So the bubble started in the 1990's? How can we blame Bush and Mccain for this? Perhaps someone can tell me how banks operate because I didn't understand all the big words in the article. http://finance.yahoo.com/banking-budgeting/article/105782/How-We-Got-Here:-It's-Housing,-Stupid
Can someone scream from the rooftops that putting Barney Frank in charge of the Democrat Bailout Plan is exactly like putting the fox in charge of the henhouse! Barney Frank caused this loan mess by insisting that the government force banks to give out loans to the unqualified...Worse and incredibly, Barney still wants to make dangerous loans. Are Democrats so stupid?
I'd say Bush is partly to blame. The policy did start under Clinton, but W did make a big push for home ownership as part of his "ownership society". He may not have had a major policy change to cause it, but there was a push by his administration (and the fed) to open up loans even more. Now why Obama gets a pass when his economic advisers are/were former Fanny/Freddy and former Countrywide people I have no idea. Just because they weren't there when it finally came crashing down doesn't mean they didn't have a hand in causing it. Obama has them as his economic advisors and we're all supposed to think he has this great judgement? All that being said... I shudder having to vote for either one of these guys after the debate last night.
Yes of course Bush is to blame. I never defend Mccain or Bush or the Republicans. I just find it laughable that many of the left think Bush/Mccain = evil and Democrats = the good guys. The Democrats have helped the republicans create all the problems we face today from the Iraq war to the housing mess/financial mess.
Pretty much any goodwill/benefit of the doubt I might have given dems is gone since all I ever see are adds saying so-and-so votes just like Bush. Seriously, it's annoying as hell that that is all they know how to do. Even Obama in the debate last night, said it over and over and over again. Bush doesn't vote. He only signs laws that the congress passes. Since democrats have control of congress the last 5-6 years, and bush has used a veto all of about 2 times, "voting with Bush" is voting with democrats.
McCain's accusation that Obama was advised by Fanny's Raines wasn't true. He based it on an Washington Post article. Raines has never served as an adviser.
It's actually just the last two years with the Republicans having control of both houses for the preceding 12. Of course, in those two years, the democrats (my party but I don't claim their leadership) have been ineffectual spineless **************. This is an excellent thread for discussion. The short answer to Ted's question is that its an election year. The long answer is that both parties are incredibly short sighted and happy to put off problems that don't NEED to be addressed in the current election cycle. As someone who has sat at closing tables for about a decade now, I can tell you that to simply point to one Act or one group is not all that helpful to the overall discussion. I'm in Chicago. The community reinvestment act certainly played a role in bringing around neighborhoods like Bronzevill on the near South Side. Delapidated old mansions (it was the richest neighborhood in Chicago in the late 19th and early 20th centuries) were boarded up and surrounded by other rat traps and vacant lots. These are neighborhoods that are basically within the same distance (in the opposite direction) as Wrigleyville. In the late 90s, using HUD loans and other tools, investment returned to those neighborhoods. a full city lot that might have been purchased for delinquent taxes in 1995 were then going for 80-120,000. That is a steep climb but honestly, I think that neighborhood was finding equlibrium because a lot in that proximity to downtown Chicago SHOULD have value. (Keep in mind that this is still a fraction of a lot the same distance north of downtown. Anyway, my point is that it was working nicely AND was necessary as we started demolishing the massive projects of the "great society" in favor of scattered site housing. Fast forward. At least here, the craziness started in the late 90s and into the next decade. There is no doubt that low income buyers were getting loans that they shouldn't have given their incomes and credits. On the other hand, the massive glut of construction in Chicago was not in the lower income housing, it was in the River North, Lincoln Park areas. But its not just over building. Virtually every client I had through that period started with a price range. Through their real estate agents and mortgage brokers they went from X to X + $40-50,000. Nobody cared. The lenders in about 80% of the transactions I did sold their paper at the closing table. Do you think they cared if someone's income was a bit shaky to make consistent payments? Can't stop there though. Go to the big ticket buildings downtown and in the ritzy suburbs. People there were building spec houses AND people were consistently buying beyond their means or with risky ARMS. My point is that someone should have stepped in with reasonable regulation at virtually every step along the way. Clearly, I am not in a business where I want heavy, heavy regulation, however, everyone could see that most buyers were entering into riskier loans than they should have. I have said before that if we simply made it a requirement that any owner of property carry mortgage insurance if at anytime they own less than 20% equity when you combine all debt recorded against the property, I honestly think we avoid this problem. Maybe pile on some regulations to force certain standards to make the initial loans as well. We shouldn't be looking to blame a particular party. We should be looking to blame those in a position to do something who didn't and yes, that includes both parties but more importantly, two administrations and several hundred in Congress over the last 15 years. One last thought on this long rant. In my mind, one of the biggest problems with government is that it passes huge "fixes" and then doesn't re-visit those things. It is not enough to say, "AHA! It was the Community Reinvestment Act of 1995! It's their fault!" Nope. You may identify that as a start to a problem but that doesn't relieve government of the responsibility of monitoring any action and re-vising to address problems. One of my favorite parts of the Perot run in the 90s was how he chastised both parties for proposing big government answers (not just starting programs but also axing them). He proposed doing what any sane business does. Before passing universal health care, you try it out in some test markets. Get some urban areas and rural areas and low income and high income and you test your theory with a small scale program. Then you revise it, pass it or scrap it given the results.
I've said it before, today's problems are the result of a great bipartisan effort to to ruin the economy: 1- the Federal Reserve had the same easy money policy that it had in the 1920's (look how that turned out) 2- The Republicans deregulation of the markets....and George Bush not standing up to Greenspan when he had a great chance to in 2001 3- The Democrats putting pressure on banks to loan to poor people In a well planned economy there should be no fluctiations in the market. During the 1990's when the tech bubble started the Fed should have raised interest rates and not cut them, too many companies were getting capital that didn't deserve it. We played the same exact game with housing. It's a shame that people on bigsoccer were talking about how bad things will be when the housing bubble pops....they were talking about it in 2001....and the Federal Reserve did nothing except lower interest rates just as a short term fix over and over. Lowering the key interest rate is akin to printing money and it drives up inflation. The scary thing is that most economic numbers were worse in the late 1970's/early 80's than they are now. By the way people wouldn't need credit in the first place if we moved back to a tariff/protectionist based economy but we've already exhausted that argument.
While I wish I was above the fray, everytime I listen to Air America or look at the bigsoccer politics forum, my first instict is to act like the bizarro superdave and point out that their simple "blame bush" attitudes is too simplistic and defelcts blame from their own party who helped create this mess. I can be a jackass too but only in response to the simple minded Air America, MoveOn.org and Superdave. In their world Bad Economy + Bush is President = Bush ruined the economy. I created a long post with links about the effect of interest rates and bubbles over there and was there any reasonable discourse? No, it was just a bunch of name calling and Bush bashing. And I don't like Bush at all.
The only thing I'd add is that this is where states come in. Individual states can try and do these "solutions" in their own state. The only problem is that it seems anything one state does eventually sweeps the nation whether it's good or bad, and that's if it's not adopted by the federal government or forced down our throats by the courts.
We don't get Air America in Chicago (at least I don't think we do). I have heard it once or twice when on the road and I can't stand it. I also will occasionally flip on 560 AM in Chicago which is our conservative talk radio and they drive me bat shit crazy as well. Forget about Michael Savage and the fringe, fringe, even Laura Ingram goes off on ridiculous tangents. I had seen her on tv as a pundit and thought she was an effective advocate and a good pundit but on the radio she is like a different cat altogether. I have for years tried to convince people to just stop listening to all of it on all sides. These people have become millionaires creating their own industry of conflict and dragging discussion down the toilet as well. Yes, you see the results on all sides over at the P&CE forum. Having said all of that, I would like to catch the Rachael Maddow radio show sometime just out of curiosity. Her and Buchanan are the best and perhaps most honest pundits on tv. They also have great chemistry which is REALLY odd given their backgrounds.
God Damnnit Chris! If you're going to act level headed then I'll have to scale back my rhetoric an act more level headed too! Glad you're posting in here.