2nd Worst Financial Crisis In History: Who gets credit?

Procrustes Stretched

And you say, "Oh my God, am I here all alone?"
Dec 1, 2008
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We’ve come through the second-worst financial crisis in the history of the world bruised and shocked, but on the road to recovery. Agree?

Who gets the credit for averting complete disaster, the invisible hand or Obama? If not Obama, who?

Unemployment is high, there is a sense of bewilderment clouding the minds of the public, but all signs say we are out of the wood and on the road to recovery. Are you better off now than where only a year ago, you thought you'd be?

Credit has to go to somebody. Why haven't Obama and the Democrats formulated a message around this?
 
Well disaster has not been averted. The market needed to reallocate resources and it hasn't been allowed to do so, which means that our economy is still unsustainable. It's worse than it was when it crashed in September of 08 thanks to the bailouts and stimulus package.
 
Well disaster has not been averted. The market needed to reallocate resources and it hasn't been allowed to do so, which means that our economy is still unsustainable. It's worse than it was when it crashed in September of 08 thanks to the bailouts and stimulus package.

Kevin, are you drinking again? Maybe you should see Obama's doctor?

seriously, dude. read what everyone was saying BEFORE the reallocation of resources and the stimulus bills.

reality check on aisle 2!
 
Well disaster has not been averted. The market needed to reallocate resources and it hasn't been allowed to do so, which means that our economy is still unsustainable. It's worse than it was when it crashed in September of 08 thanks to the bailouts and stimulus package.

Kevin, are you drinking again? Maybe you should see Obama's doctor?

seriously, dude. read what everyone was saying BEFORE the reallocation of resources and the stimulus bills.

reality check on aisle 2!

I don't drink.

The question is why would I listen to those who not only failed to see the downturn coming, but laughed at those who did? I believe those who did see it coming have a bit more credibility. I'd suggest taking a look at this:

The Bailout Reader - Mises.org - Mises Institute
 
Well disaster has not been averted. The market needed to reallocate resources and it hasn't been allowed to do so, which means that our economy is still unsustainable. It's worse than it was when it crashed in September of 08 thanks to the bailouts and stimulus package.

Kevin, are you drinking again? Maybe you should see Obama's doctor?

seriously, dude. read what everyone was saying BEFORE the reallocation of resources and the stimulus bills.

reality check on aisle 2!

I don't drink.
Funny thing is, I had a feeling you'd say that.:lol:

The question is why would I listen to those who not only failed to see the downturn coming, but laughed at those who did? I believe those who did see it coming have a bit more credibility. I'd suggest taking a look at this:

The Bailout Reader - Mises.org - Mises Institute

Lots of people saw it coming, they just thought they could ignore it. Denial.

Some who spoke about it coming also spoke idiocies too wild for sanity. It's like being an astrologist or fortune teller...say enough things and one is surely going to strike gold.

I still laugh at Ron Paul and other nitwits.
 
There was once upon time, not just parakeet--doing nature's call, but also an upaid Austrian, who may have even wanted to be a wallpaper hanger.

The Ludwig von Mises Institute," published "How The Business Cycle Happens," of Murray N. Rothard, September 6, 2005. This below appears, which explains the outcome of a credit expansion, (like is now underway). The summary is in the last paragraph:

"In sum, businessmen were misled by bank credit inflation to invest too much in higher-order capital goods, which could only be prosperously sustained through lower time preferences and greater savings and investment; as soon as the inflation permeates to the mass of the people, the old consumption-investment proportion is reestablished, and business investments in the higher orders are seen to have been wasteful.[8] Businessmen were led to this error by the credit expansion and its tampering with the free-market rate of interest.

The "boom," then, is actually a period of wasteful misinvestment. It is the time when errors are made, due to bank credit's tampering with the free market. The "crisis" arrives when the consumers come to reestablish their desired proportions. The "depression" is actually the process by which the economy adjusts to the wastes and errors of the boom, and reestablishes efficient service of consumer desires. The adjustment process consists in rapid liquidation of the wasteful investments. Some of these will be abandoned altogether (like the Western ghost towns constructed in the boom of 1816-1818 and deserted during the Panic of 1819); others will be shifted to other uses. Always the principle will be not to mourn past errors, but to make most efficient use of the existing stock of capital. In sum, the free market tends to satisfy voluntarily-expressed consumer desires with maximum efficiency, and this includes the public's relative desires for present and future consumption. The inflationary boom hobbles this efficiency, and distorts the structure of production, which no longer serves consumers properly. The crisis signals the end of this inflationary distortion, and the depression is the process by which the economy returns to the efficient service of consumers. In short, and this is a highly important point to grasp, the depression is the "recovery" process, and the end of the depression heralds the return to normal, and to optimum efficiency. The depression, then, far from being an evil scourge, is the necessary and beneficial return of the economy to normal after the distortions imposed by the boom. The boom, then, requires a "bust."

Since it clearly takes very little time for the new money to filter down from business to factors of production, why don't all booms come quickly to an end? The reason is that the banks come to the rescue. Seeing factors bid away from them by consumer goods industries, finding their costs rising and themselves short of funds, the borrowing firms turn once again to the banks. If the banks expand credit further, they can again keep the borrowers afloat. The new money again pours into business, and they can again bid factors away from the consumer goods industries. In short, continually expanded bank credit can keep the borrowers one step ahead of consumer retribution. For this, we have seen, is what the crisis and depression are: the restoration by consumers of an efficient economy, and the ending of the distortions of the boom. Clearly, the greater the credit expansion and the longer it lasts, the longer will the boom last. The boom will end when bank credit expansion finally stops. Evidently, the longer the boom goes on the more wasteful the errors committed, and the longer and more severe will be the necessary depression readjustment.

Thus, bank credit expansion sets into motion the business cycle in all its phases: the inflationary boom, marked by expansion of the money supply and by malinvestment; the crisis, which arrives when credit expansion ceases and malinvestments become evident; and the depression recovery, the necessary adjustment process by which the economy returns to the most efficient ways of satisfying consumer desires.[9]"

So Central banks create credit, which they just naturally put into nonsense businesses, which fail, and then a Depression happens because there is suddenly nothing else left to do! "Seig. . . .!"

Possibly anyone should return to the opening sentence. Ludwig von Mises was never paid for this stuff, and the parakeet likely had a far better grip on reality!

Missing is that problem of the "income scale." Frivolous, or possibly even implied, gay bankers making nonsense loans may look like the start of the credit crisis, now in play, but the sub-prime lender also had rational basis to expect a return. The buyer could flip the house to a more credit-worthy borrower, or the economy could make the buyer an actual paying customer.

Enrepreneurs are miscast as "forecasters," in the idiocy thinking of the unpaid Austrian, and so they have no clue about the concept of "paying customers," to begin with.

So what in fact happened?

The Total U. S. Credit maket found 2% or less of itself in jeopardy. There were bad bundled loans that had gone unregulated, or missed in any audits, and a small amount of "errors(?)" of lending were exposed. One or two reliable giants were affected, confined mostly to the one credit market, (USA), and so the U. S. federal government provided some bridge loan funding to some banks, mostly now re-paid. Other governments had their own problems to deal with, and did.

Now there is an Ivy League educated, federal administation in place, of the opinion that the main shock is over, and that no Tsunamis are occurring. Consumers will get a one-time, equal-amount kind of national cost-of-living adjustement. The one-time COLA is not precisely the outcome decades of properly done, equal amount COLA's

There is a problem with income scale, and how the raises of it are computed.

The reason that a recovery is under way, according to the unpaid Austrian, and the followers: Is that banks, even now. are causing a depression, with new credit(?)--or not enough new credit(?)!

The Austrian probably couldn't get a paycheck, especially now!

"Crow, James Crow: Shaken, Not Stirred!"
(They don't know that white man speak like snake, especially in Austria?)
 
We’ve come through the second-worst financial crisis in the history of the world bruised and shocked, but on the road to recovery. Agree?

Who gets the credit for averting complete disaster, the invisible hand or Obama? If not Obama, who?

Unemployment is high, there is a sense of bewilderment clouding the minds of the public, but all signs say we are out of the wood and on the road to recovery. Are you better off now than where only a year ago, you thought you'd be?

Credit has to go to somebody. Why haven't Obama and the Democrats formulated a message around this?

What have you been smoking? How can you possibly believe that Owe Bama has "saved us" when every other word out of his mouth is spend, spend, spend. He's driving the car faster than any other President in history as he races towards the poor house. I think you're on drugs.:lol:
 
Who gets the credit? The millions of people who get on with their private lives, being productive and persevering in the face of the insanely damaging policies of our elected repre...errr...make that self-appointed wannabe rulers.
 
We’ve come through the second-worst financial crisis in the history of the world bruised and shocked, but on the road to recovery. Agree?

Who gets the credit for averting complete disaster, the invisible hand or Obama? If not Obama, who?

Unemployment is high, there is a sense of bewilderment clouding the minds of the public, but all signs say we are out of the wood and on the road to recovery. Are you better off now than where only a year ago, you thought you'd be?

Credit has to go to somebody. Why haven't Obama and the Democrats formulated a message around this?

What have you been smoking? How can you possibly believe that Owe Bama has "saved us" when every other word out of his mouth is spend, spend, spend. He's driving the car faster than any other President in history as he races towards the poor house. I think you're on drugs.:lol:

How? Well the world didn't end and Wall Street recovered. We were told WS was crashing without intervention? Obama intervened and WS didn't crash?

Ignorance may be bliss and denial may be comfortable, but you are making a public ass of yourself.:eusa_shhh:
 
Who gets the credit? The millions of people who get on with their private lives, being productive and persevering in the face of the insanely damaging policies of our elected repre...errr...make that self-appointed wannabe rulers.

Policies? We were facing the end of the world, and the world didn't end. We were saved. It's a miracle damnit. A miracle!
 
It's as much of a miracle as an arsonist, who shows up to help put out a fire he set, is a hero.
 
It's as much of a miracle as an arsonist, who shows up to help put out a fire he set, is a hero.

The analogy would hold if we were talking about Bush being in office, but Obama was not in office when the World's Financial Crisis was coming to a head.

Bush and Clinton would be the arsonists here.

get a life and while you're at it, ask for a boxed set of critical thinking skills. I think there is a discount being offered for pseudo-intellectuals with poor personal hygiene. You should qualify.
 
It's as much of a miracle as an arsonist, who shows up to help put out a fire he set, is a hero.

The analogy would hold if we were talking about Bush being in office, but Obama was not in office when the World's Financial Crisis was coming to a head.

Bush and Clinton would be the arsonists here.

get a life and while you're at it, ask for a boxed set of critical thinking skills. I think there is a discount being offered for pseudo-intellectuals with poor personal hygiene. You should qualify.



It's far more complicated than just Clinton, Bush, or Obama.

For decades, multiple interests have conspired and/or acted to plunder the U.S. taxpayer. This crisis is just one reductio ad absurdum of Privatizing Profit and Socializing Risk.

Steve Melanga wrote an excellent piece in 2008 on one of the proximate causes of the current crisis: Slack Lending Standards.

Ignoring the import of such data, federal officials went on a campaign to encourage banks to lower their lending standards in order to make more minority loans. One result of this campaign is a remarkable document produced by the Federal Reserve Bank of Boston in 1998 titled “Closing the Gap: A Guide to Equal Opportunity Lending”.

Quoting from a study which declared that “underwriting guidelines…may be unintentionally racially biased,” the Boston Fed then called for what amounted to undermining many of the lending criteria that banks had used for decades. It told banks they should consider junking the industry’s traditional debt-to-income ratio, which lenders used to determine whether an applicant’s income was sufficient to cover housing costs plus loan payments. It instructed banks that an applicant’s “lack of credit history should not be seen as a negative factor” in obtaining a mortgage, even though a mortgage is the biggest financial obligation most individuals will undertake in life. In cases where applicants had bad credit (as opposed to no credit), the Boston Fed told banks to “consider extenuating circumstances” that might still make the borrower creditworthy. When applicants didn’t have enough savings to make a down payment, the Boston Fed urged banks to allow loans from nonprofits or government assistance agencies to count toward a down payment, even though banks had traditionally disallowed such sources because applicants who have little of their own savings invested in a home are more likely to walk away from a loan when they have trouble paying.

Of course, the new federal standards couldn’t just apply to minorities. If they could pay back loans under these terms, then so could the majority of loan applicants. Quickly, in other words, these became the new standards in the industry. In 1999, the New York Times reported that Fannie Mae and Freddie Mac were easing credit requirements for mortgages it purchased from lenders, and as the housing market boomed, banks embraced these new standards with a vengeance. Between 2004 and 2007, Fannie Mae and Freddie Mac became the biggest purchasers of subprime mortgages from all kinds of applicants, white and minority, and most of these loans were based on the lending standards promoted by the government.

Meanwhile, those who raced to make these mortgages were lionized. Harvard University’s Joint Center for Housing Studies even invited Angelo Mozilo, CEO of the lender which made more loans purchased by Fannie and Freddie than anyone else, Countrywide Financial, to give its prestigious 2003 Dunlop Lecture on the subject of "The American Dream of Homeownership: From Cliché to Mission.” A brief, innocuous description of the event still exists online here.

Many defenders of the government’s efforts to prompt banks to lend more to minorities have claimed that this effort had little to do with the present mortgage mess. Specifically they point out that many institutions that made subprime mortgages during the market bubble weren’t even banks subject to the Community Reinvestment Act, the main vehicle that the feds used to cajole banks to loosen their lending.

But this defense misses the point. In order to push banks to lend more to minority borrowers, advocates like the Boston Fed put forward an entire new set of lending standards and explained to the industry just why loans based on these slacker standards were somehow safer than the industry previously thought. These justifications became the basis for a whole new set of values (or lack of values), as no-down payment loans and loans to people with poor credit history or to those who were already loaded up with debt became more common throughout the entire industry.

What happened in the mortgage industry is an example of how, in trying to eliminate discrimination from our society, we turned logic on its head. Instead of nobly trying to ensure equality of opportunity for everyone, many civil rights advocates tried to use the government to ensure equality of outcomes for everyone in the housing market. And so when faced with the idea that minorities weren’t getting approved for enough mortgages because they didn’t measure up as often to lending standards, the advocates told us that the standards must be discriminatory and needed to be junked. When lenders did that, we made heroes out of those who led the way, like Angelo Mozilo, before we made villains of them.

Now we all have to pay.


RealClearMarkets - Articles - The Long Road to Slack Lending Standards
 
Bush and Paulson bailed out the banks.

They get some of the credit for averting finacial collapse.

They however put vertually no strings on the money they gave the banks.

Obama is trying to do what he can with what they left and the tarp the Bush team started.

Its amazing to me how many righties dont remember Bush standing in front of the media cameras on Sept, 2008 and announcing if we did not bail out the banks we would have finacial collapse.

Bush and team presided over the creation of this mess and did nothing, at least they tried to fix it rather than letting the economy collapse.

Remember the phrase "I guesss we are all kensyens Now".
 
Well disaster has not been averted. The market needed to reallocate resources and it hasn't been allowed to do so, which means that our economy is still unsustainable. It's worse than it was when it crashed in September of 08 thanks to the bailouts and stimulus package.

I agree we are not out of the water by any means!
Reasons I say this:
(1) Real unemployment is still between 17-22%
(2) "Official" unemployment is over 10%
(3) Banks are still failing!
(4) Small businesses still can't get loans
(5) Banks are not lending in general
(6) The only job growth has been in government! That is ALWAYS a bad thing.
(7) Student Loan Debt (because of insane increase in tuition) has skyrocketed since Bill Clinton sgned into law making student loans nearly impossible to discharge or get any relief from.
(8) Credit Card Defaults are at all time highs
(9) Foreclosure rates are still high
(10) More people in unemployment and welfare than anytime in US history
(11) People who are employed are losing benefits, taking pay cuts, having to take furloughs, losing 401(k) matches etc.
(12) The manufacturing basis is shrinking and becoming smaller by the day
(13) The deficit is still 10x higher than its ever been
(14) The dollar is weak
(15) And cap and trade is about to be crammed down our throats
 
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TARP is largely a non-starter of an economic issue, anymore. The banks involved have repaid large chunks already. Wall Street crashed, and so did everyone else. State and Local governments got bailed out, and two clunker-SUV-makers, and some insurance agents, got bailed out.

That last part ought to send a signal. Doin' the Detail is still a paying job, apparently.

State and local governments don't have to repay anything, and still the funding is out there! Real economics is done at computer desks, sorting out the auto registration applications, in America!

And then there are the teachers: Who caused it all in the first place, sending troops to still clueless about what was happening, or about to happen!

"Crow, James Crow: Shaken, Not Stirred!"
(Great half-wit father in Washington: Need Send Betrayus, long-knife, yellow hair dye, and giant white hat! Send to nearest river--Yellling a lot! In New Diplomacy, Actually: The government in Kabul is really in charge(?), lampoon intended! Send in unpaid Austrian scholar, for cover!)
 
1. We are not yet out of the woods of economic disaster when measured by unemployment (including true unemployment) and structural growth (cash for clunkers and $7k per new home for 1st time home buyers spurred spending but the minute those programs ended the spending stopped dead)

2. The national debt is in the stratosphere and the money has been spent on entitlements and non-productive wealth transfers (as opposed to the war machine that won WWII), and it's increasingly funded by the Communist Chinese. The end of this particular chapter is very, very scary. Are We in Good Company on Deficits? Mastersen's Musings

3. Moral hazard in the banking system was massively increased by Bush and then even more so by Obama/Geitner. Obama's selection of Geitner as Treasury Secretary was one of his worst mistakes as President. Geitner was horribly overmatched in negotiations with investment banks, who extracted from him 100 cents on the dollar for reckless gambling while Main Street was left to deal with layoffs and contracting business demand. Why would Obama appoint the head of the NY Federal Reserve to Treasury Secretary when Geitner failed to prevent the mortgage crisis when he had the power? In any event, the banking system remains structurally unsound as long as banks believe that if they win they keep the loot and if they fail they get reimbursed. This is death for any country and should have been fixed by now.

4. In January of 2009, Geitner was sent by Obama to Capitol Hill to articulate the administration's plan for solving the mortgage crisis (toxic assets choking the banking system). Geitner laid an egg, and the Dow Jones average plummeted from 9,000 to 6,000 as a direct result (I believe) of this pathetic performance by Geitner. As was widely reported, Geitner's plan lacked important details, and also held glaring contradictions (such as simultaneously inviting private investors to bid on toxic mortgages while telling home owners that their payments would be restructured...[soliciting bids for a moving target is assinine])

5. Instead of repairing all the damage done by 8 years of Clinton deregulation and then 8 years of Bush deregulation, Obama decided to make socialized medicine his number one priority. Socialized medicine - a massive nationalization of 18% of the US economy at the same time the economy is in a depression...the guy is an absolute beginner and we are all stuck for now in his playground while he tries to figure it out.

May we awake from this nightmare and find true leadership from either party - anyone but this marxist in the white house who's faking it, and not very well.
 
TARP is largely a non-starter of an economic issue, anymore. The banks involved have repaid large chunks already. Wall Street crashed, and so did everyone else. State and Local governments got bailed out, and two clunker-SUV-makers, and some insurance agents, got bailed out.


No, it is not a non-issue.

TARP is being abused by the Obama Administration as a slush fund. The repayments should be used for deficit reduction; instead, they are re-doling them out in defiance of the legislation.
 
Kevin, are you drinking again? Maybe you should see Obama's doctor?

seriously, dude. read what everyone was saying BEFORE the reallocation of resources and the stimulus bills.

reality check on aisle 2!

I don't drink.
Funny thing is, I had a feeling you'd say that.:lol:



Lots of people saw it coming, they just thought they could ignore it. Denial.

Some who spoke about it coming also spoke idiocies too wild for sanity. It's like being an astrologist or fortune teller...say enough things and one is surely going to strike gold.

I still laugh at Ron Paul and other nitwits.

Yeah they ignored it, uh huh. They didn't believe the Fed inflated boom could go on forever. Uh huh.

As for the Austrians, they had an actual explanation as to why the downturn would happen, and then it happened just like they said. They weren't just predicting the sky would fall.

[youtube]2I0QN-FYkpw[/youtube]
 
Bush and Paulson bailed out the banks.

They get some of the credit for averting finacial collapse.

They however put vertually no strings on the money they gave the banks.

Obama is trying to do what he can with what they left and the tarp the Bush team started.

Its amazing to me how many righties dont remember Bush standing in front of the media cameras on Sept, 2008 and announcing if we did not bail out the banks we would have finacial collapse.

Bush and team presided over the creation of this mess and did nothing, at least they tried to fix it rather than letting the economy collapse.

Remember the phrase "I guesss we are all kensyens Now".

:eusa_shhh:
 

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