What Caused the Financial Meltdown?

[av8torntn]

Sub-prime and greed by the derivative mortgage lenders and other funds have affected every homeowner and every taxpayer in the US.

So JMHO but it is affecting 100% of the households!

I just see the markets as more consumer driven so if anyone could be called greedy it would not be a failing lender.

 

[UPS Lifer]

I just see the markets as more consumer driven so if anyone could be called greedy it would not be a failing lender.

The only difference I see with consumers is that someone has to give them the money. Without a loan they can't move up to another house or take the cash and buy a car or boat or go on a trip.

Where some of the consumer greed comes into play is the feeling that the home would continue to build equity (we now know this to be artificial equity) and they could always go to plan B and sell for a profit to pay the debt.

Well so much for plan B! We also had all the speculators with the same thought process.

But again, if you can't get the loan there is no money to buy anything and the greed factor goes down to tube.

 

[wkmac]

http://vdare.com/roberts/080923_deregulation.htm

 

[av8torntn]

The only difference I see with consumers is that someone has to give them the money. Without a loan they can't move up to another house or take the cash and buy a car or boat or go on a trip.

Where some of the consumer greed comes into play is the feeling that the home would continue to build equity (we now know this to be artificial equity) and they could always go to plan B and sell for a profit to pay the debt.

Well so much for plan B! We also had all the speculators with the same thought process.

But again, if you can't get the loan there is no money to buy anything and the greed factor goes down to tube.

caveat emptor not caveat venditor

I could not force anyone to take a loan and especially in this climate of government over regulation I could never believe that some lender took advantage of a borrower with all the things you sign at closing. I do not think the lenders were greedy at all. If they were they would have made enough money to survive during the down cycle.

My view only and I understand most of the Country agrees with your view. The consumer knew the stakes when they decided on an interest only loan or a loan for up 125% of market value of the property. They also knew they put up their property to secure the loan. The lenders knew they were buying high risk loans and they knew the default rate would be higher. The citizens now demand that my tax money goes to bail out these two groups. The reason as far as I can understand is that they want to be able to continue to make loans to keep home ownership rates high and to be able to make home equity loans so people can continue to use their homes as an ATM machine. I would rather see these markets fail and in my opinion if the government got out of the way a more efficient model would present itself in the marketplace.


The only kink in the system from my point of view was the federal government not allowing a free market. By this I mean they kept interest rates at an artificial low and they created entities to purchase these high risk loans. The consumers demanded this from the government to continue to drive the value of their homes upward. No surprise to me this system does not work efficiently. This cycle has been predictable in the larger markets for years. Yes I understand this is a little larger than in the past. In the past it has been more of a regional thing. One reason is that a larger group of the general population is now a homeowner.

I understand that I have oversimplified this problem. It was not meant to mock you it was for the benefit of someone else.

 

[UPS Lifer]

av8torntn,

I know a lot of folks who believe as you do including my wife! There is a lot of merit to what you say...

However, most folks really don't understand how the financial process works.

Their main concern is "Can I afford the payment?". Before the meltdown they even were optimistic. They believed that they could pull money out of their houses.

Speculators should not be rewarded. But we do need to stop the bleeding, and maybe it is an across the board cut on the interest on EXISTING primary home loans.

I don't know how to "split the baby". Anything we do is going to have some sort of pitfall.

I don't like my tax $$ going to the leeches of the world but I certainly do not want to see my neighbors losing their homes either.

We have to find common ground don't you think? If we don't, the USA will fail! This is not an option.

 

[wkmac]

av8torntn,

I know a lot of folks who believe as you do including my wife! There is a lot of merit to what you say...

However, most folks really don't understand how the financial process works.

Their main concern is "Can I afford the payment?". Before the meltdown they even were optimistic. They believed that they could pull money out of their houses.

Speculators should not be rewarded. But we do need to stop the bleeding, and maybe it is an across the board cut on the interest on EXISTING primary home loans.

I don't know how to "split the baby". Anything we do is going to have some sort of pitfall.

I don't like my tax $$ going to the leeches of the world but I certainly do not want to see my neighbors losing their homes either.

We have to find common ground don't you think? If we don't, the USA will fail! This is not an option.

If we don't, the USA will fail! This is not an option.

With all due respect I completely disagree with that thinking. It fails only because you (general term, not you specifically) refuse to think outside old. worn out social planning economic models. I'm not taking about the welfare kinda social models specifically but the models of where gov't economic planners try and manipulate business and economic models that either benefit selected industries or benefit gov't based on driving tax revenues over what the citizen might do on their own if left on their own.

These wonks come to Washington with their societal thesis in hand trying to prove they work and we end of being the guinea pig to suffer the fate whether it works or not. In the meantime, whoever the politically connected was that brought in the raschal, either made his/her money they wanted, positioned their interest into monopoly status or achieved some other means of power as a result and we the poor suckers are left with the debris and distruction all over the floor.

Some maroon years ago locked us into a society of oil by building a tax model behind it to support roads for example and look where it has gotten us. Had we found another method of payment, say a toll for example, the market could bring forward any means of conveyance because how it durived it's energy to move would be meaningless from a tax policy standpoint. All that would matter then would be the market place itself and the relationship between buyers and sellers. At present when oil was $10 a barrel, federal gov't gave back money through production tax credits in order to keep the process going. T. Boone Pickens in testifying before Congress on his wind idea spoke about making those production tax credits apply to wind energy. Some argue doing this for business is smart of gov't and from one business model, that may be true but what effects downstream do you create with such market intervention? Had gov't not given oil tax credits when it was $10 a barrel, might they have turned off the pump and closed up supply a bit to raise the price per barrel and make it profitable. If gov't let that happen, people might have begun changing habits, driving less, not buying SUV's but buying smaller, higher mileage cars and this would effect their bottomline in tax revenues.

If we all converted to electric cars today, the complete road system would go into chaos for lack of funding or if someone developed a 100 mpg car that got large scale use among the consuming public, the negative impact on tax revenues again would place fed. road funds in panic. I contend gov't tax revenues are as big a barrier to alternative energy and high efficency vehicles as the technology itself based purely on economic tax models of the federal gov't.

People scream that de-regulation has caused the crisis and if you stay locked into the Keynesian/fiat economic model, that argument does hold some water I would grudgingly admit. But if you completely de-regulated even to the point of no central bank having monopoly on currency and currency creation and you let people decide medium of exchanges among themselves, this defangs the so-called fatcats of corporatism the left uses as a whipping boy and it kills the welfare state abuse that the right uses to it's own agendas. Gov't sits in the middle and swallows up more and more power and digs us economically deeper no matter which side rules in this process.

Let's kill this whole endless circle of stupidity and let local folk decide among themselves how they want to do bidness and conduct life. If the plumber, hardware store owner, doctor and auto repairman understand the nature and need for an honest, fair economy and then you add in some factory workers, welder, electrician and local banker, you don't think between them and some more townsfolk that they couldn't come up with an honest and fair economy among themselves?

Our founding fathers did it and look what we have to work with today that they didn't. Now tell me again it's impossible! BULLSCHITT! This is America and nothing is impossible when we put our minds to it and gov't stays out of the way.

AV's right, gov't should stay out of the market.

JMO.

Audit the Fed!

 

[UPS Lifer]

wkmac,

Actually, I am glad to see that this bill is meeting with a lot of dissension on both sides. This means that there should be some serious hammering on both sides to get a bill that makes sense.

I normally would say that keeping the government at bay with less legislation and regulation is a good thing. Not this time! ... And not when we are talking about a multi-trillion dollar plus economy which affects the world! Our financial infrastructure needs to be monitored, oversight and accountability needs to be in place.

The dam is ready to break and the market may collapse if this bill is not hammered out. Word has it that the market could drop 1000 to 2000 points if the economy comes to a halt because the money dries up. Unfortunately this is a time when the Federal Government MUST get involved.

I do not disagree with your thinking on energy. I really like what I hear from T. Boone Pickett but this is not going to fix the immediate problem that is happening right now.

Changes need to happen with regards to energy and highway taxation.

But first and foremost, we have to restore confidence in respect to the American people and the world financial markets.

 

[av8torntn]

av8torntn,

We have to find common ground don't you think? If we don't, the USA will fail! This is not an option.

I am not really sure how to take this. Do you want to find common ground with me? I would like to see the government out of the mortgage business. You would like to see a massive expansion of the governments role in the mortgage business.

No, I do not think the USA will fail if we do not do something about these loans. To me the US in an idea that we can govern ourselves through a very limited central government. To me the only way for this idea to fail is to continue to give the government more and more power. I believe that people have come to this country from all over the world seeking freedom and the opportunity to be successful.

Back to topic. It seems everyone agrees that the cause of the financial problems comes from the two most heavily regulated industries. Where I do not agree with the mainstream is that the answer is not more government. This could be a great opportunity for the citizens to rise up and rid the government from one small part of our daily lives. Of course that will not happen because the debate is now down to how much money should we print up to prop up these industries and should we limit the pay of their employees. Who would have thought a couple of years ago that there would be debate in congress on weather or not to limit the pay of executives? How bout if you want to limit someones pay lets limit the pay of members of congress to the lowest ranking private in Iraq? Afterall he or she does more for this country than they do.

I understand we now face a serious time with our credit markets. I just do not think the answer is the one we are seeing proposed. I also believe that it will carry on for some time no matter what the government does or does not do. Rest assured that I feel that all that will happen in the end is the government will push this problem farther down the road.

 

[JustTired]

I understand we now face a serious time with our credit markets. I just do not think the answer is the one we are seeing proposed. I also believe that it will carry on for some time no matter what the government does or does not do. Rest assured that I feel that all that will happen in the end is the government will push this problem farther down the road.

I agree.

The problem is....we have created a "I want it, and I want it now!" society. Whether it's the CEO that wants his/her millions....or the average Joe that wants that new car or 50" flat screen tv. How many people actually "save up" to buy anything? The percentage has to be small. I'm guessing less than 5%. It's too easy to plop that card down and walk away with the "have to have" of the day.

You can't trust anyone to do the "right thing" anymore. De-regulation is great in theory. But, with no regulation and the aforementioned society we live in, there will always be someone taking advantage for their own personal gain.

The other part of the "I want it, and I want it now" mantra is......"and I don't care what it does to anyone else."

Maybe letting things run their course might just be the "cure" this country needs. JMO

 

[Give-Me-A-Break!]

Here is something that was shared with me, an interesting concept!

"Im against the bailout!"

I'm against the $85,000,000,000.00 bailout of AIG. Instead, I'm in favor of giving $85,000,000,000 to America in a We Deserve It Dividend . To make the math simple, let's assume there are 200,000,000 bonafide U.S. Citizens 18+. Our population is about 301,000,000 +/- counting every man, woman and child.

So 200,000,000 might be a fair stab at adults 18 and up.. So divide 200 million adults 18+ into $85 billon that equals $425,000.00. My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend . Of course, it would NOT be tax free. So let's assume a tax rate of 30%. Every individual 18+ has to pay $127,500.00 in taxes.

That sends $25,500,000,000 right back to Uncle Sam. But it means that every adult 18+ has $297,500.00 in their pocket. A husband and wife has $595,000.00. What would you do with $297,500.00 to $595,000.00 in your family? Pay off your mortgage – housing crisis solved. Repay college loans – what a great boost to new grads Put away money for college – it'll be there Save in a bank – create money to loan to entrepreneurs. Buy a new car – create jobs Invest in the market – capital drives growth Pay for your parent's medical insurance – health care improves Enable Deadbeat Dads to come clean – or else!

Remember this is for every adult U S Citizen 18 + including the folks who lost their jobs at Lehman Brothers and every other company that is cutting back. And of course, for those serving in our Armed Forces. If we're going to re-distribute wealth let's really do it...instead of trickling out a puny $1000.00 ( "vote buy" ) economic incentive that is being proposed by one of our candidates for President. If we're going to do an $85 billion bailout, let's bail out every adult U S Citizen 18+! As for AIG – liquidate it. Sell off its parts. Let American General go back to being American General. Sell off the real estate. < BR> Let the private sector bargain hunters cut it up and clean it up.

 

[UPS Lifer]

I am not really sure how to take this. Do you want to find common ground with me? I would like to see the government out of the mortgage business. You would like to see a massive expansion of the governments role in the mortgage business.

No, I do not think the USA will fail if we do not do something about these loans. To me the US in an idea that we can govern ourselves through a very limited central government. To me the only way for this idea to fail is to continue to give the government more and more power. I believe that people have come to this country from all over the world seeking freedom and the opportunity to be successful.

Back to topic. It seems everyone agrees that the cause of the financial problems comes from the two most heavily regulated industries. Where I do not agree with the mainstream is that the answer is not more government. This could be a great opportunity for the citizens to rise up and rid the government from one small part of our daily lives. Of course that will not happen because the debate is now down to how much money should we print up to prop up these industries and should we limit the pay of their employees. Who would have thought a couple of years ago that there would be debate in congress on weather or not to limit the pay of executives? How bout if you want to limit someones pay lets limit the pay of members of congress to the lowest ranking private in Iraq? Afterall he or she does more for this country than they do.

I understand we now face a serious time with our credit markets. I just do not think the answer is the one we are seeing proposed. I also believe that it will carry on for some time no matter what the government does or does not do. Rest assured that I feel that all that will happen in the end is the government will push this problem farther down the road.

My original reference was that we need to find common ground as a country. I do not like government control. That being said there are times there needs to be controls, regulation and heavy oversight. This is an industry that needs this. If Wall Street and the Main Street investors lose confidence - the market will crash. If the little investor loses confidence in government or their bank.... a frenzy will take place and there will be a run.

Monopolistic industry or companies, such as oil, electricity, financial markets, where people rely on it to such an extent that it is almost like a lifeline and in some cases is just that, needs to have controls to stop greed and gouging. All future markets and short sale practices need control over greed mongers who are out there everyday gambling with their investors money.

As a country we had to establish the SEC to eliminate the possibility of another Great Depression. Those controls were necessary. The banking, mortgage and financial industry needs the same sort of safe guards to protect little America from corporate greed.

 

[tieguy]

My original reference was that we need to find common ground as a country. I do not like government control. That being said there are times there needs to be controls, regulation and heavy oversight. This is an industry that needs this. If Wall Street and the Main Street investors lose confidence - the market will crash. If the little investor loses confidence in government or their bank.... a frenzy will take place and there will be a run.

Monopolistic industry or companies, such as oil, electricity, financial markets, where people rely on it to such an extent that it is almost like a lifeline and in some cases is just that, needs to have controls to stop greed and gouging. All future markets and short sale practices need control over greed mongers who are out there everyday gambling with their investors money.

As a country we had to establish the SEC to eliminate the possibility of another Great Depression. Those controls were necessary. The banking, mortgage and financial industry needs the same sort of safe guards to protect little America from corporate greed.

I agree a true free economy could do a lot more harm then good. I'm not crazy about a government bailout. It needs to come with the understanding that something has to change to prevent this situation in the future.

 

[wkmac]

protect little America from corporate greed.

As the country left the 19th century and entered the 20th, the pressures of gov't intervention in the market place grew out of fear of the great robber barons. We are told these men were using monopoly positions to get rich on the backs of working folk. Bankers were also said to be the evil of evils as well. As a result, the first 20 years of the 20th century saw gov't intervention into the market with such things as the Federal Reserve Act and anti-trust laws. Ironic the people who wrote such laws were or had connections to the great robber barons. As law was created we had the excess of the roaring 20's followed by the dark depressed days of the 30's where again we saw lots of market intervention that expanded the footprint of the federal gov't. The market failures also helped to consolidate into fewer hands. Many scholars today now are reaccessing the 30's and understanding that many of the interventions made things worse not only in the short term but also had longterm consequences as well.

The 1940's and WW2 or WW1 Part 2, caused economic upturn as war funding into the private sector from gov't for war materials caused a temporary market that resulted in what some believe a economic boom. And Bretton Woods was born which place the dollar towards it's status of global giant. This war industry continued into what is called the 50's where the American Middle Class came of age and some argue in it's hayday. 1960's saw domestic turmoil over various political/social issues and of course Vietnam. Economics played an up/down role and then we get to the 1970's and again gov't intervention including a wage and price freeze by the gov't. Bretton Woods collapses but the last restraints on open money creation was removed when the dollar was no longer pegged to gold. The federal reserve was free to print money as it saw fit. Late 70's saw lots of economic turmoil and gov't again chasing the problem with more and more intervention.

Ah, the great 1980's, the age of so-called deregulation where gov't actually shrank and disappear from the view. Nothing could be further from the truth. This was a period of intervention as well as the monster banks and Wall Street used intervention in sly ways to consolidate markets in which the good old local town S & L's were driven out forcing borrowing to flee to larger commerical banks. Instead of letting these S&L's who had obviously done stupid things fail on their own leaving a lot of S&L's who were OK to survive and keep small town America alive, gov't used it's "Crisis" process to inflict excessive intervention in the market to where those viable remaining S&L's couldn't compete and in step the big banks to consolidate the market place. What some call conspirators I would call pure opportunists. Now economics were more centralized and easier to control as a means of economic planning and policy making. Now it becomes important for the Federal Reserve Chairman to be seen on TV as he walks into Congress and depending on the size of the briefcase determines if it's good news or bad. Remember Briefcase watch on CNBC anyone?

Now the 1990's come and with it the end of the coldwar and the "Peace" dividend. Everyone is running head long into the stock market. 401k's, IRA's and to juice up the pot Al Gore invented the internet so we could have an internet.com boom. Poor Al will never live that one down. But the 1990's also brought about more gov't in the form of international economic treaties like NAFTA and WTO and of course American law had to change to comply with these treaties and thus public policy also had to shift. Well of course in order to have international trade, your foreign trading partner needs something to trade with and when many what we called 3rd world countries at the time had nothing to trade, it was our wealth redistribution duty to redistribute wealth so they could trade. Now these countries had little but they had labor in true abundance and what they needed were jobs that were labor intensive and didn't require lots of education because these countries had no educational system to begin with. Where do you think those manufactoring jobs that America has lost went? Now in fairness to the 90's it didn't start there but the 90's played a growing role and everybody was in the game. Again, gov't intervention outside the natural course of market dynamics brought this into being as public economic policy was molded to drive for a specific outcome.

Now we come to the 21st century. The shifted jobs are great but at the same time in order to grow these new emerging markets to their full potential you are going to need a skilled and educated class of society. Being the interventionist/redistributist that we are, we've shared our wealth (at the point of force from a gov't gun, some call it taxation) so why not now share our educatonal system too! Foreign students get preferred status at many colleges under the guise of diversity but truth is they are the lead troops in a new class of citizen for these merging markets that will seed future growth. Even better, let the families come here for a taste of the good life with the belief they'll export "democracy" back home.

I mean, a growing business needs new customers right? As this market grows, it will need capital and here stands King Dollar and you know what, things are going pretty good too. People, we call them illiegal aliens are learning how to use the dollar and better yet, they are shipping the dollar back home. Exporting american democracy, ya gotta love it!

But the shiney is wearing thin on this new dollar and others are starting to notice such things as the Euro and if things get bad enough, they seek safe haven in the arcain, neanderthal economics of gold. But in our case the gov't has injected intervention into the market place at every level.

For the last 100 years the gov't has been neck deep in the market place and through public policy. Every 20 to 30 year we have a crisis in the economic sphere and at each turn the market consolidates tighter and tighter into fewer and fewer hands and with it grow the gov't oversite. Everyone is pointing at Paulson and his past ties to Goldman Sachs, blah, blah and completely valid point. You might say, how well was gov't oversight over Goldman Sachs in all of this? Very true and valid. But what about the 90's and Robert Rubin? It's easy to finger point at these guys because of Goldman ties but the truth is we've had gov't oversight.

Gov't has completely and utterly failed at planned economics using a hybrid model of socialism. We continue with every crisis to shove the market into ever tighter centralized hands that hold a status that 100 years ago would be decried as a monopoly. Standard Oil was initially broken up into 34 different oil companies back in the early 1900's. By the mid 20th century all thanks to gov't intervention, the oil business was monopolizing again into what was called the Seven Sisters. Further market consolidation has taken place even in light of much stricter and stronger anti-trust/monopoly law with what is now called the Supermajors. Now the Seven Sisters are global oil giants that dominate the oil business around the world. http://www.ft.com/cms/s/2/471ae1b8-d001-11db-94cb-000b5df10621.html

All this came about as gov't intervention took place in America moving this industry from the US being dominate to a global alliance being dominate. Let's consider these new 7 giants for their country of origin.
Brazil, Saudia Arabia, China, Russia, Venezuela, Iran, Malaysia. Now, what if the US still dominated the global oil market as it had and the public policy goal was to promote global markets, what would these 7 countries have to bring to the market table? Here's something to consider, what if someone tired to bring a 100 mpg car to the market or a non-oil vehicle to market? If America is the largest global customer of these oil and all of a sudden you take our buying of global oil out of the market place, what happens to the price of global oil? It collapses right? If oil prices collaspe, how can the policy wonks who've setup out national public policy towards global trade and global interdependence assure themselves success? Without global trade for our dollar, how do we service our debt? If we can't pay our debt, who gets thrown out of office because the people wake up? Why are the politicians igoring the polls against market intervention and going ahead anyway?

Has a light bulb started going off in your head about the goodness of market intervention and driving economics via public policy planning?

In 100 years of social intervention, free markets have in fact shrank as the means of production if you will have consolidated into fewer and fewer hands. To even start a business today, you have a legal minefield to negociate with fees, and licenses and then the law is written in such ways that a trip to a lawyer is necessary not only to assure compliance but then to obtain corp. charter just to position yourself to even compete in most cases. We decry bankers and finaciers but good God look at what lawyers who make up the vast majority of legislative bodies have done to us and my wife works in that field!


Again, how much intervention is enough before they ever finally get it right?

Can anyone here tell me the answer to this question. Folks like me only have ground to complain because no matter what amount of gov't you demand, they still in the long run never ever get it right and the problem only grows worse and much larger!

 

[wkmac]

http://www.lewrockwell.com/paul/paul480.html

 

[wkmac]

Is the whole crisis bogus?

Who is Robert Higgs?

http://en.wikipedia.org/wiki/Robert_Higgs

 

[av8torntn]

http://www.lewrockwell.com/paul/paul480.html

"It is truly a shame that, less than two decades after the fall of communism, the lessons of price control are completely lost on most Washington power-brokers. The Treasury proposal before Congress is nothing more than a form of price control, an attempt to keep asset prices artificially elevated."

We must have a very short attention span.

 

[av8torntn]

Here is an email floating around. Someone should look into the laws that made it out of committee in 2003 then blocked on the floor of the Senate.



Under President Jimmy Carter, the Depository Institutions Deregulation and Monetary Control Act of 1980 changed the rules governing thrift institutions and expanded alternative mortgages.



In 1995, President Clinton put on steroids the Community Reinvestment Act, another well-intentioned Carter-era law designed to encourage minority home ownership. In so doing, he created the market for risky sub-prime loans.



In 1999, Clinton appointed Franklin Raines to run Fannie Mae. Raines not only mis-managed the quasi-government institution, he looted it for a total of almost $100 million in compensation before he was forced out in early 2005.



The Clinton-era corruption, combined with unprecedented catering to "affordable-housing" lobbyists, has now resulted in the nationalization of both Fannie and Freddie, a move that is expected to cost taxpayers tens, if not hundreds of billions of dollars.



Where is Raines now? In jail? No! He is one of Barack Obama's economic advisors.

No kidding!

Other Clinton cronies and current Obama advisors, including Jim Johnson and former Janet Reno aide Jamie Gorelick, padded their pockets to the tune of another $75 million.



Why hasn't Obama called for a criminal investigation of Freddie Mac and Fannie Mae?

He can't. Members of his economic advisory team would be subjects of any such criminal investigation.



Why hasn't Obama demanded congressional hearings, with testimony from Jim Johnson, Franklin Raines, and Jamie Gorelick?

Why hasn't Obama demanded that Johnson, Raines, and Gorelick return the tens of millions of dollars they received from these institutions to the shareholders? And why doesn't he demand a special prosecutor to investigate these people?

Again, he can't.

They are all part of the Obama team!

Both Senator Chris Dodd, D. Ct, the Senate Banking Committee chairman, and Representative Barney Frank, D. Ma, the House Banking Committee chairman received tens of thousands of dollars in 'campaign contributions' from the very institutions they were supposed to be regulating.



Why doesn't Obama criticize Chris Dodd and Barney Frank for blocking earlier reforms of these companies- including those proposed by the Bush administration in 2003 and Senator John McCain in 2005?

Could it be that the truth would interfere with Obama's leftist ideology?

Is Barack Obama afraid the truth will keep him out of the White House?

If you're concerned about our nation's future, please understand that the Democrats who 'regulated' Fannie Mae and Freddy Mac into the ground are the same Democrats who now want to 'fix' it.



If you think the national lame stream- in the tank for Obama -news media will tell you the truth about any of this, you're smoking something that ain't legal!

 

[wkmac]

We must have a very short attention span.

I'm shocked it's long enough to even qualify to be called a span!


Good point BTW.

Under President Jimmy Carter, the Depository Institutions Deregulation and Monetary Control Act of 1980 changed the rules governing thrift institutions and expanded alternative mortgages.

Hmmmm. That might prove interesting if true in relation to the S&L deal in the 80's. Reagan gets the blame because it was on his watch and that's life but I'm a believer in compounding gov't over time (to borrow a principle of investing saying) and that sometimes what happens in one adminstration may have in fact had some roots in a previous term.

Wait! I just remembered, that 1980' Act was what killed Glass Steagall and allowed the Federal Reserve to regulate non-member banks like S&L's. It also gave the S&L's/credit unions/etc. the power to have checking accounts. Why is that so important? Consider how money is created and this directly from the Federal Reserve Bank of Chicago in their book "Modern Money Mechanics" http://landru.i-link-2.net/monques/mmm2.html

Who Creates Money?
Changes in the quantity of money may originate with actions of the Federal Reserve System (the central bank), depository institutions (principally commercial banks), or the public. The major control, however, rests with the central bank.
The actual process of money creation takes place primarily in banks.(1) As noted earlier, checkable liabilities of banks are money. These liabilities are customers' accounts. They increase when customers deposit currency and checks and when the proceeds of loans made by the banks are credited to borrowers' accounts.
In the absence of legal reserve requirements, banks can build up deposits by increasing loans and investments so long as they keep enough currency on hand to redeem whatever amounts the holders of deposits want to convert into currency. This unique attribute of the banking business was discovered many centuries ago.
It started with goldsmiths. As early bankers, they initially provided safekeeping services, making a profit from vault storage fees for gold and coins deposited with them. People would redeem their "deposit receipts" whenever they needed gold or coins to purchase something, and physically take the gold or coins to the seller who, in turn, would deposit them for safekeeping, often with the same banker. Everyone soon found that it was a lot easier simply to use the deposit receipts directly as a means of payment. These receipts, which became known as notes, were acceptable as money since whoever held them could go to the banker and exchange them for metallic money.
Then, bankers discovered that they could make loans merely by giving their promises to pay, or bank notes, to borrowers. In this way, banks began to create money. More notes could be issued than the gold and coin on hand because only a portion of the notes outstanding would be presented for payment at any one time. Enough metallic money had to be kept on hand, of course, to redeem whatever volume of notes was presented for payment.
Transaction deposits are the modern counterpart of bank notes. It was a small step from printing notes to making book entries crediting deposits of borrowers, which the borrowers in turn could "spend" by writing checks, thereby "printing" their own money.
What Limits the Amount of Money Banks Can Create?
If deposit money can be created so easily, what is to prevent banks from making too much - more than sufficient to keep the nation's productive resources fully employed without price inflation? Like its predecessor, the modern bank must keep available, to make payment on demand, a considerable amount of currency and funds on deposit with the central bank. The bank must be prepared to convert deposit money into currency for those depositors who request currency. It must make remittance on checks written by depositors and presented for payment by other banks (settle adverse clearings). Finally, it must maintain legally required reserves, in the form of vault cash and/or balances at its Federal Reserve Bank, equal to a prescribed percentage of its deposits.
The public's demand for currency varies greatly, but generally follows a seasonal pattern that is quite predictable. The effects on bank funds of these variations in the amount of currency held by the public usually are offset by the central bank, which replaces the reserves absorbed by currency withdrawals from banks. (Just how this is done will be explained later.) For all banks taken together, there is no net drain of funds through clearings. A check drawn on one bank normally will be deposited to the credit of another account, if not in the same bank, then in some other bank.
These operating needs influence the minimum amount of reserves an individual bank will hold voluntarily. However, as long as this minimum amount is less than what is legally required, operating needs are of relatively minor importance as a restraint on aggregate deposit expansion in the banking system. Such expansion cannot continue beyond the point where the amount of reserves that all banks have is just sufficient to satisfy legal requirements under our "fractional reserve" system. For example, if reserves of 20 percent were required, deposits could expand only until they were five times as large as reserves. Reserves of $10 million could support deposits of $50 million. The lower the percentage requirement, the greater the deposit expansion that can be supported by each additional reserve dollar. Thus, the legal reserve ratio together with the dollar amount of bank reserves are the factors that set the upper limit to money creation.

but here's the kicker!

Who Creates Money?
Changes in the quantity of money may originate with actions of the Federal Reserve System (the central bank), depository institutions (principally commercial banks), or the public. The major control, however, rests with the central bank.
The actual process of money creation takes place primarily in banks.(1) As noted earlier, checkable liabilities of banks are money. These liabilities are customers' accounts. They increase when customers deposit currency and checks and when the proceeds of loans made by the banks are credited to borrowers' accounts.
In the absence of legal reserve requirements, banks can build up deposits by increasing loans and investments so long as they keep enough currency on hand to redeem whatever amounts the holders of deposits want to convert into currency. This unique attribute of the banking business was discovered many centuries ago.
It started with goldsmiths. As early bankers, they initially provided safekeeping services, making a profit from vault storage fees for gold and coins deposited with them. People would redeem their "deposit receipts" whenever they needed gold or coins to purchase something, and physically take the gold or coins to the seller who, in turn, would deposit them for safekeeping, often with the same banker. Everyone soon found that it was a lot easier simply to use the deposit receipts directly as a means of payment. These receipts, which became known as notes, were acceptable as money since whoever held them could go to the banker and exchange them for metallic money.
Then, bankers discovered that they could make loans merely by giving their promises to pay, or bank notes, to borrowers. In this way, banks began to create money. More notes could be issued than the gold and coin on hand because only a portion of the notes outstanding would be presented for payment at any one time. Enough metallic money had to be kept on hand, of course, to redeem whatever volume of notes was presented for payment.
Transaction deposits are the modern counterpart of bank notes. It was a small step from printing notes to making book entries crediting deposits of borrowers, which the borrowers in turn could "spend" by writing checks, thereby "printing" their own money.

I used the blue highlight for effect. The 1980' Monetary Act and all acts afterwards should be looked at in relation to one aspect. Reserve Requirements. If the reserve requirements are eased, this is a sure way of inflating the money supply through local bank money creation which a debt receipt in itself.

http://en.wikipedia.org/wiki/Reserve_requirements

 

[moreluck]

The Dems. were really caught in a lie today. When John McCain was on his way to D.C., the Dems. said "he doesn't need to be here, we already have a deal.....it's done."

A bunch of lying scumbags....Pelosi, Reid & Frank !!! They don't give a flying "friend" about us and our economic troubles. If their retirements were threatened, it'd be a whole different story!

Politicians (both sides) suck !!

 

[UPS Lifer]

The Dems. were really caught in a lie today. When John McCain was on his way to D.C., the Dems. said "he doesn't need to be here, we already have a deal.....it's done."

A bunch of lying scumbags....Pelosi, Reid & Frank !!! They don't give a flying "friend" about us and our economic troubles. If their retirements were threatened, it'd be a whole different story!

Politicians (both sides) suck !!

Nobama's camp went one step further and said that McCain is the one who took a tenuous agreement and threw a wrench into the middle of the negotiations with his political grandstanding.

McCain called Harry Reid's bluff and comes to DC to lead the Republicans and gets blamed for showing up - I hope people see through the real politics! No wonder the congressional approval rating is in the toilet!

And what is with Bill Clinton - he came out for McCain again today. Me smells a fox in the hen house. If McCain wins Hillary runs again in 2012!!

Bill & Hill are one hell of a team! Subtle support for the opposite side!!!