Quote :

"Just look at the extreme resistance the Fed has to being audited...and folks on this web site that lean right said that would do nothing but politicize the Fed. "

Personally, im coming to the conclusion that the fed seems to be creating a ton of problems and controls too much power for a small group of people. imo. I wouldnt cry about the imaginary safety blanket being abolished.

9/24/2009 10:22:06 PM

Quote :

"It's also amazing that people like you refuse to believe that said actions could have any responsibility whatsoever for the current situation. "

Shocker, you don't have a clue yet again. I'm on the record on this website saying there is a lot of blame to go around. I put the great idea of home ownership for those of questionable credit way down at the bottom of the list though. It's like saying "you know, we really should kill people and we should strongly encourage people to do it" being after the people who sold guns to the guy who said he was buying it to kill people and behind the guy who watched the gunman walk up to the target saying he was going to kill him, and behind the guy who pulled the trigger. This has been hashed over on numerous econ blogs of all sorts of political leanings.

Quote :

"Because we bailed them out. You shrink their size by letting them fail. They go into bankruptcy, the failing parts get chopped up ad sold off, the profitable parts get repackaged and either sold off or formed into a smaller leaner company. Instead, we bailed them out. Sure they trimmed some jobs and fat at the lower levels, but when the economy recovers, they'll hire them back, be just as big as they were before, and then keep growing, perpetuating their too big to fail status."

Umm, thanks for restating what I just said in more verbose terms? Despite a bailout, we still can insist on carving up their pieces.

9/24/2009 10:25:37 PM

Quote :

"The biggest financial and industrial institutions in the world - from B of A, to GM and AIG - were going down."

BoBo, what is this obsession everyone has with "the biggest"? Seriously, if I tell you the biggest car in my neighborhood was wrecked, would your response be "well, I guess no one can get to work now." This nation has over ten thousand banking institutions, and you are obsessing over six.

The fact is, those firms are big. But are a relatively small fraction of the U.S. economy. We're not talking Iceland here. The whole of wall street (of which only a fraction was in any danger) is small in terms of %GDP compared to the industrial and financial bankruptcies of 1893, a recession which was only 20 months long.

It is a well rehearsed myth that massive bankruptcy produces long recessions. But the evidence points the other way. History is clear: the Great Depression was special in two respects: first, it is the only recession in which the Federal Government under progressive Hoover and later FDR decided to 'reform' the capitalist system; second, it was many times longer than any other recession in U.S. history.

Quote :

"You do realize if the Fed wouldn't have bailed out C, BOA, AIG, and various other TARP recipients, the dollar value and in %gdp of the banks failures do to this crisis would have made 1987 look like a bump in the road."

Perhaps in dollar terms, there has been more than two decades of inflation since then. But I don't have the data right now for %gdp. Nevertheless, that huge flush of bankruptcies related to the S&L crisis didn't even cause a recession! Recessions are a confluence of events, "widespread bankruptcy" is not a sufficient condition. What you need are people of power on TV telling everyone we are entering the new Great Depression. That is not what Reagan did in 1987, but it is what Pelosi and Bush did.

Quote :

"Which Heritage or Cato paper did you read that explained this one? "

Neither. It was a study of all previous recessions going back to before roman times out of George Mason University. I found it convincing. I also found a similar theory supported in Manias, Panics, and Crashes: A History of Financial Crises republished in 2005 (originally from 1978). Turns out we are not the first nation to come up with the idea of bailing out politically influential firms. In actuality, we were among the first to refuse to do so back when we were mere colonists.

And it is entirely your opinion that there is such a thing as too big to fail. As a percentage of GDP, our largest firms today are puny compared to those that came before. AIG at its height had a worth of only 0.6% of U.S. GDP at its height in 2005. Meanwhile, Reading Railroad was bigger, alone worth 2.3% of U.S. GDP. It and many other firms also went belly up in 1893. I doubt if all the firms we have (and have not) bailed out would add up to just this one company.

9/25/2009 12:01:29 AM

Quote :

"... but it is what Pelosi and Bush did ... "

Pelosi and Bush, in collusion? ... Now that is something notable. We will just have to agree to disagree. It does tell me a lot though. It's not often that people on all sides of an issue agree - and they all did agree that we had to do something about the collapse of our entire automobile industry and our financial institutions. I guess they weren't true Idealogues.

It would take a true idealogue though to blame the length and depth of the great depression on government intervention though (despite general concensus to the contrary). I am not suprised at all that you found those studies and books "convincing". They told you what you already knew - that government intervention is the greatest evil in the known world. I do appreciate the citation though. I will look into the book, and if you have a link to the George Mason study I would like to look that over also.

9/25/2009 8:21:35 AM

^

Quote :

"It would take a true idealogue [sic] though to blame the length and depth of the great depression on government intervention though (despite general concensus [sic] to the contrary)."

Actually, it's generally accepted fact. Your position runs counter to objective conclusions concerning the subject at issue.

Quote :

"Frantic attempts to shore up the economies of individual nations through protectionist policies, such as the 1930 U.S. Smoot-Hawley Tariff Act and retaliatory tariffs in other countries, exacerbated the collapse in global trade. By late in 1930, a steady decline set in which reached bottom by March 1933."

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

9/25/2009 8:45:39 AM

First off, appologies and appreciation to LoneSnark. After doing some research, I found out that the book he recommended seems to be quite a popular book, and it looks interesting - although I don't think it necessarily supports his conclusions. From the Amazon page:

Quote :

" As Peter L. Bernstein summarizes nicely in his introduction, Professor Kindleberger's argument boils down to four principles: (1) Irrational behavior does occur from time to time in financial markets. (2) There is a general, repeatable pattern in how this irrational behavior plays out (a positive economic displacement is followed by euphoria that takes the form of overtrading, then distress following revulsion, discredit by lenders in the overtraded assets, and then panic leading possibly to a crash brought on by those who bought high). (3) The economic system needs a lender of last resort to step in at the right time and in the right way to restore confidence and liquidity. (4) Trying to solve these problems by being doctrinaire is "wrong . . . and dangerous.""

Secondly, with regards to hooksaw. I don't think I was clear enough. It's not the protectionist policies that I was talking about. They were generally agreed to be a failure. What I was talking about is the bailout policys - in terms of the WPA and other government programs to get people working, etc.

(from the same Wiki article)

Quote :

" Economic stimulus was attempted through a new alphabet soup of agencies set up in 1933 and 1934 and previously extant agencies such as the Reconstruction Finance Corporation. By 1935, the "Second New Deal" added Social Security (which did not start making large payouts until much later), a jobs program for the unemployed (the Works Progress Administration, WPA) and, through the National Labor Relations Board, a strong stimulus to the growth of labor unions. In 1929, federal expenditures constituted only 3% of the GDP. The national debt as a proportion of GNP rose under Hoover from 20% to 40%. Roosevelt kept it at 40% until the war began, when it soared to 128%. By 1936, the main economic indicators had regained the levels of the late 1920s, except for unemployment, which remained high at 11%, although this was considerably lower than the 25% unemployment rate seen in 1933. "

and

Quote :

" There has always been debate among politicians and scholars as to whether New Deal policies lengthened and deepened the Depression. One small voluntary response survey from 85 PhD holding members of the Economic History Society, which the author stated may not be representative of all economic historians, showed that there were statistically different opinions between economic historians who taught or studied economic history and those that taught or studied economic theory. The former were in consensus that the New Deal did not lengthen and deepen the depression, while the latter were more evenly divided."

P.S. - Dictionary.com

Quote :

"Idealogue I*de"a*logue\, n. [Idea + -logue, as in theologue: cf. F. id['e]ologue.] One given to fanciful ideas or theories; a theorist; a spectator. [R.] --Mrs. Browning "

9/25/2009 9:28:29 AM

Bobo, your words imply to me that you misunderstand my position. As I said, the evidence suggests that bailouts and stimulus (that do not result in repudiation) do not lengthen recessions, they are just not worth the money because neither do they shorten them, although they may reduce the severity. What does seem to lengthen recessions is widespread changes to government policies such as taxation and regulation. And never before or since in American history has the tax and regulatory regime changed more on a year to year basis than during the Great Depression. WW2 ended the Depression by bringing an end to FDR's rampant experimentation. I recommend The Forgotten Man by Amity Shlaes, which spoke here at NCState about a year ago.

And no, it does not take a conspiracy theory for politicians in Washington to want to seek power and spend money, especially on our most politically influential industries (I'm sure they would have never bailed out Microsoft or Walmart, both larger enterprises). To sum back up: the current recession is not and could not be another depression because neither FDR nor Hoover is in the white house. What we have is Obama which knows better than to start a trade war, jack up tax rates to 91%, or send people to prison for letting customers choose their own chickens.

[Edited on September 25, 2009 at 10:36 AM. Reason : .,.]

9/25/2009 10:28:12 AM

He raises all the right questions but often his answers are absent or...lacking. Really lacking. His solution in this movie is apparently participatory democracy, which is fine and dandy, but much like extreme libertarianism which leaves you grasping for charity in times of catastrophe (which I'm sure people will disagree with because as well all know, the truly free market does not fail, ever), it's too subject to the irrationality of the electorate (which can be more damaging than any irrational market).

I'm more of a welfare capitalist, but I appreciate him making people ask questions and think about why things are fucked up.

9/25/2009 10:32:57 AM

Michael Moore was interviewed on the Colbert Report on 9/23/09. Some excerpts:
SC: "How is it evil sir?"
Moore: "Because it is not a democratic system...Capitalism is the enemy of democracy because the people do not have a say in how this economy is run."
SC: "you argue that things like Goldman Sacks have too much influence over this administration and and previous administration. Who then do you think should have that kind of influence?"
Moore: "The people of this country. This is our government. This is our economy. They actually have elected representatives. In the Senate, 60 are democratic..."

SC:"Is not capitalism a dangerous enemy to make? What if the free market decides it doesn't need a Michael Moore anymore? Who's going to keep you in baseball caps?"
Moore: "As long as people keep going to my movies I get to keep making them. That's how it works."
SC:"That's how this show works too."

And thus Michael Moore himself justifies the moral foundation of capitalism. On the other hand, if Michael Moore gets his wish and the economy is run by the People's elected representatives, what happens if Sarah Palin wins the Presidency in 2016 and decides producing Michael Moore movies are not economically justifiable?

[Edited on September 25, 2009 at 12:27 PM. Reason : .,.]

9/25/2009 12:25:53 PM

Something of interest I found out recently, the central planners in the Soviet Union set prices roughly in line with what they found in Western catalogs. Without free market guidelines, there would have been no way to price the goods produced in a command economy.

9/25/2009 2:14:54 PM

^ I'm pretty sure Moore is not in any way advocating a command economy.

It seems he's arguing against the oligarchy that typically springs forth from un-checked free markets.


^^ The people wouldn't let that happen... that's how democracy works. It's the same mechanism really as capitalism.

9/25/2009 2:19:46 PM

well, if he really was a communist, then we wouldn't be talking about a price system at all, now would we?

actually, the premise behind socialism isn't worth, it's need. moot point there.

when you have a massive government producing everything everyone buys, you could say it is state capitalism, which is just as bad as your worst communist nightmare b/c basically there is one store and you kinda have to go to it or die.

back to moore and democracy, i'm going to venture to guess he's more of a local democracy guy. you know, local currency, co-ops, community garden, all that shit you see in carrboro, which is cool, but it's also nice to drive to Raleigh and go to IMAX.

9/25/2009 2:33:43 PM

moron, the people wouldn't let what happen? Electing Sarah Palin? Or letting whoever is elected circumvent the rights of the capitalist film industry to invest as they see fit?

9/25/2009 2:59:32 PM

^ probably both of those.

9/25/2009 3:03:00 PM

I stopped using this example because, well, it carries bad memories. But, fine. What happens when the people elect George Bush and he decides 'the people' shall not suffer the presence of Michael Moore movies?

9/25/2009 4:09:08 PM

Quote :

"eyedrb: I can understand your logic bridg, but I feel that it is wrong. Banks certainly dont want your house, not in this market. Plus your scenerio is VERY small and NOT the main reason people are getting kicked out of thier house, esp due to CORPORATE GREED that caused all this apparently. hahaha The ONLY reason they are getting kicked out is bc they arent making the payments."

Quote :

"1985: What are they going to do with your house, who are they going to sell it to right now? They don't want it, they'd much rather have your money."

By admitting they don't want our houses right now, you're implying that there was a time when they did actually want people's houses.

So I just wanted to thank you for admitting that, yes, banks have been involved in the greedy practice I described. And a large part of what we're enduring now is the direct result of those greedy practices. Banks anticipated being able to write risky loans for overpriced homes because they could collect some money and still resell the property. And now they're all, "Woe is me. People aren't paying up, and the property is worth way less now."

And it would all be really, really funny if they weren't passing along their woes to all their other customers and the general American public.

9/25/2009 4:09:19 PM

^ But I don't see how that is harming the customers. The customers got a huge house they wanted, they just didn't get to keep it. And as you point out, the banks that did this are being punished (except for those that were bailed out, of course). No more punishment is necessary, since no fraud was involved. As such, just ignore it, they will lose their shirts and not do it again for a great while.

9/25/2009 4:22:24 PM

^The homeowner had their credit hurt. The other people in the neighborhood had their home values hurt.

And the banks that didn't get bailed out are "punished," but they can still gouge the fuck out of their other customers with higher credit card fees and interest rates, more aggressive overdraft fees, etc...to make the money back that they lost through irresponsible practices. So other customers are hurt too.


I don't believe people quite appreciate what happened here. The specifics are difficult to grasp, but people aren't even getting the big picture. Private and public leadership failed, and a foolish public followed them.

This issue has crazy implications to me. I think we need to go back to college, find out what the fuck these people are learning, revisit some old ideas about what makes a person smart, educated, capable... We lowered some standards along the way, and as long as that meant some guy with a thick country accent and bad grammar had a better shot at a decent paying job to support his family, it was okay...but now it looks like we've lowered standards for positions that are really, really important. Some rich kid who styles himself as a self-made man and doesn't like books? RED FLAG, that guy isn't fit to run shit.

9/25/2009 5:17:12 PM

Michael Moore should be appointed as the fat bastard czar

9/25/2009 10:41:55 PM

really guys we've lost sight here is how these cooncakes are even getting floor time more often than salisburyboy.

every

single

one

of their propsitions take the constitution and turn it into a shitty origami boat packed with faggots totting ak-47s that fire al gore green stamped bullets that kill only humans who work for a living

9/25/2009 11:15:11 PM

^^^ Do you know what Alan Greenspan said when he testified before congress (I kid you not!)?

Quote :

" "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity (myself especially) are in a state of shocked disbelief," "

Duh ... In other words, "We overestimated people's willingness to fulfill their fidiciary responsibility". Nobody could have seen that. Generally, if there is a choice between getting really rich now or protecting your shareholder's equity, personal self-interest trumps (especially if it's legal).

That my friends is the structural problem with complete deregulation ... (in spite of the "Invisible Hand of the Market" gently holding us, and guiding us along.)

9/25/2009 11:53:07 PM

Quote :

"I'm on the record on this website saying there is a lot of blame to go around. I put the great idea of home ownership for those of questionable credit way down at the bottom of the list though."

Fail boat, let me try to explain where I disagree with this. You essentially had a stable supply of houses and millions of people who were out of the market bc they didnt qualify for traditional loans. So along comes politics and with a good intentioned plan they wanted to get these people into the market backing thier risky loans with federal dollars. Now you have upset the free markets balance and now have demand WAY above supply, sending prices soaring.

The perfect storm took place because we had a down market and very low rates. This encouraged OTHER people to jump on the money train, seeing how housing was now in a boom (artificial) with great returns. Following this trend, people saw their house prices jump so they borrowed on thier house or just average americans with average incomes decided to move up in house counting on thier homes value to continue to increase. Investment companies got into the mix lured by high returns. Others decided they would start putting real estate in thier portfolios or just flip houses to catch the returns, people who have never done this before were making a ton of money. Building also went into a boom trying to meet the demand (artificial). Then it pops when supply approaches demand, people started losing thier homes they couldnt afford in the first place, whether it was the guy making 20k with a 200k house or the guy making 300k with 4 investment properties, eventually they had to start PAYING on thier loans. At this point supply was WAY higher than demand, esp in those hot areas and the prices fell.

What I will argue is that the companies that mortgaged their companies future on housing deserved to go under. Banks who did the same should have as well, bought up by their competition who either refused to make these loans or did so much less. However, I have some sympathy for these banks as they were pushed/backed by the govt to a make them initially. And those who PICKED out the house, WENT to the mortgage company/bank, filled out the paperwork requesting the money to pay for THE HOUSE THEY PICKED OUT AND WANTED, who suddenly are now innocent victims deserve to lose thier house. Its consequences to thier action, which is much tougher to deal with than just claiming the victim role.

Bridget, I think you need to research collateral and secured loans. Of course the bank is protected by securing thier loan, its thier money. Its a lot tougher to get 300k in unsecured loans. hahah. Besides, the banks DONT want the houses now, which is when they are foreclosing on people who arent paying thier loans. See the difference? Banks would much rather you pay yoru mortgage, its guaranteed income over 30yrs. The house is more of a risk to them. Your main thesis is that banks gave these people risky loans. So NO money down, LOW interest rates, so that they could own the property when the borrower defaults bc the prices are going to keep going up? right? So why wouldnt the bank just go buy the property and cut out the middle man they know they are going to lose money on? Forclosures/lawyers arent free. LOL, its not a very practical theory in most cases.

[Edited on September 26, 2009 at 9:20 AM. Reason : .]

9/26/2009 9:12:36 AM

hey guys...did you know that Michael Moore is...fat?

9/26/2009 10:00:49 AM

Quote :

"Do you know what Alan Greenspan said when he testified before congress (I kid you not"

Yes. I watched him say it on tv. But I suspect he was overstating his position. He attended college and was presumably well educated in terms of economic history. He was the one that coined the phrase "irrational exuberance", why should he be shocked when it strikes again?

Quote :

"Generally, if there is a choice between getting really rich now or protecting your shareholder's equity, personal self-interest trumps (especially if it's legal)"

Of course it would, but these people didn't get rich now. These CEOs lost huge chunks of their fortunes because their portfolios were heavily loaded with their own companies stock, and there is no evidence that any of them tried to unload it in the years before the crisis, even though it would have been perfectly legal to do so. As such, I am convinced that they had no idea their companies were in such danger. You didn't know, no one of consequence knew. There was no one shorting the stock in the run up to catastrophe. It was just one of those things, faith in common practice, they were doing things they way they had been doing them for years and they always made money doing it. All humans fall victim to it.

And there is the problem with regulation. Businessmen are not the only people that fall victim to this mental fallacy. The regulators read the same newspapers as the businessmen. As such, the regulators too saw no problem with the common practice, even imposed regulation in favor of it. I suspect it was the regulation that proved effective at convincing everyone that the bubble could go on. I remember reading an article to just such an effect in Reason magazine a few years ago which argued that a combination of lending regulation and land-use regulation had caused the price spikes, and that prices would keep rising unless the regulations were repealed, which they never would be. Well, these libertarian journalists were wrong; the regulations stayed and prices collapsed anyway. But the argument being made was convincing at the time to everyone involved, even the regulators.

So the question is, would the bubble have gone on as long as it did without the regulators help? I suspect not.

Quote :

"And the banks that didn't get bailed out are "punished," but they can still gouge the fuck out of their other customers with higher credit card fees and interest rates, more aggressive overdraft fees, etc"

Only until their customers, facing the price increases, seek banking services elsewhere. My online bank charges no fees on overdraft protection and actually pays me interest on my checking account and refunds any ATM fees. Be part of the solution: try to convince your friends at expensive banks to switch banks.

[Edited on September 26, 2009 at 10:38 AM. Reason : .,.]

9/26/2009 10:35:58 AM

Quote :

"Of course it would, but these people didn't get rich now. These CEOs lost huge chunks of their fortunes because their portfolios were heavily loaded with their own companies stock,"

I wasn't talking about the CEOs. I was talking about those thousands of mortguage brokers, packagers, and resellers that made a mint, before things went bad.

I think what led to the problem was the amount of foreign money coming into the country (particularly from China). When there is a ton of money coming in people will always find a place to put it - then let the cards fall where they may.



A friend of a friend was working at Citi Bank during the eighties, when the South American crisis happened. She said that the OPEC countries had a ton of money and needed to do something with it, they loaned it to South America. Of course they couldn't pay it back, and a crisis was born.

If someone has money to invest, there will always be people willing to take it from them. The brokers don't take a risk. It's reminds me of the "Three Rules of Pimping": "Get the money up front, Get the money up front, Get the money up front" ....What happens after that is anyone's guess.

[Edited on September 26, 2009 at 12:30 PM. Reason : *~<]Bo]

9/26/2009 12:28:35 PM

Quote :

"These CEOs lost huge chunks of their fortunes because their portfolios were heavily loaded with their own companies stock, and there is no evidence that any of them tried to unload it in the years before the crisis, even though it would have been perfectly legal to do so."

Angelo Mozillo would like to disagree.

Quote :

"There was no one shorting the stock in the run up to catastrophe."

Also false. More than a handful of people got fantastically rich buying up CDSs ahead of the blowup.

Quote :

"So the question is, would the bubble have gone on as long as it did without the regulators help? I suspect not. "

Are you kidding. The bubble was created in the first place because regulators stopped regulating. This is indisputable.

Quote :

"Only until their customers, facing the price increases, seek banking services elsewhere. My online bank charges no fees on overdraft protection and actually pays me interest on my checking account and refunds any ATM fees. Be part of the solution: try to convince your friends at expensive banks to switch banks."

Here is the thing. Capitalism takes quite awhile to work, especially in entrenched industries. It's a bit curious that they all magically started jacking rates up at the same time. Is that capitalism? They also punish you if you close credit cards, making trying to switch not so easy. About 30 minutes ago I read a WSJ article about the airlines making 267% more on fees this quarter compared to the same quarter a year ago. Where is the competition? Only guys like you are completely obtuse to the fact that those with the money are in much better shape to continue fleecing money from everyone else than those without the money are to mobilize democracy to stop the shit from happening.

Quote :

"Fail boat, let me try to explain where I disagree with this. You essentially had a stable supply of houses and millions of people who were out of the market bc they didnt qualify for traditional loans. So along comes politics and with a good intentioned plan they wanted to get these people into the market backing thier risky loans with federal dollars. Now you have upset the free markets balance and now have demand WAY above supply, sending prices soaring."

Simply, no. Those making the initial CRA loans were doing more due diligence on the borrowers than your standard 20% down with a job. They had to. Later, the banks, awash with money from China look at this success and did what Wall Street does, they got greedy as fuck. They didn't have time to do the diligence because a borrower would just go down the street to the next broker. The broker didn't give a fuck because there was a good chance the loan wouldn't default within 90 days. The rating agencies faced the same thing where an iBank would just go to the next agency for the AAA. The iBanks didn't give a fuck to sell it to the poor Swedes who trusted the AAA rating. And the regulators didn't want to take away the punch bowl because..well, they didn't get paid shit and they hoped they could make connections in Wall Street and jump from being a cop to being a dealer.

Sure, the legislation might have set the ball rolling, but there were countless upon countless steps along the way that would have snuffed out the problem that it's just complete partisan hackery to keep falling back to the ole "the liberals caused it because they wanted to give loans to minorities"....especially when you say that without giving credit to the libertarian Greenspan for keeping rates at historical lows for...forever.

This same story has been posted on this site time and time and time and time and time again by numerous different people. You aren't going to change your position, enjoy the ignorance.

[Edited on September 26, 2009 at 1:08 PM. Reason : .]

9/26/2009 12:47:42 PM

Quote :

"the banks, awash with money from China look at this success and did what Wall Street does, they got greedy as fuck. "

Bingo! What else do you do if you've got a bank ... You've got tons of foreign money and you've got to make loans if you want to make a profit.

[Edited on September 26, 2009 at 1:51 PM. Reason : *~<]Bo]

9/26/2009 1:46:05 PM

Quote :

"Are you kidding. The bubble was created in the first place because regulators stopped regulating. This is indisputable."

It's like you didn't read a thing he said. If the gov't itself didn't CREATE THE BUBBLE in the first place, then the "lack of regulation" wouldn't have mattered anyway. If the gov't hadn't pushed home ownership on people who had no business owning a home, then regulations don't even play a part. Read a newspaper or something

Quote :

"Also false. More than a handful of people got fantastically rich buying up CDSs ahead of the blowup."

CDS != selling a stock short. Read a newspaper or something

[Edited on September 26, 2009 at 5:12 PM. Reason : ]

9/26/2009 5:12:10 PM

Quote :

"CDS != selling a stock short. Read a newspaper or something"

I'll dumb this down since it's fairly obvious you don't know too much about the stock market.

If you think a stock will go down, you can profit by

1) Shorting the stock
2) Buying a CDS
3) Various other methods

If you guess right, you win.

It's really that simple.

Quote :

"If the gov't hadn't pushed home ownership on people who had no business owning a home, then regulations don't even play a part."

It's like, we can type it 50 times and you don't want to entertain the thought that your position is just wrong. The initial people that got those cra loans defaulted at rates the same or less as those that got riskier sub prime loans. Please take a moment to read that again.

Quote :

"THE INITIAL PEOPLE THAT GOT CRA LOANS DEFAULTED AT RATES THE SAME OR LESS AS THOSE THAT GOT RISKIER SUB PRIME PRODUCTS"

http://www.windsofchange.net/archives/looks_like_cra_didnt_cause_it_after_all.html

Quote :

"In response to an audience question that asked, in short, whether the CRA requirements imposed by Congress were at the root of the problem, the answer was a resounding "no". We looked at CRA pools and the [post-default] returns on them is higher than the equivalent return on conventional pools."

http://debatebothsides.com/showthread.php?t=73500

Quote :

"The results of the study show that home loan borrowers with similar risk characteristics defaulted at much higher rates when they borrowed subprime mortgages than when they received loans made primarily for Community Reinvestment Act (CRA) purposes. "

http://www.businessweek.com/investing/insights/blog/archives/2008/09/community_reinv.html

Quote :

"Not surprisingly given the higher degree of supervision, loans made under the CRA program were made in a more responsible way than other subprime loans."

Is that a large enough portion of ownage or would you like some more?

Shoddy underwriting standards is the first line of failure, not the idea of home ownership for those who may have had some bad luck in the past yet are still viable candidates to pay back a loan.

It's really mind boggling how partisan some of you are being about this? For what reason? It's over and done and only morons stick to ideological guns about this.

[Edited on September 26, 2009 at 7:12 PM. Reason : .]

9/26/2009 7:11:00 PM

if only the gov't push for homeownership stopped at poor people, then you might have a point
but, hey, I can cherry-pick sources, too.

you are bitching at ME about being partisan? When apparently they only failure was that of "no regulation?" Really? shut the fuck up.

Barack Obama could eat a baby on live television and you would be the first person in here to defend him for it.

9/26/2009 7:34:54 PM

fail boat and bobo, where do banks get their money to loan? Do you feel the majority of thier money, esp during this period came from its customers?

9/26/2009 7:51:21 PM

Quote :

"if only the gov't push for homeownership stopped at poor people, then you might have a point but, hey, I can cherry-pick sources, too."

Remind me, who were those other people that the government forced to take loans they couldn't afford? So you have nothing to say about the poor underwriting standards that were really at the root cause of this mess?

Quote :

"you are bitching at ME about being partisan? When apparently they only failure was that of "no regulation?" Really? shut the fuck up."

So, not even 10 posts up I have a comment saying it was numerous things and you somehow construe that as "no regulation"? Look, the Fed under an insanely libertarian Greenspan was a key piece in relaxing regulation. Would you like to dispute this fact, or is it just more fun for you to just claim that I am saying this is the only reason, despite my very own words otherwise?

Quote :

"but, hey, I can cherry-pick sources, too."

Whats fucking stopping you from doing it? Find one source, and make it as conservative as you can make it, that says the CRA was the root cause of the mess, and we can talk about it.

Quote :

"Barack Obama could eat a baby on live television and you would be the first person in here to defend him for it."

Now, lacking any substance or factual basis for making a post you resort to some really shitty trolling. Is this what happens when someone is busted and socially inept as you are?

Quote :

"fail boat and bobo, where do banks get their money to loan? Do you feel the majority of thier money, esp during this period came from its customers?"

What does this have to do with anything?

9/26/2009 10:58:39 PM

Quote :

"So you have nothing to say about the poor underwriting standards that were really at the root cause of this mess?"

No need for regulation there. Everyone knows they were a problem, so no company is going to use them again.

Which is the point: if it is sufficiently common knowledge for regulators to be aware of it, the businessmen are aware of it too, so there is no need for regulation to ban practices no one would dare use without first coming up with something clever to negate the dangerous incentives.

9/26/2009 11:53:36 PM

Quote :

"Which is the point: if it is sufficiently common knowledge for regulators to be aware of it, the businessmen are aware of it too"

You'd have a fantastic point if recent history didn't contradict you 100%.

9/27/2009 12:37:15 AM

I believe it's been pointed out numerous times that LoneSnark is a moron who is also full of shit.

9/27/2009 1:30:13 AM

^ isn’t that the definition of “economist”?

9/27/2009 1:47:37 AM

Quote :

"How did capitalism fail? Companies who made poor decisions failed...... Companies who made good decisions did not fail.... Thats capitalism 101. Sorry, Businesses must fail in capitalism.....thats how we get better."

Companies who made poor decisions got bailed out. That's how Amurica works.

9/27/2009 9:06:45 AM

IMStoned420, care to explain how history 100% contradicts that statement? I didn't see any laws or rules from regulators restricting the practice. I only saw laws and rules reinforcing the practice in question. As such, your words are sufficiently obscure I think we deserve more elaboration.

9/27/2009 9:15:24 AM

Quote :

"What does this have to do with anything? "

Just trying to baby step you up to the top of the food chain.

9/27/2009 9:31:30 AM

http://www.washingtonpost.com/wp-dyn/content/article/2009/09/26/AR2009092602706.html

I only read the first page, but it more or less contradicts your statement 100%.

Please, stop applying the basic econ knowledge you know and what happened in the past as some sort of absolute truth about the current crisis. Just about everything you post now days can't be tested because its all "well, if the government wouldn't have done this, this would have happened, but we'll never know".

^ If you have some sort of greater point to make, feel free to do it.

9/27/2009 12:01:24 PM

Quote :

"So, not even 10 posts up I have a comment saying it was numerous things and you somehow construe that as "no regulation"?"

Given that that is the ONLY thing you ever bitch about, such a caveat is fucking useless.

Sure, you're a nice guy, but you're an asshole. you're an asshole. you're an asshole. Oh, and you're an asshole. But, I said you were a nice guy. Don't pigeonhole me!

Quote :

"Remind me, who were those other people that the government forced to take loans they couldn't afford? So you have nothing to say about the poor underwriting standards that were really at the root cause of this mess?"

You deny that the gov't pushed home ownership? You deny that dubya said "go out and spend" after 9/11? OMFG, I CAN ATTACK DUBYA!!! HOLY SHIT!!!

Quote :

"Whats fucking stopping you from doing it? Find one source, and make it as conservative as you can make it, that says the CRA was the root cause of the mess, and we can talk about it. "

Why stoop to your level?

Quote :

"Now, lacking any substance or factual basis for making a post you resort to some really shitty trolling. Is this what happens when someone is busted and socially inept as you are?"

No. It's what happens when I run in to a partisan troll such as yourself.

9/27/2009 2:46:27 PM

Quote :

"Given that that is the ONLY thing you ever bitch about, such a caveat is fucking useless."

I'm pretty sure I have brokers feet to the fire in this (and other) thread as well. The difference is, brokers who exhibited shitty underwriting standards broke no laws. They were the most clever of the bunch because they made easy as hell money and offloaded the problem onto other people. Hell, even the banks are somewhat resolved from blame because they did what they do, attempt to make as much profit as possible.

It's the regulators who relaxed regulation, then didn't do one shred of their job to reign in the excess. But, feel free to get us off on stupid tangents in lieu of finding one shred of credible anything to support your position. It is kinda what you do, so we expect it. Moving right along.

Quote :

"You deny that the gov't pushed home ownership? You deny that dubya said "go out and spend" after 9/11? OMFG, I CAN ATTACK DUBYA!!! HOLY SHIT!!!"

No, I'm telling you to find me one blog post or study on the topic that supports your position that this novel idea of home ownership is the true reason for the mess. I offered multiple links that say CRA didn't do shit. Do you have...one?

Quote :

" Why stoop to your level?"

Rofl, the only way you can 'stoop' to this level is if you somehow enter a wormhole from stooping so low and end up above at my level.

Quote :

" No. It's what happens when I run in to a partisan troll such as yourself."

If this is the best you can do, you should probably just kill yourself now.

9/28/2009 2:44:03 AM

Quote :

"Moore: "Because it is not a democratic system...Capitalism is the enemy of democracy because the people do not have a say in how this economy is run.""

Moore and I might agree on the point that corporate welfare is wrong. Companies shouldn't be able to use gov't to gain advantage over either customers, competitors or suppliers.

But we may disagree that, on the other hand, private citizens shouldn't also be able to use gov't to gain financial advantage over each other. (welfare, single-payer healthcare etc, "spread the wealth" around taxation).

One way to help prevent these two temptations is by making the federal gov't smaller and less dominant over our lives.

[Edited on September 28, 2009 at 10:39 AM. Reason : .]

9/28/2009 10:38:59 AM

No, failboat, the article you list seems to support my position that regulators are at best no help whatsoever at dissuading bubbles. If you ignore everything the regulators did to puff up the bubble, your own evidence is conclusive that neither were they helpful in preventing it.

Quote :

"No, I'm telling you to find me one blog post or study on the topic that supports your position that this novel idea of home ownership is the true reason for the mess."

From the New York Times in 1999:

Quote :

"In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders. The action, which will begin as a pilot program involving 24 banks in 15 markets will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring. Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. ''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''"

http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=all

Is it really still your position that these government agents had nothing to do with this fiasco?

[Edited on September 28, 2009 at 11:50 AM. Reason : .,.]

9/28/2009 11:40:09 AM

Quote :

"'From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry."

Nostradamus eat your heart out.

9/28/2009 7:30:59 PM

Here's the story, Mr. Snark. If you want to make your case, you have to go beyond the surface level. You are in college afterall. Yes, President Clinton wanted Fannie Mae and Freddie Mac to work to get lower income people into houses, but before you start jumping up and down yelling, "See, see, it's all the government's fault.", you have to show how big of an effect that had on the overall crisis.

Mr. Boat posted several articles showing that CRA the failure rates were no higher that other subprime loans - implying that the effect was relatively small. So prove him wrong, and statements like, "Is it really still your position that these government agents had nothing to do with this fiasco?", won't do it. Dig a little deeper. There is a big difference between "no" effect and 100% cause. Show the failure rates of those loans and how big of a share they were of the overall failures. Did it have a significant effect? Who knows? But, with a little work you might be able to find out, and even convince other people - but it's not going to happen with just exhortations, and surface level analysis.

9/28/2009 7:32:29 PM

But it was not my position that the CRA was 100% at fault. Bubbles happen. Irrational exuberance for <insert commodity here> happen. Try to remember, we had a dot-com bubble just nine years ago and in that bubble the government played almost no part. But, because government is so intertwined in the bubble commodity of this time around, housing, it was ready, willing, and eager to make things worse. Not because government is evil, but because government is made up of people which themselves posses animal spirits. Structurally speaking, a housing bubble will always be worse than a tech bubble, but not this bad.

So, to be clear, we were going to have a housing bubble anyway. Some banks were going to go under because of it. What the government did with the its various machinations was make the bubble steeper and longer by exploding both the pool of borrowers and amount that could be lent. Not one action taken by the government was to curtail the bubble, all action fed to make it bigger. As such, yes, I can say that without government intervention the bubble would have been smaller and less painful to recover from. Even you recognize that the CRA had an effect, although you claim it was small, but it seems failboat seems to believe that with even more intervention by regulators the bubble would have been avoided, which is lunacy, since all the interventions they did do added to the problem, I think it safe to say all further interventions would also add to the problem.

9/29/2009 10:24:36 AM

Quote :

"But, because government is so intertwined in the bubble commodity of this time around, housing, it was ready, willing, and eager to make things worse."

WAT?

Quote :

"So, to be clear, we were going to have a housing bubble anyway."

WAT?

Quote :

"What the government did with the its various machinations was make the bubble steeper and longer by exploding both the pool of borrowers and amount that could be lent."

WAT? I think you are revising history here pal. The government did no such things, unless by government you are including your libertarian God Greenspan who held rates too low for too long and then stared dumbfounded at a system that didn't self police.

Quote :

"Not one action taken by the government was to curtail the bubble, all action fed to make it bigger. As such, yes, I can say that without government intervention the bubble would have been smaller and less painful to recover from."

I'm not even sure what to call this other than just making up history to suit your ideology needs. You are correct, the government intervened in the markets in ways that helped fuel the bubble. Namely by having rates too low for too long and REMOVING legislation meant to control banks. However, it's about as asinine as it gets, though I'm not surprised giving your partisan hackery, to suggest more government intervention would have made things worse. Where do you come up with this shit? Is it just blanket statements we should all expect from you Libs? It isn't unrealistic to expect a government and central banker to do the prudent thing regarding the economy, even if it is painful in the short term. All we have to do is look at Paul Volcker and the early 1980s for this example.

Governments are capable of getting things right occasionally. I know it's hard to believe, but it happens.

9/29/2009 11:00:02 AM

Quote :

"The government did no such things"

From the New York Times in 1999:

Quote :

"The action, which will begin as a pilot program involving 24 banks in 15 markets will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring. Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. ''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''"

Is it really still your position that these government agents had nothing to do with this fiasco? That the only government agents that deserve any blame is Alan Greenspan?

9/29/2009 4:12:41 PM

What. . .what's that you say, LoneSnark?

[Edited on September 29, 2009 at 4:28 PM. Reason : Some will never see it, man.]

9/29/2009 4:28:03 PM