Did deregulation really cause the crisis?
Are the Democrats getting away with a Big Lie?
The suggestion that deregulation "caused the crisis" is convenient for Democrats in the domestic context and for those who dislike freedom and capitalism worldwide. But is it true?
Simon Cowell is not the only British import to the US who has made a career putting the Yanks right. This fellow - full disclosure, he is a friend of mine - does it as well.
An earlier piece in the UK sets out the same view in more political terms and with a wealth of fascinating detail.
And how about a piece from the distant past when the whole thing was akin to the sound of distant thunder at a summer party (to use Philip Larkin's memorable description of (I think) old age creeping on).
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Yes.
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It doesn't matter who is running the country if there's no integrity on the consumer or corporate level. It's like getting new tires and hoping it will fix a faulty engine.
In any administration, there are going to be those that exploit the system. Certainly, deregulation played a part by opening a huge loophole for those that were looking for one. On the other hand, forcing banks to lend money to those who really can't afford to pay it back (over-regulation) is equally stupid.
Maybe if we simply did away with Adjustable Rate and No $ Down mortgages? Because unless you're super-careful, getting one of those is like asking for foreclosure.
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I haven't read your blog in a while. Funny, I remember it making more sense than this....
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I think this is been partly caused by the lack of regulation. The level of economic carte-blanch has made the financial system vulnerable to the foibles of individuals - stock markets literally rise or fall on how nervous investors are.
You could say that "fears" of a financial crisis are a self-fulfilling prophecy. If you create the impression of a crisis, and there's no regulatory measures powerful enough to impose some stability, you get a free-fall on the back of the jittery nerves of rich stock-marketeers looking after number-one.
If there was greater regulation, I don't think this downtown would been as pronounced.
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I like getting my retaliation in first, before the mud-slinging gets going.
The Washington Post piece is very interesting; I for one always felt the Fed/Greenspan policy of reducing interest rates to nearly zero didn't make a lot of sense. It hadn't seemed to have worked too well in Japan, and there's a lot more government oversight of the economy there.
As for the Spectator piece, well, it is the Spectator, so it does rather over-egg the pudding on one side.
The crunch point, however, is that I don't see any sign of either of the candidates (nor the two parties, nor the current administration) addressing those issues and proposing long-term solutions.
That would, after all, seriously damage many of their promises/policies (on both sides) so that they would have to be presented as something a llittle more complex than 5 second soundbites.
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Mr. Webb - you are beginning to sound like a Republican. To equate a belief that deregulation contributed to the decline of financial markets with disliking capitalism and democracy is utterly reprehensible.Shame on you.
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Yes, well, maybe not first. (But early.)
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Mallaby is correct in that the Democrats have a share of the responsibility, and he is correct that it is an oversimplification to attribute our problems today to Bush 2 and McCain - that's just politics. It is nevertheless just to assign the largest share of the blame to the quarter-century of deregulation which has been the policy of the Republican party under Reagan and the two Bushes, and under Democrat Clinton with a Republican Congress dominated by Gingrich and Gramm. It is entirely fitting and proper that we should throw the Republican rascals out and restore regulation throughout the financial system.
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"The suggestion that deregulation 'caused the crisis' is convenient ... for those who dislike freedom and capitalism worldwide."
Mr. Web,
Who are you kidding with this remark. In one short sentence you gave yourself away as a propogandist! And not even a very good one!
Look up freedom in the dictionary. You will find that it has nothing to do with government oversight of markets.
I consider the idea that people who disapprove of market anarchism/cronyism , dislike "freedom", to be the stupidest thing said in this century (so far). But hey, don't fear, this century is less than a decade old and Bush and Co still has a few months in office. Still plenty of time for someone to break your record.
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No, carping Cowell is certainly not the only braying Brit these shores have had to endure uninvited advice from, there's at least one Beeb foreign correspondent that fits the same bill. The simple fact of the matter in the present crisis - and it is very real and urgent one - is that it's far too complex to admit the sort of easy explanations that are being proferred by media ideologues anxious to exculpate their cronies and patrons in the moneyed class and blame the victims. In a sense it is partly true as Mallaby has it , "The claim that the financial crisis reflects Bush-McCain deregulation is ... nonsense." But only insofar as it was Democrats as well, including some of Obama's alleged "superior" advisers that are equally implicated in the pitfalls of de-regulation. It might better be referred to as the Clinton-Rubin-Bush-McCain, etc. deregulation. To try and paint the Dem's as excessively zealous defenders of the underclass or enemies of the rich; or pin the crisis on an obscure undersecretary of housing shows to what lengths the shils of the uber-class will go in attempting to swat the proles and silence any gathering " skepticism about markets." "Framing the mess as the product of deregulation will make the backlash nastier" - true or not - which is where our dutiful media market " snake-oil salesmen" come in, to make sure that doesn't happen, to try and pull the wool over the public's eyes again so that the whole rotten system can go on as before. That's what they get paid very well to do.
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There are great many culprits
Wall Street Greed certanatly
But others include
Irresponsible personal spending
The Dems protecting Fannie Mae
Laziness among much of the U.S working population
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"Simon Cowell is not the only British import to the US who has made a career putting the Yanks right."
God I dearly hope you're jokeing! Simon does not "put the yanks right!" He expresses his opinion on a tallent show. It is up to the people whom he expresses those opinions to whether they take his advice or not, and in that sense I guess he puts those contestants right, but yanks in general? Aside from judgeing whether someone can carey a tune or not, there is no "right" or "wrong" way to sing a song as there most certainly is a "right" way to solve a financial crisis and a more incorrect way to do so. Judgeing a singing compatition is more or less just a matter of opinion, where as there have been proven ways to improve financial situations, and proven ways to worsen them. There is a huge difference between judgeing singing, and saveing an economy, wouldn't you agree?
Not the best of comparisons, I'd say.
That being said, though, I agree with your point that the Democrats are stretching things a bit when they say that deregulation is the soul cause of the current financial mess we are in. But this is an election year. Of course campaigns stretch truths!! It is to be expected, after all, in a nation's electoral process, is it not? Just look at Cameron's speech to the Tory confrence last week! He pledged to never (should he get into power) let what happened in America happen in the UK. As if to blame all of the UK's financial whoes on Labour. The UK's financial whoes ar no more all Labour's fault as the US's financial whoes are all the Republicans fault. The financial crisis was caused by several different factors. Individuals blowing their money and not saveing it, taking lones which they knew they couldn't pay back, as well as corperations, lobbiests, and Wall Street becomeing greedy and selfish with the relaxing, if not abolishment, of regulation rules. So while yes I agree with you that deregulation was by far not the only or largest cause of this crisis, it certainly was a big one. Regulations in the financial markets are like laws. Laws exist to keep people from running wild, and regulations should exist in the market to keep CEOs etc from doing the same. There needs to be punishment in the markets as well as in life for offenders.
The world is unimagineable without the British-this fact is undeniable. But at the same time, people need to know that America can think, articulate, and solve problems for itself!! It frustrates me beyond belief to hear the British prime minister (I think it started with Blair) say that the UK is the "bridge between the America and Europe." As if the UK needs to translate for the US the message that the US is trying to send the rest of the world. All nations should just act in their own interests, and trust other nations to articulate for themselves how they see the world and where they feel it needs to go.
That being said, Tomorrow should be a welcome break from the "pathetic" questioning of the other so-called debates that our moderators put on huh? Its a town hall type of debat! But of course, knowing you Justin, you'll probably complain that Americans were too respectful of their leaders.
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The three articles that Justin Webb has selected to try and prove the point that he wants to make are provocative in the extreme.
The Sebastian Mallaby piece is too short and too general to have any intellectual meaning. All of us know that the Chinese financial surge has impacted on the world economy since the nineteen eighties but it was during the Bush years that it began to seriously affect the US economy. Bush and his Treasury Department did nothing - nothing - to address the problem. The Executive just went along with the flow, and to blame it on Congress and the Democrats is misrepresenting the responsibilities of the president and his administration executive as laid down by the US Constitutution.
The next article is a Spectator one claiming that the Clinton Democrats are to blame. Do us all a favour. In the Spectator's view, the Clinton Democrats are probably to blame for England failing to qualify for last summer's European Cup. The Spectator is not without its funnily little biases. I do not believe that even the Spectator, for all its pomposity, would want to be held responsible for electing another Republican administration under current circumstances.
It is a sad reflection on this Justin post that the final piece was written in 1999. The world has changed unalterably since the time that that piece was written and it would be healthier to be dealing with the here and now in 2008 rather than harking back to a pre 9/11, pre Iraq war time, when our world was seen in a very different light.
Provocative Justin, but nul points from this reader.
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It's not just deregulation, but the creation of financial instruments which bypass existing regulation, notably "credit default swaps." These are like insurance, but defined in such a way that they don't fall under insurance regulations. Time published a warning about these in March:
http://www.time.com/time/business/article/0,8599,1723152,00.html
CBS' 60 Minutes also had a discussion of these recently.
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So those who oppose reckless deregulation dislike freedom and democracy? Gutter journalism at its worst, Justin! Even worse, the logic is twisted, shallow, hollow... in short, contrary to what any serious journalist should stand for. You may as well say that child porn laws, human rights laws, etc, in which the state 'regulate' the social order, is against freedom and democracy. Democrats are not against deregulation as such, Justin, what they call for is responsible deregulation that forestalls the sort of problem we have on hand now. Deregulation may not be sole cause of the current crisis, but every rational person agrees it's contributed very significantly to the current impasse
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Why, when introducing the article by his friend Sebastian Mallaby, did Justin bring Simon Cowell into the picture (other than to remind us about Reality Game Show Hosts/Republican Vice Presidential wannabees )?
Honestly, Justin, you don't need to talk down to us lot to get us to respond. We can make up our own minds, and even use our own words, without being dumbed down into a telephone-voting world.
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Everyone knows that Clinton and the Democrats are to blame for the credit crisis, but it's much worse than that. I have it on good authority that Democrats are wholly responsible for AIDS, cancer, war, famine, hatred and Original Sin.
I'd include Nazism too, but vivalecid already linked the two in an earlier post.
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It's important that points like this are made, in the interests of open and fair debate.
However, I don't agree with the view that the democrats are to blame. The suggestion that banks were forced by 'left wingers' into less scrupulous lending is a little hard to swallow. There are some banks (e.g. the Cooperative) that have strong ethical standards and these are most often the ones that are hearlded by the left. It is a common approach by the right to blame the left and vice versa - there's probably enough blame to go around. If the democrats are at fault, it is probably that, yes, they were encouraging banks to open up mortgages for people. However, I think that the banks promptly exploited the lack of regulation to pretty do whatever they wanted (in the best spirit of free market 'principles').
I don't think that Barack Obama will be restricted by any mandate; ultimately - assuming he is elected - he'll be in a position to do whatever is necessary to solve this crisis.
It is a little churlish for republicans and their supporters to argue that the Democrats are misleading people about the major issues, when the Rebulicans owe their last 2 victories to such activity (and, indeed, the 1988 election).
People in the US I think are clearly identifying the Republicans with principles of deregulation (which would be right) and have thus identified them with the current crisis. If the case against the democrats is that strong, I wonder why McCain has not proposed a stronger set of economic regulations to get some control of the current political situation back.
I suspect that the real reason is the one that the first article mentioned - Obama has a better economic team and economics is not McCain's strongest suit. That knowledge, more than anything, is what I think is guiding the American voters.
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All of this makes me want to dig up an old
copy of "Paper Money" by Adam Smith.
Does anybody know what chapter we are on?
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A number of posters are showing a complete lack of sense of humour, particularly with the Cowell comment. It amazes me when people are quick to assume the worse, not even stopping to check for a joke. Justin, as a master stirrer, operates his spoon well.
That said, the 3 articles say what I believe, so they must be true!
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20:
seanspa: He does, doesn't he? A runcible one, now, alas, wrapped in a three-pound note, too. We should stop teasing, really.
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I'm guessing that Justin was getting a teeny bit bored and decided to provoke a storm of outrage, his blog so he is entitled but really Mr. Webb how about a real topic now please???
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good article but all these articles seem to highlight that lack of regulation mandating transparency between financial institutions especially regarding financial instruments like derivatives is what led to this mess.
we are looking at regulation as the government holding the hands of corporations telling them when to trade and how much to trade...this is not so.
there should be more rules tht makes disclosure of certain records and transactions mandatory and not give these organisations options to creatively leave certain important but seemingly minor details off the books for thir convenience. this has been resisted by law makers for some time.
Shouldnt a shareholder have the right to know what the CEO is making and if he has a golden parachute clause in his contract?
How can an organisation sell credit swaps (which are basically insurance policies) without following rules that govern selling insurance?
yep it was lack of regulation and outdated regulation that had a LOT to do with this mess.
Fannie and Freddie mac on the other hand is just as responsible. they gave banks guarantees that they would buy these toxic loans from them , hence why they crashed! so democrats are just as guilty for their demise, but it was wall street who did not have enough wisdom to not place bets on the housing bubble. seeing the nature of these loans. and it was lack of regulations that allowed wall street firms to not be upfront about how much risk they were taking.
and Justin? are you somehow suggesting that democrat supporters are in someway similar to those who do not like capitalism?
by world standards i think the DNC is more right wing than traditional 'liberal' parties and are more moderate conservatives as opposed to the GOP which is extreme conservative.
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Justin writes the whole thing was akin to the sound of distant thunder at a summer party (to use Philip Larkin's memorable description of (I think) old age creeping on.
I think he refers to W. H. Auden who wrote
Death is the sound of distant thunder at a picnic.
I don't think the present situation portends the death of the financial market or America itself
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Finally, the blog addresses an issue instead of personalities!
Good!!
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gunsandreligion:
It frustrates me beyond belief to hear the British prime minister (I think it started with Blair) say that the UK is the "bridge between the America and Europe."
It was, and it was partcularly silly. The joke at the time was "What's so good about being a bridge? People just walk all over you."
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"The suggestion that deregulation "caused the crisis" is convenient for Democrats in the domestic context and for those who dislike freedom and capitalism worldwide."
More fatuous nonsense I'm afraid - trying to create a 'false dichotomy' of the 'You're either with us or with the terrorists' variety.
The idea that if you are not for unbridled, free, unregulated, 'red-in-tooth-and-claw' capitalism that you are some kind of 'anti-freedom' [yeah, right...] communist is just poppycock / nonsense on stilts / hogwash.
Take your pick. All markets have to operate within certain boundaries. This superficial analysis, and the failure to recognise the difference between bureaucratic paperwork and red tape on the one hand, and a vital necessity for ethical and moral standards on the other, is totally unbecoming a member of the BBC, which itself DOES NOT operate in a free-market capitalist world !
It is a 'public sector monopoly' - so how do you square that with your statement.
All the Democrats are saying is that if a car has no brakes and defective steering then sooner or later there will be a crash - and you are disagreeing with them ? Feeble, Mr Webb, you can do so much better than this - and frequently do.
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any comment on the Palin "Obama-terrorist-sympathiser" cheap shot?
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This comment was removed because the moderators found it broke the House Rules.
As an average American, I can say that I don't know as much as big investors do about the details on why the crisis happened or how it can be turned around, but I can say that I knew something was horribly wrong when people were building and buying houses that were way more expensive than they could seemingly afford. As it turns out, they couldn’t afford them and now many of the companies that bought those mortgages in bundles from the banks have gone belly-up. There is something to be said for living below your means incase the scenario that we are facing today happens, and it is a lesson about credit that Americans would do well to remember when taking such financial risks. At least I can take solace in the fact that enough people in my state had the sense to not get so heavily involved in the housing bubble; we’re not doing great, but we’re not hurting as much as some states either.
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Our fiscal and economic crises were caused by out of control debt (national corporate and personal) and by easy money. Deregulation was the instrument used by CEOs and stock market operatives to make hundreds of millions in profits while the banks and financial institutions they represent were becoming insolvent, and millions of small stock market investors and pensioners were losing most of their assets.
Regulation must be reinstituted to avert further deterioration, but what we need to implement immediately are policies conducive to balancing our budgets to restore consumer confidence. Easy credit may produce temporary benefits, but they will simply perpetuate the malaise that is killing our economy and will actually exacerbate it in the long run.
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Obama is up in the polls. Is this is due to the recent smears backfiring, or the worsened economic situation, or both?
Both West Virginia and Georgia are now listed as leaning to McCain, but no longer solid for him. Pennsylvania is listed as solid for Obama.
Intrade reflects Obama's increasing lead.
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eightypercent:
It is a sad reflection on this Justin post that the final piece was written in 1999. The world has changed unalterably since the time that that piece was written and it would be healthier to be dealing with the here and now in 2008 rather than harking back to a pre 9/11, pre Iraq war time, when our world was seen in a very different light.
Justin said it was 'old' (Eight years, of course is ancient history.) but it was interesting in that it was a forewarning that no-one took heed of.
I'm glad to have been pointed to all three, all of which I read, because I thought they were all informed and authoritative.
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Mr Mallaby has some intersting points but in reality in matters little whether deregulation was at fault or the lack of appropriate regulation. It is a reasonable conclusion to make from considering the facts in general and from the agruments in his article that the latter is the case, although I doubt that was his intention.
The lack of investment by little regulated hedge funds in the toxic investments probably has little to do with the lack of regulation, rather that there were better opportunities in their areas of specialisation. A healthy scepticism in free markets is surely appropriate as long as new regulation is not rushed and consideration given to its indirect consequences as well as the direct impact.
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ref #32
There are no smears.
Everything said about his relationships are facts.
The truth is it own defense
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Oh Justin - I know you plumped for McCain a while ago and your hangin' awn ; ) to the goddam idea (ref: BBC Radio 5 Live interview Simon Mayo show: 06/10/08) but this is a little weak.
I look forward to the 'Palin is rooten-tooten right about Obama terrorist link' see this tenuous link.
And I like to think of myself as neutral...
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28, Parrissia:
Any comment on the Palin "Obama-terrorist-sympathiser" cheap shot?
Hundreds. See the comments to Justin's previous post 'McCain out of Michigan'. I do hope that doesn't start up again here.
Justin would be well advised to steer well clear of opening that can of worms again. There's nothing he could add that hasn't already been reported.
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35, Ubermensch.
Democrats bad. Republicans good. There aren't any gray areas in your life, are there?
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re: 23 moderate_observer
I believe this post identifies the single most important issue in the crisis.
Even in a totally chaotic, unregulated market, if there is sufficient transparency to allow rational buy/sell decisions to be made, egregious behavior will not be rewarded in the marketplace. If the unsoundness or the illegality of certain practices is allowed to be hidden, individual misbehaviors can snowball into market-wide bubbles, panics, and crises.
The fact remains that the entire problem is not a Rep/Dem issue, but that government (both parties) has been in bed with those moneyed interests from whom they have demanded (and received) financial and other rewards for allowing various misbehaviors to be hidden. Any suggestion that there is a substantive difference between the two parties in the area of corruption is either extreme partisanship or intellectual dishonesty (or both).
Post #27 by lordBeddGelert also identifies a key issue, regarding the difference between substantive regulation and bureaucratic red tape.
Even with substantive regulation, there has always been a problem with the actual enforcement of the regulation that has existed: the US press is replete with stories about "Company X has agreed to pay a penalty of y dollars without admitting any wrongdoing in exchange for dropping of the case." Sadly, what is neglected is that Company X was accused of practices that resulted in tens or hundreds of millions of profit and the penalty was generally a small percentage of the ill-gotten gain. Over the years, it has gotten to the point that these penalties were included as part of the "normal cost of doing business" calculation for many companies.
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28/32/35:
To quote Clinton, perhaps "It's the economy, stupid?"
I beg you not to go over that attack again. It's been done to death here over the weekend.
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28, Parresia.
The smears are an act of desperatiion and do not appear to be doing McCain any good. He has been sayinging the same sort of thing about Obama for months, which may lessen it impact. It's like a kid who gets smacked all the time. He doesn't notice the extra smack.
It is also possible that the voting public cares more about the economy than who Obama's pals are, or aren't.
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A piece on 60 minutes last night made a very convincing case that $60 trillion of trade in mortgage instrument papers underlies this disaster. These instruments provided insurance to holder of consolidated mortgages, but were deliberately called "swaps" to avoid the regulation of the insurance industry.
When housing values dropped and foreclosures ramped up, holders of the swaps started demanding payment. Alas, the swap issuers had not set aside sufficient funds. So, they went belly up.
Regulation of the market is fundamentally necessary because the market is not fundamentally perfect. The market is the summation of many decisions made by many people. When those decisions arewrong, bad things happen.
In this instance, people believed housing prices would escalate indefinitely, and built a financial house of cards on the premise. They were wrong.
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11, Ubermensch.
If I remember correctly, a couple of years ago the was a bill regarding governement intervention vis-a-vis Fannie and Freddie. Obama voted for it. McCain voted against it.
Does anyone have the details on this?
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McCain's slide in the polls are primarily due to the worsening economic outlook. Americans in general almost always put Democrats in office when times are tough economically. I'm amazed my candidate has done as well as he has in a historically Democratic year. It is a testament to the fact that most Americans philosophically wobble between center right and center left, and we elect individuals who set to course for their parties rather than parties that set the course for individuals.
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I wouldnt think this financial discussion will matter, its too complicated to summarise to the public, so it wont be mentioned by McCain.
Surely a more relevent issue today is the fact Obama stooped to similar lows as Palin by bringing up the Keating 5? Yesterday he said it was cheap and desperate by the Republicans to attack him over the Weathermen issue - today he does a similar thing...
I support Obama but I dont think this was a good move. Negative campaigning either bites you in the ass or annoys the unsure voters - it only works for Republican voters.
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Deregulation coupled with greed. Lehman executives were grilled by Congress today about their excessive compensation just before the collapse, while at the same time asking for a bailout. They were gambling, being rewarded handsomely for it, and it backfired when the housing market fell apart along with an excessive number of bad loans.
McCain's ties to the Keating 5 are real. The Savings and Loan debacle needs restated for those that were not around at the time or do not remember the details.
Keating 5 and McCain
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Deregulation did not cause this crisis. Deregulation took the cops off the street and let the hoodlums run rampant.
Also the problem wasn't so much deregulation but the lack of will in the Bush administration to do it's job and actually enforce regulation.
In America our executive branch's most important job is to execute the laws passed by Congress. They decided to shirk their responsibilities and now my 5 year old nephew and his grand kids will be paying for it.
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What on earth do you mean by freedom in this context? Are you saying that if you disagree with a process that is systematically running an entire planet into the ground somehow you're anti-freedom.
Is the freedom to pay yourself $300 million dollars in 8 years more important than the freedom to spend your hard earned savings in your old age rather than have them disappear in hyper-inflation?
This has nothing to do with freedom and everything to do with neo-conservatism.
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44, BienvenueEnLouisiana wrote:
"It is a testament to the fact that most Americans philosophically wobble between center right and center left, and we elect individuals who set to course for their parties rather than parties that set the course for individuals."
Yes, it's why so many of us Europeans have trouble here. We can't really get our heads round the fact that neither party appears to have a distinct platform all its members subscribe to, nor necessarily even shares with their own president or presidential candidate. As was clearly in evidence last week.
Congress really appears to be an evolving coalition of individuals, not even a coalition of parties.
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Ref 45
Obama had refrained from raising the Keating 5 Savings and Loan incident in Arizona until the McCain/Palin ticket accused him of links to terrorism because he accepted an invitation from Bill Ayers to attend a "meet and greet party" to launch his Chicago political campaign and because he sat on the same corporate boards as Ayers in two non-profit organizations. I don't have anything against anti-war activism, but I think Ayers solutions were too radical, to put it mildly, and I find the recent suggestions that Obama was unaware of Ayers past a bit disingenous.
I deplore negative campaigning, but I think it would have been politically suicidal for Obama not to respond in kind. Restraint didn't get Kerry very far four years ago. For the first time in a very long time, we have a democratic candidate willing to fight back.
BTW, I plan to vote for Obama because I am convinced that he has the best fiscal and economic policies, and because he is a highly educated and inspirational leader at a time when we are experiencing a vacuum in leadership.
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#45 fierce_teapot:
I wouldnt think this financial discussion will matter, its too complicated to summarise to the public, so it wont be mentioned by McCain
Very, very wrong.
This financial discussion is the only thing that will matter for the remainder of the campaign. It is not some esoteric problem whose damage is limited to Wall Street.
Small businesses cannot meet payroll because they cannot get the loan that they always get to write the checks.
Auto sales are plummeting because no one is willing to extend credit.
Businesses are laying off workers because customers have gone away.
McCain isn't talking about the economy because, as his campaign admits, he is sure to lose if he does.
The Republican Party and conservatism in America have failed. The only thing left for McCain is a campaign base on lies.
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#49, british-ish, it's a coalition of lies, actually.
I'm waiting for the first politician to stand up
and tell the American people that our taxes
will have to go up to pay for this mess.
That'll be the day!
By the way, to answer your question on
the previous thread as to buying a Congressman:
1. They require continual feeding.
2. Honest ones stay bought.
3. Ditch them when the tax loopholes they
write for you do not cover bribery charges.
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#49 british-ish:
... so many of us Europeans have trouble here. We can't really get our heads round the fact that neither party appears to have a distinct platform all its members subscribe to
And its also why so many Americans make false analogies about European politics.
It's worth remembering that the Founders thought they were crafting a political system with no parties.
People change parties in the U.S. Looking at Kinnock, Blair, and Thatcher, I'm not so sure that's not the case in the UK.
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It is good to read about the opposing views expressed in the articles referred to by Mr Webb.
Nick Bryant's latest blog, "Lucky, Lucky, Lucky?" refers to an IMF report about Australia's ability to weather the financial storm (BBC Blog Network). This is a short quote from it:
"Still, there's more to Australia's comparatively strong position than luck. I'm usually one of the first to have a moan about this country's bureaucratic overkill and official petty-mindedness. But the strict regulation of the banking sector is one of the main reasons why Australia has had no Lehman Brothers or Northern Rock."
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Roland Gross wrote:
Is the freedom to pay yourself $300 million dollars in 8 years more important than the freedom to spend your hard earned savings in your old age. . .
Yes, that was roughly the principle everybody in the financial markets (including those who were happy to see their investments artificially rise every year through a fiction) was working on.
And that was exactly the 'freedom' people like William Kristol have been propounding (and some of his ilk still are, heaven help us) for the past few years.
I'll make no secret that I felt long ago the whole thing was a fraud, and I despise the lot of them. I'm not exactly pleased that our own government was happy to sit on the sidelines and watch, either.
In fact, last election here I was one of many who voted 'tactically' in order to reduce our government's majority. And probably will again next time. It's perhaps a pity that there isn't a third political party in the USA that allows voters to do that.
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ref #38
Actaully that describes you Lost your Marbles.
Anyone who supports Israel(Lieberman) is a weasal
Anyone who dares criticize Obama is wrong.
I've been against Obama because he is unqualfied, he associates with several people who are responsible for the economic crisis (The Fannie Mae and other lenders), and many of his other associates and his wife hate this country.
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The Mallaby piece is interesting and balanced.
The Sewell one repeats the canard that it's all about lenders being forced to lend to people they knew were a poor credit risk by the Clinton Administration. I think that one's been well debunked though I don't have the time to find the references now. Try the usual suspects - Obsidian Wings, Crooked Timber, etc.
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Oh, gunsandreligion, here you are. I had a couple of questions on the previous post (620) about investing in the purchase of a Congressman, but it looks as though the value might fall even more in the next few weeks, perhaps even lower than that of British MP's, so I'm not in a hurry.
How much has this election cost now, by the way? Enough to bail out Iceland, by any chance?
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52, gunsandreligion, oh thanks.
The feeding looks a bit worrying. Is there any chance they could learn to live on thin gruel with a slice of stale bread and margarine once a week as a treat, like the rest of us?
I know lots of Brit MP's still want to eat at The Ivy, and I can't afford to eat there myself.
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The Obama campaign has this to say about Mr McCain, Charles Keating and the present financial situation.
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57. vagueofgodalming:
Yes; that may have built the bonfire, but it was the repackaging later that hid the risk that set fire to it, which the Spectator (being of a rightish persuasion, in case some here don't know it) rather skates over, which is where it's useful to have the Washington Post article.
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45. fierce_teapot:
"I wouldnt think this financial discussion will matter, its too complicated to summarise to the public, so it wont be mentioned by McCain"
On the contrary, expect McCain to mention his statements warning of the risks posed by Fannie Mae and Obama's lack of involvement in the problem until now. I did hear an Obama spokeswoman say he called for a "summit" last year.
It's interesting to see so many people deny the democrats' very real involvement in the Fannie Mae debacle. The facts are all there and have been there for years. Many raised the issue. Nobody took action.
C-Span captured the hearings wherein democrats fiercely defended Fannie Mae, even going as far as accusing the Federal Housing Enterprise Oversight Office of conducting a "lynching".
The line that this was caused by greedy Wall Street is incomplete. It doesn't include the fact that the democrats created a demand for bad mortgages by forcing them on Fannie Mae.
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57. vagueofgodalming:
"The Sewell one repeats the canard that it's all about lenders being forced to lend to people they knew were a poor credit risk by the Clinton Administration."
How is this untrue?
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Re: Keating 5.
According to the CNN special aired on McCain a few weeks ago, McCain was deeply shaken by his brush with impropriety and this led to his long campaign against special interests.
This is exactly the response one would expect when a person has an experience like this.
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I think I agree with most of the comments here. I have to say, Justin, you are creating a false dichotomy here. You're basically saying that "The Clinton administrations regulation is to blame, and therefore anyone for regulation is anti-democracy". While I agree that some of the decisions under Clinton have created this mess, there are plenty of other causes. Don't forget also that Bush has had 8 years to change things around.
Anyway, even if we accept that regulation is the main cause, that is not a reason to say that the concept of regulation is bad. Far from it, I think Clinton only got half the job done. That administration encouraged the lending and the mortgages for those less fortunate, but didn't put the protections in place to protect the US (and therefore the world) from the repercussions. I have to say that providing homes to those who don't have them is a just and noble deed, and the alternative is less regulation and therefore an even more split society in terms of wealth. No, the answer is not less regulation, but MORE. Clinton didn't go far enough.
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I understand Sebastian Mallaby's point. Government interference in the economy must have played its part, as well as risky deregulation. The issue is far too complex to blame either laissez-faire policies or federal control for the crisis.
However, doesn't Mallaby make a shaky assumption that Obama's rhetoric will determine his economic policy if he reaches office?
For me, this can't be the case. Obama has more effectively appealed to the nation over the issue but it doesn't mean he'll turn into an economic demagogue if he is president. Rather, his performance demonstrates he can bolster public confidence in his abilities in a crisis while doing what is necessary to avert it (i.e.voting for the bailout).
Given that the health of the economy is, in no small part, dependent on consumer confidence, this skill musn't be underestiimated.
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To those who claim that Palin's negativity is going to backfire, you should consider the fact that people feel strongly about what she's saying about Obama.
Sarah In Silicon Valley
From Powerlineblog.com
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60, David_Cunard:
That is so dull! And so long!
I'd just had a shower, and like Alice, found that so dry I needn't have bothered to use a towel.
I think the Dems ought to fly over some of the guys who make our party political broadcasts, fast.
Surely they could make their points quicker (and more effectively) than that? I can't see that as an effective response to Ms Palin at all.
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#58, #59, british-ish, I would not hold out
hope for buying elections on the cheap;
we have, as Will Rogers once said, "the
best Congress that money can buy."
So, you might ask, "What kind of quality
corruption can I buy?" Mark Twain once
called 12 members of Congress "idiots."
When they demanded a retraction, he
apologized to the "12 members of Congress
who are not idiots."
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british-ish, you could always throw in a few
travel perks.
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#68. british-ish: "60, David_Cunard:
That is so dull ! And so long!"
Don't blame me, I'm just the messenger!
Nevertheless, the Democrats are trying to portray McCain as less-than-honest in the same way that the Republicans want to associate Mr Obama with 'terrorists'. At this moment, with prices increasing by the minute, I believe that the financial impact on those at home will outweigh any accusations about Obama's past relationships. The Keating affair hurt more people than did Obama's contacts. It's a pocket book election.
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Oh, british-ish, I'm not so sure that there
is room for thin gruel on the Congressional
cafe menu, now that Pelosi has revamped it.
However, there might be room for thick gruel.
Twice a week, please. Put mine on the same
plate as my Chesapeake rockfish.
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gunsandreligion: 70
Oh, great. I won't have to pay the outrageous amount Fedex charges to ship stuff across the Atlantic then. My Congressman (or woman, I'm not sexist) will come free.
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71:
David, OK I won't, but some messengers should have learnt by now it may sometimes be safer not to go ahead with the delivery . . .
"Money and the economy top the list for stress for 80 per cent of Americans" I've just heard on the BBC from USA Today's night editor. And apparently Obama is pulling ahead in some of the iffy states.
I was sceptical, but maybe you're right. As they say, a week is a long time in politics.
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56, Ubermensch.
You are ranting again.
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72, gunsandreligion:
I'm getting the inkling of a better idea. Do you think I could get a Congressman/woman to buy me?
I quite like the pears with Stilton cheese and watercress and possibly the cumin-scented leg of lamb with almond couscous; er, but "baked goods with Italian names, like biscotti, focaccia and frittati" er, areItalian, and I'm half Italian.
I'm not sure about the pan-roasted Chesapeake rockfish with sweet potato fennel hash and yellow pepper relish, though. A bit of a messy taste, I'd have thought.
How on earth do you find this stuff?
I've just heard McCain on the "I've achieved things in the Senate, what has hedone?" tack.
As I predicted a day or two ago, what's the betting he'll claim the credit for 'solving the crisis" soon?
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Justin, Gary (#1),
Much as I hate to differ with two such august gentlemen, no no no no no. And hell no. The ability of idiots to lend to idiots and sell those investments on to more idiots has little to do with the major issues we face. Sure, it has been the tipping point, but not the cause.
What has caused it is a series of economic chickens coming home to roost, mostly:
- Massive deficit spending
- Progressive devaluation of the dollar requireing higher interest rates to attract foreign capital
- increase in the cost of imported goods, specifically hydrocarbons
- The reduction of median income in the American family
- The most expensive healthcare in the world funded through a stealth tax on businesses and employers
None of which excuses Bush and co. These are the effect of disasterous long term economic policy. Takes about 6 years for stuff like that to trickle through into the economy at large. But the average guy doesn't want to discuss Keynesian or monetarist macro economics. So hanging deregulation and fat cats as the villains in cahoots with the real culprits is fine with me.
Economist Sam
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Re: the negative attacks
You know the old saying: "If you've got nothing good to say about yourself, then say something bad about your opponent"
It worked for Bush twice, but in the current climate of economic woe, I don't think it will have the same impact. If we look at the debates so far, focus groups reacted badly to negative attacks from either side.
http://politicalticker.blogs.cnn.com/2008/10/06/attendee-at-mccain-rally-calls-obama-a-terrorist/#comments
This sort of thing does not look good for the GOP.
And this is what McCain really wants to say...
http://www.youtube.com/watch?v=4sDPr7g8Cms
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Not a lie by the dems but a partial over simplification. It was all of deregulation, paid 'blind eyes' and cronyism motivated by well lined pockets, including dem pockets and...general greed and stupidity by all. But the money is centered more behind the GOP, who move their smaller members to the vote with fears of tax increases and business cost increases under the guise of 'fiscal responsibility' and a 'free market'; and move the populous "base" by tickling their prejudices. Less than 2% of the US make over $250,000 - but each and every one of them want to keep every penny. The Pope is right - it's greed at fault - it's a sin.
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This post is the reason why journalists should stick to writing fiction.
When I want financial analysis, I know where not to get it from.
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PS - come on....the old "yellow peril"? No one forced anyone to play with China. Next thing we'll hear they've reduced their army to microscopic proportions and are floating up everyone's noses.
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#12
But Simon does have a Bugatti Veyron.
Vroom vroom. Toot Toot
Toady Sam
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http://www.huffingtonpost.com/2008/10/06/olbermann-special-comment_n_132456.html
Keith Olbermann hammers Palin
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SamTyler1969 (#77), I don't disagree. Certainly a lot of different factors come together to affect the state of the economy. I don't hold that deregulation is literally the cause. Removing the policemen does not cause crime. If only everybody would just treat everybody else right, we wouldn't need them, would we?
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#74. british-ish wrote: "some messengers should have learnt by now it may sometimes be safer not to go ahead with the delivery . . ."
The 'message' is being sent to everyone whoever supported Obama; I'm surprised no-one else here had received the same thing. I've always thought that Americans voted with their wallets; in good times for the Republicans and in not so good, for the Democrats. At least, that's what Bill Clinton discovered.
#82. "Toady Sam" - a very expensive VW with souped-up Audi motors. It can't be driven properly around these parts so what's the use of it?! I'll stick with the Bentley.
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Given how the Democrats supported the deregulation, it's not hard to say they share some of the blame.
Given the voter anger over the bailout, I can safely say that a number of third-party candidates will get vote totals more than double the 2004 third-party combined vote totals.
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Aren't you taking a political stance by calling a link between deregulation and the market crash a "Big Lie"? And no - I don't think that phrasing it in the form of a question avoids the issue.
It may well be that deregulation is *not* the cause. I don't know. But then neither do you.
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How stupid is Palin?
Well Thanks to Mr. Olberman the answer is clear...
Must Watch
What an idiot woman.
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This comment was removed because the moderators found it broke the House Rules.
#85
None of which detracts from the performance of the beast. To say 'No, I like my Bentley' is the same arguement, car wise, that says 'My Lincoln Town car is very nice. Who would drive a Corvette?'
It's an age thing.
Motorist Sam
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86, galeooo.
Palin reminds me of an old-timey ward boss. Maybe that is why "pit bull" fits.
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Justin , China trade ? Dont buy into that arguement .Its like Nancy Reagan said ..They could have just said no.
Greed , self interest and a dose of no consequences is my guess
deregulation just created the perfect storm conditions for the speculators
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A system without checks will inevitably result in excesses. Frugality has never been a strong point with wall street, and the "greed is good" mantra certainly led to this fiasco. In opposition to what the republicans say, a "free Market" exists only in ideal capitalism, and not in a working capitalism. There will always be greedy people out to make bucks, and it's up to the system to make sure that they are regulated.
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Come on, Justin! The Republicans have been claiming credit for the "benefits" of deregulation for almost 30 years! Of course people are increasingly willing to blame them! It is true that the Democrats, particularly Bill Clinton, have tried to (and sometimes succeeded in stealing some of the credit for themselves. When Clinton was in office the Dems fell over themselves trying to prove they were also a "business-friendly" party. Well, the the party is over (no pun intended). As one caller said on a morning drive time show today, "Now we know what they did with all that money they saved in tax cuts", speaking of the "investor class". Indeed. They gambled it away, and in the process have taken us all down with them. Will Obama make a difference? He has to, just as FDR did.
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#90. Motorist Sam: I forgot to say welcome back after your short absence; your wit has been missed.
"To say 'No, I like my Bentley' is the same arguement, car wise, that says 'My Lincoln Town car is very nice. Who would drive a Corvette?'
It's an age thing."
Hey, a Bentley can go 200 mph! That's not for sissies and short of a runway, there's nowhere for it to show its paces either. There are plenty of "mature" gentlemen who tool around L.A. in a Corvette and who wouldn't be seen dead in a Lincoln. It's not an age thing, but taste. After all, we are what we drive, in La-La-Land at least.
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There's something that's not quite right here. The one article mentions that the plan for sub primes was that there'd be a 1% premium for the first 2 years and this would fall away if the borrower had made regular payments. The stories that have surfaced in the last 2 years reveal exactly the opposite, low initial repayments then a balloon.
So what is the true story?
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@ British-ish
I think the McCain smear campaign deserves a special post. That's because this "new" policy shows clearly that McCain has run out of ideas and that he intends to spend the last 30 days till the election on such idiotic claims instead of debating the real issues
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Phew - I realised that I had sunk into a bit of a rant in my response to Justin's post (brought on mainly by the un-called for introduction of Simon Cowell's name into the equation) but I've just watched Keith Olberman deliver his historic rant of all rants.
He goes on for over eleven minutes !
I think he's a bit upset !
And he's right.
How on earth are those two candidates going to carry on with a "Town Hall style" debate tonight after all that has been said in the last couple of days and with global finances imploding around them ? Its going to be unmissable.
Shakespeare himself couldn't have made this up.
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I finally figured it out! Both candidates are competing
to see how quickly they can lose this race, because
both are smart enough to realize that they don't
want to win.
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I read your BBC headline news with the time line to the current crisis with great interest.
I also read Bitsh-ish's comments in the blog below.
You could argue that Alan Greenspan and the Fed have a lot more to answer for than he would like to pin on them!
Having raised the interest rate from 1.75% progressively every month for two years. It doesn't take a mathematician to work out that at some stage some people with mortgages are going to get into trouble - subprime or any other kind.
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Reports from Sarah Palin's rally held in Florida are deeply disturbing and the video shows members of the audience shouting "Kill Him".
This is rabble-rousing of a very worrying kind.
Sarah Palin has shown an ability to change the game without regard for the consequences. Not only has she brought this ability to the debate as a whole, but more importantly she has done it to McCain himself.
The news channels are full of pictures of him lashing out and it is horrible to see a man of his age, experience and self-proclaimed "honour" stoop so low. He is destroying the image he would like us to have of him before our very eyes. Pace Olberman, I am driven to ask "who are the terrorists now ?"
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deregulation and tax cuts may not have been the whole cause of this GLOBAL economic decline, but they most certainly allowed the effects to manifest and worsen in America. deregulisation and decentralisation of government destabalises the economy, as ALL the free market cares about is efficiency and profit. not the need of their service of goods, thus unnecessary measures are taken to procure higher profits regardless of the non fiscal costs.
also tax cuts to the rich make no sense in times of economic decline. if the market is in decline, rich people will hang on to their money. they will not invest, they will not spend. give tax cuts to people who are battling to get by and they will spend their tax cuts to make life a little easier. this will increase the flow of money... which is effectively money supply, which will increase incomes to businesses which will help create jobs as well as increasing profits for the rich. everybody wins. it makes sense. give poor people tax breaks and tax a little more form the rich!
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Great post, provocative and thoughtful as always, nicely cutting across conventional partisan claptrap ...
... just one exception ...
... that word 'freedom' there! In that context! Were you briefly possessed by the spirit of Dick Cheney? I think we should be told.
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I read this and had too sign up. 'those who dislike freedom and capitalism worldwide'. What on earth is this about - it is absolutely shameful how journalists get away with writing such meaningless platitudes - such words can only come from someone deeply embedded in an ideological straighjacket which they have decided to call 'freedom'.
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On Justin's original topic of deregulation, it is
of course true that all kinds of things contributed
to the current economic situation. Subprime
loans, as well as other forms of compression
of the risk premium, were symptoms of a massive
credit bubble.
But, some forms of regulation were sensible
measures adopted after the crash of 1929,
such as the Glass Steagall Act of 1933.
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"Did deregulation really cause the crisis?"
No Justin, it was little Leprechauns from Mars.
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The Big Lie??!!! Justin you make my blood boil. Read some academic literature for a change. Deregulation is not sustainable in the long term. If you dont believe me then read Stiglitz "The Roaring Nineties". This man knows a bit or two about economics as he won the Noble Prize in Economics.
Deregulation allows a much greater scope for corporate abuse and corruption. I am sorry here Justin, but here you are 100% wrong, it isnt a lie. Its the truth. That Obama is making political capital out of it is perfectly legitimate. The Reagan years are coming to an end.
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I think the key is to understand that ALL markets go up and down in a cycle over time. Things seem to go wrong when we forget this or more usually think we are so clever we have conquered this.
If we learn one thing from this whole debacle it must be that we must base our plans on this fundamental truth - when people talk of "new paradigms" (in other words we have conquered the business cycle) they should be ridiculed till they stop. Talk of "new paradigms" is hubris of the highest order that allows us to ignore clear risks.
The risk taking may be for simple greed (Wall St.) or it may be driven by more worthy goals (politicians wanting to solve social problems) but going forward we need to find mechanisms to allow down-side risks to be taken seriously and not ignored.
The really worrying thing is that in 10-20 years time we will probably be back with a strong market growth, we'll have forgotten this debacle and some-one will be talking of "new paradigms" that allow us to ignore risk
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This is special pleading disguised as dispassionate analysis. How can he ignore the circumventing and final abolition of Glass-Steagall? Mortgages worth over 100% of income? The transformation of bad debts into securities and the abuse of rating agencies so these were AAA rated? Greenspan's insouciance helped this along - but was not the fundamental cause. Now nobody knows whose asets are sound and whose are bad. There has to be more regulation; we cannot live through this again.
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# 108 - Nigel
Whilst I agree with your comments (and even the fabled Tudor dynasty managed to bankrupt the country about once every twenty years), I do wonder whether we have ever seen a global meltdown like his ?
Certainly not in financial terms, because there is just so much more money sloshing around than there was ten years ago.
But has there ever before been a crash which whose effects are felt all over the world like this ?
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Whether or not the public blames the Reps or Dems doesn't seem to be the point.
Its that they seem to trust the Dems to fix it.
It hasn't been said (yet) but the phrase "It's the economy stupid" will have certainly be thought by huge numbers of people (with results for all to see)
http://www.fivethirtyeight.com/2008/10/todays-polls-106.html
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"Big Lie", eh? If I made such a comment with it's obvious connotations, I'd expect my commented to be deleted.
But anyhoo, let's try to focus on the substance... did deregulation of financial services specifically cause this crisis?
Probably in part. Alan Greenspan - longest serving Fed Chairman (1983-2006) - was adament that commercial firms were better placed than regulators to measure counterparty risk. In other words, the world's most influential central banker was advocating regulators back off probing of credit and counterparty risk at regulated firms.
Is this deregulation? It sure as heck isn't aggressive regulation.
The Mallaby article though doesn't make an awful lot of sense. He says the Chinese current account surplus led to all types of financial institutions across the globe investing in US mortgage-backed assets, even the more risky stuff that the GSEs were increasingly getting exposure to.
If I had to finger a particular culprit, it would have to be the fixation on ratings agencies. Not the agencies per se, but the bankers, investors and regulators who put so much stock in the expertise of the agencies.
And if I had to point to a particular voice worth listening to regarding this crisis, it would have to be Nouriel Roubini, now widely acknowledged as the leading authority on the crisis.
And he is absolutely adament that lax regulation was a large part of the problem. So go read up on the Lebanese-Italian import who is "putting the Yanks right" - his website is rgemonitor, you'd do well to spend some time there rather than tooling around with the Washington Post.
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Is that THAT Eddie George ?
From the authoritative post, I rather think it is.
Anyway, he certainly puts Justin and his Washpo mate to rights.
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I had read that Justin Webb was an apologist for US/UK capitalism and US/UK 'shock and awe' invasions all over the world.
Now I find that opinion is reinforced after reading the drivel in this article.
No doubt there are several causes for the credit crunch but it should be blindingly obvious that deregulation is at the heart of the the credit crunch.
Deregulation allowed individuals at all levels to spend money that they didn't have.
Even as I write, there are still adverts that allow individuals to buy luxury goods without having credit checks. It is criminal that any government should even allow that.
All this talk of freedom: Freedom for whom? Freedom for the rich few? Freedom to engage in perpetual excess until we are all ultimately enslaved by our own greed?
Justin, the trouble is that you mix with too many stupid people.
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What caused the crash was the Bush tax cuts and the war in Iraq. Bush blew a vast hole in the US deficit that could only be funded by the influx of Chinese and Russian capital buying treasuries. As a consequence, he put the currency under pressure and at the same time allowed an unsustainable consumer boom through excessively low interest rates. That pushed out the property bubble which was then compounded by lax lending practices and the trade in derivative lending products. The Dems are only focussing on one part of the issue, which is unfortunate: they should be making the point that all of Bush's economic policies have been disastrous. That this would happen was obvious back in 2001, and to those that listened I said so then and have always said so since.
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If you look at the "Detailed Housing Characteristics" from the 2004 Census of Housing, you will find there was a dramatic increase in the number of homeowners with conventional mortgages, i.e., 60% in 1997 and 90% in 2004. Sounds great when the definition of a conventional mortgage was a 30 year fixed rate, not includind VA, FHA, Jumbo, or Construction. However, the historical definition of conventional has changed. Now it means conforming to Freddie Mac/Frannie May guidelines. Conforming includes NINAs(No income, no assets). The US Congress and the US leadership closed their eyes to this change in a misguided attempt to get more people into a house. So deregulation did play a part in the current situation. Most of the toxic mortgages include these NINAs and they can not be salvaged with any fiscal responsibility. Mortgage brokers peddled these NINAs, real estate agents peddled them, and banks and credit unions failed to perform their fiduciary function. They should have said no! However, everyone in the process made their fees quickly and sold these mortgages as quickly as possible to larger financial institutions who bundled them into financial instruments. God who thought of that idea?
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Deregulation did not help, because deregulation clearly went too far. The current mess undeniably defines this!
The problem is/was the lack of any law. Bankers continued to trade with complete disregard for any sensible degree of responsibility. Their focus was exclusively on profits, however, they were made, (within the law that exists today.)
The lawmakers were persuaded to repeal Glass-Steagall. Bankers simply took this to mean their was no longer any barrier to them deciding what was best for us and them. It took these bankers less than 10 years, since Glass-Steagall was repealed, to bring about their own downfall, taking us with them.
Can we at least all agree, once and for all, that bankers simply cannot and must not be allowed to self-regulate ever again?
Massive profits are attractive of course, but you have to achieve them without "betting the farm." This ought to be obvious!
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Speaking as a Briton with an American wife, 3 American kids, and a pretty frequent visitor to the US over the last 20 years, I've long thought that Justin Webb was the wrong choice to report the country at all - never mind fill the post of US Editor !- any more than a tone-deaf member of an audience would be equipped to describe an orchestral concert he had sat through.It seems to me that Mr Webb is so busy attempting to explode what he considers to be British or European misconceptions of American life he fails to "get" what goes on and to see what is going on (presumably) under his nose, beyond what Washington Republicans are saying to each other.The rather pompous country club manner doesn't help ! I'm not sure that he grasps the attitude that so many British people have to the US - they're not anti-american at all, but simply disapprove of most of what the surrent administration has been doing. There are plenty of americans who also disapprove, and these aren't confined to the "liberal elites" so beloved (as a category) of commentators like Mr Webb.You're an ideal man to follow John McCain around the country - you'll be among friends !
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Using an British analysis, which may be of interest to folks in the US, as the British Post-War Consensus came to an end in the mid-seventies; the 'Thatcherite' (though monetarism in the UK started with Labour government in 1976) consensus that followed it is now coming to an end. Both lasted for about thirty years. For each of these consensuses to work both main political parties have to base their policies and political world-view on it. So I agree with Justin that no one single party is to blame - it's the thinking used during the last couple of decades that is to blame. Who started this 'thinking'? It doesn't matter; the point is it worked at that time. If something works don't change it.
I don't think the Recapitalisation programme that Japan used will work this time as the economics that underpins current thinking is failing. Call me an old British Leftie, but the only alternatives to me are either a 'mixed' economy (Keynesianism), or nationalise all the banks (both options will get banks lending to each other, to businesses, and to us again). When the economy improves, privatise them so the taxpayer gets their money back. Then do the same thing thirty years later.
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People who hate freedom! Are you stark raving bonkers, do u think anyone in the UK would go for that, the stupidest of all Bushes lines
Oh my God, you're an absolute scumbag! I dont care if this doesnt get published, but please pass it on to Justin
Or just edit out the 2nd paragraph and publish it. anything to show my absolute opposition to anything this man writes
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Justin,
"Did de-regulation cause the crisis"???? Is the Pope catholic??? Of course it did, what else could have caused a financial and economic debacle of this magnitiude if it wasn't de-regulation?
If the financial institutions regulated how they went about implementing business, the U.S. wouldn't be in this mess, and more importantly, the UK wouldn't be feeling the knock on effects of all of this.
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Surely the point about de-regulation is that it facilitates greed, not that it causes it.
The problem here seems to me is that the financial engineering tail ended up wagging the capitalist dog.
Despite my blog name, I'm a capitalist. I believe that the virtuous circle which derives from adding real value to raw materials (in the broadest sense of the term) is highly beneficial - and sustainable.
What these people have done is to remove value, not add it. And that's fatal. By looking at money as an end in itself, not as the means to oil the capitalist wheels, it sucks cash out of the circle and into the waste-bin.
This engendered a Gadarene rush for wealth, entirely out of proportion to any value that could possibly be created.
And finally they compound the sin by organising their finances to avoid tax. If I were in power, I'd reverse the great call of the American Revolution: No representation without taxation.
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re: #96 David_de_Jong
In general, one could get a 30yr fixed mortgage at a constant interest rate fixed at the time of loan closing.
One also had the option of choosing a variable interest rate, often 2-3 (or more) percent below the fixed rate, which would stay constant for a time, generally a year or two or three, at which time it would reset to the then prevailing rate, and then adjust, generally yearly, to the then current rate. This type of variable mortgage was extremely popular among the "flippers" who never intended to keep the house for more than a year or two, and also the "low income" folks, because eligibility for the loan was determined based on the initial interest rate only.
At the expiry of the initial fixed period, the rates rose in accordance with the mortgage contract and those who could just barely afford the mortgage payment with the initial "teaser" rates could not afford the new payments, and, due to the housing market, could not sell for what they still owed on the house.
Obviously, all the rates were based on the perceived riskiness of the mortgage, and the "sub-prime" rates were somewhat higher than the prime rates. That explains the higher initial rate you cite as well as the higher payment after the initial period.
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I had written agreeing with MarkfromOxford in 115; however, as I see the proportion of mindless abuse here is creeping up, as it does so often, I'm declining to participate any longer.
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HEAR ! HEAR !
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115. At 11:24am on 07 Oct 2008, MarkfromOxford wrote:
What caused the crash was the Bush tax cuts and the war in Iraq. Bush blew a vast hole in the US deficit that could only be funded by the influx of Chinese and Russian capital buying treasuries. As a consequence, he put the currency under pressure and at the same time allowed an unsustainable consumer boom through excessively low interest rates. That pushed out the property bubble which was then compounded by lax lending practices and the trade in derivative lending products. The Dems are only focussing on one part of the issue, which is unfortunate: they should be making the point that all of Bush's economic policies have been disastrous. That this would happen was obvious back in 2001, and to those that listened I said so then and have always said so since."
All of which raises the point how are Iraq and Afghanistan to be funded in the middle of a recession?
It is not naive to ask will the great US public and others be willing to spend billions in these countries when their own is in recession.
This has always been a key issue and is yet another reason why foriegn adventurism can be so dangerous if you can't back it up.
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It's like Alice in Obamaland here and someone rattled the teapot.
'Shameful'; 'scumbag'; blood boiling; the catholic pope (had to happen sometime) and even leprechauns dancing in sarcastic flourishes.
Anyway, for the person who mentioned the Tudors - they had a paradigm (I saw that above - very intellectual) that involved knocking over religious institutions and nicking their money. That's a plan surely ?
Alternatively, the Morton's Fork approach to taxation after Henry VII's chancellor, described thus:
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# 118
In the time I've been following this blog, Justin has been described as 'in the tank' (appalling expression) for Hillary Clinton, Barack Obama and John McCain.
Which might just suggest he's doing something right......
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Did deregulation cause the crisis? Yes.
Here's how. After the crash of 1929 and the ensuing investigation it was realized that the underlying cause was reckless lending of up to 90% of the value of a particular class of assets, stocks to purchase the stocks with. This made it easy to buy stocks on enormously leveraged credit. The market expanded into a bubble with prices reaching impossible heights having nothing to do with their intrinsic worth. That is their price was based on pure speculation not the underlying value of the company's assets or chances to make profits through their businesses. When the bubble burst and prices fell, the banks and brokerage houses who had made these loans called margin accounts called them in, that is they demanded payment in full immediately. Because the asset class, the stock itself was the collateral for the loan, it suddenly became worth less than the value of the loan and so there was a stampede for the exit which fed upon itself. Everyone wanted to sell before prices went even lower. This drove the market down. Stock prices collapsed and to make matters worse, the Federal Reserve tightened the credit supply, that is it drained liquidity to punish the markets for their recklessness and stupidity. It wasn't realized at the time that this was exactly the wrong thing to do if it wanted the markets to recover. As a result, the markets and the economy they supported died. To prevent this from happening again, restrictions were put on classes of credit such as mortgages issued by some types of institutions, savings and commercial banks to homebuyers to prevent making loans to unqualified borrowers in institutions where deposits would be guaranteed up to a fairly high amount by the Federal government. The Glass Steagall act of 1933 was one such measure to prevent reckless lending.
http://en.wikipedia.org/wiki/Glass-Steagall_Act
It should be noted that the depression did not end until the outbreak of WWII when the US government created enormous amounts of credit by borrowing against the future to buy the labor and material needed to fight the war. By that time all of the banks and brokerage houses that had been reckless had been pretty much ancient history, bankrupt. Therefore a bailout of failed institutions is not necessary to bring such a crisis to an end. The federal government could make credit available directly to borrowers in any amount required but the price is inflation. It was this creation of huge amounts of credit that ended the depression, not rescuing or nationalizing the banks by covering their debts with public money as is being done now.
Starting in the 1980s and through the 1990s, the government dismantled the restrictions having forgotten the lessons of history. This time the bubble was a different asset class, residential real estate but the principle is exactly the same. The plug that fixed the dam and prevented the flood was removed.
It's interesting that people who didn't have a clue only a month or two ago that anything was very wrong suddenly have all the answers about how to fix it. They seem to have become very smart very quickly. Too bad they didn’t fix before it was so obvious to the rest of us that it was broke, in other words scream to the heavens that the system was being set up for another calamity like 1929.
Who is to blame? There is plenty of blame to go around. When the UN issued a resolution that even poor people had a right to a home, President Clinton issued an executive order making it easier for poor people to obtain credit, loans to buy houses they would never be able to pay back. Republicans and Democrats alike had reasons to support it, although different from each others motives for wanting to dismantle these restrictions. So did bankers. Greenspan, Bernanke, Paulson all urged Congress to go along with this. Both the current Chairmen of the House and Senate banking committees Franks and Dodd agreed. So did their Republican counterparts when that party controlled Congress. So did McCain, Obama, Clinton, Bush, just about everyone. Some like Obama may have voiced concerns but did not sound an alarm, certainly not a sustained one. They were absolutely clueless about the implications and ultimate consequences of what had been done. The credit crisis was NOT due to the wars in Iraq or Afghanistan which only cost 1 trillion between them over 6 years. That was barely more than 1% GDP during that time, not enough by a long shot to create such a crisis. It was not the result of borrowing money from China or anyone else, and is certainly not the result of greed. There are only two emotions in a market, greed and fear. Without them there is no market. Greed is the expectation of profits, fear the expectation of losses. As soon as you hear people say the crisis is the result of greed, you know they don’t know what they are talking about. It was the result of ignorance and stupidity. Ignorance on the part of those in the government of why the safeguards were in place and the stupidity to remove them without finding out why they were there in the first place. Ignorance on the part of the highly paid highly certified “investment community” of bankers and other money managers who bought vast financial portfolios of instruments they didn’t understand and didn’t bother to try to understand. How sobering and sad to know that those who are supposed to be the most knowledgeable about such matters based on their education, experience, and justifying the huge compensation they are paid are ignorant, stupid, careless, lazy, and indifferent to what they actually do with the money they are entrusted with so long as they make temporary profits on paper in a bubble market. And it is a worldwide phenomena. Personally I have never trusted any of these people, I’ve always had a very low opinion of them and their recommendations. I don’t buy what I don’t understand and I don’t trust anyone. I can make my own investment mistakes thank you, I don’t have to pay anyone else to make them for me. I’m a believer in the old adage that a fool and his money are soon parted.
How will the world get out of the mess it is in? Ironically, the market would work the problem out given enough time but the social upheaval in the meanwhile is politically unacceptable and so governments will have to intervene. Which government and how? The answers are obvious and I’ve been saying it for a long time. The government that created the mess will be the one to clean it up. That is the US government. There is only one way for this debt to be wiped out in any reasonable time, perhaps a few years and that is for it to print enough money and make it readily available to pay for it. The question is the amount. 700 billion is hardly a drop in the bucket. How much will it take? That is unknown at this time but it’s my guess it will be somewhere between 3 and 8 trillion dollars but it could be a lot more. The good news is that the assets are “real” this time unlike the 1930s, that is they are homes people can actually live in. The net result will be a writedown of debt in real dollars at about 25 to 40 cents on the dollar for whoever owns it whether it is the private institutions or the government. In the meantime, China which depends on a steady flow of exports of mostly cheap discretionary goods will see its markets largely dry up for a time and Europe is also very vulnerable whether it knows it or not (I think it is starting to get the message.)
Three last observations. One is that it is pointless to waste time in recriminations as that does nothing to fix the problem (if all those responsible were punished, most of the Congress, a couple of American Presidents and most people with fiduciary responsibility in the financial industry would be in prison) but it is necessary to understand exactly why it happened and to fix it immediately which probably means to put the whole legal structure back the way it was before they tinkered with it. The second is that investors should file massive class actions lawsuits against the executives who profited and the boards of directors who approved their compensation while their companies were collapsing by claiming that they were defrauded because these executives knew or should have known the dire financial straits their companies were actually in. This would reduce these people to the paupers they should be for their bungling mismanagement. I suspect that only some will be found criminally negligent under American law as most of them were merely incompetent and stupid. Unfortunately, that worst of crimes in not subject to criminal punishment. The third is a warning for the future. The implications of the kind of restrictions so called environmentalists would impose would impact the world’s economy in a way that would make this look like a picnic. Whatever the answers to global warming that will work assuming it is not already too late, what they have proposed so far is clearly not one of them and carries enormous dangers of worldwide depression, famine, and social upheaval on a scale never seen before.
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Justin dares to consider the democrats' role in this mortgage mess and takes the heat for it.
It is becoming increasingly apparent that bucking conventional wisdom (ex., that it was Bush and deregulation and couldn't have been the democrats that caused this mortgage debacle) is becoming more difficult as the election nears.
The democrats did a great job of regulating Fannie Mae's customer base. They just didn't do a great job of considering the risks to the market of the increasingly riskier mortgage holders.
These would be the same democrats that people here seem to think would manage the economy better.
And, yes, we all know that in the US, home ownership is a core value; but home ownership at the expense of credit worthiness is not. That's a misguided value.
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Most of Mr Webb.s comments are pro-republican, I am sorry to say. I would rather you are in a neutral ground. Who doesn't know that the current financial crisis is a direct result of the excesses and over indulgences of the players. Greed is part and parcel of human nature. There should always be a mechanism put in place by the state to check and balance such kleptomanic tendencies. There is nothing like market auto regulation; too risky to leave things in a state of free for all.
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# Simon 121
I imagine that this is an issue which Obama will raise in his debate tonight. Both he and Biden have been trying to steer Americans' minds in this direction but are told that they are trying to "raise the white flag of surrender".
Presumably the electorate will be more open to the Obama/Biden argument after the events of the last couple of days.
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112. Eddie-george:
"But anyhoo, let's try to focus on the substance... did deregulation of financial services specifically cause this crisis?
Probably in part. Alan Greenspan - longest serving Fed Chairman (1983-2006) - was adament that commercial firms were better placed than regulators to measure counterparty risk. In other words, the world's most influential central banker was advocating regulators back off probing of credit and counterparty risk at regulated firms."
Yes, but he also said,
As a general matter, we rely in a market economy upon market discipline to constrain the leverage of firms, including financial institutions. However, the existence, or even the perception, of government backing undermines the effectiveness of market discipline.
He realized that the nature of government-sponsored entities (GSE's) increased risk and called for greater regulation of GSE's.
Testimony of Chairman Alan Greenspan
Government-sponsored enterprises
Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate
February 24, 2004
Testimony of Chairman Alan Greenspan -
Government-sponsored enterprises -
Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate
February 24, 2004
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"The suggestion that deregulation "caused the crisis" is convenient for Democrats in the domestic context and for those who dislike freedom and capitalism worldwide."
This is very poor. You could do better.
OK, Greg Dyke is gone, the broadsheets have been infected with the tabloid style, BBC is trying to be like ITN(?), but the language, concepts and grasp/chatter seems to have gone done quite shockingly over the years.
Programming is abysmal, old rubbish + new celebrity junk and people (like Paxman) who think they're the news or a parody thereof.
At least US has terrestial channels funded by ads - here we have to put up with drivel and have to fund it with the licence fee.
To paraphrase Bill Hicks - we're free to think as you tell us.
Presumably this won't get posted either - somehow inflammatory too? hah!
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129. MarcusAureliusII:
Wall Street had to know there was tremendous risk involved in MBS's. Did they just figure it was the government's risk and not theirs?
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re: #115 MarkfromOxford wrote:
"What caused the crash was the Bush tax cuts and the war in Iraq."
Well, that might be correct as a description of the most proximate underlying cause, but the real problem is more systemic and long-term. The last time the US Gov't had a surplus was in the early 60's. Continuous deficits are unsustainable, even if one can print money at will. A major crash was inevitable; the Bush policies merely hastened it. Other factors discussed on this blog played a role as well, but they are much less significant contributors.
If one looks at the numbers, it appears that either the war or the cuts might have been accommodated for quite some time, but the combination of both was just too much. In addition, the drastic rises in the price of oil in the past few years served to drain even more capital out of the economy, reducing resiliency even more.
In some ways, it's eerily similar to the "Guns AND Butter" choice that Johnson made (and Nixon more or less followed) during the Viet Nam war, which contributed greatly to the mess of the mid/late 70s which came to a head with the oil shortages.
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28. Parrisia:
"any comment on the Palin "Obama-terrorist-sympathiser" cheap shot?"
I would say you have no idea how repugnant Obama's having anything to do at all with Ayers is to many Americans.
Ayers was, in fact, a domestic terrorist. Now Obama's campaign says he didn't know this when he held his campaign kick-off in Ayers' home.
Just like he never heard Wright's more derisive sermons.
Obama seems to miss quite a bit.
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#130 AndreaNY
Excuse me Andrea, but I don't think many people over here are bothered by the fact that Justin has blamed democrats. They are more angry about the stereotyped "those who dislike freedom and capitalism worldwide". This problem started because of lack of checks and balances, and not because some freedom-haters did this.
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From City Journal, a call for greater disclosure of Ayers and Obama's relationship with him.
I particular like the description of the NY Times' incredibly vague piece on Ayers.
Calling Bill Ayers a school reformer is a bit like calling Joseph Stalin an agricultural reformer. (If you find the metaphor strained, consider that Walter Duranty, the infamous New York Times reporter covering the Soviet Union in the 1930s, did, in fact, depict Stalin as a great land reformer who created happy, productive collective farms
The Bomber as School Reformer
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Opinions, are like heads,......
This time around, being another bubble in our ever shrinking world is 'less' like any other financial adjustment, at anytime before. The lack of international investment and banking regulation may be more to blame than those making the loans.
The Glass-Steagall act of 1933,.. hmmm, I see someone even linked to it by my windows that are opened, good.
Another opinion of mine,...As to lenders and bankers that joined in the theft, profited from stealing, they should be prosecuted.
One more,.. I'm losing respect for the political system and politians. Where did they get the idea I'm voting on the past and not what they're planning 'to do'. Seems to me the senate and house have had the power to take care of the people whom put them there, they haven't I know, so address the change, make a promise, expect consequences if you fail.
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138. paul939:
True, but he is also getting some criticism for "sounding like a republican", which seems to have more to do with his mentioning the democrats' role in this.
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138. paul939:
Just to clarify. Justin implies that people who dislike capitalism would be happy to believe it is the sole cause of this situation, not that they caused it.
In other words, people with an axe to grind with the US would be happy to see its system fail.
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#133 AndreainNY
Very interesting. I read it all.
You picked out the most interesting bit.
He also says:
Form the above, Alan Greenspan was worried that detailed regulation would associate Freddie and Fannie even more with the government, giving a competitive advantage because of this artificial (well, it wasn't as it turned out) 'government backing'.
So he just wanted them stomach-stapled, their business constrained. That would have stopped the bubble getting so big.
Whether it would have stopped it going bang is another thing. The housing market was already in Fairyland.
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On the lighter side:
Three Brazilian Soldiers
At a press conference with George Bush, the reporters were surprised when George Bush put his head in his hands and appeared to be truely saddened at being told three Brazilian soldiers lost their lives in Iraq,... moments passed and George lifted his head,. a tear on his cheek,... and asked:
"Just how many men in a brazillion?"
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Cod's-Wallop
A shameless plug for your Journo buddies employer.
Let's try a more serious topic.
Like the rumour that 'W' was gonna call 'Martial Law' if the 'bail-out' failed again.
C'mon Justin. we need a serious discussion on far weightier news items.
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"139. At 2:11pm on 07 Oct 2008, AndreainNY wrote:
From City Journal, a call for greater disclosure of Ayers and Obama's relationship with him.
I particular like the description of the NY Times' incredibly vague piece on Ayers.
Calling Bill Ayers a school reformer is a bit like calling Joseph Stalin an agricultural reformer. (If you find the metaphor strained, consider that Walter Duranty, the infamous New York Times reporter covering the Soviet Union in the 1930s, did, in fact, depict Stalin as a great land reformer who created happy, productive collective farms"
We are not talking the 1930s we are talking about a publication whihc seeks to compare William Ayers with one of the greatesr mass murderers in the 20th century.
This tells us all we need to know about your hopeless politcal blinkers.
And not overlooking the profound, almost blasphemous dissrespect to Stalin's victims.
Perhaps you should show this piece to someone whose family sufffered, like all of Poland, Bulgaria etc
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"142. At 2:20pm on 07 Oct 2008, AndreainNY wrote:
138. paul939:
Just to clarify. Justin implies that people who dislike capitalism would be happy to believe it is the sole cause of this situation, not that they caused it.
In other words, people with an axe to grind with the US would be happy to see its system fail."
No faulting the logic here. Whether it actually means anything however...
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"132. At 1:47pm on 07 Oct 2008, eightypercent wrote:
# Simon 121
I imagine that this is an issue which Obama will raise in his debate tonight. Both he and Biden have been trying to steer Americans' minds in this direction but are told that they are trying to "raise the white flag of surrender".
Presumably the electorate will be more open to the Obama/Biden argument after the events of the last couple of days."
Yes I would bet money if the US electorate were asked should $1 be spent on either country while people are losing their homes the answer would be very clear.
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I'm not sure it is the democrats making most noise about who is to blame for the crisis. In fact most of the populist "Evil Bankers" rhetoric has seemed to come from the right. Just witness Palin's intellectually rigorous comment on the issue "Darn right it was the predator lenders, who tried to talk Americans into thinking that it was smart to buy a $300,000 house if we could only afford a $100,000 house. There was deception there, and there was greed and there is corruption on Wall Street... I think we need to band together and say never again. "
That is the same overcharged emotional rubbish that extremists bandied about in the 20s and 30s. Shows where her real core values lie.
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# 139 Andrea
It does not really matter what they call Ayers. The issue at stake is Obama's "relationship" with him - and evidence shows that it is really pretty tenuous.
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http://news.yahoo.com/s/ap/20081005/ap_on_re_us/foreclosure_woman_shoots_self
YET....
"The statement came after Palin had recounted a "providential" moment she experienced on Saturday: "I'm reading on my Starbucks mocha cup, okay? The quote of the day... It was Madeleine Albright, former Secretary of State [crowd boos] and UN ambassador. ... Now she said it, I didn't. She said, 'There's a place in Hell reserved for women who don't support other women.'" "
Actually, Albright didn't say that. The accurate quote is, "There's a place in Hell reserved for women who don't help other women."
http://www.huffingtonpost.com/2008/10/05/palin-misquotes-albright_n_131967.html
.........
Why are you and your running mate standing on stage and talking about Bill Ayers when my retirement acount lost 40% of its value this week? Did Bill Ayers blow up my retirement account, is that where all of my life savings went?
Why is your campaign spending a single minute bad-mouthing Jeremiah Wright? Did he cause my daughter’s college fund to disappear overnight? If so where did he take it?
http://oneangrydwarf2008.blogspot.com/2008/10/open-letter-to-john-mccain.html
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Capitalism requies unrestrained greed.
This results in victimization and great inequality.
The recognized alterative, socialism, implies
bureaucratuc inefficiency.
One may replace the other in the search for a stable and equitable society.
There may be a better way, and we should seek it.
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If you would like to know what caused the meltdown in the US read about the Community Reinvestment Act. Also read about some of Obamas work suing banks and financial institutions for discrimination against minorities.
There is an atmosphere in the US where you have to be very careful abt what you say, to the point where the cannot state certain simple facts, without being branded racist and have your life ruined. The truth of the matter is that in the 90s certain Democrats had the idea that bk blacks and other minority groups weren't getting as many loans, banks needed to be forced to give a percentage of loans to minorities. Also the govt put out programs (the Democrats of course) to give 0% down loans to low income borrows. The problem is that the reason minorities weren't getting loans was not because of racism, it was because not enough had large enough incomes or high enough credit scores to qualify. When these programs started to fail we started to see the fed start the rate cuts in an effort to "correct" the problem, which further fed the artificial influx of money into the housing market which has brought us to where we are today. The Investment Banks are primarily failing because of securities which were built on the artificial loan products created by the Community Reinvestment Act and the govt enforced minority loans. A few people have brought this up and of course they have been shouted down as racist as soon as they open their mouth. False accusations of racism have a strong component in the root of the crisis in the US.
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Sarah Palin has been the only one who has mentioned that we need to take responsibility for ourselves. I saw another comment here quoting her talking about how banks were to blame, but the quote cut short of her pointing out that people need to take responsibility. When spreading word abt our preferred candidate, we really need to ask ourselves why we need to lie or mislead abt the other. I have seen so much phony and misleading info abt Sarah Palin that it makes me wonder what Obama supporters really stand for.
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This comment has been referred to the moderators. Explain.
Andreain NY @ 133
"As a general matter, we rely in a market economy upon market discipline to constrain the leverage of firms, including financial institutions."
So, yeah, how's that working out?
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154. dancingdddccc:
"I have seen so much phony and misleading info abt Sarah Palin that it makes me wonder what Obama supporters really stand for. "
Well. They have convinced themselves that experience doesn't matter in a presidential candidate, John McCain is not a real war hero, Ayers' violence is irrelevant, and, now, forcing high-risk borrowers on banks was simply participating in the American dream of home ownership.
And Obama decries gutter politics while releasing a very long video of McCain's links to Keating.
His words and actions are often different.
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156. Eddie-george:
Andreain NY @ 133
"As a general matter, we rely in a market economy upon market discipline to constrain the leverage of firms, including financial institutions."
So, yeah, how's that working out?
**********************
When the government intervenes, as in the case of GSE's, not so well, it would seem.
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AndriainNY #135
Have you ever listened to stock analysts? They look at balance sheets, not the quality of assets. In fact not only was the quality of these assets misrepresented, uninvestigated by the experts who were supposed to do their "due dilligence", impossibly complex and convoluted, they were opaque. You couldn't decipher them if you tried. Most were intentionally designed that way. Don't blame people for taking advantage of what the government allows. All the analysts saw was that profits were doing well for awhile and when they started down, they never imagined the size of the underlying cause. They missed it just the way the government economists did. They took their eye off the ball. They were too busy with important things like their golf swings or buying another vacation home somewhere. Only two or three weeks ago, we were deluged by headlines about what was meant when Obama said putting lipstick on a pig. Before 9-11, the government and the public was preoccupied about the morality of embryonic stem cell cloning. Why do you think I don't trust these people and have only contempt for the pearls of wisdom that flow endlessly from their mouths? BTW, except for one small investment that is worth only 2% of my net worth, I've been out of the stock market for years anticipating exactly what is happening now.
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Who's to blame?
Well, it's fair to assign a share of it to the current Republican administration, who relaxed regulations. And it's also fair to assign some of it to the Democrats who assisted in this.
But the real culprits, I'm afraid, are Joe Six-Pack and the Hockey Moms of this world. You and I, in other words. In the mid-1970's the US savings rate (savings as a proportion of income) was at 14%. As of June this year that had steadily declined to just 0.7%. Given that there are still a lot of people, typically the older, more conservative types, who continue to save, that means there must have been a huge number of people who were dis-saving; i.e. spending more than they earned.
There's no need to get NASA's finest brains to work this one out; Americans were borrowing too much. Sure, you can blame the banks for lending too much, but no-one forced you take take on that extra credit card, no-one put gun to your head and made you buy a car on 100% credit. To paraphrase the pro-hunting lobby, banks don't spend banks' money, people spend banks' money.
As is so often the case, America leads and the world follows. Consumers in my home country (England) did the same. Nothing wrong with this, of course, so long as we all believe that the good times will keep rolling, that there's an ever-available source of funds, and that you can always roll current debt into another 0% transfer credit card.
At some point, the party had to stop. We all knew it had to, and we all closed our eyes to it. Politicians didn't stop it because electorally, preaching fiscal conservatism would be a vote-loser, not least because re-introducing much stricter financial controls would almost certainly have sparked a recession anyway.
It's hard to see how we get out of this without accepting that there has to be some level of austerity in the years to come. We'll have to spend less and save more. Because that means reduced consumer spending, that may well mean increased unemployment.
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#153 dancingdddccc
The current crisis has little to do with banks lending money to ethnic minorities or to those of a poor background - its just a symptom. The housing market being overvalued and Americans having hidden taxes like health bills have played more of a role. It's the middle classes that's suffering.
Fractional-Reserve Banking is an even bigger culprit.
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#160 endorfin and others
There is this persistent equation that if lack of regulation caused the problem - and I believe it partly did - then deregulation must be to blame.
How about this whole market in securitised debt was just so new and complicated the regulators could not keep up with it - or more to the point, could not keep the politicians up with it.
The Democrats saw regulation of Fannie and Freddie in particular as just some right wing conspiracy to reduce housing supply to poor people.
The Republicans saw it as a surreptitious way to spend government money - which is what had to happen in the end.
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136, Peter
Actually Clinton notched up a couple of budget surpluses in the late 90s and if Bush had not decided to blow it things might have stabilised a bit more; but instead he rolled through his tax cuts, doubled defense expenditure and then launched a war in Iraq; so the mess really is Bush's responsibility.
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endorfin #160
"As is so often the case, America leads and the world follows."
I am so glad you made this point. This proves contrary to what many believe that at best the rest of the world is no smarter than America. What do you call people who blindly follow someone else over the edge of a cliff?
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"157. At 3:06pm on 07 Oct 2008, AndreainNY wrote:
154. dancingdddccc:
"I have seen so much phony and misleading info abt Sarah Palin that it makes me wonder what Obama supporters really stand for. "
Well. They have convinced themselves that experience doesn't matter in a presidential candidate, John McCain is not a real war hero, Ayers' violence is irrelevant, and, now, forcing high-risk borrowers on banks was simply participating in the American dream of home ownership. "
As opposed to McCain Palin supporters who believe intelligence and achievement do not matter.
However the electorate, who already has had experience of an "experienced" ignoramus in high office knows a bit better.
"And Obama decries gutter politics while releasing a very long video of McCain's links to Keating. "
Yes rather enlightening. John plainly was not expecting this one.
People who live in glass houses springs to mind.
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#161, dceilar
I understand your point, but given that we've had fractional reserve banking in place for over 200 years, I can't think that it's the cause.
If we're to have full-reserve banking, we might as well return to the Gold Standard or something like it......which is never going to happen.
What we can do, however, is ensure that the reserve percentages are set at higher levels, and that there's far better regulation of the esoteric financial instruments which have been employed in the recent past.
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# 164 "America leads and the world follows"
It may never happen again though. America is as reliant on exports as the next country, and in the US these have been reduced down to mainly two categories : arms and the hi-tech industry. There is going to be a backlash against the former, and the Chinese are well able to take over the latter.
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Deregulation is a large part of it. The instruments 'created' that failed were prohibited under the old rules. The mortgages, the subprime ones, are the fault of BOTH parties.
I doubt a whole lot had to do with trade with China. It has to do with the American mindset that they are due material goods, and that they should have every gadget on the market even if it means going into debt to do it.
Not living within ones means, coupled with deregulation and lack of oversight, is the gist of the matter. That, and a weird jingoistic blindness that avows 'we're #1' even when we're not.
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We are supposed view Obama with suspicion because he has an acquaintance who, when Obama was 8 years old, was a left-wing radical who, angry about the last stupid war we got ourselves into, tried to blow something up.
This acquaintance was caught, convicted, and served jail time and is now a college professor.
Yeah, I am really worried about that.
Bush and his corrupt and incompetent administration, aided and abetted by John McCain have done more economic damage to this country in the last 8 years than Osama Bin Laden could have imagined in his wildest dreams.
And, if you want to tie people to suspect connections...
How about GW and the Saudi's? The week after 9/11, the White House arranged for special charter flights to be sent around the US to pick up prominent Saudis, including a number of Bin Laden's relatives, and fly them safely out of the country. The FBI was not informed of these flights nor were they given an opportunity to interview Bin Laden's relatives.
GW has attended social events in Saudi Arabia where Bin Laden's relatives were also in attendance.
10 out of 12 Saudi hijackers were from Saudi Arabia. None were from Iraq. Yet we invaded Iraq not Saudi Arabia.
Time and again, the CIA has briefed GW that virtually all the funding for Al Qaeda comes from Saudi Arabia and yet the US government does nothing to stop it.
It has been 7 years since 9/11 and Osama is still out there. Do you ever stop to wonder why?
Maybe it has something to do with the fact that GW has been in bed with with Saudi's for his entire adult life?
GW's connections with terrorist sympathizers are current and they are not with some misquided '60s radical.
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150. eightypercent:
# 139 Andrea
It does not really matter what they call Ayers. The issue at stake is Obama's "relationship" with him - and evidence shows that it is really pretty tenuous.
*************************
My post in response to this post did not make it past the checkers.
I will repeat that you are very much mistaken. Ayers' behavior was anathema to many Americans. Any relationship with him is unacceptable to them.
Here's another attempt to link to CNN's Anderson Cooper's look at Ayers and Obama:
http://dirtyharrysplace.com/?p=4873
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The Democrats should know because they deregulated Wall Street, as the earlier piece states. But this is all barking up the wrong tree, Justin. Miscalculations are not caused by deregulation, rather, not making corrections/adjustments is. That's because if regulators no longer have authority to go in and audit on a regualr basis and lean on banks to redress imbalances brought about by miscalculations, and correct other mistakes, you're going to get rampant chaos. Same with every industry. Supervision should never have been relaxed, and in the future it never will.
McCain is more interested anyway in casting Obama as "lying" about his ties to the home loan industry and asking what his rival had ever accomplished in government. It will be interesting to see if 'McClaim' can detail exactly what is this "lying" all about, without it coming out all incoherent Sarah "Palling" style. Lots of Republican supporters raise the question what has Obama ever done. Try this: he's studied and he's articulate. Another little thing is President of the Harvard Law Review - thousands of lawyers, including state lawyers, depend on that publication across America. There's no comeback to that because it's an important work and therefore vastly outweighs the accomplishments of politicians. Even so, Obama has only to wheel out his record as a US Senator, not to mention going straight to the top of one or the other of the two greatest political parties in America.
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This seems to make sense at the outset, but had the SEC not changed the net capital rule (as urged by then head of Goldman Sachs, Henry Paulson) in 2004 to allow banks to leverage assets up to 40-1 (the previous cap was 12-1) this crisis would not have been nearly as large or disasterous as it is.
Webb and others argue that allowing bubbles and using the "clean up later" approach had nothing to do with policy or regulatory changes. In fact, the SEC allowed this bubble to grow beyond historic precidents through deregulation, specifically the change in the net capital rule.
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plembo (#94), I don't think the people responsible for the mess are exactly "taking us down with them." For example, it has been reported that Richard S. Fuld Jr., former CEO of Lehman Brothers, made about $350 million in the few years leading up to the bankruptcy of his company. The stockholders went down, but he did pretty well himself, apart from losing face.
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Justin, I have respect for you as a journalist and you wanting to correct the perception of the US in Britain. But I am starting to get worried that you are doing a McCain and losing the plot or in other words becoming somewhat erratic.
I also heard you on the Simon Mayo show yesterday and I noticed that you sidestepped the question relating to Katrina and attacked the other bit of the question (can't remember what it was now). Rather a politician's answer I thought. I know you seem annoyed to see McCain struggling in the polls when you predicted he would win but this is getting ridiculous.
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171.peterdough:
"Lots of Republican supporters raise the question what has Obama ever done. Try this: he's studied and he's articulate. Another little thing is President of the Harvard Law Review - thousands of lawyers, including state lawyers, depend on that publication across America. There's no comeback to that because it's an important work and therefore vastly outweighs the accomplishments of politicians. Even so, Obama has only to wheel out his record as a US Senator, not to mention going straight to the top of one or the other of the two greatest political parties in America."
Two points. First, if being intelligent, articulate and well-educated are qualifications for the presidency, most of my neighborhood would probably qualify. And people rely on the writings within the Harvard Law Review. Were Obama's published?
Second, his "record as US Senator" has been noticeably absent from view. Why is this? The reason is that he has not been been particularly active. Having his name connected with legislation is not the same as being responsible for it. Likewise, giving a speech about something is not the same as legislating.
Obama's prime deliverables have been his books and speeches. They are enough to make people believe he can lead our country. Their belief is certainly not based on his shallow record in the Senate.
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Andrea
You insist that the Omaba's knowledge of Ayers in that they lived near to each other and both were working in the field of educational improvement is "important to many Americans".
In the same vein, the Keating Five scandal, being on the board of an ultra right wing organisation with links to the Iran Contras, and associating with members of the Alaska Independence Group are also "important to many Americans".
Why, if Ayers is such a toxic person, has he been left in peace to work in the public arena for more nearly thirty years ?
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No, deregulation did not cause this. It was a confluence of events, set in motion long ago.
It is a case of Murphy's Law:
1. If anything can go wrong, it will.
2. If there are a range of options about what will go wrong, the worst option will occur.
The list goes on--I'm certain it can be looked up.
But my favorite is Kelly's Corollary:
Murphy was an optimist.
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This guy in the Washington Post spends a whole article talking about market regulation without mentioning the consumer! He's unbelievable. Consumers need protection from predatory lending; the hedge funds can look after themselves (or collapse, as the case may be).
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170 AndreainNY wrote
My post in response to this post did not make it past the checkers.
I will repeat that you are very much mistaken. Ayers' behavior was anathema to many Americans. Any relationship with him is unacceptable to them.
Here's another attempt to link to CNN's Anderson Cooper's look at Ayers and Obama:
http://dirtyharrysplace.com/?p=4873
..............................................
Ayers committed crimes, he served time for them, he is now a respected educator, appointed to a senior position by the mayor of Chicago. It was inevitable that Obama would have some relationship with them because of their interests in Chicago at the time. Using this relationship to try to smear Obama as a friend of terrorism is McCarthyism resurrected. On the other hand the Keating debacle did end with the conclusion that McCain had questionable judgement, specifically in the realm of finance. This is very relevant in todays world.
Also Menachem Begin, Yitshak Shamir and other Israeli politicians had far worse records of terrorist assassinations and bombings in their pasts than anything Ayers did. Most Americans seemed quite happy for US politicians to associate with them.
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# Notting Hill
Final word from on the McCain campaign's obsession with Ayers comes from Ross Douthat :
"The stock market is tanking. The global economy is in peril and we think the most important thing on your mind should be whether Barack Obama was too chummy with a sixties terrorist you have probably never heard of."
Quite - let's move on.
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Only psychopaths like AndreainNY would vote for Palin.
These people would love to burn a cross!
America is showing the first signs of the end of what was once a great nation. American's are so brainwashed by religious rubbish and psycho-patriotism that there is no hope as long as this country is full of rednecks and psycho's like this AndreainNY.
It hurts to see your country on its way to doom, but such reality is evident. The moment you start manipulating an angry mob to call people terrorists and traitors, you are on the way to cultural war and soon a civil war.
All this to thank a psychopath like Palin and a greedy selfish man McCain.
If God is with Palin, that I will gladly be against this sort of God and all the fools like AndreainNY who walk such hatred paths.
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Oh and over regulation sure was not the cause.
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Bill Ayres is a hero to america.
or he should be.
Just as those throwing rocks in seattle should be heros.
These people told you things were wrong, you ignored them, now we or you'll suffer.
Ninny Your fellow White Folk were lynching people.
lets get the dirt of every southern senator see how many associated with the clan.
BET YOU THATS A HIGH NUMBER.
Clan were they terrorist in your eyes?
Or are they just misguided good old boys.
start digging
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175 Ninny you are about to vote for a vacuous bimbo with a geriatric old frump because she makes a good cheer leader.
again get real.
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177. eightypercent:
Andrea
You insist that the Omaba's knowledge of Ayers in that they lived near to each other and both were working in the field of educational improvement is "important to many Americans".
In the same vein, the Keating Five scandal, being on the board of an ultra right wing organisation with links to the Iran Contras, and associating with members of the Alaska Independence Group are also "important to many Americans".
Why, if Ayers is such a toxic person, has he been left in peace to work in the public arena for more nearly thirty years ?
**************************
The issue with Ayers has to do with Obama's blind eye for people's integrity when it comes to his own advancement.
If you can explain why Obama would hide his relationship with Ayers, you'll understand why the relationship matters.
As for why Ayers has been accepted in Chicago, this is probably better explained by someone from Chicago. His acceptance there doesn't mean that he's acceptable to people in other parts of the country.
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One of the few benefits to come out of this, is that the futures speculators who bought long in the oil and corn market are really seeing their backsides. I wonder when these losses will hit the market?
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"Only psychopaths like AndreainNY would vote for Palin.
These people would love to burn a cross!"
"Ninny Your fellow White Folk were lynching people."
You both are very troubled. Why not take it somewhere else.
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Tina fey does not even deserve credit for doing palin well, she happens to look similar and she just repeats the dumb palins words.
SNL "may " have palin back on.
Bull put the witch in coventry. Ignore her.
Spitting image reamed people every week. it was satire. this SNL fawning to get viewing figures, will just play in to the "oh look she can take a joke "rubbish.
She is a joke that should be a given.
If they want to make a point why not "red Wedge "it and just say.
" palin is appaling stupid windup doll in bith ways.
Winds people up. and speaks like she has had something twisted in the lower part of her body.
I wonder where they put the key in. but not for long.
Right wingers. WIN
I love to see your country crumble under Palin.
That would amuse us commies so much.
Vote Palin-- End America.
Oh and J mc criminallyinsane is irrelevant.
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mods can offer no reason for striking a letter just because it says get a life to justin
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mods put one up.
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180 AndreainNY wrote:
The issue with Ayers has to do with Obama's blind eye for people's integrity when it comes to his own advancement.
If you can explain why Obama would hide his relationship with Ayers, you'll understand why the relationship matters.
As for why Ayers has been accepted in Chicago, this is probably better explained by someone from Chicago. His acceptance there doesn't mean that he's acceptable to people in other parts of the country.
..................................................
Clutching at straws now? Also avoiding the Keating issue, which is one of substance unlike this canard. The fact is most people neither know or care who Ayers was 30 years ago. This is an issue strictly for the lunatic fringe.
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AndreainNY,
you BETCHA!
you betcha i am troubled. YOu know what troubles me?
It troubles me that my country is full of people like you. It troubles me that ignorant people decide the fate of my family, it troubles me that angry religious extremists (christians in this case) manipulate the ignorants in my country to go and call terrorist one of their own countryman. It troubles me that my country no longer is a symbol of freedom in the world but a symbol of hatred.
It troubles me to hear from international friends that America is part of the problem in the world rather than a solution.
It troubles me that people are killing their families because they can't get a job and with dignity do the sacred job of keeping a family alive. It troubles me that this country is full of haters like you, who hate non-whites, and hide behind your religious primitive ideas. God does not want you, God does not want people like you.
People like you, liars, hypocrites, rich who take advantage of the poor of the world were the ones who killed what you like to call your god.
It troubles me that this country of my fathers, is so near its doom that my ignorant country men do not realize. Rome was not destroyed in one day either, but America has started its day the moment Palin was brought on stage. Ignorance is valued more than knowledge in this once great country.
I know it doesn't trouble your type. But I hope that if you have a family to follow you, you live long enough to see their lives destroyed by your ignorance.
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ninny really come back with a defence you, never do.
you seem to be very careful in your answer. or lack of answer. it was me that mentioned your people lynching.
-----------------------
"Ninny Your fellow White Folk were lynching people."
You both are very troubled. Why not take it somewhere else.
-------------------
Your troubled you psychotic weirdo.
Your about to vote for a bimbo because your too racist.
you mock me for mentioning the lynchings. DID THEY NOT HAPPEN?
DID YOU ANSWER WHAT WOULD BE THE RESPONSE TO PEOPLE THAT ASSOCIATED WITH THE CLAN.
NO
As always, just call US freaks and sit back feeling happy with your racist self.
If she was not racist she might have said all clan activity is wrong. she ignored it AGAIN.
Every time I have asked you a question likje this Ninny you run from it. so tell me what you think of ex clan members being in the house or senate?
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Get caught up.
Anti globalisation supporters will not be as surprised as you all seem to be.
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Andrea
There are also a number of Americans who regard the Kent State shootings in the same way as others regard Ayers. The difference, though, is that it was the state that killed its' citizens, not the other way round.
Or do you agree with the words of Ohio Gov. Rhodes describing the protesting students that:
"They're worse than the brown shirts and the communist element and also the nightriders and the vigilantes," Rhodes said. "They're the worst type of people that we harbor in America. I think that we're up against the strongest, well-trained, militant, revolutionary group that has ever assembled in America."
America always has been a divided society, on many levels, and and your America is not the America that other citizens see and experience.
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Hi all. Suggest you all go over to YouTube.
It has a nice piece there which explains it all. It goes a tad fast, so you just have to use the pause button occasionally to get the details. Here's the link. And I hope it works on you like it did me:
http://www.youtube.com/themouthpeace
Toodle Pip!
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Oh and well done Mr Webb. You seem to be getting the picture in focus this time.
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Let me pose this question as I am quite interested in the response.
Re: Ayers
For those who it seems are not in the least bit rankled by his actions - how do you feel about the Unibomber, Oklahoma City, the Atlanta Olympics or, even the IRA for that matter? Do these folks bother you or are they just not on the same level as Ayers?
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Hmm, "If ignorance is bliss", then surely many posters here must be very happy.
The "balanced budget" under Clinton was a result of revisionist accounting practices and extrapolation of unrealized savings. It sounded good, but was not real.
Did Bush waste enormous resources on Iraq? Absolutely! The US did not have resources to fund this mess.
Iraq did not cause the financial crisis. China, Oil, and India did.
HUD Secretary Andrew Cuomo and President Clinton caused mortgage changes (imposed on Fannie Mae and Freddie Mac) in the early 1990's to expand home ownership for lower incomes. Clinton made it worse in August, 1999 by raising borrowing limits.
Very poor banking/loan/mortgage broker practices in the 2000's allowed the earlier bad-idea to manifest to the current mess.
It was worsened even more in 2004 when the lending ceilings were raised further to sustain the inflated prices. (I understand Obama voted for this, but have not verified. I really do not care.)
Why did it happen under Bush instead of Clinton? Because the realization that the value of real estate is coupled to the income base that can pay for it. As long as real estate went up price (not value), the bloated loans were coverable.
America enjoyed a credit frenzy under Clinton. It was perceived as "prosperity". The wealth never really existed. We passed stock ownership and real estate ownership back and forth at ever increasing prices. America borrowed against the higher prices.
Now that the dust is settling, it is most unfortunate that those who lived within their means have to fund those who did not.
Why did the confidence fall? It is not Bush.
It is because American manufacturing, services, and killed professions that produce goods and services were all outsourced or diluted by the H1B and L1B programs.
Clinton's making China the most favored nation completely and thoroughly destroyed entire American industries. (Textile, furniture, much manufacturing) It created industries, such as the export of raw and reclaimed materials.
The 1990's and 2000's diluted the American ability to actually generate goods and services (produce wealth).
The 1990's and 2000's diluted the American ability to pay for (mortgaged) real estate.
So much for Clinton's, "new economy and end of the business cycle".
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The Notting Hill Hammer (#195), you hit the nail on the head. Ayers, Dohrn, and the "Weather Underground" were consigned to the dustbin of history long ago. Hardly anybody remembers them. The irony is that they are now probably enjoying their extra 15 minutes of fame.
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As a Chicagoan maybe I can lend some insight about the city with broad shoulders.
I like many ,here in the windy city,come into contact with a multitude of people poltitically covering the spectrum .
In a diverse and multicultural city Chicago much like London is a polygot of people and perspectives , One finds oneself with people of various stripes on a routine basis . We may not agree with all perspectives but they do repesent an opinion . We have become a tolerant lot ( maybe not as tolerant as London but a great evolution from the days of the 1968 convention riot ).
Ayers is a professor of Education at the University of Illinois Chicago . Dispite what he may have done as a young man he seems to have made a reputaion for himself that has earned him a place in the the community.
His wife is a Associate Professor at Northwestern University Law School and also has had issues as a young woman.
Hyde Park, the neighborhood of Obama is in the backyard of the University of Chicago where Obama taught for years .
It would not be uncommon for any academic to be in contact in some sense with people of a wide a variety of orientations and opinions.
Merely being there does not make any of us fellow travelers .
If my math is correct ,Obama was eight and in Hawaii when Ayers had his issues of radicalism .
I also have taught at a University in Chicago . It is inevitable that we brush against many who we may not share the same world perspective .
Thats what makes Chicago interesting
I invite anyone who has not been to Chicago to take a look . You might be suprised at how far we have come .
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A few years ago Henry Kissinger bemoaned the lack of intelligent and thoughtful public discourse and remarked that the men who crafted the constitution must be turning in their graves. I wonder how those men would have regarded Palin? I'd love to hear Kissingers private thoughts on the subject. This woman is an embarrassment to everthing that Americans say they value about their country. Is this what the founding fathers envisaged.
What really irks me is that both McCain and Obama have fought long campaigns and been chosen by their party to represent them. Palin has done neither, yet she has taken it upon herself to insult and besmirch the Democratic candidate with nothing other than innuendo and spite.
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#166 Endorfin
#161, dceilar
I understand your point, but given that we've had fractional reserve banking in place for over 200 years, I can't think that it's the cause.
If we're to have full-reserve banking, we might as well return to the Gold Standard or something like it......which is never going to happen.
What we can do, however, is ensure that the reserve percentages are set at higher levels, and that there's far better regulation of the esoteric financial instruments which have been employed in the recent past.
Excellent intelligent reply. Fractional-Reserve banking though is not completely innocent in all this. Banks have always had more loans (assets) then deposits (liabilities) (if all savers withdraw their deposits at the same time the bank will run out of money), but when much of its assets turn out bad and savers start withdrawing their deposits something unpleasant starts hitting the fan.
The Gold Standard is certainly not an option as you correctly stated.
I believe the standard ratio for Fractional-Reserve banking in the past has been 1 to 10; presently, I hear, its 1 to 30 or 40! Can we regulate banks to the 1 to 10 ratio without stifling competition? All this is hypothetical until the current problems are solved. Is Keynesianism the way to go presently?
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Origins of the crisis. In 1972, President Nixon took the USD off the gold standard and opened the door for the international movement of capital. In the 80s, Thatcher and Reagan brought us monetarism and the primacy of the free market. New communication technology further facilitated the international movement of capital, the export of jobs out of the US (and Europe) and the weakening of organised labour, viz a viz, the owners of capital. For example, as Robert Reich has observed, in the 1970s, the top 1% of americans had just 8% of the nations wealth. Today they have 20%, thus reducing markedly the consumer base that economists claim to be the engine of the economy. Their real incomes reduced, working americans resorted to various coping mechanisms to stay in the consumer game, one of these being the increasing use of credit and loans they could ill afford. The origins of the crisis?, the greed of the rich.
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It is possible, I suppose, that the deregulation movement which began in earnest during the Reagan administration and subsequent proliferation of too-easy credit for everything from automobiles to houses is simply a coincidence. Of course, there were a number of factors in this financial mess we find ourselves in now. However, the easy credit and the tactics used to make it all seem okay did a great deal of economic harm. I recall the true stories of graduates of prestigious business colleges going straight into positions in large brokerage companies, insurance companies, and into investment banking and earning at least a million dollars a month. Some of that largesse went away inthe late Eighties, but much of it kept going behind the scenes. Even the way in which credit card companies exacerbated the growing problem.
Soon there were also real estate schemes which involved prchasing a house and taking out a mortgage as large as the bank or other institution would allow. Then the house was sold or rented to own. The equity was used to do more of the same. People were told they could earn so much money in this way they could quit their day jobs and live like millionaires. Then came the loan companies giving a mortgage loan to anyone who was still beathing. This goes on and on.
Meanwhile, no one was watching and government did nothing. It was a trainwreck waiting to happen. Now there are people who lived way beyond their means, people who bought homes way beyond their means. Too many people are in debt up to their eyeballs just as one of the old advertisements used to say. I am not persuaded that the lack of oversight and lack of regulation combined with the Me Generation mentality did not cause this disaster. The Democrats did not invent this story to make Republicans look bad. Republicans had most of the legislative control while this entire problem was developing and no one on either side had enough sense or courage to say thisimpending disaster must be stopped must be stopped. That is, they turned a blind eye and some politicians benefitted until the financial system began falling apart like a poorly constructed garment..
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208
Ayers never actually killed or attempted to kill anyone. His bombings were directed at symbolic buildings. Whether he knew what Robbins, and his girlfriend Oughton, were intending when they blew themselves up is another matter.
What he did, though, can't be condoned. However, his later projects and acceptance by Illinois University put him back into the mainstream of society.
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# 211 Lqwchicago
Thank you for your post confirming to us that tolerance and understanding do still exist in America. Some of us have been getting alarmed - particularly by the reports of behaviour at recent McCain/Palin rallies which smack more of 1930's Germany than the rainbow country which we have loved.
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ref #211
I visit Chicago every year on business and enjoy is a great deal.
But my perspective and this is not to cast aspersions on your city or any other but why does this guy deserve a job at the University?
I would love to see the law saying tenure is a right.
I don't think Ayers, Churchill or the Duke 88 deserve to have high paying educational jobs.
But back to Obama there is supposidly more information being revealed about William Ayers connection on of all places CNN.
I know most Obamaphiles would disregard a Fox News reference
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208. At 5:53pm on 07 Oct 2008, invisibleserendipity wrote:
Let me pose this question as I am quite interested in the response.
Re: Ayers
For those who it seems are not in the least bit rankled by his actions - how do you feel about the Unibomber, Oklahoma City, the Atlanta Olympics or, even the IRA for that matter? Do these folks bother you or are they just not on the same level as Ayers?"
Well Nelson Mandela was a convicted terrorist (unlike Ayers) as well wasn't he and he had been welcomed by Presidents and spoken in the COngress
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To the people who think that banks were "forced to give loans to people who couldn't afford them," please check your facts. Bank were forced to stop relining whole neighborhoods -- usually minority neighborhoods -- meaning that no one living there could get a loan, even if they had perfect credit. Yes, some borrowers made rash decisions, but no one FORCED the banks to do anything but judge people on an individual basis, rather than lump everyone in one area into a pariah category. Above all, no one forced lenders to give out no-asset-no-income loans. Yes, the borrowers should have known better too, but aren't the lenders supposed to to be the most educated about the consequences of making foolish loans? They just figured they would make a pile of dough by bundling up loans they knew were rotten and selling them off to the next buyer, and investors seemed not to know or care that they were engaged in a game of "hot potato." There is plenty of blame to go around without just making stuff up. Lately I meditate a lot on a friend's remark: "I think some of the filthiest words in the English language are 'It's just business.'" A lot of us worldside are now paying for the notion that somehow our personal ethics and our business ethics need have no relationship to one another.
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the associations of politicians is a very trivial topic, because if you were to look closely at the associations of all politicians on both sides you would probably be appalled.
being someone influential anywhere you know and meet some of the worst types of people sometimes unknowingly.
like the obama relationship with rezco, its very easy to be an associate of a person like rezco and not be aware of his illegal activites. the same goes for Mccains relationship with Keating.
What should matter is if these politicians knowingly assisted these people in anything illegal. criminal charges would apply.
Everyone is capable of misjudging someones character so if we as voters attempt to use this to cast judgement on another individual it makes us hypocrites.
As for Obama's relationship with Ayers, if he wasnt a close friend with this man then why does it matter? was obama suppose to quit the charity board when ayers joined or was he suppose to sell his house and move because Ayers lived in the same neighborhood?
I also havnt heard any criticism about the university of illinois for hiring ayers as a professor, or was it obama who hired him too?
lets talk about something that really affects the daily operation of the country, constantly voting based on soap opera and gossip is what got bush elected in the first place, and look how that turned out?
even his supporters are paying for his 'great leadership' now.
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I'm no authority on this so I'd appreciate some help.
As I understand it, after WWII, America demaded that Briton and France (possibly others) pay back their war debt in gold. In the 60s President de Gaulle wanted to repratriate all the Euro Dollars that had flooded Europe, in exchange for their gold backed value. America refused and subsequently unilaterally abandoned the gold standard which led, almost overnight, to a massive increase in the gold price. This was rumoured, at the time, to bring America's gold assets closer to the value of their issued dollars. Closer, but nowhere near the true value. This, to a certain extent, provided the impetus that made the dollar king in the world markets, and replaced the Swiss Franc as the dominant standard currency.
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208. At 5:53pm on 07 Oct 2008, invisibleserendipity wrote:
Let me pose this question as I am quite interested in the response.
Re: Ayers
For those who it seems are not in the least bit rankled by his actions - how do you feel about the Unibomber, Oklahoma City, the Atlanta Olympics or, even the IRA for that matter? Do these folks bother you or are they just not on the same level as Ayers?
Not the same.
For starters the Ira were way above the level of ayres.,
and secondly he is now an elected official. is he not.
.
If white america was so great in the 60's people would not have needed to fight.
Americans always referred to IRA bombers as freedom fighters and up to the attacks of 9/11 they were protected by american courts as freedom fighters free speech etc.
And that was while they were still bombing.
PS America I guarantee if you think the weather underground was bad you just wait till Mc implailim gets in if they do.
the weather will be the last subject of discussion.
Go america your heading down and I 'm loving the show.
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Justin why do the mods not print the letter that says your useless.
you'll been falling hook line and sinker for hillery. it was under clinton that america started being sold off.
Hippies all protested got tear gassed and beaten all round the world, but here is Justin and some "friends" of his starting to recognise what the hippies noticed ten years ago.
longer.
catch up so called educated people.
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215. At 6:09pm on 07 Oct 2008, niceapplepye wrote:
Nicely summarised. Also, don't forget the rise of the daytraders who took out mortgages to finace their levered positions during the dotcom boom.
This isn't just an american problem, though. In England the majority of banks were offering up to 120% mortgages, based on the assumption that prices would continue rising. They're the ones who should carry the downside of the risk.
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Oh no, GWB is currently explaining, in simple examples, what the credit crunch is. Probably the same way it was explained to him.
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Justin,
It's surprising that you are the spokesperson for the American people on the BBC website. I would think that the BBC would continue their excellence of reporting world news and would want to uphold that same standard to their website.
Your post with the subtitle "Are Democrats getting away with a big lie? " is incoherent and only serves to incite rather than educate. Inciting hatred through misinformation and outright lies however has become the platform for the McCain/Palin campaign which you are following.
Gov. Palin will be speaking at East Carolina University in Greenville, NC sometime this evening. They are not releasing the exact time since law enforcement is concerned about campus security. She will again not be speaking with the press. The press is not allowed to interview students or anyone in attendance inside Minges Coliseum.
The Governor will be speaking at a University that has recently had increased racial tensions due to nooses being hung from trees on campus. Her remarks serve to incite racial hatred and fear. Over the weekend she condones someone in the audience yelling "kill him" (meaning Obama) by not speaking out or saying that that this not acceptable. Her speech which will try to tie Obama to a "terrorist" only has one meaning in the south: Fear the BLACK Man.
It doesn't matter if the accusation is true or not. The Republicans are getting away with the biggest lie!
Her hate filled speech will only add lighter fuel to a simmering college campus.
If McCain and Palin truly cared about "Country First" then they would want to ensure that another Kent State doesn't happen in NC. If McCain and Palin truly cared about "Country First" then they would stick to the issues of the economy and dispense with their hate filled racist rhetoric. If McCain and Palin truly cared about "Country First" then they would assist law enforcement and campus officials and help to ensure that students would be safe on campus by not INCITING a riot through Palin's rhetoric.
If any type of riot occurs tonight or at any other planned McCain/Palin event it will not be the fault of those in attendance.
McCain/Palin and some Editors such as yourself have whipped up the hate, increased existing racial tensions and have garnered the support of neo-nazis and extremist groups as well as Republicans. The responsibility of any injuries or deaths that occur at any McCain/Palin political rally will be squarely on their shoulders and yours.
I said it here first. The stage is set. All McCain/Palin need is a match. Obama=terrorist. Obama=Antichrist. Guess you haven't gotten these emails yet, Justin? Guess you haven't gotten the Obsession DVD in your mailbox yet?
The American Republican party has now become the equivalent of the German Republikaner.
The Biggest Lie of the campaign you ask rhetorically I presume?
The Republican's platform of catering to white middle America's hate and fear of blacks while using the slogan "Country First". They are running on a platform that will tear this country apart at the very fabric of our seams unless we diligently fight those who incite racism in every corner.
We must diligently fight the smear such as your post and subtitle "Democrats are getting away with the biggest lie"
You should say it more succinctly Justin. Just say it: Democrats are liars.
Shame on you Justin. Shame on McCain and shame on Palin.
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Need evidence that US deregulation played a big part in the crisis?
Here's a link about "Naked Short Selling", a widespread criminal practice on Wall Street:
http://www.abovetopsecret.com/forum/thread398341/pg1
It also exposes the suppression of info about "Naked Short Selling" practices in Wikipedia
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MagicKirin
I dont think that tenure for Ayres was a matter of right .I think by the criteria of the University of Illinois at Chicago he earned it by academic performance . As its not the University where I taught or attended , I would only surmise that his educational qualifications justified the postion.
I myself would have had issues with his backround but that goes to show you there are a multitude of opinions in Chicago
ps glad you enjoyed Chi Town
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David_de_Jong (#216), we don't know that. We know only that neither Ayers not Dohrn have been convicted of homicide. There is one unsolved murder of a San Francisco police officer, Sgt. McDonnell, in 1970 which some think may be related to the Weather Underground. I have no opinion one way or the other on this question, except that I hope the crime is solved. For now, a presumption of innocence applies.
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Looking for a single factor that precipitated the current economic implosion is a little naive. However it is clear that the suspension of rules and lack of oversight allowed leading members of the economic community to suspend traditional levels of qualification for borrowers. The motivation for this was greed, get rich quick, get out and let someone else mop up the mess. The reckless atmosphere that has been bred at the leadership level of many government agencies and private corporations by this administration is also to blame. Free competition and democratic values do not operate best when left entirely alone, as we now see. Correct oversight and lawful operation is necessary for them to operate efficiently and in the best interest of the greatest number of people.
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What do 'Osama Bin Laden' and 'Barry Obama' have in common?
They both know someone that bombed the Pentagon.
That said,are or should you to be judged by the company you keep?
Would not a 'known' bank thief, albeit unconvicted, be the best at protecting your life savings?
Should not a 'known' bomber be in your cabinet, using his abilities enhancing your safety?
Or is prophecy,.. "America, your chickens are coming home to roost!"
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invisibleserendipity (#208), Ted Kaczynski, Eric Rudolph, and Timothy McVeigh are "not on the same level as Ayers." They are people who have been convicted of murders, and who have received appropriate justice.
As regards Ayers and Dohrn, justice has run its course, unless something new comes up. In the meantime, they are very old news. Some may think they got off easy for things they did or may have done in the 1970s. Maybe, maybe not. Things don't always turn out the way you might like, particularly when politics is involved. That's life.
The crux of the controversy for me is that McCain and Palin like to dwell on this because they have nothing of substance to talk about. They are grasping at straws.
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At the moment, if the election were held today, it appears that Obama would win. A month is a long time in American politics but there is a fair bet he will win. I wonder how long it will take once he assumes office for buyer's remorse to set in, not just at home but around the world. Like most charismatic aspirants to political power, he will undoubtedly prove very much less adequate as a leader then those who support him expect of him. At best he would have a difficult road to hoe even if he knew what he was doing. But the truth is, on ability he is very lacking in virtually every regard. He has little real knowledge, being new to the federal government. He has no knowledge of the economy or foreign affairs. His associations with terrorists like Ayers and other disreputable people will not help him any. He's a protectionist. He is not a pacifist. The reason he wants to get out of Iraq is so that he can go to war with Pakistan. He'll be facing crisis after crisis. His economy is in a shambles and nobody really knows how to fix it. He may inherit a deep recession headed for a depression. I predict that within a year, most people who voted for him will regret it. I also predict that at some point more than a few people outside the US will say he is even worse than Bush. But for the time being, a lot of people can enjoy their illusions and hopes.
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Are you being paid in some way to say this??
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Yes, deregulation of the housing market by Bill Clinton is the root of the problem.
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I think someone who cannot construct a coherent paragraph, and who has not mastered elementary spelling and punctuation, is in no position to lecture "so called educated people."
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It makes a great political strategy to blame your opponent for whatever problems currently exist while taking credit for anything whatsoever positive.
It may be true that in hindsight the right regulations at the right time might have averted this crisis. On the other hand to my knowledge no member of any political party ever proposed specific regulations that would have done so. No member of any party rescinded existing regulations that would have done much to help either.
When a sub-prime mortgage is offered to an a less than credit worthy customer is this the fault of the greedy lending executive? The shareholders failure to oversee said executive? The governments failure to put in place regulations that discourage lending to said customer or worse to encourage that lending? The customer who accepts credit without full understanding of the cost or worse, irresponibly, in full knowledge of the cost?
The answer of course is all of the above.
The same sort of scenario hold true when a derivative security based on the aforementioned sub-prime loan is offered.
The question then becomes just how far are we willing to go in granting government power to avoid all problems and crises that may arise? "Big Brother", "Lord of the Flies" or should we try to strike some balance?
Balance is of course what everyone would answer but the current state of polarization in politics around the world is leading us ever closer to choosing one or the other extreme instead.
The crisis has happened. We will get through it. We will know what sensible regulations need to be put in place to avoid a recurrence. We don't need to place blame there is plenty to go around.
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What on earth is the point of all this pfaffing around trying to find someone to blame? I see from the news this is what Congress is doing, instead of inquiring into linger term solutions.
This could be the only time anyone will see me quoting Margaret Thatcher approvingly. She is said to have addressed civil servants thus: "I don't want to hear about problems, I want to hear about solutions."
So do I; so does a large portion of the rest of the world. Apparently America doesn't. Too scared of the implications of the solutions, are we?
You can leave the rest to the historians. And let them make the comparisons with Nero,
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What did the Weathermen stand for? This was no rebellion against white america, it was simply an attempt to overthrow a democratically elected government and impose a communist regime. This was not rooted in civil rights, but in a failed ideology. Yes, I know capitalism as practised recently doesn't look great right now, but that doesn't make communism any better than democracy.
The reason Ayers keeps coming up is because he is supposedly unrepentant. We have dealt with policticians who were once 'terrorists' because they were subsequently elected to office. Ayers wasn't interested in elections, democracy or free choice. He wanted to impose his ideology on others. Now that to me is fascism.
He is quoted as claiming the group's ideology was "Kill all the rich people. Break up their cars and apartments. Bring the revolution home, Kill your parents". Nothing about racial equality or civil rights.
What I am looking for from Obama is a denunciation of what Ayers stood for, and not just a claim that they are accidental acquaintances.
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"170. At 3:59pm on 07 Oct 2008, AndreainNY wrote:
I will repeat that you are very much mistaken. Ayers' behavior was anathema to many Americans. Any relationship with him is unacceptable to them."
Possibly true. But don't Palin's links to Alaskan independence activism render her equally unacceptable to those same Americans? Or - dare I say it - does her patriotism go unquestioned on account of her skin color?
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BBC breaking news :
Bush urges joint crisis response
President Bush said the US economy would 'come through'
US President George W Bush has called for co-ordinated action by leading industrialised countries to tackle the worldwide credit crunch.
His response is like his long pause after being informed of the 9/11 attack
god help us all
What has W been doing lately ?packing ?
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You are a Republican propagandist. Bushs' right hand.
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JodyNC (#227), I don't see where you get the idea that Justin is "spokesperson for the American people." Who appointed him that? He certainly hasn't claimed to be, as far as I know.
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222:
It was, effectively, one of the consequences of the deal done to secure the 5 billion dollar loan Britain negotiated with the US in 1948, after previous loan arrangements were cancelled, when we were effectively bankrupt after the War.
(We paid the final instalment off on 29th December 2006, by the way. American aid to Britain for the second world war did not actually come free.)
The US wanted to ensure that the dollar would become a reserve currency and either suoercede or replace sterling, though the dollar I think wasn't finally totally recognised as de facto supreme until 1972.
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188, AndreainNY :
The issue with Ayers has to do with Obama's blind eye for people's integrity when it comes to his own advancement.
If you can explain why Obama would hide his relationship with Ayers, you'll understand why the relationship matters.
etc,...
_______
Andrea, with all due respect, you are spamming.
Every time you have an opinion on a matter, you stubbornly repeat it numerous times, it really is a nuisance.
If Obama was caught poking his nose , we'd hear about it from you over the next few weeks, day by day.
I got another one for you - Obama the evil drug user.
When admitting he had smoked marihuana as a youngster, and asked if he had inhaled, his answer was : 'I thought that was the whole point.'
There, that should keep you busy for a while, and hopefully distract you from that silly Ayers 'issue'.
Speaking of which, I think any actual or fabricated connection between Obama and Ayers is irrelevant, and so is the Keating scandal, to be fair.
Both Obama and McCain have since moved along; Obama has appearently not had any close ties to Ayers, and certainly wasn't in any way involved in terrorist activities.
McCain has - 20 years ago - made a grave mistake and seems to have regretted it, but who cares.
It's all water under the bridge.
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Yes, it wasn't really deregulation that caused the crisis, however well-documented the SEC's decision to allow some of the biggest banks to get farther into debt may be. (Read last weeks New York Review of Books).
In fact the Republicans aren't really for deregulation at all, or, if they are, this had nothing to do with the bottom falling out of the economy.
Also, Iraq really had WMD and Bush has been an excellent president.
I don't really understand why you'd post a WUM thread like this.
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ref 227
Jody NC you make is sound like this is first time there has been harsh campaign rhetoric.
There has been contiued smear from the Dems especially on Palin.
If you are from North Carolina you have some of the most infamous hate mongers in Academia: The Duke 88
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195. The Notting Hill Hammer:
"Clutching at straws now? Also avoiding the Keating issue, which is one of substance unlike this canard. The fact is most people neither know or care who Ayers was 30 years ago. This is an issue strictly for the lunatic fringe."
Keating did not advocate killing innocent civilians. McCain attended a meeting with him, was investigated and exonerated. He spent the rest of his career advocating against special interests.
You may not care what Ayers did, but I can assure you many Americans do -- just not people who are willing to overlook anything in Obama's past.
Labeling people who believe Obama's relationship with Ayers is suspect as the "lunatic fringe" is childish.
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I have to say that I am amazed at the intellect of the readers of this blog. I live in the States and am frequently irritated when there is a blatant disregard to facts in the frequent attacks against President Bush. I'm no fan of the President, but, being honest and well read I must admit that he is only partly (and even at that, only a very small part) at fault for the current crisis.
I am a research assistant focused on the failures which happened in the Great Depression in our banking industry. Current policy of de-regulation did not start in 2000 when President Bush took office but instead in his father's years (a slight push) then President Clinton finished it off, making sure that the corporate giants would be able to control the market. President Bush has contributed to the process but it was already spiraling out of control by the time he took office.
Like so many other things, people in general fail to acknowledge when their own parties make mistakes. I appreciate those who have left unbiased comments, contributing the failure to President's Bush Sr., Reagan and Clinton, it was a bi-partisan failure, and a failure which I believe will happen over and over again as long as we fail to instill some virtue to control the human desire for wealth and power.
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Great articles with food for thought. It's just a shame the candidates aren't debating this.
I also find it amusing that some of the commentators who advocate regulation over anarcho-capitalism don't seem to realise that this implies a reduction in freedom for the big companies and a deviation from the free market ideology. Not that all kinds of freedom are sacrosanct: I, for one, don't mind losing the freedom to murder other people in exchange for a government that prevents others from killing me!
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ref #229
Great Resturants, Museums and music, and the transit system goes to the airport.
My point regarding tenure is why should it allowed protection for Academics who should be fired.
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This comment was removed because the moderators found it broke the House Rules.
Obama: bail out Wall Street
McCain: bail out Wall Street
where's the difference?
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There are several factors that caused and are influencing the crisis. Saying it was only either the Fed or deregulation is not enough the answer the question. From all the information out there, one gathers it was a combination of several factors, including mismanagement on the Fed's part and loose regulation, as well as consumer irresponsibility and several other causes we could point to.
The bottom line is that is that this meltdown is a lesson about the need of a separation of the interests of the state and the interest of the capitalist entities of the world.
Foresight and reponsibilty is what we need to start demanding, both from our leaders in government as well as from the private institutions that have so much influence over our lives.
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I have a naive question :
700 billion $ is not an accountant's rounding error. It is 26,000 metric tons of pure gold, and it takes 750 large trucks to move that.
6 months ago, nobody seemed to know that there was a such a hole in the accounts; now everyone knows that there is one. So either that money was not really there 6 months ago, or it was. If it wasn't, then why did all these brilliant economists, central bankers and financiers not say so then ? And if it was there, where has it gone in the meantime ?
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DougTExan
Do you realize how stupid your sound?
How do you live with yourself? it must be really hard.
other than being an ignorant you also come out as a coward. you know why?
the only thing you really wish you could do is admit you would love to get a KKK badge.
You know damn well there is no connection between obama and bin laden, as a matter of fact there is more connection between the republican party and bin laden since they are the ones that keep him alive to serve their purpose of fighting unnecesary wars and fool idiots like you. (wasn't bush employed by Bin Laden's family?)
Yea i am insulting you! you betcha! wink wink...
you have no idea what a terrorist really is...why don't you stick to watching your fox news and getting brainwashed by your preacher or McPalin.
If this wasn't my country i would have holeheartedly wished to see McCain and Palin win only to have idiots like you stop making decisions about the fate of billions around the world for the sake of what US did in the past.
But I have to admit, if there were no people like you, than America would be too good to be true.
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british-ish (#239), "the point of all this pfaffing around" is that we are near the end of a rather long election season and need to get through it with the right result. That would be to throw the Republican rascals out. There are some Democratic rascals, too, but as they are "liberal" rather than dogmatic, they are more amenable to revising their positions. When the Democratic Party takes control of everything, that's the time for solutions. Then they can take full responsibility for the outcome.
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lawchicago (242) wrote:
"God help us all. What has W been doing lately? Packing?
He doesn't really need to do that until closer to Christmas, does he?
Perhaps he's been practising not calling Gordon Brown "Tony", Medvedayev "Vladimir" and Sarkozy "Jacques" in readiness for the G8 meeting. That's the sort of preparation for a global leaders' meeting in the midst of a crisis that could take up a lot of time.
I'll give him this, he certainly has a gift for stating the obvious.
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seanspa (#240), Obama has denounced the Weathermen, through a spokesman, William Burton, who is quoted in a discussion of this subject at the following link:
http://blog.washingtonpost.com/fact-checker/2008/02/obamas_weatherman_connection.html
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The short answer is that deregulation has played its part in this fiasco, how big we may know one day. Whether it has favoured the Democrats or the Republicans, also not clear. Just now it is not doing John McCain any good. It is his party that has been in power during the worst excesses of Wall Street and that is why he is trying to distance himself from GWB. Nice try but it won't work.
His campaign is not being helped by his choice of VP. Seemed brilliant at first, someone to bring in the very right-wing, "religious" female voter and her mate. It's all falling rather flat.
The US electorate is much more intelligent than some of us Europeans sometimes think.
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Of course deregulation caused the crisis. When you remove the only way of checking these big, greedy firms, what do you think happens? They get greedy because no one is keeping an eye on them and do whatever they like. Deregulation went on from Reagan if I am not mistaken and so popular. Well, so much for capitalism now and so much for the Reagan legacy. Look at what has happened: Dow Jones has dropped another 500 points today. Thousands if not millions will lose their jobs and savings. Who cares about them?
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246. Fritz_Kraut:
Andrea, with all due respect, you are spamming.
Every time you have an opinion on a matter, you stubbornly repeat it numerous times, it really is a nuisance.
***********************
I could also view comments contradicting my own as stubbornly repetitive.
It is equally a nuisance to read repeatedly people claiming that Americans don't care about what Ayers did when, in fact, Americans have voiced their concerns about Ayers continuously since the primary.
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I'll let my final word on the Obama-Ayers relationship be this video of a Time reporter questioning an Obama spokesman.
He is unable to get an answer to the question of whether Obama believes it's okay to associate with a terrorist. Wonder why.
Obama Spokesman Admits Obama Knew About Ayers
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Well if we look at history and the big picture deregulation is the culprit.
History -the great depression caused in part by banks investing in the stock markets and the the South Seas Bubble.
1933-Glass Steagal Act passes and prevents banks from investing in stock market
1999 the final vestiges of the Glass Steagal Act are removed by the Republican congress and the Democratic President.
Now bank holding companies can interact with the stock market-going against the law enacted to prevent another great depression.
2001-9/11
After that the recession was avoided by manufacturing a housing boom with a reduction in regulation of loans. This created an artificial jump in housing demands and thus a bubble. Since the banks and stock market are free to intermingle the banks have unlimited investors who are spending other peoples money.
2004 SEC bends to the will of large Banks (including CEO Henry Paulson, of Goldman Sacks) and decreases the amount needed for asset protection allowing the banks to ship more money to the Investment side-and the banks where allowed to regulate themselves. http://www.nytimes.com/2008/10/03/business/03sec.html?
So we have a deregulated banking industry allowed to interact with the global stock market and it creates a housing bubble that is what this mess is about.
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To anyone interested, my post 253 gave the details on the BBC's own "Complaints" page so others could complain, as I have done, about the delays tonight.
It appears the moderators thought this information ought not to appear here.
The person responsible for this part of the BBC's website is Richard Deverell, Head of News Interactive, if anyone is interested.
And that, moderators, is in the public domain, published on this BBC website. And by the way (hint) you are dealing with a media journalist here.
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260 (Gary A Hill)
Oh dear, I'd forgotten it was that wretched right-wing British rag that started this with his brother doing the dirty work Christopher Hitchens presumably couldn't find an outlet for.
How embarrassing.
All I can say by way of apology is that the Daily Mail is so anti immigrant it could easily be accused of being racist, still thinks Maggie Thatcher should be PM and it supported the British Fascists in the 30's.
It hasn't changed much, as you can see.
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Yes. I think we need a clear set of rules, and strict enforcement. When we have a set guideline then we can expect to see some stablility.
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Wake up folks,
Its the central banks that caused all this. This collapse has been done with pupose and by design. Why do you think they stopped publishing the M3 index?
All this bail out nonsense is just adding fuel to the fire. The next stage of all this is hyperinflation, mass unemployment and will end up with food queues.
We would have had a small chance had we just let the markets and banks fall (the puke) instead we are taking the pison pill and what was once only going to effect the private money is now going to bring down our public money.
Its the fed, the bank of england, the ECB. Look no futher for those who have done this.
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"U.S. investment banks, regulated by the Securities and Exchange Commission, bought piles of toxic waste...
If that doesn't convince you that deregulation is the wrong scapegoat..."
(A quote from the article inspiring this thread.)
The proximate cause of the crisis was caused by the SEC INSUFFICIENTLY regulating US investment banks. Yes, we understand that they have oversight, and, in that sense, "regulate," but this is a dishonest argument.
The article strikes me as written by a free-market, anti-regulation fan who is trying desperately to shift the blame away from the obvious culprit. The truth is that the free market never worked, and that prosperity has only been achieved by states balancing somewhat free markets with a large public sector.
Many remain ideologically attached to the false God of the free market, nevertheless, and will not abandon their faith.
The larger point that the Democrats collaborated in many instances does show that this, like every other crisis, was not caused purely along party lines. But we knew this already.
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An alternative view of the current crisis which differs sharply from the sources cited by Justin can be found at
'Subprime Suspects: The right blames the credit crisis on poor minority homeowners. This is not merely offensive, but entirely wrong' http://www.slate.com/id/2201641/
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227. At 7:09pm on 07 Oct 2008, JodyNC wrote:
A whole bunch o sense.
------------------------
Gary sorry if my typing is not up to my thoughts, but well twist it.
Did the Globalisation protesters get it wrong.
Has Globalisation been the saviour of humanity that was promised ?
Did the policies of selling industry to china to evade epa regulations and get cheap labour help the world?
Did "consolidating" industry to a few multi nationals better the world?
Is it better that your average pair of knickers has seen more miles than the person wearing them help.
Was it not the Hippies that believed what Rachel Carson had to say before the rest got on board.
Education is better than just an understanding or care of the way words are put.
So many Educated people have done us so well.
Problem is they were Ignored by the " Educated People" .
An english Professor is not always an avid historian and a learned man, as Mark is, often they seem to be people obsessed with depressed drunks.
_--------------------
Back to Jody well said again.
well written to if that matters.
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Britishish I call that Rag ,good for applying wax to metal and little else, the "Daily Diana"
Does it still have something about Di and the Boys every day?
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I still find it remarkable that GWB seems to be an irrelevancy in terms of this election. Although McCann seems to be slipping back in the polls it has not been to the extent that I would have thought. After all the Republican party has been in power for 8 years and has had its hand on the tiller through the biggest meltdown in the financial markets since the Great Depression.
Now I understand that the US laissez-faire notion of government as well as the federal nature of the states may go some way to explaining this. However, it cannot be denied that GWB has overseen the biggest defecit in the US economy since records began. He has also been directly responsible for a great misjudgement in the invasion of Iraq. This immoral and unnecessary war has caused untold damage to the region, has displaced 4 million Iraqies and has got nowhere near its intended objective of bringing democracy and stability to the country.
In addition, to this while it is debateable whether the war directly caused the current crisis, the increase in fuel costs and the projected costs (funded in the main part by loans) of three trillion dollars must have limited the US governments options to deal with the crisis.
Add to this the 2000 election fiasco and the debacle over Katerina and the fact that right now American popularity in the world is about as low as anyone can remember and it all points to meltdown in the polls.
For all this McCann as a republican is still holding up in the polls. At present he is behind by 9 to 5 points in the polls which does not strike me as political meltdown.
Maybe I find hard to understand because I am a Brit and using the British model I know the electorate would be chomping on the bit to get its revenge through the ballot box on a administration that was so disreputable and discredited.
Perhaps this can partly be explained by the fact that in the US the party connection is not so strong as in the UK. Certainly Obama has worked hard to try to connect McCann with the Bush administration while McCann has had a hard time squaring the circle with the idea that he is something new while still holding on to the ideals of the Republican party.
Whatever the reason its a mystery to me.
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It was a noble cause but even the New York Times knew who was taking a huge risk in 1999.
Search "Fannie Mae Eases Credit To Aid Mortgage Lending" from nytimes.com.
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240 seanspa wrote:
"What I am looking for from Obama is a denunciation of what Ayers stood for, and not just a claim that they are accidental acquaintances."
From this link - http://www.politifact.com/truth-o-meter/statements/776/
"Asked about his relationship at a Democratic debate on April 16, 2008, Obama said, "This is a guy who lives in my neighborhood, who’s a professor of English in Chicago who I know and who I have not received some official endorsement from. He’s not somebody who I exchange ideas from on a regular basis.
"And the notion that somehow as a consequence of me knowing somebody who engaged in detestable acts 40 years ago, when I was 8 years old, somehow reflects on me and my values doesn’t make much sense."
'Detestable acts' sounds like a denunciation to me.
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It was impossible to regulate questionable securities that are now the blame for the current economic turmoil in a political environment screaming for deregulation.
New types of "snake oil" securities were introduced in this environment of deregulation. In 2004 the SEC removed regulation from major investment firms and allowed these institutions to self regulate themselves.
With such a low opinion for the need for regulation in the United States it is not surprising that the large source of cheap capital that was available would quickly find itself being used for questionable securities that promised quick lucrative returns.
With a political environment that favored regulation the large source of cheap capital might have flowed into industry and innovation instead of wallpaper.
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Deregulation lies at the heart of the present financial crisis. FDR beginning in 1933 set in motions laws to protect people from what we are suffering now.
The Neoconservatives/Neocons convinced a dim witted president that these rule need no longer apply and he believed them instead of US history. Now the world pays the price of his ignorance.
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Blaming deregulation is like saying that it was a knife that killed him. Deregulation may have been one of the tools used to bring about this collapse but the culprits are those who weilded the knife.
and now the culprits have all decided to give us a half a percent cut in the interest rate, so after they have knifed us they are offering a band aid.
If you read the 451 pages of the 'bail out bill' you will soon learn thatis nothing more than a bill that creates a financial dictatorship in the US. I hold out little hope that our answer to this problem will be any different. leaving all us to argue the toss.
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The financial mess surroiunding the housing industry in the US has very little to do with "de-regulation" or poor regulation. Rather it had everything to do with the Federal Government trying to engineer a specific social outcome. The vehicle of the social engineering experiment was the Community Reinvestment Act. In short the Federal Government greatly incentivised banks (even forced them) to lend to people who should never have been granted a loan...and then Freddie and Fannie guaranteed the loans. This train wreck was entirely foreseeable and could have been easily avoided. While I am no proponent of the inordinate compensation of bank executives, the preponderance of blame rests with the politicians (particularly with the Democrats and the Clinton administration)...a fact that has somehow been largely overlooked and underreported
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265. At 01:09am on 08 Oct 2008, TrialofK wrote:
a polite letter explaining what happened
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This comment has been referred to the moderators. Explain.
It was W.H. Auden thinking of his own death, not Larkin.
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AMERICA HAS BEEN COOKING THE BOOKS TO MAKE IT LOOK FUNDAMENTALLY SOUND. The economy here is a result of self inflicted woulds done by the government in favor of the rich to the middle and lower classes.
*****Deregulation is a very big PART of the problem.*****
In brief, the U.S. has some big hairy fundamental issues on the macroeconomic scale.
1. We have a trade deficit of $700billion dollars which started with the signing of NAFTA with China in 1996. The production stayed the same, the labor was cheap. Americans lost $100-200 billions each year in taxable salaries, purchasing power and the ability to make the mortgage payments. This encouraged China to buy U.S. Treasuries, they were kind enough to keep the Yuan low. For their own benefit, but the Yen is rising and America's going to be paying more debt back to Japan for a very long time.
The US dollar declined in direct proportion with this trade deficit alone, before Bush got into office. So Bush took a bad situation and screwed it up royally.
2. The GDP is up because the collective derivative market has a fraudulent value.
The banks and non-bank lenders screwed themselves by selling unsecured debts in a bearish economy.
http://en.wikipedia.org/wiki/Image:US_derivatives_and_US_wealth_vs_total_world_wealth_1995-2007.gif
Also, the falsely appraised real estate values, inflation and increased costs of imports like gas pumped the GDP up even higher. Without credit, America didn't have the purchasing parity. Credit is the easiest way to transfer wealth. This was done to make the federal deficit look like it's at 65% of the total GDP.
http://en.wikipedia.org/wiki/Image:US_Federal_Debt(gross).JPG
All of the sudden, after the G7 meeting North Korea is off the hook for nuke testing. I am suspicious that China wanted their money back which started this mess.
Without real job creation and innovation, the U.S. simply isn't able to fix this mess.
There's no transparity for the American people, a lot of crimes. We have to get this fixed. To the world, we didn't approve of this and we're sorry for your troubles.
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Justin:
Yes, the deregulations in reality had a major part in the downturn of the economy in the United States...Also, overspending by all parties didn't help....
--Dennis Junior--
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