or Connect
AppleInsider › Forums › Other Discussion › AppleOutsider › PoliticalOutsider › Obama Owns This Economy
New Posts  All Forums:Forum Nav:

Obama Owns This Economy

post #1 of 152
Thread Starter 
In the last few weeks, I've noticed that the media has been picking up on what has become obvious to those of us who are not Obamatrons: After 2.5 years, Obama now owns this economy.

Consider this article: http://www.theatlantic.com/politics/...conomy/240071/

Quote:
While Obama and Democrats can say that they inherited a terrible economy and downturn that has since only marginally improved, it's far more complicated than that.
...

With last month's dismal unemployment report and economic-growth forecasts rapidly being revised downward, it is becoming increasingly clear that it is unlikely that economic growth will be sufficient to create meaningful job growth on a sustained basis through the 2012 election.

...

The odds of unemployment dropping much below 8.0 percent by Election Day are quite small. Many have been pointing to the fact that no modern president has been reelected with an unemployment rate above 7.2 percent, which is technically true.

...

Just two years earlier, during the 1982 midterms, unemployment was at 10.8 percent. Presumably, Reagan still would have won if unemployment was at 7.3 percent; there was nothing magical about 7.2 percent.

The point is that unemployment had topped out and the economy had clearly turned around with the arrow pointing in the right direction. The best Obama can hope for is that the economy will improve from its worst point and that the arrow will be pointing in the right direction.

jimmac et al will continue miss the point, claiming that "no one" could expect us to "get out of this" in 2.5 short years. Of course, that is likely true. It is not reasonable to think that the economy would magically turnaround after Obama took office. But one would expect that things not get worse. Things have indeed gotten demonstrably worse as I and others here have noted. The response from the left has been this:

1. Give it more time!
2. <silence>It's Bush's fault! He wrecked the economy!
3. We need to invest in infrastructure!
4. Things will (hopefully) get better!
5. Republicans want to kill Medicare!
6. It would have been much worse without Obama. He saved us!
7. Sarah Palin!

Internally, I think the White House knows that unless things look better in the next 60 days, they are in a heap of trouble. There is simply no way the President will be reelected with unemployment where it is now. Given this fact, we can expect the Dems to try something drastic in the near future.

So what will they do? To borrow a phrase, they'll double-down on stupid! At least, they'll try. The Republican House will make it hard to get anything through. But they'll attempt to push through new "stimulus" spending and "emergency" measures. Best of all, they'll assail Republicans for opposing the President "for political purposes." Meanwhile, the Obama Administration will continue to place onerous regulations on business, refuse to press for tax relief while claiming they will let the Bush tax cuts finally expire, fail to pursue energy independence and print money like it's going out of style (which...uh...it is).

Obama has failed. The progressive-socialist agenda is dead. The only thing is, it doesn't seem like Obama knows it yet. But the Obamatrons and general Lefties are figuring it out, and they are going apoplectic.
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
post #2 of 152
Bush and Obama both own this economy. Obama has merely continued and expanded upon Bush's economic policy. Both believe it's okay for the government to meddle in the economy. Witness the result.

Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

Reply

Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

Reply
post #3 of 152
Thread Starter 
Quote:
Originally Posted by jazzguru View Post

Bush and Obama both own this economy.

Disagree.


Quote:
Obama has merely continued and expanded upon Bush's economic policy.

I think he's expanded it to such a degree that it's a new thing. It's so vastly expanded that his intervention has taken on a life of its own. We're not talking about manipulating interest rates or running $200-400 billion deficits anymore.

Quote:

Both believe it's okay for the government to meddle in the economy. Witness the result.

I agree the government should stay out of it as much as possible. That said, I don't think Bush believed that in principle. He even said as much. He did what he did out of what he saw as a dire need. He allowed government to grow too much, however.
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
post #4 of 152
Quote:
Originally Posted by SDW2001 View Post

Disagree.




I think he's expanded it to such a degree that it's a new thing. It's so vastly expanded that his intervention has taken on a life of its own. We're not talking about manipulating interest rates or running $200-400 billion deficits anymore.



I agree the government should stay out of it as much as possible. That said, I don't think Bush believed that in principle. He even said as much. He did what he did out of what he saw as a dire need. He allowed government to grow too much, however.

Quote:
Disagree.

Partisan drivel.
Without the need for difference or a need to always follow the herd breeds complacency, mediocrity, and a lack of imagination
Reply
Without the need for difference or a need to always follow the herd breeds complacency, mediocrity, and a lack of imagination
Reply
post #5 of 152
Loose money, easy credit, flood the market with cash and we get a housing bubble. Why blame just the executive branch? Where was Barney Roll the Dice Frank when all this was happening? He was rolling the dice! Will he lose his job?

Let's scape goat the short sellers trying to deflate the bubble!

Let's blame the CDS betting against the bubble!

More smoke more mirrors.


What did Obama do? Prolong the pain. Waste trillions. Spike costly regulations. Interfered in markets. Not a good launching point for reelection.
post #6 of 152
Quote:
Originally Posted by FloorJack View Post

Loose money, easy credit, flood the market with cash and we get a housing bubble. Why blame just the executive branch? Where was Barney Roll the Dice Frank when all this was happening? He was rolling the dice! Will he lose his job?

Let's scape goat the short sellers trying to deflate the bubble!

Let's blame the CDS betting against the bubble!

More smoke more mirrors.


What did Obama do? Prolong the pain. Waste trillions. Spike costly regulations. Interfered in markets. Not a good launching point for reelection.

However Bush got the ball rolling either through his actions or lack thereof. Not a good launching point for a Republican presidency.
Without the need for difference or a need to always follow the herd breeds complacency, mediocrity, and a lack of imagination
Reply
Without the need for difference or a need to always follow the herd breeds complacency, mediocrity, and a lack of imagination
Reply
post #7 of 152
Quote:
Originally Posted by jimmac View Post

However Bush got the ball rolling either through his actions or lack thereof. Not a good launching point for a Republican presidency.

Details please? What law did he pass without congress?
post #8 of 152
Thread Starter 
Quote:
Originally Posted by FloorJack View Post

Details please? What law did he pass without congress?

Let's go further...what actions did he take (or fail to take) that contributed?
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
post #9 of 152
Quote:
Originally Posted by SDW2001 View Post

Let's go further...what actions did he take (or fail to take) that contributed?

Neither one of you will get an answer. \
NoahJ
"It is unwise to be too sure of one's own wisdom. It is healthy to be reminded that the strongest might weaken and the wisest might err." - Mahatma Gandhi
Reply
NoahJ
"It is unwise to be too sure of one's own wisdom. It is healthy to be reminded that the strongest might weaken and the wisest might err." - Mahatma Gandhi
Reply
post #10 of 152
Quote:
Originally Posted by SDW2001 View Post

Let's go further...what actions did he take (or fail to take) that contributed?

He failed to cut Fan Fred lose from GSE status. He encouraged loose lending in pursuit of the "ownership society". He enacted barriers to free trade.
post #11 of 152
He created TSA & homeland security and created yet more public sector unions.
post #12 of 152
Quote:
Originally Posted by SDW2001 View Post

Let's go further...what actions did he take (or fail to take) that contributed?

He appointed Chris Cox to head the SEC, for one thing. What did Obama do? You can't say "Congress did it, not the president" for Bush, and also say "Obama owns it".
45 2a3 300b 211 845 833
Reply
45 2a3 300b 211 845 833
Reply
post #13 of 152
Quote:
Originally Posted by e1618978 View Post

He appointed Chris Cox to head the SEC, for one thing. What did Obama do? You can't say "Congress did it, not the president" for Bush, and also say "Obama owns it".

Well at the very least Democrats own it.
post #14 of 152
Quote:
Originally Posted by SDW2001 View Post

In the last few weeks, I've noticed that the media has been picking up on what has become obvious to those of us who are not Obamatrons: After 2.5 years, Obama now owns this economy.

Consider this article: http://www.theatlantic.com/politics/...conomy/240071/



jimmac et al will continue miss the point, claiming that "no one" could expect us to "get out of this" in 2.5 short years. Of course, that is likely true. It is not reasonable to think that the economy would magically turnaround after Obama took office. But one would expect that things not get worse. Things have indeed gotten demonstrably worse as I and others here have noted. The response from the left has been this:

1. Give it more time!
2. <silence>It's Bush's fault! He wrecked the economy!
3. We need to invest in infrastructure!
4. Things will (hopefully) get better!
5. Republicans want to kill Medicare!
6. It would have been much worse without Obama. He saved us!
7. Sarah Palin!

Internally, I think the White House knows that unless things look better in the next 60 days, they are in a heap of trouble. There is simply no way the President will be reelected with unemployment where it is now. Given this fact, we can expect the Dems to try something drastic in the near future.

So what will they do? To borrow a phrase, they'll double-down on stupid! At least, they'll try. The Republican House will make it hard to get anything through. But they'll attempt to push through new "stimulus" spending and "emergency" measures. Best of all, they'll assail Republicans for opposing the President "for political purposes." Meanwhile, the Obama Administration will continue to place onerous regulations on business, refuse to press for tax relief while claiming they will let the Bush tax cuts finally expire, fail to pursue energy independence and print money like it's going out of style (which...uh...it is).

Obama has failed. The progressive-socialist agenda is dead. The only thing is, it doesn't seem like Obama knows it yet. But the Obamatrons and general Lefties are figuring it out, and they are going apoplectic.

The wars fucked us up in 8 years with Bush leading us in Iraq for nothing.No control over Wall Street with Bush another screw up! No one is running in 2012 that gives a shit about the country including Obama.
post #15 of 152
Thread Starter 
Quote:
Originally Posted by FloorJack View Post

He failed to cut Fan Fred lose from GSE status. He encouraged loose lending in pursuit of the "ownership society". He enacted barriers to free trade.

Bush definitely did not have the power to cut them loose from GSE status. Only an act of Congress could do that. Even if he could, that wouldn't have prevented or solved anything. Also, the administration did warn on Fannie and Freddie as far back as 2003. Watch as Democrats go bonkers. http://youtu.be/_MGT_cSi7Rs

Quote:
Originally Posted by FloorJack View Post

He created TSA & homeland security and created yet more public sector unions.

And that led to...what? I don't like TSA anymore than you. Homeland Security is another matter. The goal was to unify agencies and break down barriers on cooperation. Support it or not, it had nothing to do with the economy. Also, note that Bush didn't want TSA to be unionized.

http://www.npr.org/blogs/itsallpolit...gaining-rights

Quote:
Since the creation of the Transportation Security Administration shortly after the Sept. 11 terrorist attacks, its airport screeners have sought to be part of a collective bargaining unit.

The Bush Administration and congressional Republicans opposed that, however. Thus, 40,000 TSA workers continued to work without the kind of union representation some wanted.


Quote:
Originally Posted by e1618978 View Post

He appointed Chris Cox to head the SEC, for one thing. What did Obama do? You can't say "Congress did it, not the president" for Bush, and also say "Obama owns it".

1. Chris Cox did not cause the meltdown or even contribute to it.
2. I'm not saying Congress did it. I'm saying the talk of "Bush wrecked the economy" is nonsense. Anyone that understands what happens knows that no one person or groups is responsible. The blame is spread across a large swath, from homeowners that bought more home than they could afford (or were not creditworthy), to investment banks that were over-leveraged, to AIG that held too much default insurance, to predatory lending, to an eventual drop in real estate prices...the blame is everywhere.

Quote:
Originally Posted by marvfox View Post

The wars f*cked us up in 8 years with Bush leading us in Iraq for nothing.No control over Wall Street with Bush another screw up! No one is running in 2012 that gives a sh*t about the country including Obama.

I edited your post because I'm at work and prefer to avoid profanity for the most part. In any case...this is exactly the kind of lazy, partisan thinking that infects many in the populous today. It's also the reason they neither liberals no conservatives respond to your posts. I will do so for this one, because it's so blindly inaccurate:

Iraq had little, if anything, to do with our current economic situation. There WAS control over Wall Street. The problem is that few people understood exactly what they were doing on mortgages. And I disagree, I think many people running "give an S" about the country. People have different ideas and different visions. I think Obama cares plenty about the country...I just don't like his vision or his ideas, not to mention his results. Does Ron Paul care about America? Did Mike Huckabee? Is Mitt Romney some kind of Manchurian Candidate? The fact is that there may be things wrong with ALL of these people, but they still "care about the country."
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
post #16 of 152
Quote:
Originally Posted by FloorJack View Post

Well at the very least Democrats own it.

Wait... haven't the Republicans had control of the Senate for half a year? OmG they didn't fix it yet!!!?
post #17 of 152
Thread Starter 
Quote:
Originally Posted by tonton View Post

Wait... haven't the Republicans had control of the Senate for half a year? OmG they didn't fix it yet!!!?

Uh, they' have control of the HOUSE for half a year. The House is 1/2 of 1/3 of the government. The Democrats controlled the White House and Congress for two years, and all of Congress for two years before that. The GOP has extremely limited power right now. They're not going to get any bills through. About the only thing they can do is stop what the Dems want, which amounts to more spending, more spending and...wait for it...more spending.
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
post #18 of 152
sdw - Chris Cox caused the meltdown by approving unlimited leverage in investment banks. Many causes of course, but that was the biggest one.
45 2a3 300b 211 845 833
Reply
45 2a3 300b 211 845 833
Reply
post #19 of 152
Quote:
Originally Posted by tonton View Post

Wait... haven't the Republicans had control of the Senate for half a year? OmG they didn't fix it yet!!!?

Really don't understand how the American government works, eh?
The evil that we fight is but the shadow of the evil that we do.
Reply
The evil that we fight is but the shadow of the evil that we do.
Reply
post #20 of 152
It think it's more accurate to say that WE own this economy.

"[G]overnment, even in its best state, is but a necessary evil; in its worst state an intolerable one; for when we suffer or are exposed to the same miseries by a government, which we might expect in a country without government, our calamity is heightened by reflecting that we furnish the means by which we suffer." -- Thomas Paine

(emphasis mine)

Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

Reply

Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

Reply
post #21 of 152
Quote:
Originally Posted by jazzguru View Post

It think it's more accurate to say that WE own this economy.

"[G]overnment, even in its best state, is but a necessary evil; in its worst state an intolerable one; for when we suffer or are exposed to the same miseries by a government, which we might expect in a country without government, our calamity is heightened by reflecting that we furnish the means by which we suffer." -- Thomas Paine

(emphasis mine)

Said another way: We get the government we deserve.

Now this in't necessarily universally true. Some fight against bad government but still get the government others have foisted upon them.

The state is nothing more than a criminal gang writ large.

Reply

The state is nothing more than a criminal gang writ large.

Reply
post #22 of 152
Thread Starter 
The government did not cause the meltdown. And e#, no..Chris Cox did not cause it, either. Banks were leveraged at 20:1 or even 30:1 for many years. Once the housing market imploded, there was not sufficient cash to cover losses. The banks would have needed maybe even 2:1 ratios to cover what happened in 2008. Trying to pin what happened on person is completely absurd.
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
post #23 of 152
Quote:
Originally Posted by SDW2001 View Post

The government did not cause the meltdown. And e#, no..Chris Cox did not cause it, either. Banks were leveraged at 20:1 or even 30:1 for many years. Once the housing market imploded, there was not sufficient cash to cover losses. The banks would have needed maybe even 2:1 ratios to cover what happened in 2008. Trying to pin what happened on person is completely absurd.

The government did, indeed, cause the meltdown. It started nearly 100 years ago with the creation of the Federal Reserve.

Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

Reply

Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

Reply
post #24 of 152
Quote:
Originally Posted by SDW2001 View Post

The government did not cause the meltdown. And e#, no..Chris Cox did not cause it, either. Banks were leveraged at 20:1 or even 30:1 for many years. Once the housing market imploded, there was not sufficient cash to cover losses. The banks would have needed maybe even 2:1 ratios to cover what happened in 2008. Trying to pin what happened on person is completely absurd.

You are wrong.

http://www.sourcewatch.org/index.php...#High_leverage

It isn't the only thing that caused the problem, but it is one of the main things, and it was caused by Bush's appointment. Other causes - lack of regulation on CDSes, lack of regulation on mortgage origination, lack of regulation on mortgage sales, and the Fed's low interest rate policy after 9/11.
45 2a3 300b 211 845 833
Reply
45 2a3 300b 211 845 833
Reply
post #25 of 152
Quote:
Originally Posted by SDW2001 View Post

The government did not cause the meltdown.

I completely disagree. The government, in various forms and fashions, has been deeply involved in the banking, monetary, lending (and, specifically, mortgages) systems for decades to the point where they have created any number of major distortions, moral hazard situations, perverse incentives and un-backed leverage situations.

The government absolutely, without question has been very much and very intimately involved in creating and perpetrating this depression.

The state is nothing more than a criminal gang writ large.

Reply

The state is nothing more than a criminal gang writ large.

Reply
post #26 of 152
Quote:
Originally Posted by MJ1970 View Post

I completely disagree. The government, in various forms and fashions, has been deeply involved in the banking, monetary, lending (and, specifically, mortgages) systems for decades to the point where they have created any number of major distortions, moral hazard situations, perverse incentives and un-backed leverage situations.

The government absolutely, without question has been very much and very intimately involved in creating and perpetrating this depression.

TRIPLE POINTS SUPER BINGO!!!!!

This is why true conservatism or true reform needs to get government out of the roles it has taken on instead of merely tinkering around the edges. First that's the only true way to solve the problem and second when any group, party or person tries the latter approach it damages the brand so to speak because then people become confused and conflicted about the solution.

"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

Reply

"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

Reply
post #27 of 152
Quote:
Originally Posted by e1618978 View Post

You are wrong.

http://www.sourcewatch.org/index.php...#High_leverage

It isn't the only thing that caused the problem, but it is one of the main things, and it was caused by Bush's appointment. Other causes - lack of regulation on CDSes, lack of regulation on mortgage origination, lack of regulation on mortgage sales, and the Fed's low interest rate policy after 9/11.

How did the CDS cause the melt down? Consider the fact that without a melt down the CDSs would be fine.
post #28 of 152
Quote:
Originally Posted by MJ1970 View Post

I completely disagree. The government, in various forms and fashions, has been deeply involved in the banking, monetary, lending (and, specifically, mortgages) systems for decades to the point where they have created any number of major distortions, moral hazard situations, perverse incentives and un-backed leverage situations.

The government absolutely, without question has been very much and very intimately involved in creating and perpetrating this depression.

People forget just how much paper Fan and Fred hold. Then they turn around and tell us lack of government involvement caused the problem

GSE being used to enact political will was the problem.
post #29 of 152
Quote:
Originally Posted by FloorJack View Post

How did the CDS cause the melt down? Consider the fact that without a melt down the CDSs would be fine.

Lack of CDS regulation caused the bankruptcy of AIG. Not the biggest part of the crisis, but significant. They should have been regulated like other kinds of insurance, with capital requirements etc. We have never had problems with life insurance or fire insurance like we had with CDSes, because life insurance and fire insurance have capital reserve requirements.
45 2a3 300b 211 845 833
Reply
45 2a3 300b 211 845 833
Reply
post #30 of 152
Quote:
Originally Posted by e1618978 View Post

Lack of CDS regulation caused the bankruptcy of AIG.

And that was probably a good thing.

Bankruptcy is capitalism's way of punishing failure, incompetence, sloppiness, inefficiency and inappropriate risk-taking.

Government bailouts the State's way of rewarding failure, incompetence, sloppiness, inefficiency and inappropriate risk-taking.

The state is nothing more than a criminal gang writ large.

Reply

The state is nothing more than a criminal gang writ large.

Reply
post #31 of 152
Quote:
Originally Posted by MJ1970 View Post

And that was probably a good thing.

Bankruptcy is capitalism's way of punishing failure, incompetence, sloppiness, inefficiency and inappropriate risk-taking.

Government bailouts the State's way of rewarding failure, incompetence, sloppiness, inefficiency and inappropriate risk-taking.

The government failed to regulate CDSes, which resulted in a huge bailout when AIG went bankrupt, and you are suggesting that is a good thing? You are crazy.

This illustrates the biggest problem with libertarianism - what happens when you are given freedom to do damage, and then you do more damage than you can repay? It would have been much better to stop them from being able to do the damage in the first place.
45 2a3 300b 211 845 833
Reply
45 2a3 300b 211 845 833
Reply
post #32 of 152
Quote:
Originally Posted by e1618978 View Post

The government failed to regulate CDSes, which resulted in a huge bailout when AIG went bankrupt, and you are suggesting that is a good thing? You are crazy.

Thanks for your opinion about my mental state. That aside...ye's that's exactly what I'm saying. Bad business decisions should be met with bankruptcy. That's reality. Everything else in attempt to subvert reality. It helps educate and inform the market about what bad business decisions are.


Quote:
Originally Posted by e1618978 View Post

This illustrates the biggest problem with libertarianism - what happens when you are given freedom to do damage, and then you do more damage than you can repay. It would have been much better to stop them from being able to do the damage in the first place.

Yes, I know that the technocratic Utopian philosophy. But the world is a risky place. We cannot legislate away all the risk and danger in it. No, the best way is for dangerous and risky things to result in their natural consequences which helps teach us all what dangerous and risky things can do.

The state is nothing more than a criminal gang writ large.

Reply

The state is nothing more than a criminal gang writ large.

Reply
post #33 of 152
Quote:
Originally Posted by e1618978 View Post

Lack of CDS regulation caused the bankruptcy of AIG. Not the biggest part of the crisis, but significant. They should have been regulated like other kinds of insurance, with capital requirements etc. We have never had problems with life insurance or fire insurance like we had with CDSes, because life insurance and fire insurance have capital reserve requirements.

The CDS haven't even really paid off yet. They had to pay warrants in the billions that took down AIG because they couldn't make the call. BUT if by some chance the MBSs and CDOs come back in value then the warrants can come back to AIG et al.

It seems as though the whole thing is more complex than you know.
post #34 of 152
Thread Starter 
Quote:
Originally Posted by jazzguru View Post

The government did, indeed, cause the meltdown. It started nearly 100 years ago with the creation of the Federal Reserve.

I think that's debatable.

Quote:
Originally Posted by e1618978 View Post

You are wrong.

http://www.sourcewatch.org/index.php...#High_leverage

It isn't the only thing that caused the problem, but it is one of the main things, and it was caused by Bush's appointment. Other causes - lack of regulation on CDSes, lack of regulation on mortgage origination, lack of regulation on mortgage sales, and the Fed's low interest rate policy after 9/11.

Yes, you've presented that view. Here is another from Forbes: http://www.forbes.com/2008/09/22/chr..._0922pitt.html

It was absolutely not caused by Bush's appointment of Cox. And the problem was not simply "lack of regulation." One cannot regulate out greed and bad assumptions. One cannot regulate out labeling subprime funds as "Triple A Mortgage Plus Funds." One cannot ignore the government's push in the 1990s to approve no doc laons, low income loans and previously un-creditworthy borrowers' loans.



Quote:
Originally Posted by MJ1970 View Post

I completely disagree. The government, in various forms and fashions, has been deeply involved in the banking, monetary, lending (and, specifically, mortgages) systems for decades to the point where they have created any number of major distortions, moral hazard situations, perverse incentives and un-backed leverage situations.

The government absolutely, without question has been very much and very intimately involved in creating and perpetrating this depression.

I take the point. In the long view, yes..government absolutely contributed. What I'm saying is there is no set of actions or inactions from 2001-2008 that caused the meltdown. This problem goes back to at least us coming off the Gold Standard. It's not like we can do what e# is doing, where we say that one man's appointment and changes in investment bank leverage policy caused the whole thing.
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
post #35 of 152
Thread Starter 
Quote:
Originally Posted by FloorJack View Post

The CDS haven't even really paid off yet. They had to pay warrants in the billions that took down AIG because they couldn't make the call. BUT if by some chance the MBSs and CDOs come back in value then the warrants can come back to AIG et al.

It seems as though the whole thing is more complex than you know.

Gee, imagine that.
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
post #36 of 152
Quote:
Originally Posted by SDW2001 View Post

Banks were leveraged at 20:1 or even 30:1 for many years.

This is the part that was factually wrong ^^^
45 2a3 300b 211 845 833
Reply
45 2a3 300b 211 845 833
Reply
post #37 of 152
Quote:
Originally Posted by e1618978 View Post

Lack of CDS regulation caused the bankruptcy of AIG.



Quote:
Originally Posted by e1618978 View Post

The government failed to regulate CDSes, which resulted in a huge bailout when AIG went bankrupt, and you are suggesting that is a good thing? You are crazy.



AIG never filed for bankruptcy.

Quote:
Originally Posted by MJ1970 View Post

Bad business decisions should be met with bankruptcy.

Correct.

Unfortunately the market isn't permitted to work when government subverts private enterprise.

An AIG bankruptcy would have had devastating and far-reaching effects. They would also have been temporary. AIG was clearly insolvent and the normal course of events is liquidation, which would have left many creditors empty-handed, many businesses unable to function, and many people suddenly unemployed. What people failed to realize is that like nature, capitalism abhors a vacuum. Or, to look at it another way, capitalists LOVE a vacuum! Failure of AIG would have presented a unique opportunity for any number of other insurers, previously unable to break into such a monolithic business. Unfortunately for capitalism, we'll never know. "Corporate welfare" is nothing compared to the effective nationalization of AIG.

The problem was that AIG convinced its friend Hank Paulson to go frighten Congress into giving them a multi-billion dollar handout, and he predictably agreed. The bozos in Washington were (and are) so economically illiterate they were cowed into thinking Armageddon was upon us, and the circumstances were so far beyond Bush's comprehension it's not funny.

This laid the path toward our present "age of bailout" in which a long parade led by GM and Chrysler similarly went to Congress... followed by helicopter money (failed) the stim bill (failed), C4C (failed), QE1, QE2 (failed, failed)... ad nauseum...

A true leader would have simply said "no". A true leader would have preempted whatever crap was on TV that night and explain to the public what was going to happen after AIG didn't open for business on Wednesday. Then, explain why it's no business of the government to do anything about that sad fact. Then, propose a plan to Congress to authorize however many hundreds of millions of dollars of capital available to any underwriter who presents a business plan to purchase the various and sordid distressed assets of AIG and recover their previous operations. These companies would contract with all of AIG's former assets so as to repay the government any money lent to them within 30 days. Two or three days of havoc, then business as usual. How much time do you think Berkshire Hathaway would have needed to decide which of AIG's assets were good deals to be had, at fire-sale prices? Finally, convince an overburdened and anxious American public that this crisis is insignificant compared to more significant events in US history, and that we will survive and even prosper in the events that were to follow. This wasn't Pearl Harbor. It wasn't another terrorist attack. It's not an impeachment. It's not even a blue dress. We shall overcome. God Bless the United States of America, we now return you to whatever junk you were watching because we all know how important that is.

At least five good things would have resulted from this:

1. The "age of bailout" would have never occurred
2. Another business with inept management, built on bad debt, would have failed
3. The failure would have been justified
4. It would not have taken a nickel of long-term debt
5. A President would have distinguished himself as a leader

Unlike AIG, Lehman did file for bankruptcy and was liquidated. Did the world come to an end? Does anyone even remember them? No, because you think AIG went bankrupt when in fact we simply threw a bunch of money at them!

This is like treating a symptom. The disease continues, undeterred.
A is A
Reply
A is A
Reply
post #38 of 152
Thread Starter 
Quote:
Originally Posted by john galt View Post






AIG never filed for bankruptcy.



Correct.

Unfortunately the market isn't permitted to work when government subverts private enterprise.

An AIG bankruptcy would have had devastating and far-reaching effects. They would also have been temporary. AIG was clearly insolvent and the normal course of events is liquidation, which would have left many creditors empty-handed, many businesses unable to function, and many people suddenly unemployed. What people failed to realize is that like nature, capitalism abhors a vacuum. Or, to look at it another way, capitalists LOVE a vacuum! Failure of AIG would have presented a unique opportunity for any number of other insurers, previously unable to break into such a monolithic business. Unfortunately for capitalism, we'll never know. "Corporate welfare" is nothing compared to the effective nationalization of AIG.

The problem was that AIG convinced its friend Hank Paulson to go frighten Congress into giving them a multi-billion dollar handout, and he predictably agreed. The bozos in Washington were (and are) so economically illiterate they were cowed into thinking Armageddon was upon us, and the circumstances were so far beyond Bush's comprehension it's not funny.

This laid the path toward our present "age of bailout" in which a long parade led by GM and Chrysler similarly went to Congress... followed by helicopter money (failed) the stim bill (failed), C4C (failed), QE1, QE2 (failed, failed)... ad nauseum...

A true leader would have simply said "no". A true leader would have preempted whatever crap was on TV that night and explain to the public what was going to happen after AIG didn't open for business on Wednesday. Then, explain why it's no business of the government to do anything about that sad fact. Then, propose a plan to Congress to authorize however many hundreds of millions of dollars of capital available to any underwriter who presents a business plan to purchase the various and sordid distressed assets of AIG and recover their previous operations. These companies would contract with all of AIG's former assets so as to repay the government any money lent to them within 30 days. Two or three days of havoc, then business as usual. How much time do you think Berkshire Hathaway would have needed to decide which of AIG's assets were good deals to be had, at fire-sale prices? Finally, convince an overburdened and anxious American public that this crisis is insignificant compared to more significant events in US history, and that we will survive and even prosper in the events that were to follow. This wasn't Pearl Harbor. It wasn't another terrorist attack. It's not an impeachment. It's not even a blue dress. We shall overcome. God Bless the United States of America, we now return you to whatever junk you were watching because we all know how important that is.

At least five good things would have resulted from this:

1. The "age of bailout" would have never occurred
2. Another business with inept management, built on bad debt, would have failed
3. The failure would have been justified
4. It would not have taken a nickel of long-term debt
5. A President would have distinguished himself as a leader

Unlike AIG, Lehman did file for bankruptcy and was liquidated. Did the world come to an end? Does anyone even remember them? No, because you think AIG went bankrupt when in fact we simply threw a bunch of money at them!

This is like treating a symptom. The disease continues, undeterred.


There is no way to tell for sure what would have happened. I, for one, do believe that if we didn't bailout AIG, the entire financial system may have failed.

Consider: AIG gets called on what effectively is default insurance to the tune of $85 billion in a day. AIG fails. Their insured banks book billions in losses in one day. They fail. Their customers, who are often other banks, pension funds and almost everything else on the planet...fail. The US financial system fails, causing the world financial system to fail. And it's all because we didn't want to temporarily nationalize them, which is now in the process of paying back it's bailouts while the treasury unloads stock.

Now, could it all be BS? Yes. But there is no way to prove that. Believing that it is some sort of scare tactic to transfer taxpayer money assumes that Paulson, Bernake, AIG, Goldman, BoA, Merrill, Wells Fargo, JPMorganChase, Citigroup, etc...all were in cahoots to defraud the public. Alternately, it assumes the aforementioned firms conspired to "dupe" Paulson and/or Bernake into the same.

I don't buy it. In fact, the consensus is that many banks didn't even want TARP money at all, but were "strongly persuaded" to take it by Paulson and Bernake to help unfreeze credit markets. Many banks have actually paid much of this money back.
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
post #39 of 152
Thread Starter 
Quote:
Originally Posted by e1618978 View Post

This is the part that was factually wrong ^^^

One of the problems is that we're not speaking the same language. In literal terms, you're correct. But banks have been lending on 10% liquidity/reserves for years. Just to show how much more complicated this is, take a look here: http://www.housingwire.com/2010/07/0...-sink-the-ship

This stuff is way above my pay grade, but suffice it to say leverage and liquidity are more complex than one guy changing rules from his laptop.
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
Reply
post #40 of 152
Quote:
Originally Posted by SDW2001 View Post

There is no way to tell for sure what would have happened. I, for one, do believe that if we didn't bailout AIG, the entire financial system may have failed.

Consider: AIG gets called on what effectively is default insurance to the tune of $85 billion in a day. AIG fails. Their insured banks book billions in losses in one day. They fail. Their customers, who are often other banks, pension funds and almost everything else on the planet...fail. The US financial system fails, causing the world financial system to fail. And it's all because we didn't want to temporarily nationalize them, which is now in the process of paying back it's bailouts while the treasury unloads stock.

Now, could it all be BS? Yes. But there is no way to prove that. Believing that it is some sort of scare tactic to transfer taxpayer money assumes that Paulson, Bernake, AIG, Goldman, BoA, Merrill, Wells Fargo, JPMorganChase, Citigroup, etc...all were in cahoots to defraud the public. Alternately, it assumes the aforementioned firms conspired to "dupe" Paulson and/or Bernake into the same.

I don't buy it. In fact, the consensus is that many banks didn't even want TARP money at all, but were "strongly persuaded" to take it by Paulson and Bernake to help unfreeze credit markets. Many banks have actually paid much of this money back.

You're still not understanding how the CDS work and what the warrants on them are for. From your position of ignorance you can't hypothesize what might have happened.
New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: PoliticalOutsider
AppleInsider › Forums › Other Discussion › AppleOutsider › PoliticalOutsider › Obama Owns This Economy