Good News

[85suited 0]

It still continues to amaze me that people like 85 and brvhrt can read this and continue to assert that it was all because the government somehow "forced" the loan companies to lend to minorities. If you really read this you'll realize that the mortgage lenders were not only not forced but were out there grabbing people off the street to lend to at the height of this madness. And yeah you're right gobears, we're all screwed.

It's important to note that Fannie and Freddie bought paper from all sorts of mortgage originators, not just from banks bound by the CRA. But the loans still counted toward Fannie's and Freddie's affordable-housing goals-and helped lead to their meltdowns.These "affordable housing goals and subgoals"-authorized, ironically, by the Federal Housing Enterprises Financial Safety and Soundness Act-became more demanding over time and, by 2005, required that Fannie and Freddie strive to buy 45 percent of all loans from those of low and moderate income, including 32 percent from people in central cities and other underserved areas and 22 percent from "very low income families or families living in low-income neighborhoods." As one former Fannie Mae official puts it: "Both HUD and many advocates in the early 2000s were anxious for the GSEs to extend credit to borrowers with blemished credit in ways that were responsible." How were such goals to be met? Crucially, subprime loans didn't only allow banks to meet their CRA lending requirements; sold to Fannie and Freddie, they could also help the two secondary mortgage giants meet their affordable-housing targets. Not all subprime loans, or even a majority of them, were made for CRA-related reasons-the combination of cheap money and imprudent borrowers clearly made for a tremendous bubble. But such loans, bundled into asset-backed securities, were purchased (according to a June 2007 HUD report) especially by Freddie Mac to help fulfill its affordable-housing goals.

[hblask 1]

I don't think you're that dumb H nor do I doubt your reading ability though with that answer you've given me cause to wonder. Tell me again how AIG ended up a zombie company due to lending to minorities and not for sneaking through as many regulatory loopholes as it could find with the eager assistance of lawmakers and their friends in the Whitehouse. Because in reading the article, I can't see how you can make that assertion. Your analogy doesn't hold here at all because, the effect was so far removed from your supposed cause as to be rendered inconsequential. In fact, there are multiple causes and the very least of them is the government requiring some lending to minorities. It's like blaming a raindrop for a tsunami.

I didn't say it was the requiring lending to minorities, you may be arguing with someone else. But the mortgage meltdown is not something that would've happened in the absence of the privatized win/socialized loss implicit in Fannie Mae and Freddie Mac. The laws had been in place for a while, but the banks had mostly ignored it because it was terrible business. Finally they started getting pressure to make bad loans. So they threw a few out to get the regulators off their back. Then they realized they had bad loans on their book, so they packaged up a bunch of them and sold them to third parties with the implicit promise that the government would back them if they failed.So now, these bad loans made a profit for banks. If there had been no implicit government guarantee, the packaged loans would've been worth so little it would not be worth it. Who would buy a package of loans to people with terrible credit?So now, banks realized they had a product. It was profitable to crank out bad loans and get them off the books. A whole new market was created selling these pieces of crap, because the crap was backed by Freddie and Fannie. In a free market, crap sells for crap prices. In a distorted market, crap sells for premium prices. And nobody had much incentive to look at them too closely, because after all, the government wouldn't abandon us in our time of need, would it?So no, it wasn't caused by lending to minorities, which is why I never said that. It was caused by really stupid, insane rules that people like Cato had been warning about for a decade and the Democrats and Republicans ignored.

[akoff 0]

I'm old school. We still run the wishbone.

That is great, Barry Switzer is yeehawing somewhere!!! now back to the "spread"

[Jeepster80125 0]

I don't think you're that dumb H nor do I doubt your reading ability though with that answer you've given me cause to wonder. Tell me again how AIG ended up a zombie company due to lending to minorities and not for sneaking through as many regulatory loopholes as it could find with the eager assistance of lawmakers and their friends in the Whitehouse. Because in reading the article, I can't see how you can make that assertion. Your analogy doesn't hold here at all because, the effect was so far removed from your supposed cause as to be rendered inconsequential. In fact, there are multiple causes and the very least of them is the government requiring some lending to minorities. It's like blaming a raindrop for a tsunami.

I don't think you understand the analogy. What do you think of H's most recent reply to you? I'm curious about your thoughts.

[gobears 0]

This guy sounds like Henry. Pretty much spot on.Prolonging the RecessionThe Federal Reserve has a philosophy: That the economy is based on consumption and lending. On its face, this is ridiculous, so let me explain.It assumes that production is a foregone conclusion and that bureaucratic processes are just as good as creating production (efficiency) as market processes.When an economy based on capitalism goes into recession, it's for a reason. It happens because capital has been misallocated, and assets have been produced that are unproductive.Savers stop lending as they see less return for risk than warranted. Over-capacity is quickly worked off. Savers soon see a reason to lend again: there is a productive use for the capital and thus a good return for the risk. This is a hit and miss process, but it tends to work over time, just like evolution does.The Federal Reserve does not believe that a recession, short and sweet, is a corrective process. Either that, or it has become politically unacceptable to allow any dislocation in growth, growth for its own sake. So just when the market (savers) pull back on lending, the Fed interrupts this process and artificially lowers interest rates. The fractional banking system finds more speculative uses for that money and capital is allocated to unproductive assets.We have been going through this for many years, to the point where all this debt creation is unproductive. The longer the Fed denies the reality of the process and insists that lending gets done for unproductive things like condo-building, the worse the ultimate resolution will be.

[Balloon guy 158]

This guy sounds like Henry. Pretty much spot on.Prolonging the RecessionThe Federal Reserve has a philosophy: That the economy is based on consumption and lending. On its face, this is ridiculous, so let me explain.It assumes that production is a foregone conclusion and that bureaucratic processes are just as good as creating production (efficiency) as market processes.When an economy based on capitalism goes into recession, it's for a reason. It happens because capital has been misallocated, and assets have been produced that are unproductive.Savers stop lending as they see less return for risk than warranted. Over-capacity is quickly worked off. Savers soon see a reason to lend again: there is a productive use for the capital and thus a good return for the risk. This is a hit and miss process, but it tends to work over time, just like evolution does.The Federal Reserve does not believe that a recession, short and sweet, is a corrective process. Either that, or it has become politically unacceptable to allow any dislocation in growth, growth for its own sake. So just when the market (savers) pull back on lending, the Fed interrupts this process and artificially lowers interest rates. The fractional banking system finds more speculative uses for that money and capital is allocated to unproductive assets.We have been going through this for many years, to the point where all this debt creation is unproductive. The longer the Fed denies the reality of the process and insists that lending gets done for unproductive things like condo-building, the worse the ultimate resolution will be.

NOW I see the beauty of Aboma's plan. By taking away the REWARD part of Risk/reward, he is making risk for risk sake the correct way to do business. Which as we have seen with this current financial maelstrom is something the government is very good at facilitating. They just did it backwards, first they should have removed rewards, then the risk for risk sake would have been sound economic practises.It's really quite beautiful if you just swallow the koolaide

[nutzbuster 7]

Every day this looks worse and worse. The double speak, the lies, deception, etc.Bush part 3? It may as well be, only Demo style. Funny how when it's them doing the F-ing it's o.k.Keep in mind that half of the country is in shock/pissed/scared/ and pretty much is getting angrier by the day at the ineptitude carnival that is Reed, Pelosi, Dodd, Frank, Geithner.... jopke.Even Europe is starting to look at us with a concerned eye and seemingly losing it's Obama erection. The Czech President came out saying he thinks THe current plan to fix the financial situation is a recipe for disaster. And what is all this BS about a NEW WORLD CURRENCY???Jesus.. I had hoped this would be good, better, not a radical socialist take over of everything I have ever known.I want out. I want him out. Someone please make this stop.

[strategy 4]

Bush part 3? It may as well be, only Demo style. Funny how when it's them doing the F-ing it's o.k.

I agree with you entirely, obama could get away with some absurd stuff before his supporters would blink an eye. it's a ****ing shame that so many of us are blind partisans. I just don't remember ever seeing you care when bush was running the same type of budget.

Keep in mind that half of the country is in shock/pissed/scared/ and pretty much is getting angrier by the day at the ineptitude carnival that is Reed, Pelosi, Dodd, Frank, Geithner.... jopke.

you seriously overestimate the number of people who know what's happening outside of the informative adverts that tell us the economy isn't going well. btw snuggies are excellent for coping with a recession.

Even Europe is starting to look at us with a concerned eye and seemingly losing it's Obama erection. The Czech President came out saying he thinks THe current plan to fix the financial situation is a recipe for disaster. And what is all this BS about a NEW WORLD CURRENCY???

europe, china, et al are unhappy because our plan of action is going to hurt the spending power of the dollars they've got tucked away. if they want out, they can exchange their dollars for another currency quietly, especially now that it's at a high against most others. can you come up with a guess as to why they didn't take that plan of action instead?

[Balloon guy 158]

I agree with you entirely, obama could get away with some absurd stuff before his supporters would blink an eye. it's a ****ing shame that so many of us are blind partisans. I just don't remember ever seeing you care when bush was running the same type of budget.you seriously overestimate the number of people who know what's happening outside of the informative adverts that tell us the economy isn't going well. btw snuggies are excellent for coping with a recession.europe, china, et al are unhappy because our plan of action is going to hurt the spending power of the dollars they've got tucked away. if they want out, they can exchange their dollars for another currency quietly, especially now that it's at a high against most others. can you come up with a guess as to why they didn't take that plan of action instead?

Oh Oh OhPick Me Pick Me

[Balloon guy 158]

Ahem...The failure of Vietnamizationto win popular support... caused an ongoing erosionof confidence... in the various American...but illegal... Saigon regimes.

[Loismustdie 0]

I agree with you entirely, obama could get away with some absurd stuff before his supporters would blink an eye. it's a ****ing shame that so many of us are blind partisans. I just don't remember ever seeing you care when bush was running the same type of budget.you seriously overestimate the number of people who know what's happening outside of the informative adverts that tell us the economy isn't going well. btw snuggies are excellent for coping with a recession.europe, china, et al are unhappy because our plan of action is going to hurt the spending power of the dollars they've got tucked away. if they want out, they can exchange their dollars for another currency quietly, especially now that it's at a high against most others. can you come up with a guess as to why they didn't take that plan of action instead?

Bushs budget is on the way to being tripled. Please forgive Scott for understanding the word tripled. In other news, the new administrations fiscal policies are nowhere near the last administrations. Anyone who thinks otherwise is terrible at the maths.

[strategy 4]

Bushs budget is on the way to being tripled. Please forgive Scott for understanding the word tripled. In other news, the new administrations fiscal policies are nowhere near the last administrations. Anyone who thinks otherwise is terrible at the maths.

bush was a terrible conservative. accept it and move on.

[strategy 4]

let me be clear on this one. if obama continues these deficits, I will criticize him as much as I do bush. I think the recession is a retarded reason to spend that much money, just the same as all of the other justifications they find to increase the national debt. we have the most successful economy in the world, the most human capital, etc. and essentially zero excuse for not correcting the problem. don't blame the other party. we are ALL guilty of not holding our guys accountable.it's shameful. I don't think it would happen if we had any semblance of control over our biases.

[Sal Paradise 57]

bush was a terrible conservative. accept it and move on.

YOU'RE TERRIBLE AT YOUR FACE(this is how I will argue politics henceforth.)