Recession? We don' need no steenkeen recession!
- Thread starter jimpeel
- Start date
chcr
Too cute for words
The reason so many banks failed in 1929 is because banks were allowed to borrow from their consumer (savings, checking, etc.) divisions to pay debts incurred by their commercial divisions. Laws were enacted to prevent this from happening again. Guess what the federal government is allowing banks to do during the current "problem." Just sayin'...
catocom
Well-Known Member
MrBishop
Well-Known Member
Classic Con views - deregulate.
MrBishop
Well-Known Member
This kind of explains broadly why this neoliberalism fails.
http://news.bbc.co.uk/2/hi/business/7618745.stm
http://news.bbc.co.uk/2/hi/business/7618745.stm
catocom
Well-Known Member
then why are they bailing these places out?
Classic view of cons is to butt-out period.
They aren't doing that now though.
chcr
Too cute for words
Jeez cat, you don't do that shit if it's going to cost you money personally.
jimpeel
Well-Known Member
It is a big deal. The problem is, although I am against these types of bailouts, they are necessary. Why? Because all of those banks out there holding paper for these idiots would go down as well. The shortsighted see only Frannie May and Freddie Mac but fail to see the downstream effect their collapse would cause and why the feds have to prop them up. They fail to figure on what a run on the banks would cause and they certainly have no conception of a monetary collapse. "Just let 'em fail." sounds so wonderful until they are saying "I have nowhere to live, nothing to eat, no job, and no prospects for a job. Why didn't someone do something?!?! Boo Hoo!"
Only one time has this type of bailout actually worked; and that was Chrysler. Chrysler paid back the bailout money seven years early.
jimpeel
Well-Known Member
They aren't just doing it "now". They have been doing it since Clinton repealed the Glass-Steagall Act of 1933.
http://en.wikipedia.org/wiki/Glass-Steagall_Act
catocom
Well-Known Member
I don't consider myself short sited at all.
I also apparently understand way more than you give me credit for.
You definitely wouldn't see me crying because I took a bet and lost.
Inkara1
Well-Known Member
One thing with Chrysler... the bailout money let the Caravan/Voyager minivans come to market, and that minivan product is a big reason why Mopar started making money. It combined most of the utility and room of a van with most of the fuel economy and driving characteristics of a compact car (since it was a Dodge Aries with different skin) and fit in most garages. It was the right product for its time and the sales numbers proved it, thus filling Chrysler's coffers and allowing them to pay off the loan early.
Does AIG have something waiting in the wings that will provide a new source of income?
Does AIG have something waiting in the wings that will provide a new source of income?
jimpeel
Well-Known Member
From Investor's Business Daily (Yeah, yeah, its just an op-ed yada,yada. Pay no attention to that man behind the curtain. Pay no attention to the truth.)
http://ibdeditorial.com/IBDArticles.aspx?id=306370789279709
http://ibdeditorial.com/IBDArticles.aspx?id=306370789279709
jimpeel
Well-Known Member
And then there's this:
http://hotair.com/archives/2008/09/16/whose-policies-led-to-the-credit-crisis/
Whose policies led to the credit crisis?
posted at 9:40 am on September 16, 2008 by Ed Morrissey
The credit crisis and the lack of oversight over government-subsidized lenders like Fannie Mae and Freddie Mac occurred on the watch of George Bush, and many blame his economic team for their lack of oversight in the collapse. Barack Obama has made this point one of his major campaign themes, arguing that John McCain would provide more of the same failures that Bush did. However, what many do not recall is that Bush wanted to tighten oversight with a new regulatory board for Fannie Mae, Freddie Mac, and other government recipients for the express purpose of addressing bad loan practices — and Democrats blocked it.
The New York Times reported this five years ago:
This should have been a no-brainer, right? With hindsight, we can see that the Bush administration had accurately diagnosed the problem in the lending market and had a plan to address it. Fannie Mae and Freddie Mac reluctantly supported the plan. However, Democrats objected (emphases mine):
Sounds a little like the Democratic denial of problems in Social Security, doesn’t it? Nothing to see here, no crisis on the horizon. Everybody just move along, now. The Democrats had forced lenders to assume more risk at lower interest rates in the 1990s, as IBD points out today, and they didn’t want to countenance an end to their populist policies:
It was the Bush administration that wanted to rein in the madness in the credit markets, and the Democrats who wanted to extend the Clinton policies that created the crisis we have now. After the fit hit the shan, as Michelle says, these same Democrats want to shift blame back to the administration that wanted to increase oversight and curtail risk in lending practices while reducing patronage at the giant GSEs.
The Bush administration isn’t blameless in letting this get out of hand, but clearly the origins of the disaster and the efforts to keep bad policies in place fall on the Democrats in this case.
Update: John Lott points me to a March column he wrote at Fox News explaining the underlying causes of the debacle. Forcing lenders to make questionable loans and blocking tougher regulation of the government-supported entities was a recipe for collapse, and Lott explained it six months before it happened.
http://hotair.com/archives/2008/09/16/whose-policies-led-to-the-credit-crisis/
Whose policies led to the credit crisis?
posted at 9:40 am on September 16, 2008 by Ed Morrissey
The credit crisis and the lack of oversight over government-subsidized lenders like Fannie Mae and Freddie Mac occurred on the watch of George Bush, and many blame his economic team for their lack of oversight in the collapse. Barack Obama has made this point one of his major campaign themes, arguing that John McCain would provide more of the same failures that Bush did. However, what many do not recall is that Bush wanted to tighten oversight with a new regulatory board for Fannie Mae, Freddie Mac, and other government recipients for the express purpose of addressing bad loan practices — and Democrats blocked it.
The New York Times reported this five years ago:
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac — which together have issued more than $1.5 trillion in outstanding debt — is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac — which together have issued more than $1.5 trillion in outstanding debt — is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.
This should have been a no-brainer, right? With hindsight, we can see that the Bush administration had accurately diagnosed the problem in the lending market and had a plan to address it. Fannie Mae and Freddie Mac reluctantly supported the plan. However, Democrats objected (emphases mine):
Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ” The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Representative Melvin L. Watt, Democrat of North Carolina, agreed.
”I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,” Mr. Watt said.
”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ” The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Representative Melvin L. Watt, Democrat of North Carolina, agreed.
”I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,” Mr. Watt said.
Sounds a little like the Democratic denial of problems in Social Security, doesn’t it? Nothing to see here, no crisis on the horizon. Everybody just move along, now. The Democrats had forced lenders to assume more risk at lower interest rates in the 1990s, as IBD points out today, and they didn’t want to countenance an end to their populist policies:
But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street’s most revered institutions.
Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.
The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but “predatory.”
Yes, the market was fueled by greed and overleveraging in the secondary market for subprimes, vis-a-vis mortgaged-backed securities traded on Wall Street. But the seed was planted in the ’90s by Clinton and his social engineers. They were the political catalyst behind this slow-motion financial train wreck.
And it was the Clinton administration that mismanaged the quasi-governmental agencies that over the decades have come to manage the real estate market in America.
Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.
The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but “predatory.”
Yes, the market was fueled by greed and overleveraging in the secondary market for subprimes, vis-a-vis mortgaged-backed securities traded on Wall Street. But the seed was planted in the ’90s by Clinton and his social engineers. They were the political catalyst behind this slow-motion financial train wreck.
And it was the Clinton administration that mismanaged the quasi-governmental agencies that over the decades have come to manage the real estate market in America.
It was the Bush administration that wanted to rein in the madness in the credit markets, and the Democrats who wanted to extend the Clinton policies that created the crisis we have now. After the fit hit the shan, as Michelle says, these same Democrats want to shift blame back to the administration that wanted to increase oversight and curtail risk in lending practices while reducing patronage at the giant GSEs.
The Bush administration isn’t blameless in letting this get out of hand, but clearly the origins of the disaster and the efforts to keep bad policies in place fall on the Democrats in this case.
Update: John Lott points me to a March column he wrote at Fox News explaining the underlying causes of the debacle. Forcing lenders to make questionable loans and blocking tougher regulation of the government-supported entities was a recipe for collapse, and Lott explained it six months before it happened.
jimpeel
Well-Known Member
Wrong. The Glass-Steagall Act of 1933 installed regulations which the biggest con of them all repealed on Novermer 12, 1999.
Read it and weep.
http://en.wikipedia.org/wiki/Glass-Steagall_Act
jimpeel
Well-Known Member
Apparently they will be selling off a good portion of their assets pursuant to the bailout.
Also, don't forget the K car and the resurgence of the convertible. Chrysler led that charge and it was a marketing coup. Chrysler was the only company with a convertible for two model years and the sales went through the roof.
jimpeel
Well-Known Member
I wasn't pointing fingers or stating names.