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I regret giving my opinion. I, for one, enjoyed reading your opinion. It seemed well thought out and balanced. No one knows what the right answer is to the current crisis, and those who give simplistic answers to these complex issues ("cut taxes!", "fire SEC chairman!", "it's all Republicans/Democrats' fault!") do not have much credibility IMO. I hope they won't run you off with the oversimplified answers and the "you are obviously a Socialist" comments... I hope you continue to post. AGG
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Tax cut after tax cut has resulted in INCREASED revenue to the government, Why is it then that our budget deficit has gone up after every tax cut? I see you blame "tax and spend liberals" on this, but for the past 7 years we had a Republican Prez/Congress combo - why did our national debt go through the roof? AGG
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Crisis? What Crisis? -Supertramp, 1975.
TJ: Hey GC! What are you DOING here? (then you can ask me the same 2uestion!).
-ol' 2long
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Tax cut after tax cut has resulted in INCREASED revenue to the government, Why is it then that our budget deficit has gone up after every tax cut? I see you blame "tax and spend liberals" on this, but for the past 7 years we had a Republican Prez/Congress combo - why did our national debt go through the roof? AGG hmmm...how about an economy that tanked after 9/11. How about several fronts in the war on terror. How about the impact of the price of oil on our economy and markets. It isn't reduced taxes that have caused the mess.
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I regret giving my opinion. I, for one, enjoyed reading your opinion. It seemed well thought out and balanced. No one knows what the right answer is to the current crisis, and those who give simplistic answers to these complex issues ("cut taxes!", "fire SEC chairman!", "it's all Republicans/Democrats' fault!") do not have much credibility IMO. I hope they won't run you off with the oversimplified answers and the "you are obviously a Socialist" comments... I hope you continue to post. AGG I agree--it was well written and articulate. Any premise that places liability for the credit crisis on the subprime mortgagors is simplistic to the point of being nonsensical. I have no idea why some people would rather embrace a fiction than understand the truth. The call for federal regulation is not socialistic but an imperative that is a day late and a dollar short. Ask yourselves, with the credit-derivatives market growing to over $50 trillion of outstanding contracts--what was sustaining that growth? The appetite for low-grade debt was insatiable. Do you understand that this entire schema was predicated upon a demand for risky debt? Risky debt became the fuel for the engine of commerce. Let me break it down in simple terms. The Credit derivative markets were the Kingpin traffickers. The mortgage brokers were the street level dealers and the subprime mortgagors were the junkies. Who do you think ran the show the Kingpins or the junkies?
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Thanks, AGG.
Maybe this will get me modded (it would be the first time):
I love a good debate but I do not like it when FH responds to things I write. I inevitably wind up wasting my energy peeling off the stickers he slaps on me. It's a predictable pattern, and it's tiresome.
I don't do "ignore" but maybe that would be a better approach. But I actually like and admire some of the wingnuts around here, even when they cheerlead for the ones I can do without. That makes "ignore" an unsatisfying solution.
Anyway, thanks for patting me on the head.
GC
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So who were all these mortgage brokers holding guns to the heads of citizens forcing them to sign bad mortgages?
I'm sorry, but if someone is willing to go along with fraud on either side of the desk transacting the business, the borrower or the lender, I have no sympathy for them if they can't pay their bills.
One of my customers is a bank, a rather conservative one in a college town far from Wall Street that isn't really impacted by this. I was there last month and they were still making mortgage loans. I asked if they were impacted and they've forclosed on exactly ONE home in the past couple of years and that was because the borrower had a run of bad luck, not because of a sub-prime mortgage.
He said that most of the folks who were getting sub-prime mortgages didn't understand what they were getting.
My question is when is it the borrowers responsibility to know what they are doing? We already have laws that tell the the APR as well as the effective rate, which is interest plus all the fees to obtain the mortgage.
I say we TEST the borrower (and probably lenders or those on Wall Street buying bundles of MBO's or issuing CDS's, since it seems many of them didn't really know what they were doing at all levels.
But my idea is that you give someone three figures, the amount being financed, the interest rate and the term and you ask them to calculate their mortgage payment. If they cannot do the math to determine this amount with some defined variance such as 1% of the payment, then why give them the money?
I'm not even talking escrows, just the P&I portion of the payment.
And even better, if it's an ARM, tell them the max it can adjust each adjustment period and have them figure the maximum new payment each time it adjusts until it reaches the highest rate allowed by the terms of the mortgage.
Anyone who thinks an ARM is not going to adjust up if the lender has the right to raise the rate is in another kind of fog.
I'm not saying Wall Street or the bankers are sinless here. But I am saying that folks pay for remaining ignorant. We can't just keep saying innocent victim when the reality is most of them just don't know, nor do they care about learning what all those numbers really mean.
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Yo, 2long! It was late, and I peeked in here, and I saw this enlightening thread, and it was late, so I let the old impulses grab me and I dipped my toe in.
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EE--You're right many subprime mortgagors are not victims. My point was not to diminish the importance of personal fiscal responsibility but to highlight that the credit derivatives markets required risky debt to sustain growth.
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GC:
Glad you stopped by. I won't attack you like FH did. You described a future model of the US in a paragraph that FH expanded into some of the component parts, with some predictibly "pat" answers to some of them. And that's NOT to critize FH. Much devolves into sloganeering, and this thread has had some and avioded it in soem areas pretty well.
Does the "Market" need oversight? Certainly. FM and FM LOST thier oversight in 1999 and created the enviorment that resulted in the financial tangle that we are in now. It wasn't the CRA Act that created this, it was the decision to allow FM and FM to purchase the subprime loans that they would NEVER take before. Many people raised the alarm, but they were ignored.
I understand about producing "nothing" in this country. IT would behoove us to rebuild a strong manufacturing base. Unfortunatly, the economics don't favor that happening in the US any time soon. It would be great, but in order to have manufacturing, you have to be able to compete on a low-cost basis with the other manufacturer's And we can do that with high-end products and technical services. But we miss it for anything low end. Others can do it cheaper and easier. Many of them are polluters and not paying so-called "living wages" and that makes it easier for them to be "low-cost". This advantage will come to an end in the not to distant future. Wages are rising and because of the degradation of the environment, controls will become increasing expensive.
And about sustainable energy? We could produce all the electricty needed each day using existing solar technology if we covered an area the size of Vermont in Nevada (per the National Geographic in 2007). But what happenes when the sun goes down? For economic reasons, if the price of oil went to $200 a barrel, then it would be very easy for alternative methods of producing energy to get traction. Yes, refilling the SUV, or even the Prius at that point is pretty stiff. But then we would sell the gas guzzlers and start driving around in smaller, lighter vehicles. Maybe powered by electricity (from those same solar panels?) or hydrogen. It took 20 years to build the gasoline distribution system for cars, it will take as long for the NEXT fuel systems for personal transportation.
I could go on, and I would be interested in fleshing out some of your ideas, many of which start to make sense once they start hitting people in the pocketbook. But they won't change until then.
Sort of returning to the topic of this thread, I just fininshed reading this article in the Economist. Here> url=http://www.economist.com/finance/displaystory.cfm?story_id=12342273]Economist Article[/url]
The article is discussing the differences between 1929 and 2008. And maybe why Bernanke is proposing to do what he has proposed.
LG
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Does the "Market" need oversight? Certainly. FM and FM LOST thier oversight in 1999 and created the enviorment that resulted in the financial tangle that we are in now. It wasn't the CRA Act that created this, it was the decision to allow FM and FM to purchase the subprime loans that they would NEVER take before. But, FM and FM were government controlled...they weren't part of the "evil" free market that is said to need more regulation. They were government sponsored and government regulated. They aren't an example of privatization gone amok...they are an example of what happens when privatization doesn't happen in the first place! Many people raised the alarm, but they were ignored. And by many people, you mean the regulators and the GOP, right? Even Bill Clinton knows who is to blame for this(although, he doesn't admit his part in it.) BILL CLINTON: "Democrats for years have been "resisting any efforts by Republicans in the Congress or by me when I was President to put some standards and tighten up a little on Fannie Mae and Freddie Mac." LINK Want2, You ought to check out the above link to see what BC said about blaming this mess on Phil Gramm.
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Republicans have always been anti-regulation...or at least they are supposed to be. Less government, right?
This thing is a whole lot bigger than Fannie Mae and Freddie Mac.
Everyone had a hand in making this turd sandwich, now we all have to take a bite.
Divorced
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It isn't reduced taxes that have caused the mess. That wasn't my point. I said that we had a Republican Prez and a Republican Congress for many years, who proceeded to implement tax cuts, but the deficit went up regardless. What gives? 9/11, wars, oil, yadda yadda, we can always think of reasons for spending more money than we have. It's no different than people doing their personal budgets (or NOT doing them, as seems to be the case), where you can always find an excuse for spending money you don't have ("my car broke, my AC broke, my kid got married..."). I thought Republicans were all about reducing the deficits, but all I see is a sea of red ink to show for the last 8 years of Republicans.. I don't see how blaming the Democrats as "tax and spend" makes any sense, it's really the pot calling the kettle black. Didn't we have a balanced budget under Clinton? AGG
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Last edited by ThornedRose; 10/02/08 04:14 PM.
Simul Justus Et Peccator “Righteous and at the same time a sinner.” (Martin Luther)
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Did we have Katrina and that financial hole with Clinton?
Did we have 9/11 and that money pit with Clinton?
They both played a huge part.
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I thought Republicans were all about reducing the deficits, but all I see is a sea of red ink to show for the last 8 years of Republicans.. I don't see how blaming the Democrats as "tax and spend" makes any sense, it's really the pot calling the kettle black. Didn't we have a balanced budget under Clinton?
AGG Not really, as they took thinks like Social Security off the books to make them look like they balance. But even if you believe the lie about the budget being balanced, the budget is done by Congress, not the president. The president can only request money. Congress approves or denys Any budget, good or bad is the work of congress and the credit or blame belongs to them. The president can veto the budget or sign it. He can make a request and then reject or deny what congress presents.
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Good debate of the past -
GOP had their chance and didnt hold to their contract and 2 yrs ago many were kicked out of Congress. Cutting taxes did work as the govt rcvd more revenues than anytime in history. But the spending went nuts - all of sudden the GOP lost their way. Bush never vetoed a bill for a number of yrs.
Tough lesson for the GOP has they may lose power for a generation. Too bad. We just may have a DEM Congress with a super majority and a DEM president. First time since Jimmy Carter - anyone dispute those were some bad times?
But what of the future
Obama during the primaries advocated many of the same policies that are found in Canada. But of Canada has a very high tax rate and a military of only 75K persons.
So do the DEM folks on the forum believe that the new paradigm will include nationalized healthcare (Dems have been talking about this since the Carter and Kennedy primary), reduced military and eventually a higher taxed society will happen?
What I am saying here is that Obama is no Clinton. His handlers including Pelosi and Reid will be advising and guiding him.
Instead of talking of the past - would like to see what future we will see with an one party govt - it will likely happen. The thing is I do not see much details of what future the Dems are guiding us to.
Last edited by rwinger; 10/02/08 04:40 PM.
Me:52 W: 52 Married: 32 yrs 2 Sons (29 & 23) 1 Dtr (20) 1 GDtr (2.5) precious little girl
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the budget is done by Congress, not the president. The president can only request money. Congress approves or denys Didn't we have a Republican Congress under Bush? AGG
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Yep, no arguement from me about spending Republicans. I simply don't agree with your assessment of Clinton. We had a Democratic president, but a Republican congress. Now we have a Republican president and a Democratic congress, and sadly, this group wants to spend $700B of taxpayer money that I personally don't trust either party to spend wisely. At the very least, if Wall Street wants Uncle Sam to buy these MBO's, then let them come up with private investors with matching money and every lot bought is split evenly between Uncle Sam and the investors. They are going to spend the money, it's their addiction. So I at least want to see they by at reasonable values. Like I've said before, I don't trust those who brought us successes such as FEMA trailers, the Viet Nam war and the breakup of AT&T, the oversight of Enron, the House Banking Scandal, etc, to buy these MBO's at the right price. I do believe the market will ultimately determine the right price. The problem is the government nor Wall Street will accep that right now the market price is close to ZERO. So if the market says they are worth ZERO, why do we need any money to 'git 'er done' I'll take all of them at ZERO
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this group wants to spend $700B of taxpayer money It's up to $850 billion now...
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