I think Ron Paul needs a hug

[vazar-da-priest]

go ron paul!

hopefully ppl start talking about him

he really does know what hes talking about

[GennGreymane]

go ron paul!

hopefully ppl start talking about him

he really does know what hes talking about

unlike let god do it perry

[Austilias]

People always have a fetish for the "revolutionary" underdog, some win (Obama, not very much of an underdog though), some don't (Ross Perot, who wasted millions of dollars). At the end of the day, 'politics' becomes a farcical notion after a while. Obama promised "change", but anyone who has the slightest understanding of the American political system knows not only how hard it is to attain a monopoly of both houses, but also how hard such things can come back and bite those who do overstep their mark. Now Obama's consistently making concessions, and becoming the quintessential Clintonesque inhabitant of the middle ground which, while still popular/successful, breeds discontent in the more tribal thinkers/voters who put him there in the first place. Ron Paul may make promises true, but they're such very easy things to make; it's keeping them that proves to be the final hurdle that is stumbled upon.

[Dalorian]

The most maddening thing about American politics is the fanatic obsession, almost cult, of centrism. Republicans say cut and slash everything except defense, Obama and Democrats say "okey, but only by this much(which is usually a pittance below what Republicans suggest)" and the media goes "well, the obvious answer must be in the middle".

To call Democrats "left" - to say that there is ANY major left-wing force - in America is, quite frankly, laughable; the American Left died after the Great Society, today all you see are Clinton- and Obama-types who agree with Reaganomics and Thatcherism.

If you want a middle-ground, there has to be a left and a right, otherwise the middle-ground will be located far off in the right, among the libertarian nutjobs and market fundamentalists, and the left will be among the traditional right-wing, like Romney or Obama.

[GennGreymane]

new video is up

[Pert]

Nothing, which is why we need to fix the deregulation that let it happen in the first place.

Government regulation caused the mortgage crisis in the first place. It wouldn't have happened at all if Cuomo and others hadn't started interfering in an attempt to increase the number of homeowners.

[Wells]

Government regulation caused the mortgage crisis in the first place. It wouldn't have happened at all if Cuomo and others hadn't started interfering in an attempt to increase the number of homeowners.

You're saying the CRA caused the mortgage crisis? Which regulation are we talking about here?

[GennGreymane]

You're saying the CRA caused the mortgage crisis? Which regulation are we talking about here?

hes referring to the Clinton administration wanting to get more Americans in homes including those who could not afford it

[Deleted]

You're saying the CRA caused the mortgage crisis? Which regulation are we talking about here?

Fannie and Freddie played a much larger role in the mortgage crisis. Their role was significant but not big enough to single handedly cause a bubble like that.

It was mostly Federal Reserve's cheap money policy in the wake of the dotcom bubble, coupled with banksters who knew they'd be bailed out once they failed.

[Wells]

Fannie and Freddie played a much larger role in the mortgage crisis. Their role was significant but not big enough to single handedly cause a bubble like that.

It was mostly Federal Reserve's cheap money policy in the wake of the dotcom bubble, coupled with banksters who knew they'd be bailed out once they failed.

Blaming the Fed is pretty silly. The Fed didn't make banks give out bad loans. it didn't make them push predatory loans on people.

There are two things to blame the subprime mortgage crisis on, government deregulation, and shortsighted and abusive banking practices.

hell 84% of the subprime mortages were made by private banks, not FM/FM, who actually got fewer subprime mortgages as the bubble grew.

The crisis was a prime example of the dangers of rampant deregulation.

[Deleted]

Blaming the Fed is pretty silly. The Fed didn't make banks give out bad loans. it didn't make them push predatory loans on people.
There are two things to blame the subprime mortgage crisis on, government deregulation, and shortsighted and abusive banking practices.
hell 84% of the subprime mortages were made by private banks, not FM/FM, who actually got fewer subprime mortgages as the bubble grew.
The crisis was a prime example of the dangers of rampant deregulation.

I'm not gonna start arguing with you about it here, but the federal reserve set the interest rate extremely low. This creates a credit expansion. A credit expansion means there's temporarely (before loans are repaid) more money in the system. This creates a bubble.

Also, alot of the ridiculous risk taking by banks is thanks to the Federal Deposit Insurance Corporation and the fact that the banks themselves were gonna get bailed out as well.

[Wells]

I'm not gonna start arguing with you about it here, but the federal reserve set the interest rate extremely low. This creates a credit expansion. A credit expansion means there's temporarely (before loans are repaid) more money in the system. This creates a bubble.

The bubble isn't what made the crisis what it was though. Bubbles form and pop all the time. Massive bank fraud and bad lending practices are what made it this recession.

[Pert]

posted too early.

[Deleted]

The bubble isn't what made the crisis what it was though. Bubbles form and pop all the time. Massive bank fraud and bad lending practices are what made it this recession.

There is always a fundamental economic cause why bubbles form. Businesses don't usually make massive mistakes simultaneously.

Bank fraud and bad lending practices was one part of it. But that's the symptom of the causes I just presented.

[Wells]

Banks don't like giving money to people with bad/no credit.

Actually they loved doing it with variable interest rates. As soon as the bubble looked like it was going to burst they jacked the rate and foreclosed on the house.

---------- Post added 2011-08-18 at 10:31 PM ----------

There is always a fundamental economic cause why bubbles form. Businesses don't usually make massive mistakes simultaneously.

Bank fraud and bad lending practices was one part of it. But that's the symptom of the causes I just presented.

No one made banks engage in these practices. Low interest rates don't have to encourage bad lending practices in a properly regulated system.

[Pert]

Blaming the Fed is pretty silly. The Fed didn't make banks give out bad loans. it didn't make them push predatory loans on people.

There are two things to blame the subprime mortgage crisis on, government deregulation, and shortsighted and abusive banking practices.

hell 84% of the subprime mortages were made by private banks, not FM/FM, who actually got fewer subprime mortgages as the bubble grew.

The crisis was a prime example of the dangers of rampant deregulation.

Well, from the start FNMA and FHLMC are both government sponsored, so we're already divorced from the free market.

Banks don't like giving money to people with bad/no credit. The government sees this as a problem because it prevents poor people from getting the loans they need to become homeowners, so boom, FNMA/FHLMC are created for the express purpose of getting those people housing.

Every year Fannie and Freddie are supposed to buy up "affordable" mortgages, and that's exactly what they did. You could say that they should have given a harder look at subprime securities, and that HUD failed in their oversight, but what they did is exactly what they were commissioned for. By buying up those subprime-backed securities they created a market for additional subprime lending. Subprime lending is for people who ordinarily wouldn't get loans... great success, right?

In 2000 HUD raised FNMA/FHLMC's "affordable housing" goal, in 2004 HUD raised it again. In 2004 FNMA/FHLMC purchased ~44% of the subprime securities market in order to meet the mandate that 58% of their mortgages serve low-income individuals.

[Wells]

To further elaborate, deregulation allowed banks to sell of their assets as MBSs, which led to them not giving a shit about who they lent to.

Over all the rate of default on FM/FM loans was substantially lower than in the private industry because they were forbidden from engaging in these practices.

So yeah the fed setting interet rates low encouraged lending, but deregulation allowed for fraudulent lending. Without the deregulation we would have seen a minor bubble and a really good time to buy a house.

[Deleted]

No one made banks engage in these practices. Low interest rates don't have to encourage bad lending practices in a properly regulated system.

They sort of were (yet obviously all frauds should be prosecuted and people jailed, which isn't happening). Consider the effect of the FDIC, which insures peoples bank deposits up to a certain value. This means the FDIC will refund any bank deposits not repaid to the depositors if a Bank goes bankrupt.

Normally there would be demand on different sorts of banks. Safe and Risky. The safe one's would have larger reserves and gamble less, but give a lower interest rate. The riskier one's would have smaller reserves and gamble more, but pay higher interest. People who want to make sure they don't lose their money thanks to ruthless gambling would perfer the safer banks at lower interests.

However as Bank deposit safety is no longer an issue thanks to the FDIC, the safer banks have no competition advantage over the risky banks. Instead they're exactly as safe for the customer, except the "safer" banks offer a lower interest rate. People want higher interest rates to gain more of their savings. Due to the competetive nature of the market, all banks are forced to become riskier and riskier. This sort of excess is the result.

[Wells]

Due to the competetive nature of the market, all banks are forced to become riskier and riskier. This sort of excess is the result.

We used to have regulation to prevent this. It worked fantastically.

But I'm mystified by the worldview that holds the FDIC as a bad thing.

[Deleted]

We used to have regulation to prevent this. It worked fantastically.
But I'm mystified by the worldview that holds the FDIC as a bad thing.

Because the FDIC is the cause of this ridiculous risk taking. Or atleast one of the causes.

Putting on aditional regulation just causes more similar problems. Always best to solve the problem at the root.