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post #71 of 95 (permalink) Old 09-24-2008, 12:35 PM
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We are not talking about just minorities. This is an issue that deals with the whole concept of Government telling private industry that they have to give bad loans to people who are high risk. Then in turn the Government goes and buys up an inordinate amount of High risk loans through Fannie Mae and Freddie Mac, and when the default rate is more than can be born the Government comes in with our money and says "it's ok sweety, take this it will help get you through the day."

It is like giving Aspirin to help a Heroin addict get through withdrawl. And the kicker is that the government was the dealer who gave the junky the smack! How's that for Irony? Woody Allen couldn't make this crap up!
Much of that is very correct except that you left out the parts where the government regulations that kept a lid on abuses and levels of high risk were removed and/or not enforces. That element is at least equal in responsibility for this mess. Gramm Bliley took ALL the constraints off the industry that had GOVERNED the "give bad loans to people who are high risk". By the way, prior to Bramm Bliley 97% of those "bad loans" were not delinquent and paid on time, providing high income for the lending institutions.

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post #72 of 95 (permalink) Old 09-24-2008, 12:40 PM Thread Starter
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Jim the focus of the article is the red herring that Obama likes to throw out to the crowds that is called "Predatory Lending." Nowhere in the article does Beck say that minorities are to blame.

Not to mention the fact that this discussion has gone WAY outside the realm of the article.

What we are talking about is the overall principle of Government intrusion upon the private sectors ability to do good business. And in this case the problem with the Mortgage industry is completely the Government's doing, both party's have S%#t all over them from this.

Who's John Galt.

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post #73 of 95 (permalink) Old 09-24-2008, 12:44 PM
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You lost me. I suggested that the entire industry should have been deregulated in 1970. I have no clue what you're saying above, other than lauding handout programs that fly in the face of a free market.
My point is that free market just isn't all that it is cracked up to be. With free market there was limited credit for an entire group of people who were able to afford houses but were not able to get the credit. FME just did not cater to that population. FME lended to whom it wanted, how it wanted and when it wanted.

Deregulation earlier had the potential to simply cause the same issues, earlier. Unfettered financial markets simply have proven to not work in a large environment for long periods of time. Folks are too greedy, unethical and cutthroat. GRA as described above solved a bunch more problems than it caused. Changing the rules with Gramm Bliley is what hosed it. Prior to GB the only people that didn't like GRA was those who just don't like programs for minorities at all, no matter the reason.

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post #74 of 95 (permalink) Old 09-24-2008, 12:52 PM
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If you can't afford a house, you can't have one. Simple. Why should the government be in the business of handing out houses?

You're skimming the surface a bit, aren't you? Isn't the underlying truth that the main culprit in regard to both the Great Depression and the current financial crisis is the Federal Reserve System itself? You seem to accept the role of the Fed, then move on to secondary factors.

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U.S. Federal Reserve and money supply

Monetarists, including Milton Friedman and current Federal Reserve System chairman Ben Bernanke, argue that the Great Depression was caused by monetary contraction, the consequence of poor policymaking by the American Federal Reserve System and continuous crisis in the banking system.[10][11] In this view, the Federal Reserve, by not acting, allowed the money supply as measured by the M2 to shrink by one-third from 1929 to 1933. Friedman argued[12] that the downward turn in the economy, starting with the stock market crash, would have been just another recession. The problem was that some large, public bank failures, particularly that of the Bank of the United States, produced panic and widespread runs on local banks, and that the Federal Reserve sat idly by while banks fell. He claimed that, if the Fed had provided emergency lending to these key banks, or simply bought government bonds on the open market to provide liquidity and increase the quantity of money after the key banks fell, all the rest of the banks would not have fallen after the large ones did, and the money supply would not have fallen as far and as fast as it did.[13] With significantly less money to go around, businessmen could not get new loans and could not even get their old loans renewed, forcing many to stop investing. This interpretation blames the Federal Reserve for inaction, especially the New York branch.[14]

One reason why the Federal Reserve did not act to limit the decline of the money supply was regulation. At that time the amount of credit the Federal Reserve could issue was limited by laws which required partial gold backing of that credit. By the late 1920s the Federal Reserve had almost hit the limit of allowable credit that could be backed by the gold in its possession. This credit was in the form of Federal Reserve demand notes. Since a "promise of gold" is not as good as "gold in the hand", during the bank panics a portion of those demand notes were redeemed for Federal Reserve gold. Since the Federal Reserve had hit its limit on allowable credit, any reduction in gold in its vaults had to be accompanied by a greater reduction in credit. Several years into the Great Depression, the private ownership of gold was declared illegal, reducing the pressure on Federal Reserve gold.

Austrian School explanations

Another explanation comes from the Austrian School of economics. Theorists of the "Austrian School" who wrote about the Depression include Austrian economist Friedrich Hayek and American economist Murray Rothbard, who wrote America's Great Depression (1963). In their view, the key cause of the Depression was the expansion of the money supply in the 1920s that led to an unsustainable credit-driven boom. In their view, the Federal Reserve, which was created in 1913, shoulders much of the blame.

In opinion, Hayek, writing for the Austrian Institute of Economic Research Report in February 1929[15] predicted the economic downturn, stating that "the boom will collapse within the next few months."

Ludwig von Mises also expected this financial catastrophe, and is quoted as stating "A great crash is coming, and I don't want my name in any way connected with it,"[16] when he turned down an important job at the Kreditanstalt Bank in early 1929.

One reason for the monetary inflation was to help Great Britain, which, in the 1920s, was struggling with its plans to return to the gold standard at pre-war (World War I) parity. Returning to the gold standard at this rate meant that the British economy was facing deflationary pressure.[17] According to Rothbard, the lack of price flexibility in Britain meant that unemployment shot up, and the American government was asked to help. The United States was receiving a net inflow of gold, and inflated further in order to help Britain return to the gold standard. Montagu Norman, head of the Bank of England, had an especially good relationship with Benjamin Strong, the de facto head of the Federal Reserve. Norman pressured the heads of the central banks of France and Germany to inflate as well, but unlike Strong, they refused.[17] Rothbard says American inflation was meant to allow Britain to inflate as well, because under the gold standard, Britain could not inflate on its own.

In the Austrian view it was this inflation of the money supply that led to an unsustainable boom in both asset prices (stocks and bonds) and capital goods. By the time the Fed belatedly tightened in 1928, it was far too late and, in the Austrian view, a depression was inevitable.

The artificial interference in the economy was a disaster prior to the Depression, and government efforts to prop up the economy after the crash of 1929 only made things worse. According to Rothbard, government intervention delayed the market's adjustment and made the road to complete recovery more difficult.

Furthermore, Rothbard criticizes Milton Friedman's assertion that the central bank failed to inflate the supply of money. Rothbard asserts that the Federal Reserve bought $1.1 billion of government securities from February to July 1932, raising its total holding to $1.8 billion. Total bank reserves rose by only $212 million, but Rothbard argues that this was because the American populace lost faith in the banking system and began hoarding more cash, a factor quite beyond the control of the Central Bank. The potential for a run on the banks caused local bankers to be more conservative in lending out their reserves, and this, Rothbard argues, was the cause of the Federal Reserve's inability to inflate.

"If spending money you don't have is the height of stupidity, borrowing money to give it away is the height of insanity." -- anon
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post #75 of 95 (permalink) Old 09-24-2008, 12:56 PM
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Don't know, don't care. I'm not interested in discussing minorities, I'm attempting to discuss free-market capitalism. Not my best subject, but I am trying...
And that is exactly what should happen: these guys took a big risk selling crap, and they lost. They would have done better selling Sarah Palin dolls. They should be the losers. If it had worked and property values covered their unscruplous asses, they would all be getting rich. Fuck them.

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.

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post #76 of 95 (permalink) Old 09-24-2008, 12:57 PM
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Originally Posted by TNTRower View Post
Jim the focus of the article is the red herring that Obama likes to throw out to the crowds that is called "Predatory Lending." Nowhere in the article does Beck say that minorities are to blame.

Not to mention the fact that this discussion has gone WAY outside the realm of the article.

What we are talking about is the overall principle of Government intrusion upon the private sectors ability to do good business. And in this case the problem with the Mortgage industry is completely the Government's doing, both party's have S%#t all over them from this.
The focus of the article was to shift the discussion to legislation that made the qualifying criteria for a loan easier to meet for minorities, all in the context of discussing the financial meltdown on Wall Street.

I will agree that "predatory lending" seems to be an equal opportunity ass fucking tool to be used against the unsophisticated borrower. To suggest otherwise is less than accurate. But for Obama to be speaking to a mostly minority constituency in a speech, and to expect him to stress how the practice of predatory lending screwed a segment of the population missing from the gathering, is unrealistic.

My point is that the extra consideration given to minorities by the law is not the cause of the meltdown. Unregulated greed is the cause. Just like the plan to hand out $2B of the taxpayer's money to the same Wall St. corporate assholes who got us into this mess as bonuses. Predatory lending is like any other predatory sales gimmick that takes advantage of the target customer's weaknesses. Selling teens cigarettes or beer by showing how they "help" you get laid is an example. In fact, almost any sales gimmick involving sex qualifies. Because the reasoning part of the mind is shut down while the part that wants to fuck takes over. Selling people shit, whether it is cars or houses or extra quantities of booze they don't actually need by using a gimmick that uses a built-in, hardwired program element that can suppress logic and deliberation is predatory. Same with Karl Rove's methods for gathering voters to vote for candidates who do not have their best interests at heart, based on fear of queers diddling their kids, or the black boogie man raping their women, or "Islamofacists" winning the modern crusades with the "Christofacists." It is all the same shit and, unfortunately, needs to be held in check by the government. Jim
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post #77 of 95 (permalink) Old 09-24-2008, 01:02 PM
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And that is exactly what should happen: these guys took a big risk selling crap, and they lost. They would have done better selling Sarah Palin dolls. They should be the losers. If it had worked and property values covered their unscruplous asses, they would all be getting rich. Fuck them.
But if some sort of bailout is deemed in the interest of the American public, shouldn't this all be done by Congress, out in the open, rather than behind the closed doors of the Fed? I trust elected representatives to further my interests before unrepentant and untouchable demagogues behind closed doors.

"If spending money you don't have is the height of stupidity, borrowing money to give it away is the height of insanity." -- anon
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post #78 of 95 (permalink) Old 09-24-2008, 01:03 PM
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Jim the focus of the article is the red herring that Obama likes to throw out to the crowds that is called "Predatory Lending." Nowhere in the article does Beck say that minorities are to blame.
If the article is not about minorities, and not about trying to blame them, why spend 90% of the article on GRA and weak examples in a report instead of simply putting the context of the point in the beginning of the article [instead of tucking it in at the last moment?

The article is so riddled with red herrings and misdirection that frankly I am surprised you could nail down just one focus.

Study after study after congressional hearing [even Republican ones] show that Predatory Lending was a viable issue that had to be addressed. The BBC study, linked elsewhere on this forum is a very good study on the subject.

As for subject matter on this thread, ALL are covered by the meandering article.

And you never did get back with me on those inaccuracies and lies by omission that you felt needed proof.

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post #79 of 95 (permalink) Old 09-24-2008, 01:18 PM
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Originally Posted by GermanStar View Post
If you can't afford a house, you can't have one. Simple. Why should the government be in the business of handing out houses?

You're skimming the surface a bit, aren't you? Isn't the underlying truth that the main culprit in regard to both the Great Depression and the current financial crisis is the Federal Reserve System itself? You seem to accept the role of the Fed, then move on to secondary factors.

From Wiki:
That is the misconception of GRA. There is an entire demographic that CAN afford houses, that CAN afford to move the next step up BUT, prior to GRA most banks would not lend to them because they did not fit into their comfort zone and tight lending standards. By tight lending standards I don't really just mean credit scores or ability to repay, I also mean the amounts of loans as an example. Banks would not loan on a $25,000 house as it was too low value and their ROI was too low at mortgage lending rates. With $500,000 houses that is not an issue. In distressed neighborhoods it was. Enter GRA. Prior to GRA folks had to go to loan companies at 18% to get a 20K house loan on 6-10 years which would be above budget for most. Folks in those neighborhoods PROVED their worth by returning the investment 97% of the time prior to the Deregulation of Gramm Bliley. After that, and the attack of the marketeers, all bets were off.

As for the FED and its role in the Great Depression and the current mess, yes, it is a big player. In the current mess it should have acted well before it did, sometime in 2006 instead of late 2007. In 2006 the FED was still "selling" subPrime as a great tool for corporate growth [not its role].

The alternative is to not have a FED, and that would also not work. Certainly not now as a debtor nation but not "way back" when we were without debt and the FED was trying to keep debt down. Interestingly, much of the Great Depression was caused by the same factors we have now. Too much credit being generated by consumers and business. When the economy dipped hard, and folks were not able to keep up, the system collapsed on itself. Most blame a LACK of FED action in 1929-30 as on of the causes of the depth of the Great Depression that followed.

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post #80 of 95 (permalink) Old 09-24-2008, 01:26 PM
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As for the FED and its role in the Great Depression and the current mess, yes, it is a big player. In the current mess it should have acted well before it did, sometime in 2006 instead of late 2007. In 2006 the FED was still "selling" subPrime as a great tool for corporate growth [not its role].

The alternative is to not have a FED, and that would also not work. Certainly not now as a debtor nation but not "way back" when we were without debt and the FED was trying to keep debt down. Interestingly, much of the Great Depression was caused by the same factors we have now. Too much credit being generated by consumers and business. When the economy dipped hard, and folks were not able to keep up, the system collapsed on itself. Most blame a LACK of FED action in 1929-30 as on of the causes of the depth of the Great Depression that followed.
It is the secrecy of the Fed that is so problematic, isn't it? Eliminate the Fed and there is no lack of action. Make the Fed completely transparent and there is no lack of action (well, hopefully). Was the Fed as secretive back in the 20's as it is now? Ron Paul suggests that he has far greater access to the CIA than he does the Federal Reserve.

"If spending money you don't have is the height of stupidity, borrowing money to give it away is the height of insanity." -- anon
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