The Monster That Ate Wall Street

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  • Posted By: sboss1960 @ 09/28/2008 4:02:02 PM

    Robber Barons and no oversight. John McCain says that one of his biggest heroes is Theodore Roosevelt, the original Republic "maverick". If John is really true to the legacy of Theodore Roosevelt he needs to go after and cleanup this financial mess like Roosevelt went after the 'fat cats" of his day. Roosevelt ushered in the Progressive Era, a time in US history that in reaction to the business excesses of that day passed a number of substantive laws and REGULATIONS still on the books in one form or another. The Pure Food and Drug Law passed during Roosevelt's tenure come to mind. McCain (and the Republicans) like to evoke the name and memory of Theodore Roosevelt when it is convenient. Too often however they fail to mention that Roosevelt was someone who believed in laws and regulations and "walked the talk". Roosevelt broke with his own party who elected Howard Taft following Roosevelt. He felt that Taft was not aggressive enough following up on the work that he had begun. Roosevelt ran as a Republican against standing President Taft in the 1912 election and then broke with the Republican Party after failing to clinch the Republican nomination. He left the Republican Party, formed the "Bull Moose Party" and attempted to run against Taft as a third-party candidate. This split caused the election to be thrown to Woodrow Wilson, a Democrat. The Taft ideological wing of the Republican Party then focused on many of the Republican "values" we see to this day. The party in the 1920s produced such luminaries as the deregulatory: Harding, Coolidge and Hoover. The "hands off" approach to business helped to setup the economic meltdown of their day, the Great Depression. The Republican Party was in my mind, at its best when Theodore Roosevelt was at the helm. He had some great and innovative ideas for his day but at the same time was not a Democrat. Sadly for the Republicans, his work was not carried on and the party again became beholden to business and the rest is history. John, do not say that one of your greatest heroes is Theodore Roosevelt without realizing what he stood truly stood for. Roosevelt was not a maverick in words alone!!! After spending most of your career deregulating laws designed to prevent meltdowns, you do not even come close to holding a candle for Theodore Roosevelt.

    • Posted By: Nowforthetruth @ 09/28/2008 4:06:32 PM

      Here's the lead of a New York Times story on Sept. 11, 2003: "The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago." [see link below]

      McCain said in co-sponsoring the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, "If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole."

      What was Barney Frank and fellow Democrats saying at the time of these attempted reforms? According to reports, Representative Barney Frank(D-MA) claimed of the thrifts "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." Representative Mel Watt (D-NC) added "I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing." [ See Community Reinvestment Act, second link below w/ history]

      The first link below contains a purported list of the top 25 in Congress who got contributions from the folks at Fannie and Freddie. Obama is listed second, after Dodd, even though Obama is just a junior Senator. Obama is followed next by Kerry and then Clinton. The last link describes how some in Congress tried to use the original bailout bill to funnel money to groups like ACORN. See:

      http://www.investors.com/editorial/IBDArticles.asp?artsec=16&artnum=1&issue=20080918

      http://en.wikipedia.org/wiki/Community_Reinvestment_Act

      http://article.nationalreview.com/print/?q=M2QwNDhkZTg2OGYzZjkzM2E2NDEwM2U5OGVkNTc0YzU=

      http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63

      http://online.wsj.com/article/SB122247015469280723.html?mod=googlenews_wsj

      • Posted By: integrityisscarceatnewsweek @ 09/28/2008 5:02:27 PM

        Thank God for "Nowforthetruth". I was stunned by the lack of integrity of the Newsweek "journalist's" report. He is clearly a surrogate for Obama as no fair-minded person could write such a biased and unbalanced article. And reading all these comments of profoundly ignorant and twisted people made me shutter to think that these people could actually vote. Obama is warmed-over Jimmy Carter with a Lyndon B. Johnson twist. If you are old enough to remember those administrations, prepare yourselves for another losing war on poverty (complete with much higher taxes) and serious abuse from radical Islamic extremists (while Obama "talks" to them) should this blessed nation have the misfortune of an Obama presidency.

        • Posted By: lilyred @ 09/28/2008 6:42:38 PM

          Newsweek has long history of publishing liberal mumbo jumbo. No surprise here.

          • Posted By: Bobbles @ 09/28/2008 7:02:59 PM

            Could not agree more, Newsweek is rapidly becoming so Liberal and left wing, it not worth buying it any more, look at their circulation figures.

  • Posted By: haynessemperfi @ 09/28/2008 7:00:10 PM

    Greed Without Accountability

    Economic Domino Theory

    By RALPH NADER

    The worst top management of giant corporations in American history is also by far the most hugely paid. That contradiction applies as well to the Boards of Directors of these global companies.

    Consider these illustrations:

    The bosses of General Motors (GM) have presided over the worst decline of GM shares in the last fifty years, the lowering of GM bonds to junk status, the largest money losses and layoffs of tens of thousands of workers. Yet these top executives are still in place and still receiving much more pay than their successful counterparts at Toyota.

    GM???s stock valuation is under $7 billion dollars, while Toyota is valued at over $160 billion. Toyota, having passed GM in worldwide sales, is about to catch up with and pass GM in sales inside the United States itself!

    GM???s executives stayed with their gas guzzling SUVs way beyond the warning signs. Their vehicles were uninspiring and technologically stagnant in various ways. They were completely unprepared for Toyota???s hybrid cars and for the upward spiral in gasoline prices. They???re cashing their lucrative monthly checks with the regular votes of confidence by their hand-picked Board of Directors.

    About the same appraisal can be made of Ford Motor Co., which at least brought in new management to try to do something about that once famous company???s sinking status.

    Then there are the financial companies. Top management on Wall Street has been beyond incompetent. Wild risk taking camouflaged for years by multi-tiered, complex, abstract financial instruments (generally called collateralized debt obligations) kept the joy ride going and going until the massive financial hot air balloon started plummeting. Finally told to leave their high posts, the CEOs of Merrill-Lynch and Citigroup took away tens of millions of severance pay while Wall Street turned into Layoff Street.

    The banks, investment banks and brokerage firms have tanked to levels not seen since the 1929-30 collapse of the stock market. Citigroup, once valued at over $50 per share is now under $17 a share.

    Washington Mutual ??? the nation???s largest savings bank chain was over $40 a share in 2007. Its reckless speculative binge has driven it down under $5 a share. Yet its CEO Kerry Killinger remains in charge, with the continuing support of his rubberstamp Board of Directors. A recent $8 billion infusion of private capital gave a sweetheart deal to these new investors at the excessive expense of the shareholders.

    Countrywide, the infamous giant mortgage lender (subprime mortgages) is about to be taken over by Bank of America. Its CEO is taking away a reduced but still very generous compensation deal.


    www.votenader.org

  • Posted By: tamra30 @ 09/28/2008 4:40:04 PM

    My Friends, this is the light of truth revealed by economic
    author Pat Choate. Now let???s look at the Wall St.
    bailout and see how prophetic Choate is.
    WHO CAUSED THE CRASH?
    2006???Greg Farrell, USA Today, wrote, ???It???s a Wall
    St. bonus bonanza. Wall St. firms are expected to pay
    out a record $23.9 billion in bonuses this year.???
    2006: $23.9 billion; 2005: $20.5 billion; 2004: $18.6
    billion; 2003: 15.8 billion; 2002: $19.8 billion;
    2001: $13.0 billion; 2000: $19.5 billion; 1999: $13.5
    billion: 1998: $9.1 billion; 1997: $11.2 billion.
    Total: $144 billion in bonuses alone!
    In 2006, four of the top five brokerage houses have
    posted record earnings, paced by Goldman Sachs,
    where income jumped 68% over 2005. Morgan Stanley
    announced a 51% rise in earnings. Bear Stearns and
    Lehman Brothers also set records for revenue and
    earnings. Goldman???s CEO Lloyd Blankenfein, received
    $53.4 million in compensation, the largest ever
    granted to a Wall St. CEO.
    Joining Blankenfein in the bonus stratosphere is
    Morgan Stanley CEO John Mack who received $40.2
    million. Lehman CEO Richard Fuld received $10.9
    million and a ten year stock payout worth $186 million.
    to read more & how obama fyts in go to
    http://www.insightusa.us/FayesFacts/FFsept24-08

    • Posted By: Bobbles @ 09/28/2008 6:59:46 PM

      Yes we know that Wall Street etc are all crooks, but, the USA was founded on crooks and users, I am minded of the Kennedys who were nothing but a bunch of crooks in disguise

  • Posted By: Nar27 @ 09/28/2008 6:57:15 PM

    Tactics of these "want freedom for business and the heck with freedoms and security for the citizens" The tactics are always but always blame the victim, you know the guy on the bottom....not the big guys that came up with the plans in Florida to become instant rich and knowingly that the govt. would not prosecute. You know,do whatever you wish without any ethics or regulations and when it hits,blame it on the average individual for spending too much. Never is the fault of the powerful, even though they set the rules and our govt. for the people and of the people goes along with them.

    • Posted By: pearsoncrz @ 09/28/2008 6:59:06 PM

      In 2005, for the first time in history, a serious Fannie and Freddie reform bill, S. 190, was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets. If that bill had become law, then the world today would be different. But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

      http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0



      In support of S 190, also known as the Federal Housing Enterprise Regulatory Reform Act of 2005, John McCain said: "For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac--known as Government-sponsored entities or GSEs--and the sheer magnitude of these companies and the role they play in the housing market. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay."

      http://www.govtrack.us/congress/record.xpd?id=109-s20060525-16

      Federal Housing Enterprise Regulatory Reform Act of 2005 would have Amended the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to establish: (1) in lieu of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development (HUD), an independent Federal Housing Enterprise Regulatory Agency which shall have authority over the Federal Home Loan Bank Finance Corporation, the Federal Home Loan Banks, the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac); and (2) the Federal Housing Enterprise Board.
      Most importantly with regard to the CDS situation, S. 190 set forth operating, administrative, and regulatory provisions respecting: (1) assessment authority; (2) authority to limit nonmission-related assets; (3) minimum and critical capital levels; (4) risk-based capital test; (5) capital classifications and undercapitalized enterprises; (6) enforcement actions and penalties; (7) golden parachutes; and (8) reporting. Adoption of these regulatory provisions would have undoubtably affected the way CDSs were dealt with in "private" enterprises.
      The bill would have also amended the Federal Home Loan Bank Act to establish the Federal Home Loan Bank Finance Corporation., and transfered the functions of the Office of Finance of the Federal Home Loan Banks to such Corporation. If this had been in place three years ago, this whole situation might have been averted.

      http://www.govtrack.us/congress/bill.xpd?bill=s109-190&tab=summary

  • Posted By: RO in Reno @ 09/28/2008 6:58:28 PM

    Interesting article, it's amazing JP Morgan was the initiator so to speak and now is one of the survivors.

  • Posted By: HankC @ 09/28/2008 6:42:52 PM

    I believe the repeal of the Glass-Paulson Act is the root cause of this issue. This act essentially controlled this this type of problem. This type of mess was around during the Great Depression. The Act was repealed in 1999 during the Clinton Administration. It is funny to see Barney Frank involved in the current mess. He was
    was part of the repeal process. Money Changers and Politicians you just can't trust them.

    • Posted By: pearsoncrz @ 09/28/2008 6:57:46 PM

      It wasn't because banks were allowed to sell investment products, but because unregulated financial operations who were not "banks" were not subject to banking regulations.

      Banks are required to maintain minimum capital levels and classify their assets in a way that investment businesses are not. It is the lack of any real minimum capital guidelines that allowed the CDSs to get misused and become too large a portion of the investment companies' assets, so that when these lost their liquidity, even if supported by relatively secure assets like land and student loans, the institutions which had invested heavily in them suddenly were unable to meet their own cash obligations.

      There is a huge difference between an FDIC insured bank and an investment company. Even if both were able to market investment products, banks were limited in the ways they could invest in these products themselves.

    • Posted By: pearsoncrz @ 09/28/2008 6:47:05 PM

      In 2005, for the first time in history, a serious Fannie and Freddie reform bill, S. 190, was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets. If that bill had become law, then the world today would be different. But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

      http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0



      In support of S 190, also known as the Federal Housing Enterprise Regulatory Reform Act of 2005, John McCain said: "For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac--known as Government-sponsored entities or GSEs--and the sheer magnitude of these companies and the role they play in the housing market. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay."

      http://www.govtrack.us/congress/record.xpd?id=109-s20060525-16

      Federal Housing Enterprise Regulatory Reform Act of 2005 would have Amended the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to establish: (1) in lieu of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development (HUD), an independent Federal Housing Enterprise Regulatory Agency which shall have authority over the Federal Home Loan Bank Finance Corporation, the Federal Home Loan Banks, the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac); and (2) the Federal Housing Enterprise Board.
      Most importantly with regard to the CDS situation, S. 190 set forth operating, administrative, and regulatory provisions respecting: (1) assessment authority; (2) authority to limit nonmission-related assets; (3) minimum and critical capital levels; (4) risk-based capital test; (5) capital classifications and undercapitalized enterprises; (6) enforcement actions and penalties; (7) golden parachutes; and (8) reporting. Adoption of these regulatory provisions would have undoubtably affected the way CDSs were dealt with in "private" enterprises.
      The bill would have also amended the Federal Home Loan Bank Act to establish the Federal Home Loan Bank Finance Corporation., and transfered the functions of the Office of Finance of the Federal Home Loan Banks to such Corporation. If this had been in place three years ago, this whole situation might have been averted.

      http://www.govtrack.us/congress/bill.xpd?bill=s109-190&tab=summary

  • Posted By: M. WHITE BEAR @ 09/28/2008 6:57:16 PM

    A very informative article, but I still have 3 big questions.
    Is there any mechanism being implemented to stop this from happening again ?
    Who are the bad guys, are there any, or is it just a bad plan gone wrong ?
    What is the next segment of the economy to collapse ?

  • Posted By: stellarslayer @ 09/28/2008 5:02:58 PM

    Is there any self ethics regulation within these markets and those who bed with them?

    • Posted By: Bobbles @ 09/28/2008 6:57:02 PM

      Don't mention ethics unless you want to mention Dodd and the other Democrats including Obama who were in bed with this crooked group.

  • Posted By: bmaddigan @ 09/28/2008 6:56:33 PM

    God is NOT happy...

    WOE To them, ---->>> Wall St.

    The sins (PRIDE & GREED) of the fathers,

    Visited Upon the children (Us)

    Coupled with a Lot

    of 'SELF' Exalting & DECEPTIVE practices

    = our Present financial, RED/Black HOLE...

  • Posted By: bmaddigan @ 09/28/2008 6:55:19 PM

    God is NOT happy...

    WOE To them, ---->>> Wall St.

    The sins (PRIDE & GREED) of the fathers,

    Visited Upon the children (Us)

    Coupled with a Lot

    of 'SELF' Exalting & DECEPTIVE practices

    = our Present financial, RED/Black HOLE...

  • Posted By: hulahula96789 @ 09/28/2008 6:55:07 PM

    We need to oust every politician that has been in office more than 12 years! I bet that would eliminate at least 2/3rds of them. Our government is corupt and we need to get NEW BLOOD and representatives who serve This United States of America instead of their own power, power and perks. Wake up and VOTE!

  • Posted By: bkghd @ 09/28/2008 5:10:20 PM

    To those (tcnw) who would blame the homeowners/borrowers in lower income neighborhoods, what else were they to do as they watched the American Dream fly past their tenement doorsteps in the form of out of control and out of sight real estate prices? When a window of opportunity came along in the form of low rates and little risk, they had little choice but to jump on the bandwagon.
    "Fannie Mae Approval" used to mean something. But once the qualifications and standards loosened, the bubble got pushed beyond the bursting point. Remember 28-36? Qualified borrowers needed a PITI to Gross Income Ratio of 28%, with 36% including car and credit card payments and such. Suddenly loans were being written with 70% PITI to income ratios. Lower qualifying standards meant that borrowers could afford more, increasing the money supply, hence increasing demand, and sending housing prices soaring. Traditional economics 101 classes teach that lowering of interest rates staves off inflation. But if a developer is having trouble attracting buyers to his subdivision, and one day rates drop and the next day he finds buyers lined up on his doorstep, he will raise his prices. His competition will jump in and break ground. Building supply and appliance prices also rise with the demand at the lumber yard, the hardware store, Sears, and Home Depot. As home values rise, home improvement contractors, benefitting from equity lines, raise their prices because they have more work than they can handle. This is great on the one hand, expansion of the economy, but it is also called inflation. The textbooks need to be be re-written. Finally, couple this with reckless adjustable rates with little or no money down, and you have a recipe for disaster where the writing was on the wall years ago. What drove it all was a thirst for profits today, as if today is in a vacuum, and to hell with what may come tomorrow. Everyone associated with the lending industry, from the mortgage broker to the CEOs of FNMA, AIG, Countrywide, and Bear Stearns, all are essentially paid on commission. The question is, where were the regulators, and whose pockets were they in? Wait! There's still more: One way that the FED controls credit is by adjusting the percentage of cash a bank must have on hand versus its loan portfolio. Historically this has been around 16 - 20%. Increasing the percentage, from say 17.3 to 17.5, tightens credit by forcing the banks to discourage lending through raising rates in order to balance to the new requirement. This is part of the mechanics of what happens when the FED raises or lowers rates when they meet every 6 weeks. They can play with that cash ratio requirement. But recently the investment banks have only about 3.3 cents cash on hand for every dollar in their loan portfolios! Where was the SEC, where was the FED, where were the Fannie/Freddie regulators?

    • Posted By: klebrun @ 09/28/2008 6:17:30 PM

      You hit that nail squarely on the head.

      • Posted By: Bobbles @ 09/28/2008 6:54:26 PM

        The regulators were in the pockets of the Democrats, or was it the other way around, who exactly gave money to who?

  • Posted By: hulahula96789 @ 09/28/2008 6:54:23 PM

    Ok, so everyone making your comments: GET OUT AND VOTE THEM OUT!! What's done is in the past. Let's start working for a better future government!

  • Posted By: bdulu @ 09/28/2008 6:29:28 PM

    Necessary and relevant to go after the fat cats, but do not dismiss that this was the result of government deregulation intended to impose a social engineering if you will. The Clinton/Ruben plan to deregulate was motivated by what essentially amounted to an entitlement. Loans there were made available if you were a woman, belonged to a particular group (including income standard). The fat cats capitalized on this opportunity and abused it with impunity, but perhaps we need to sit back and analyze it as another failed social paradigm being forced in concert with unscrupulous greed.

    • Posted By: Bobbles @ 09/28/2008 6:50:34 PM

      We all know what to blame, failed social engineering and socialist policies from Carter and Clinton.

  • Posted By: Newslessiness @ 09/28/2008 5:37:12 PM

    To write a story of this nature without mentioning who is responsible for the federal legislation freeing the banks from any regulatory oversight makes a mockery of the notion that this article really explains how Wall Street became the rigged slot machine that is eating, in one bite, $700B. To not explain how there was no regulation of any minimal capital requirements for the insurers, many of whom were related parties freed from reporting by the affiliated mumbo jumbo of the Banks' captive AICPA industry merely compounds the error. The short answer, which Newsweek seems to want to ignore, is that the credit default swaps were never a good risk - they were a contrived accounting device that let one generation of elite Bank executives to make a huge windfall and exit the scene before the risk hit home. Stop being such pansies. It the Phil and Wendy Grahams of the world that need to be put in prison. That would at least address some small measure of the damage they did with respect to the mortgage crisis and Enron.

    • Posted By: pearsoncrz @ 09/28/2008 6:48:38 PM

      In 2005, for the first time in history, a serious Fannie and Freddie reform bill, S. 190, was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets. If that bill had become law, then the world today would be different. But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

      http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0



      In support of S 190, also known as the Federal Housing Enterprise Regulatory Reform Act of 2005, John McCain said: "For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac--known as Government-sponsored entities or GSEs--and the sheer magnitude of these companies and the role they play in the housing market. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay."

      http://www.govtrack.us/congress/record.xpd?id=109-s20060525-16

      Federal Housing Enterprise Regulatory Reform Act of 2005 would have Amended the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to establish: (1) in lieu of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development (HUD), an independent Federal Housing Enterprise Regulatory Agency which shall have authority over the Federal Home Loan Bank Finance Corporation, the Federal Home Loan Banks, the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac); and (2) the Federal Housing Enterprise Board.
      Most importantly with regard to the CDS situation, S. 190 set forth operating, administrative, and regulatory provisions respecting: (1) assessment authority; (2) authority to limit nonmission-related assets; (3) minimum and critical capital levels; (4) risk-based capital test; (5) capital classifications and undercapitalized enterprises; (6) enforcement actions and penalties; (7) golden parachutes; and (8) reporting. Adoption of these regulatory provisions would have undoubtably affected the way CDSs were dealt with in "private" enterprises.
      The bill would have also amended the Federal Home Loan Bank Act to establish the Federal Home Loan Bank Finance Corporation., and transfered the functions of the Office of Finance of the Federal Home Loan Banks to such Corporation. If this had been in place three years ago, this whole situation might have been averted.

      http://www.govtrack.us/congress/bill.xpd?bill=s109-190&tab=summary

  • Posted By: hulahula96789 @ 09/28/2008 6:48:25 PM

    We need to oust every politician that has been in office more than 12 years! I bet that would eliminate at least 2/3rds of them. Our government is corupt and we need to get NEW BLOOD and representatives who serve This United States of America instead of their own power, power and perks. Wake up and VOTE!

  • Posted By: sweggen @ 09/28/2008 4:56:37 PM

    This was good article, but misses the root cause...please watch this video
    Burning Down The House: What Caused Our Economic Crisis?

    http://www.youtube.com/watch?v=H5tZc8oH--o

    • Posted By: Bobbles @ 09/28/2008 6:47:10 PM

      Yes everyone should watch this video, the truth hurts.

    • Posted By: responsible @ 09/28/2008 5:09:32 PM

      Give me a break. You've somehow missed the whole point of the Newsweek article. The housing mess by itself could not have caused the mess we're in withought the multiplyer of the CDS being in place.

  • Posted By: bighappy @ 09/28/2008 6:46:56 PM

    I am not a financial wizard or politician, I am an engineer. If used to think for years that if price is not affordable or inflated ??? I don???t buy whatever they promice, if company is unprofitable ??? it is bad even its stock is sky-hi, if we sell less than buy ??? it is bad, if Government tolerates several-time contract overruns (typical case with military and even non-military Government contractors) ??? it is wrong, if we forbid modern technology in Goverments offices or in unionized factories for the sake of poor people ??? it is wrong and very bad in the long run, if Government tries to keep unprofitable jobs in US instead of allowing to outsource them ??? it is bad, in we invite potential and real terrorists and protect them for the human rights sake ??? it is wrong, if Government and/or Congress prevent oil drilling inside the USA and instead spend hundreads of billions dollars every year buying it (therefore paying good part to terrorists) - it is bad, that all smart banks schemes or Government regulations will not help against greed or foolishness on low level, and so on. So many times I heard from politicians and economists that one of those bad things is good and hoped that I was wrong ??? never happened. Now I think that years of relative prosperity and super-power pride made american people greedy and foolish, that they elected too many idiots and hypocrits in Congress (from both parties) and about to elect more ??? I hope this time I am wrong.

  • Posted By: air35 @ 09/28/2008 6:38:31 PM

    you forgoet to mention the policies that got us into this mess. the real culprit.
    http://www.youtube.com/watch?v=H5tZc8oH--o

  • Posted By: jon32 @ 09/28/2008 6:37:30 PM

    It all comes down to one word "GREED". Funny the CEO's of these institutions are walking away millionaires. Something definitely stinks.

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