason that headline unemployment fell to 9.4pc was that so many people dropped out of the system altogether.

This schism continues to widen in American society. The well-off are doing just fine thank you. Many of the rest continue to descend into the abyss of joblessness, hopelessness, homelessness, poverty and bankruptcy. Social cohesion will not hold on our current path.

A thesis that I offered several years ago is that the credit expansion was a deliberate attempt to cover up America's structural decline. Ironically, by not facing up to the structural and incentive problems ten to twenty years ago when they were tractable (economically if not politically), the political elite created this current crisis. It was not their intent to create a crisis, merely to avoid hard decisions. They did so by "kicking the can down the road" using credit as their vehicle.

This "solution" enabled people to live beyond their means. "Let them buy widescreen TVs and I-phones" was the modern version of "bread and circuses." Pritchard points out a similar view:

Raghuram Rajan, the IMF's former chief economist, argues that the subprime debt build-up was an attempt - "whether carefully planned or the path of least resistance" - to disguise stagnating incomes and to buy off the poor.

"The inevitable bill could be postponed into the future. Cynical as it might seem, easy credit has been used throughout history as a palliative by governments that are unable to address the deeper anxieties of the middle class directly," he said.

Now, "let them eat widescreen TVs and I-phones" appears to be the solution. It is equivalent to the "let them eat cake" remedy, with the same potential ending.

The clock is ticking on the debt burden. It is only a matter of time before we are openly recognized as just another version, albeit a very large one, of the PIIGS. Just as important, however, is the ticking clock on social cohesion in this country.

The sense of entitlement cultivated by government over the years may be as intractable as the debt problem. It has corrupted the spirits and souls of men. It has destroyed the family structure. It has left a generation or two without skills and no reason to obtain them. It has transformed human beings into zombie-like creatures with little purpose in their lives. Removing them from the government teat is equivalent of separating a new-born from its mother.

There is no way out, as Pritchard alludes:

There is no easy solution to creeping depression in America and swathes of the Old World. A Keynesian `New Deal' of borrowing on the bond markets to build roads, bridges, solar farms, or nuclear power stations to soak up the army of unemployed is not a credible option in our new age of sovereign debt jitters. The fiscal card is played out.


The government is insolvent, both financially and morally.