Home Ownership and President Bush
I think the Republican Party and their cronies on Wall Street could certainly use some “faith-based programs” right now… but the truth is that the 30-year experiment with Reaganesque pro-business, anti-government, pro-deregulation economics is coming thankfully to a very abrupt end.
Duration : 0:6:50
[youtube kNqQx7sjoS8]
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No, that part …
No, that part alienated him from his base who know that government is not supposed to pick winners and losers and any attempt at compassion by a government usually ends up with unintended consequences. As did this.
Bush pushed through these types of liberal policies under the guise of “compassion”. He forgot that big government is not the place for compassion, that is the job for individuals.
Agreed…
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Agreed…
Supply-side v. Keynesian-side economics, an ongoing dispute between philosophers who in support of their ideal theories must depend strictly on invariable variables.
ALL of this could …
ALL of this could have and WOULD have been avoided if the government had not interfered in the market in the first place. Banks would not have made those risky loans and we, as taxpayers would not have been on the hook for the guarantees that Fannie and Freddie (and Ginny) made. There would have been no housing bubble and thus there would have been no bubble bursting.
This forced the …
This forced the banks to sell these assets – even though they could not get anything for them. They had a value, (as evidenced by the fact that they actually produced cash flow as the good mortgage holders made their payments) yet, could not be sold for even the value of the cash flow – because of the panic. This is what led to the shut-down of many of the big banks – they were not all that bad off – UNTIL they were forced to sell off these assets for far less than they were actually worth.
Now for another …
Now for another government intervention that caused problems. Mark to Market – this new accounting method required companies to value the assets based on what they would sell for RIGHT NOW. Since the market for mortgage-based securities was almost nonexistent, banks were forced to value these at zero. Zero was an artificially LOW value brought on by the panic – but this caused banks to run afoul of the federal capital requirements.
In addition, …
In addition, ANOTHER GSE stepped in an guaranteed these securities creating an atmosphere of perceived no risk i.e. Free Money. This created a bubble in these markets! Unfortunately there were more bad loans out there than anyone imagined (because it was artificially inflated by low interest rates, the various programs to help people get loans etc).
Before long, these bad loans overwhelmed the good loans they were packaged with – and the value of these securities plummeted.
The banks in the …
The banks in the meantime knew they were exposed to risks with the shaky mortgages, so they devised a strategy to spread that risk – to water it down by chopping up the bad loans and combining them with good loans – they created a trading instrument called a security (there are many types – credit default swaps etc). The thought was that if one bad loan defaults, it wouldn’t take the whole security down – thus providing additional safety for the banks.
All was well and …
All was well and good – until people could not afford to make that mortgage payment – and when oil prices took their sharp jump up in 2007 and 2008, it put pressure on businesses who began laying off people. In addition, those hundreds of thousands of people who should not have normally been able to buy a home, had trouble making their payments as they saw their budgets squeezed as general prices rose (because of oil prices) and they were laid off.
A new cycle had begun – the bubble had burst.
People protested …
People protested outside their banks, their HOMES and sued them in court (Liberals and Democrats) to force them to make bad loans – accusing them of racism.
This all created an artificially high demand – and prices rose. In other words, it created a housing bubble. Many people saw prices continually going up and tried to make a quick buck by buying and then quickly selling properties – which only fed the bubble.
There certainly is …
There certainly is a lot of blame to go around, and Republicans do share in some of that blame.
But Conservatism would have avoided the entire situation.
This is the type of result we can expect when we reward bad market principles.
We artificially kept interest rates low (the FED with Republican pressure). We created all sorts of programs to make it easier for low income people to buy a home (Both parties). We also forced banks to take on loans that they did not want to take on. (Democrats)
I admittedly do not …
I admittedly do not know of the ideological ratios prevalent on Wall Street, but I do know that unilateral blame is too easy in its political expedience. I also know that the policies & practices administered by seemingly many may be the resultant directives of a differing few. Thus, I refer to the assignment of comparative & contributory fault(s) however such it “pans” out.
Have a “prosperous” day.
Most of the Bankers …
Most of the Bankers who you say are conservatives are actually liberals. Wall street overwhelmingly contributes to and votes for Democrats.
There was NOTHING conservative about the bank failures.
Republicans and …
Republicans and Democrats. Aren’t they all the same. Crooks?!
Same happened in …
Same happened in the 80s during the S&L scandal: no republican took responsibility for their push of deregulating savings and loans and Reagan’s insane econ policies which also caused the 1st major post WW2 financial crash in 1987. U all badmouth democrats and gov regulation, especially FDR’s new deal but it gave america a stable econ system. Repubs dismantled it the last 30 years and enough dems sided with the crazies that it sailed through Congress, but IT WAS REPUBLICAN IDEOLOGY!
Republicans were in …
Republicans were in Congress since 1994. You had the WH since 2001, if there is nothing that happened under W that you are responsible for why should anybody bother voting for republicans?! EVER?! LOL! Grow some spine, take responsibility for your own mess! Bush could have stopped the whole mess, instead he blocked states who tried to:
GOOGLE: “Predatory Lenders’ Partner in Crime”.
The truth is that you have no facts on your side and that this video u comment on contradicts EVERYTHING U say!
Democrats took over …
Democrats took over in 2006 and ever since the economy has been tanking.
Before then the economy was creating jobs left and right.
No one said it was …
No one said it was ALL the democrats fault, but you forget that we are not a dictatorship, the Democrats BLOCKED the investigations and stopped legislation designed to prevent this.
Click on my name and go to my home page. The featured video proves this.
Fannie mae was in …
Fannie mae was in serious trouble LONG before this – and it was the Republicans who tried to stop it. The Democrats were castigating the Republicans for pointing this out (because it was a cash cow for their campaign coffers).
Go to my channel, I have a video there that shows a hearing in 2004 – and this was after several years of trying to point out the problems.
If it was all the …
If it was all the democrats fault why did the subprime mess happen 2001-2008?! You make no sense!
Fannie Mae started …
Fannie Mae started getting in trouble when in 2005 their largest mortgage provider Countrywide told them if they still want their business they better take a lot more of the Countrywide subprime business. This was during Daniel Mudd’s tenure who was a Bush appointee. U right wingers are notorious liars.
GOOGLE:
“Fannie’s Perilous Pursuit of Subprime Loans”
Not exactly true.
…
Not exactly true.
The lower and middle class got the biggest tax breaks of all in the Bush years.
The “chopping up” of bad loans would never have occured if the LIBERAL policies that both encouraged and forced banks into making them hadn’t happened.
What’s the matter …
What’s the matter is free speech too scary for you???
Emirnkamelia gets …
Emirnkamelia gets it.
Bush appointed HIS …
Bush appointed HIS cronie??????? Franklin Raines and nearly the entire board are HUGE donors to the Democrat parties!!!!!
The Democrats have been using this and taxpayer guaranteed funds to reap huge campaign contributions for themselves.
Those instruments …
Those instruments were devised to help mitigate the LOSSES that they expected because they were FORCED to take on loans they did not want to take on, and to spread the risk on loans the liberal policies rewarded them for making (when market forces would have prevented them from making them in the first place)