71–80 of 83 posts
[1] http://www3.sympatico.ca/taylormcgreal/thecomingcrash.html
Earlier quoted context omitted.
Everything you say is accurate except the insinuation that Democrats are mostly at fault. George W. Bush was in office for the worst of it, and he spent his political capital trying to convince people that a war was necessary. He spent 99% of his political capital on war and at best 1% on everything else. He was far from powerless, having control of both houses of congress. The fact is he was perfectly fine with the…
> Everything you say is accurate except the insinuation that Democrats are mostly at fault. George W. Bush was in office for the worst of it In this matter, Bush's sins are sins of omission - as you point out, he didn't do anything. Dems did something, but what they did was wrong. For example, they actively protected Fannie and Freddie. Those are sins of comission. Note that Bush didn't change the regulatory structur…
That we were in a period of historically exceptional housing price growth was obvious to everyone at the time. I heard many people claiming to be the next Warren Buffet b/c their house had appreciated 20% in the past year.
The question we need to ask is, why were there initial calls to attend to the GSEs in 1999, 2000, 2001 but none after? I'd argue that it's because a) the extent of the problem was realized and those in power figured they'd let another president deal with it, b) those in power wanted to focus on their own agenda which didn't involve cleaning up the GSEs, or c) both.
I think this is actually an argument for more accessible markets. Retail investing was not offering vehicles to the average investor who wanted to invest believing that house prices would fall. I wondered to many professional and non-professional investors how t invest against the housing market to no avail. If people had understood how to "bet" against house prices then I am confident the bubble would have deflated…
I like to say that if Greenspan had replaced his famous "irrational exuberance" comment with one citing "incredible short selling opportunities for insightful investors" things would have turned out much better.
Earlier quoted context omitted.
> Everything you say is accurate except the insinuation that Democrats are mostly at fault. George W. Bush was in office for the worst of it In this matter, Bush's sins are sins of omission - as you point out, he didn't do anything. Dems did something, but what they did was wrong. For example, they actively protected Fannie and Freddie. Those are sins of comission. Note that Bush didn't change the regulatory structur…
There is plenty of blame to go around, but one of the biggest mistakes leading up to the financial crisis was significantly lowering the amount of cash reserves the investment banks needed to keep on hand. That happened on Bush's watch with Republicans in charge of every branch of government. And the revoking of Glass-Steagall under Clinton? That was introduced by Republicans in both the House and Senate, with the Se…
If the recent crisis had been a bit smaller, existing reserve levels would have been fine.
If the crisis had been a bit bigger, then it's not certain whether even the previous reserve requirements would have been sufficient.
The only way you get 100% security is to have a 100% reserve requirement. Anything less is gambling.
So if you critique the lowering of reserve rates you are obligated to state what sort of odds you think are more reasonable.
Earlier quoted context omitted.
> Everything you say is accurate except the insinuation that Democrats are mostly at fault. George W. Bush was in office for the worst of it In this matter, Bush's sins are sins of omission - as you point out, he didn't do anything. Dems did something, but what they did was wrong. For example, they actively protected Fannie and Freddie. Those are sins of comission. Note that Bush didn't change the regulatory structur…
There is plenty of blame to go around, but one of the biggest mistakes leading up to the financial crisis was significantly lowering the amount of cash reserves the investment banks needed to keep on hand. That happened on Bush's watch with Republicans in charge of every branch of government. And the revoking of Glass-Steagall under Clinton? That was introduced by Republicans in both the House and Senate, with the Se…
Irrelevant because it didn't have any effect on the crisis.
In fact, it allowed some transactions that had some hope of slowing things down.
Note that the non-regulated institutions did better, as did the non-regulated arms of regulated institutions.
AIG was regulated up the wazoo.
Earlier quoted context omitted.
> Everything you say is accurate except the insinuation that Democrats are mostly at fault. George W. Bush was in office for the worst of it In this matter, Bush's sins are sins of omission - as you point out, he didn't do anything. Dems did something, but what they did was wrong. For example, they actively protected Fannie and Freddie. Those are sins of comission. Note that Bush didn't change the regulatory structur…
It was in Bush's clear interest make the economy appear to be strong in spite of the war and the resulting extremely high gas prices. The only way he could do this was by creating a bunch of paper wealth for average Americans via a housing bubble. That we were in a period of historically exceptional housing price growth was obvious to everyone at the time. I heard many people claiming to be the next Warren Buffet b/c…
Yet he did nothing, except that he did (see below), and what he did was counter to the above claim.
> The question we need to ask is, why were there initial calls to attend to the GSEs in 1999, 2000, 2001 but none after? I'd argue that it's because a) the extent of the problem was realized and those in power figured they'd let another president deal with it, b) those in power wanted to focus on their own agenda which didn't involve cleaning up the GSEs, or c) both.
You're forgetting Bush's bid in 2003 and McCain's bid in 2005. (The 2005 bill was actually considered in 2006.) So much for the "none after" theory. (Google "2005 mccain fannie freddie")
The evidence suggests that neither of the above theories was a major factor, that the driving factor was that every effort to deal with GSEs showed that it was an unwinnable fight. The populists wanted folks to get mortgages even if they couldn't afford them.
FWIW, during their brief tenure in the senate, Senators Obama and Clinton got more money from Fannie and Freddie than the chairmen of the relevant committees. In fact, their totals (over their entire tenure) were approaching the totals of those chairmen, even though the chairmen had been getting such donations for decades longer.
A couple years back, I remember reading an article that argued that housing was way overpriced because the rents were only about half the value of the house. They should be in line with each other.
A bit early, but still correct. I'm not sure the final chapter has been written, even as the DOW bumps up near 11,000.
Earlier quoted context omitted.
It was in Bush's clear interest make the economy appear to be strong in spite of the war and the resulting extremely high gas prices. The only way he could do this was by creating a bunch of paper wealth for average Americans via a housing bubble. That we were in a period of historically exceptional housing price growth was obvious to everyone at the time. I heard many people claiming to be the next Warren Buffet b/c…
> It was in Bush's clear interest make the economy appear to be strong in spite of the war and the resulting extremely high gas prices. Yet he did nothing, except that he did (see below), and what he did was counter to the above claim. > The question we need to ask is, why were there initial calls to attend to the GSEs in 1999, 2000, 2001 but none after? I'd argue that it's because a) the extent of the problem was re…
You can try to argue that Bush -- the guy who had control of both houses of congress and was able to sell an unpopular war -- was politically powerless do do anything, but that's just not persuasive. He decided not to make it a major issue... and he benefited tremendously from that decision... America felt rich while we waged a very expensive war and paid $5 per gallon for gas.
To use an analogy, maybe it was a Democrat who lit the cigarette and fell asleep, but it was Bush who saw the smoke, mentioned that a fire might start and then completely ignored it until it became a blazing inferno.
(I am not a member of either party so I am not intending to absolve Democrats of their share of the blame... but in this case I think most of it rests firmly on Bush's shoulders).
By the way, this was right before Mankiw got fired:
http://www.marketwatch.com/story/bush-adviser-warns-of-fanni...
Earlier quoted context omitted.
There is plenty of blame to go around, but one of the biggest mistakes leading up to the financial crisis was significantly lowering the amount of cash reserves the investment banks needed to keep on hand. That happened on Bush's watch with Republicans in charge of every branch of government. And the revoking of Glass-Steagall under Clinton? That was introduced by Republicans in both the House and Senate, with the Se…
> And the revoking of Glass-Steagall under Clinton? Irrelevant because it didn't have any effect on the crisis. In fact, it allowed some transactions that had some hope of slowing things down. Note that the non-regulated institutions did better, as did the non-regulated arms of regulated institutions. AIG was regulated up the wazoo.
Earlier quoted context omitted.
> It was in Bush's clear interest make the economy appear to be strong in spite of the war and the resulting extremely high gas prices. Yet he did nothing, except that he did (see below), and what he did was counter to the above claim. > The question we need to ask is, why were there initial calls to attend to the GSEs in 1999, 2000, 2001 but none after? I'd argue that it's because a) the extent of the problem was re…
I don't give campaign promises much weight in this discussion. You are correct that both McCain and Bush paid lip service to the idea, but Bush, the guy who could do something about it, didn't do anything. You can try to argue that Bush -- the guy who had control of both houses of congress and was able to sell an unpopular war -- was politically powerless do do anything, but that's just not persuasive. He decided not…
Huh? 03 wasn't campaign season. And Mccain wasn't running for re-election every time he went after Fannie and Freddie.
I'm not claiming that Repubs, notably Bush and McCain, did a lot - I'm pointing out that they did do what you claimed that they didn't do. And, that they weren't pushing the other way, as Dems were.
As I've written before - manslaughter vs murder.
> You can try to argue that Bush -- the guy who had control of both houses of congress and was able to sell an unpopular war -- was politically powerless do do anything, but that's just not persuasive.
I'm not claiming that he was powerless. I'm claiming that he didn't care that much.
However, there's a huge difference between that and throwing gas on the fire.
> To use an analogy, maybe it was a Democrat who lit the cigarette and fell asleep
Except that that's not what happened. Dems insisted on pouring gas on the fire and fought anyone who tried to intervene.
Bush didn't fight back much. That's wrong, but it's not nearly as wrong as actively pushing bad policy.
> He decided not to make it a major issue
true
> and he benefited tremendously from that decision
false.
He didn't take a hit for trying to deal with it, but that's not the same as benefitting. And, Dems did benefit from it.