Why do people post thread after thread blaming the American people?
- Thread starter WanderngFool
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WanderngFool
Active Expediter
The article I read said something like, "even when looking for dark clouds, all you find are silver linings" or something like that.
We've just entered the 6th year of a lackluster recovery. The unemployment rate is finally reaching the point where we'll start to see upward pressure on wages. There are problems, sure. But I'm confident higher wages will fix most of the problems.
If gloom and doom is what you're interested in, I am now, just like I've been for a few years now, terrified of what robotics everywhere is going to do to us. Driverless everything for starters. Some people love gloom and doom. Should we start a new thread?
WanderngFool
Active Expediter
Dave - I linked to the article because once again you were referring to inflation by talking about the "rising price of X" and that made me think of that article.
Why not refer to official inflation numbers?
Consumer Price Index, 1913- | The Federal Reserve Bank of Minneapolis
Inflation? Not yet, maybe it will start to show itself in 2015.
Why not refer to official inflation numbers?
Consumer Price Index, 1913- | The Federal Reserve Bank of Minneapolis
Inflation? Not yet, maybe it will start to show itself in 2015.
I haven't changed sides at all. It may surprise you, or scare you, or whatever, but pretty sure you've moved toward the common sense side. You've indicated as much by several comments you've made at various times. My heart has always been warm where appropriate.
I wouldn't strictly link to inflation indexes unless you know how they are calculated. Starting in 14, the calculations were changed. I am assuming you know that? Inflation at the wholesale level is considerably higher. That is why you have people being priced out of the housing market, paying considerably more for gas, food, taxes, and every utility. They currently say two percent, but that factors many other items related to business that doesn't translate to the average joe.
Just look at the stock market, and you have your answer.
I'm not going to try to argue statistics or numbers, but I would argue the facts of who did what to subdue risky subprime mortgages, and to increase low income home ownership.
Barney Frank said he tried the first, only to be blocked by Republicans, and that it was Bush who started the movement toward the latter.
The record seems to back him up, as does Mark Zandi. Yes, it's a press release, but the facts are easily confirmed.
Press Release :: Frank Seeks Antidote to Republican Amnesia| Financial Services Committee | U.S. House of Representatives
Might want to go a little further.
A Government-Mandated Housing Bubble - Forbes
Bush made an effort to put the skids on it, but was not successful with the democrats in Congress.
A link from the left leaning Boston Globe. Have to be fair.
http://www.boston.com/bostonglobe/e...ngerprints_are_all_over_the_financial_fiasco/
A Government-Mandated Housing Bubble - Forbes
Bush made an effort to put the skids on it, but was not successful with the democrats in Congress.
A link from the left leaning Boston Globe. Have to be fair.
http://www.boston.com/bostonglobe/e...ngerprints_are_all_over_the_financial_fiasco/
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WanderngFool
Active Expediter
Just look at the stock market? I don't follow. Are the fringe saying the market is up because they insist inflation is up???
Yeah I heard something about them changing how the index is calculated. Is there an index that isn't reworked from time to time, from the Dow Jones right on down?
So we don't get sidetracked, let's just look at inflation through 2013. Right wingers have been claiming high inflation since the start of this recession. But like a stopped clock that will eventually give the right time, as the economy gets back to normal our concerns about inflation will get back to normal. In other words, the Fed will have to keep an eye on it.
Well, you could argue it, but you'll lose. What subdued risky sub-prime mortgages was the financial meltdown. And it was Clinton who did the most to increase low income home ownership. It began with the ultimate feel-good legislation, the Community Reinvestment Act of 1977, which Jimmy Cater signed into law, and was a product of the 95th Congress, a Congress which had an extremely rare 60% Supermajority of Democrats in both congressional chambers. The CRE failed utterly to do what it was designed to do, which was increase bank investment in low income areas.
In 1989 an already influential Barney Frank introduced the Federal Institutions Reform, Recovery and Investments Act (FIRREA) as an addendum to the CRE, which is part dealt with the Savings and Load crisis of the 1980s, but also set the table for what was to come. The addendum legislation greatly increased the ability of advocacy groups, researchers, and other analysts to "perform more-sophisticated analyses of banks' records, letting them see directly where money was going, and thus enabling them to influence the lending policies of banks. If banks weren't investing enough in certain areas, they were threatened by advocacy groups with litigation in violation of the CRE.
The next step was in 1991 when they got the FDIC involved in actively promoting minority and women owned businesses in investments, then in 1992 legislated a certain percentage of Freddie and Fannie be devoted to affordable housing. In 1994 Frank was instrumental in removing the restrictions on interstate banking that was in the original legislation to put a check and balance on the savings and loan problems. Now the check and balance was gone. Poof. The next year, in a move that was hotly contested by nearly every economist out there, they dramatically lowered the compliance burden (and therefor the costs of complying) as part of Clinton's efforts to "deal with the problems of the inner city and distressed rural communities." Other legislative changes in 2005 shifted the percentage of investment required to low income (high risk) areas.
All of this can be overlaid with Clinton's move to get people who couldn't even afford the down payment into home ownership. There was a Clinton-era document that actually got posted by mistake to the HUD Website. “The National Homeownership Strategy: Partners in the American Dream." It detailed the strategy for, and the problems of, low income home ownership.
Here's an excerpt, which more than any section of the document, shows the seeds of disaster being planted:
Note the praise for creativity in addressing real, actual barriers to home ownership. It's reckless to promote home sales to individuals in such constrained financial predicaments. And we saw the poppin' bubble wrap results.
It was Carter to a large degree, and Clinton to an absolute degree, that pushed the liberal agenda of helping African Americans and Hispanics take part in the American Dream, whether they could afford it or not. And it was the House Financial Services Committee, led by Barney Frank, that forced Congress to bend over (backwards, if you like, but it was the American people who got the brunt) to make it happen.
No, the record doesn't seem to back him up, either. As Dave noted, look a little deeper than the surface comments. I mean, just because someone says something doesn't mean it's true, even though some people will believe whatever they're told. There are plenty of people who right now, today, believe that the Obama administration is the most transparent administration in history, but the reality is the exact opposite. Barney Frank said he tried tirelessly to end the conditions that allowed for the financial meltdown, but it was exactly the opposite, as he was the architect of the nuts and bolts of how it could occur, and as the lead Democrat in the House Financial Services Committee (2003 until his retirement, and was the chairman from 2007 to 2011) he put in place things which prevented the executive branch from being able to thwart his efforts. And as the lead Democrat in the House Financial Services Committee, he was in charge of Freddie and Fannie. Carter and Clinton wanted more money invested in poor urban areas, and wanted more people to own their own home, and Barney Frank did his utmost to make that happen. And as one of the many liberal elites in Congress, he didn't go broke in doing it, either.
WanderngFool
Active Expediter
Why did it take so long to become a problem? The introductory rates that sucked people in typically lasted for 2 years or less. How did people stay current with their mortgages all the way through the 90s and up until 2008?
I bought a house on one of those, "ARM" mortgages. It was a 5 year "ARM" which is about all that we saw when we bought our house in 2001. 3 to 5 years.
It was a GREAT move. Very low rate to start, SO, we were able to "double up" on payments and drive the principle down much faster. We watch the rates like a hawk. When they started to move up we switched over to a 15 year fixed rate, which was STILL lower than most, and came out ahead again.
People get in trouble because they do not do the work that needs to be done. It does not take much prior experience either. That was the first place we had done that on. All it took was asking a few questions, and then paying attention.
Part of the problem is that the government programs, that drove those kinds of mortgages, also helped to drive up the price of housing, much in the same way that student loans are helping to drive up the cost of education. Which is ANOTHER bubble that is soon going to burst, again caused mainly by government interference, coupled with people who don't bother to think things out, and WE are going to get stuck with the bill.
Why is it that, when people screw up, that WE have to bail them out? It's just not right. If you borrowed the money, YOU owe it, not me!
They didn't keep up with their mortgage payments, that's the problem. Or when they did they were playing a shell game, with the government moving the shells. Those that stayed current did so because the same preferential treatment that allowed them to get the loan in the first place also allowed them to become seriously behind in their payments without penalty, and to make them current without actually paying money to do so.
Because of the Clinton/HUD "creativity" in using the resources at hand, it allowed homeowners two free options that contributed substantially to the financial crisis and put it off for as long as it did. First, any homeowner could, without penalty, and as many times as they wanted, refinance a mortgage whenever interest rates fell or home prices rose to a point where there is significant equity in the home, enabling them to extract any equity that had accumulated between the original financing transaction and any subsequent refinancing. The result is so-called cash-out refinancing, in which homeowners treat their homes like savings accounts, drawing out funds to buy cars, boats, or second homes, or, to get current their past-due payments plus some mad money to boot. By the end of 2006, 86 percent of all home mortgage refinancings were cash-outs, amounting to $327 billion that year. Unfortunately, this meant that when home prices fell, there was little equity in the home behind the mortgage and frequently little reason to continue making payments on the mortgage.
The second freebie was that most of these mortgages were designated as "without recourse" mortgages. In essence, non-recourse mortgages mean that defaulting homeowners were not personally responsible for paying any difference between the value of the home and the principal amount of the mortgage obligation (or that the process for enforcing this obligation was so burdensome and time-consuming that lenders simply did not bother). The homeowner’s opportunity to walk away from a home that is no longer more valuable than the mortgage it carries exacerbates the effect of the cash-out refinancing. The homeowner who couldn't afford the home to start with, and couldn't afford to make the payments, still got to buy the home and have the payments made, because the housing bubble meant the price of homes were steadily rising and interest rates were steadily dropping. It was a win-win for someone who shouldn't have even owned a mortgage in the first place, whenever they got behind, or just wanted lunch money, they could refinance at will.
Another gem in all this was the tax laws which encouraged refinancing like crazy. Interest on consumer loans of all kinds - for cars, credit cards, whatever - is not deductible for federal tax purposes, but interest on home equity loans is deductible no matter how the funds are used. As a result, homeowners (both those who could afford the home and those who couldn't) were encouraged to take out home equity loans to pay off their credit card or auto loans or to make the purchases that would ordinarily be made with other forms of debt. Consequently, homeowners were encouraged not only to borrow against their homes’ equity in preference to other forms of borrowing, but also to extract equity from their homes for personal and even business purposes. The reduction in home equity more or less guaranteed the likelihood that defaults and foreclosures would rise rapidly just as soon as the economy began to contract. Which it did.
Every time they refinanced, the equity in the home went down. But as long as real estate prices kept going up, albeit just on paper and not real, and as long as interest rates fell or stayed static, they were good to go. But if the interest rate rose at all, or the housing market took the slightest dip, the bubble would burst, and that's exactly what happened.
If all of those loans were conventional loans (30 year, normal downpayment, normal interest rates) then it wouldn't have taken years, decades, for people to default. It would have taken 6 months.
To top it off, nothing was learned. You see the same commercials about buying houses for "no money down" as you did before it crashed. They are pushing the same "creative mortgages" to sell of the houses that were defaulted on.
Them, as I mentioned before, the same, exact thing is going to happen with student loans. Obama is going to run around, trotting out stupid kids, who borrowed a TON of money for a degree, with NO means of paying it back, who are now crying how hard life is, and stick THAT bill up our nose and tell us how we will benefit by it.
My first question would be HOW do I benefit by paying off loans that I am in no way responsible for. My SECOND question would be, if one is SO STUPID to take on substantial debt, with no viable means of repayment, what are you then doing in college? Someone THAT DUMB has NO business in college, they need to be back in grade school learning how to add one and one and come up with two.
Them, as I mentioned before, the same, exact thing is going to happen with student loans. Obama is going to run around, trotting out stupid kids, who borrowed a TON of money for a degree, with NO means of paying it back, who are now crying how hard life is, and stick THAT bill up our nose and tell us how we will benefit by it.
My first question would be HOW do I benefit by paying off loans that I am in no way responsible for. My SECOND question would be, if one is SO STUPID to take on substantial debt, with no viable means of repayment, what are you then doing in college? Someone THAT DUMB has NO business in college, they need to be back in grade school learning how to add one and one and come up with two.
To add to Turtle's post, lenders were more apt to delay foreclosure proceedings and let people remain in their houses because; they couldn't afford to maintain any more vacant properties and they were hoping for a government bailout.
WanderngFool
Active Expediter
What a one sided explanation for the banking meltdown. Turtle, you totally left out bankers bellying up to the feeding trough and getting their fill while socializing the risk. They'd write mortgages, package them and sell them to Wall Street profiteers. They didn't ask for nor check qualifications because it was more profitable that way. The New Deal idea of a bank holding a mortgage was gone. The Reagan Revolution era of deregulation and the mindset of worshiping the Gordon Gekkos of this world had taken over.
Oh well, I'm not about to obsess and invest hours and energy into compiling a counter argument. How strange. Anyone that wants to can google the subject and hear both sides of this argument. In my mind the motivation of Wall Street greed trumps the motivation of Barney Frank dogooderism but maybe I'm wrong. The only thing I might add to anyone's thinking is how fitting it is that Wall Street and Banking greed should end the era (I hope ).
Oh well, I'm not about to obsess and invest hours and energy into compiling a counter argument. How strange. Anyone that wants to can google the subject and hear both sides of this argument. In my mind the motivation of Wall Street greed trumps the motivation of Barney Frank dogooderism but maybe I'm wrong. The only thing I might add to anyone's thinking is how fitting it is that Wall Street and Banking greed should end the era (I hope
).
It's not a one-side or the other, it's simply what happened. Bankers bellying up to the feeding trough and getting their fill was made possible by what I posted above. Barney Frank allowed that Gekko Greed to flourish by allowing, even encouraging, unrestricted greed to run wild.
You aren't getting it - Wall Street greed and Barney Frank's dogooderism (Congress at large, really) are one in the same. They are in the hip pockets of each other.Oh well, I'm not about to obsess and invest hours and energy into compiling a counter argument. How strange. Anyone that wants to can google the subject and hear both sides of this argument. In my mind the motivation of Wall Street greed trumps the motivation of Barney Frank dogooderism but maybe I'm wrong. The only thing I might add to anyone's thinking is how fitting it is that Wall Street and Banking greed should end the era (I hope
How strange indeed coming from the originator of this thread.