The government's efforts to keep Fannie and Freddie afloat have a lot in common with the New Deal.
Comment: HIgh Rise Building have I-Beams every few feet to Support the Building. If you remove too many I-Beams will Collapse. When Big Business take too many Good Paying Jobs out of the USA ...... 1920 will Return. Take it to the Bank. It is Coming !!!
Comment: On HIgh Rise Buildings ........ the Building has I-Beams evey 20 feet or so. If you take out too many I-Beams the Building will Collaps. When enough Good Paying Jobs are Removed from the USA ..... our Economy (Will Collapse)
Take it to the Bank ....... It IS Coming !!!!
Comment: NotSoBig, The Gold Standard was discontinued because the politicians deemed it "inflexible", in other words, we can't "monetize" debt and spend beyond our means with this frickin' gold standard, so we want to get rid of it! And they did. And look where we are today. Secondly, ginamlaster makes a good point about the collapsing dollar and the inflation eating us alive I was hoping that Gin would have a good explanation for the 95 years of constant dollar devaluation since the creation of the Fed. Of course, the "court economists" we see on the television and read in publications like this never, ever want to talk about why a dollar is worth 4%-5% of its pre-Fed level. Nor do they wish to assign blame for the currency inflation and debauchment of the dollar.
Gin, you're still upside down on the cause of the Great Depression. 1). Currency manipulation by the Fed
2). Smoot-Hawley Tariff Act 3). Hoover & FDR increasing the marginal income tax rate into the stratosphere.
Debt is a factor - but who created the easy credit? The policies of the Fed. Before its creation, credit was a very dear commodity and was hard to get and hard to keep. "Credit-worthiness" meant something. Don't forget to include the fraud of "fractional-reserve" banking in your causation of the Great Depression. And finally, "unit" banking laws in the U-S did not allow branch banking. As any first-year economics student is taught, branch-banking allows for the diversification of risk in the lenders portfolio. The US did not allow branch banking and economic downturns in certain regional areas could cause the wholesale collapse of banks in those areas. It's instructive to note that Canada allowed branch banking and not one single bank failure was recorded in Canada during the Great Depression.
Comment: What MSM kool-aid? Dude, what caused the Great Depression of the 30's is the same thing that's causing a brand new depression right freaking now: D-E-B-T!!! The banks and lending institutions that financed the loans for this subprime housing fiasco simply saw a way to "get rich quick". By peddling adjustable-rate mortgages to people who couldn't possibly qualify for fixed-rate loans, subprime borrowers were suckered into believing that they could get into a house...usually too much house...with crappy credit and little to no money down. ARM loans were NEVER intended for families planning to stay in a home. They're business loans for investors who plan to flip the property for a profit in three to five years; investors who are financially able and willing to deal with the fluctuation in interest rates until they can sell the property for a profit.
Common sense says that borrowers that don't have the credit for a fixed-rate loan won't be able to handle an ARM for a home worth a quarter of a million bucks. Strict regulation would have made it a jailable offense to even offer an ARM to such borrowers. But with no regulation keeping them in check, lenders went ahead and scammed those people with no fear of repercussions, confident that when interest rates went up, they were going to hit mega pay dirt by doubling and even tripling mortgage payments. Instead, they crashed the system and ended up with a sh*tload of debtors who all defaulted on their loans at the same time. Regulation and strict enforcement would have prevented all of this from happening in the first place. Now for the sake of the economy, taxpayers are going to have to bail out Fannie, Freddie, Bear and the others, which sucks all the more when you realize that they got into this mess by trying to scam the American people.
This crisis has us trapped in a death spiral, and the Fed is the reason alright but not for the reasons you state. The dollar is failing so badly because in order to staunch the subprime hemorrhaging, the Fed has no choice but to hold down interest rates to prevent even more foreclosures. But the lower the interest rate, the lower the value of the dollar, which now has an actual value of only 40-50 cents. It now takes twice as many dollars to buy the same things we bought for half the price a year ago. The low interest rate is why the price of gas shot up so fast. It isn't really $4.40 a gallon. It's still $2.20, but the weak dollar is forcing us to pay twice as much for it. Raise the interest rates and the dollar improves, but then mortgage rates will shoot back up and so will the loan defaults. It's a vicious see-saw. The only solution I see is to force these lenders to convert every last one of those bogus ARMs to fixed-rate loans at the original mortgage rate. They won't profit, but they won't be stuck with a bunch of defaults. Homeowners, will get to keep their homes and we can finally raise interest rates and lower the price of gas.
Comment: The viewpoints I'm following are not special interests and do not stand to gain financially from either more or less intervention by the federal government. They are in the parlance, 'honest brokers of information". Read Murray Rothbards "What Has the Government Done to Our Money". Read Lawrence Reed or Lew Rockwell or Donald Luskin. Stop paying attention to the "court economists" of the status quo. These toadys for the "business as usual crowd" (and that includes your "golden boy" Obama) are going to lead us into an economic collapse that will make the Great Depression look like a Sunday stroll in the park. Bernanke and Paulson are frauds. They are confidence men who are pulling the greatest swindle on the American people we've seen yet.
Here's my last point: Do any of you understand what the term "fractional reserve" banking means? Simply defined it means banks must only have "in reserve" a fraction of their investors deposits. The reserve ratio has been 10% for eons. So, in reality, if there's a run on any bank in this country - the bank only has access to 10% of the investors monies - Yes, the FDIC bailed out IndyMac's "customers". But the FDIC only has $50b dollars in assets and the value of all bank assets in this country is in the trillions. What happens when the contagion of "confidence crisis" spreads across the country? As the system is structured there is no way you can get every dollar you have on deposit at your neighborhood bank. Of course, you might think Bernanke can fire up the counterfiet printing press at the Fed and print all the dollars needed to bail the depositors out, right? So what's the value of that money going to be? $20 dollars for a gallon of milk? $10. for a loaf of bread? $15 dollars for a gallon of gas? etc. etc. etc.
Folks, we are screwed - major league and it's all the fault of the political class in DC. They alone own the blame for the economic collapse that will destroy us all.
Keep believing that FDR ended the Great Depression, that printing money out of 'thin air' solves problems and that Mussolini made the trains run on time. They're all lies and the people who believe them will ultimately be living in card board boxes set atop steam grates in some metropolitan downtown.
Comment: Just to add to my last comment. The Fed is the problem. It exists solely to inflate the currency and debase the dollar. Open your eyes and look at the facts.
#1). The 2008 U-S dollar is worth 4 cents of the value of the 1913 dollar - the year the Federal Reserve was established. Prior to that - btwn 1800 and 1913 the value of the dollar remained constant. In fact, as technology improved over the course of the 19th century, the dollar continued to buy more, not less. That is not necessarily the case today.
#2). The Fed caused the Great Depression thru its mis-management of the money supply - inflating and deflating the supply by fiat and causing financial collapse.
#3). FDR caused great harm by taking us off the Gold Standard - Quick class - does anyone know why FDR did this?
Answer: Because a gold standard constricted the growth of government spending. Govt could only print in dollars what it held in reserve in gold. FDR had to get rid of the GS in order to finance his 'flim-flam' scheme - "The New Deal" - all predicated upon fiat money, unlimited taxation, spending and the incurring of massive amounts of public debt. And it DID NOT WORK. Between 1933 and 1941, FDR indebted US taxpayers to the tune of $8 billion dolars - a massive debt in that era and at the end of that time even his own treasury secretary Henry Morganthau had admitted that the massive govt spending did not solve unemployment, did not restore confidence in markets or government and did not increase the nations GDP. In other words, the "New Deal" was a typical statist, totalitarian centrally-planned economy that FAILED!!!
I don't usually venture on this site, because I know that the people who write on these forums are mostly ill-informed and ill-educated as to the causation of economic maladies besetting us. Seriously, for your own good, you need to put down your MSM kool-aid and start reading some real alternative viewpoints.
Comment: You fool! Gold Standard was discontinued, because it makes sense to let the market decide relative currency values. Money isn't "real" to begin with; it only represents added value and gives a vehicle for exchange. Inflation can happen if money is issued without real value added in the economy, that's true. But your fed-caused-the-great-depression rant is old hat.
Comment: The reason the FDR regulations haven't held is because right from the moment he died--Truman and everyone else set out to destroy that legacy of safety--with dismantling the network of regulations he build in to keep us safe. There is a way out of all of this--and, the Federatl REserve is, right now in Texas, consulting the only FDR specialist left who really knows what he is doing... No matter how much in the way of untruths the media tries to make about the FRD legacy--it is now our only chance, and some are "seeing the light"--apparently including the Federal Reserve, who are totally panicked out and consulting this one--whom a few months ago they would have told you was a "nutcase". to salnder him to the US populace--who believed it, unlike the European and Asiam populastion, who see him as a great thinker and the American citizenry as deluded.
Comment: This crash of this economy was bound to happen as every president since Reagan systematically removed each of the regulations put into place SPECIFICALLY to prevent a crash from ever happening again. This all started back in the 80's when Reagan started deregulating everything. It gained tremendous traction during the Clinton bubble years and finally culminated with the inevitable collapse of the finance industry in the Bush era when the bubble finally burst. Ronald Reagan is such a hero to the rich because he began the process of deregulation that created a ton of new millionaires and turned existing millionaires into billionaires.
It took almost 30 years to dismantle the carefully-constructed regulations that were enacted by FDR to get us out of the Depression and prevent another Great Depression from ever happening again, but they finally did it and here we are. Those regulations were the reason why our economy remained consistently strong and it's what made us the richest country on Earth. Regulation made getting rich quick a whole lot harder because speculation was rigidly controlled, but it kept the nation from experiencing the unrelenting inflation and devaluation of the dollar that's killing us now.
Nobody ever questioned the wisdom of removing the very regulations that protected us from bank failures, shady lending practices and what is essentially usury, i.e., the charging of unreasonable or relatively high rates of interest on loaned money. The next president had better take a lesson from FDR and strictly regulate those industries again. The Great Depression proved beyond any doubt that industries cannot be trusted to police themselves, so strict government oversight and accountability are an absolute must because without it, the economy will inevitably collapse under the weight of unfettered greed.
The next president also needs to realize that FDR's regulations allowed corporations to thrive but also protected the little guy from being overworked and underpaid by them. They also had to pay to take care of their employees by providing 100% health and dental insurance. It use to be that having a job meant having 100% health care for you and your family. Providing health care to employees was just one of the costs of doing business in the USA. But deregulation meant that companies no longer had to pay for full coverage, and thus the health care crisis began in earnest as working people were suddenly faced with massive medical debt they've never had to carry before. I'm telling you, if you want to know why it all went to crap, it's all tied to deregulation.
Comment: All taxpayers should have a voice in this matter.I will not vote for any legislators who subscribe to this issue!
Comment: I acknowledge the corruption that was relevant between Wall Street and Capitol Hill in the 30's and and the largess and outright corruption that has evolved between the early 80's and today....But let us be honest, everyone was cashing in; including those who are singing the blues today. At least my ancestors had the honest persuasion of a pistol to the head instead of singing the blues to Freddie Mac and Mae.
I protest. I pay my mortgage on-time even though, both my spouse and I am disabled. I paid for both disability and mortgage insurance when I was healthy. I even ( unbelieveable as it is) bought a Whole Life Policy when I was in my thirties. So, bust my chops, when I don't cry because I played it close to the vest with a fixed-rate loan and didn't re-fi, every time I felt like something new.
In the end, you get what you pay for. Boo-Hoo for those who rolled the die and lost.
Comment: Home prices are going to crash hard. They are nowhere near the bottom now. In fact, there is a historical level at which they will finally stabilize, but probably after dropping even below that level.
The level is the historical P/E Ratio for real estate. There is a even a calculator where you can determine the value of your home after the crash is finished.
http://www.howtosellyourhouse.net/value.html
Comment: All Hail James Thurber ("The Secret Life of Walter Mitty").
GOVERNMENT OF THE CHICKENS, BY THE CHICKENS, AND FOR THE FOXES CANNOT LONG ENDURE.
When no one is guarding the chicken house, the chickens are vulnerable. When the foxes are guarding the chicken house, the chickens get eaten.
This isn't about change we can believe in, it's about change that has to happen. Republicans yapping about less government is code for less government regulation. It's just another synonym for greed.
How much longer are, chickens, are we going to let the foxes call the shots?
Comment: This situation is entirely of our own making. The mortgage lenders should have been focused on servicing their mortgages, not passing them around like hot potatoes to speculators and trying to squeeze extra interest - now most of those lenders are going under along with their clients. Wall Street got just as greedy as it did in the 1980s, with similar results - we just have to hope that the rest of the fundamental stresses on the economy (due to war and to our increasing energy crisis that's NOT just going to go away like it did in the 1970s) don't tip us from recession to Depression.
Whenever a country gets away from the *real* business of making the world go round - doing actual work, and providing customer service at a level that allows customers and businesses to work together - and starts trading pieces of paper designed to say that one or another person is showing a profit, in *real* economic terms the economy is going to start tanking. Economic gains are produced from the production of real goods, real services, not figures on paper. Paper profits that aren't backed by solid real economic growth are *always* a recipe for damage to the greater economy.
Comment: you are so correct!
Comment: HAS ANYBODY BOTHERED TO CHECK WHETHER OR NOT THE SECURITY GUARDS AT FORT kNOX ARE REPUBLICANS?
Comment: you are so correct!
Comment: Your're all wrong and all wet. FDR's "New Deal" prolonged the Great Depression and made things worse. Read the history. Read Lawrence Reeds "Great Myths of the Great Depression"
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