Let's cut the bull shit and get down to the truth. The beginning..

[Mac1958]

.

What caused the recession, hmm.

Short answer: Greed & incompetence.

Longer answer:

Greed demonstrated by those in the financial services industry who created impossibly complex financial products and then pushed them onto people who could not possibly have understood them. Greed demonstrated by those same people who bought impossibly complex financial products even though they didn't even fucking understand them. They were just excited by their expected returns.

Greed demonstrated by consumers who knew damn well they were getting into mortgages that included payments that were going to increase in the future - that didn't stop them or course, since they just had to have a bigger house, right now, no matter what.

Greed demonstrated by mortgage companies that created and offered mortgages that didn't even require proof of income or employment. Greed demonstrated by the consumers who willingly purchased homes even though they knew they could not afford them, but what the hell, they didn't even have to report their income or employment.

Greed demonstrated by consumers who hopped right in to one of those 125% LTV home equity loans so that they could pay off bills they'd later run back up, and to buy all kinds of really cool goodies they didn't need, especially at the cost of their equity.

Incompetence demonstrated by government regulators who had an abject inability to properly stay on top of new and complex financial instruments as they were being foisted on buyers.

Incompetence demonstrated by politicians who bend over for the knee jerk notion that less regulation is always better, they're just as dense as the politicians who think MORE regulation is always better. Regulation failed here, gang.

Incompetence demonstrated by the ratings agencies when they provided A ratings to CMO's that turned out to be steaming piles of shit (although this could also fall under the category of greed, since the ratings agencies want to stay in the good graces of certain clients).

Greed demonstrated by AIG, which just kept writing credit default swaps knowing damn well that they didn't have proper reserves, coupled with the incompetence demonstrated by our stupid shit regulators who let it all happen right under their nose.

The Great Recession? A team effort. A symptom of a culture in rapid decay.

.

 

[Douger]

Let's see if this group can actually do this. I want us to get to the root of problems and weed out the truth. Not the truth according to the left or the right, but the truth.

I am conservative but not an idealogue. If we can get to the truth here, I can accept it.

First issue on the table:

What caused the recession?

murkins who swept floors but wanted to live like Eddie Van Halen.
Next question.

 

[Charles_Main]

As good a summation as I have ever read, Lowly carpenters I talked to knew it was coming a long time before I ever heard a banker even mention the word bubble. You can't build spec houses forever, had to end up with someone holding the bag, never would have guessed we would have unconditionally bailed them out so completely that they would not even take a lesson from the whole mess.

Yep. I followed the new housing developments in my town for years. When one neighborhood was still just surveyed dirt squares, the price for the future houses was about $240,000. A couple years later, they were going for over $300,000.

That house I eventually went to the action for reached $320,000. As I was looking at it, a broker approached me. The builder had a broker in the development office to make deals right on the spot.

I wasn't the slightest bit interested in paying $320,000 for the house, but I listened to her pitch.

She told me I could have the house for a monthly mortage payment of $300 a month for the first two years.



That is one bitch of a negative amortization.

I had also recently found a Wachovia internal memo online which described their incredibly aggressive Pick-A-Payment program.

It was these two things which told me we were in for one helluva crash.

I contacted a reporter I knew at a local TV station to let her in on what was happening. Sadly, she could not understand what I was trying to tell her. Too bad. She would have been two years ahead of the curve on the story.

No one believed me.

Oh well.

So, yeah, construction workers probably had a real good idea what was coming.

I know I did. Right Before the Crash I was Working for a GC building Spec Homes. I could not help but notice that we kept getting cheaper and cheaper, as far as what went into the Homes, yet the Prices kept going up.

I built many ah Spec home, that my Boss Sold for 400k or more, that In My mind I could not understand why it was worth more than 250k. It was so obvious that the Prices were Inflated. I don't think you even needed to be in the Industry to see it.

And the People buying them? It was often very Apparent that they were Buying well beyond their means. Ending up with a Huge Payment that they could just barely afford Then Let alone if their Rates went up. People Buying homes based on the Idea that they will acquire X amount of Equity in 4 years or what ever and be able to Refi before the Balloon, Only The Equity was never to come.

Very Dangerous situation, and It was easy to see it coming.

 

[francoHFW]

Pubs' and their cronies' corruption and incompetence, putting their pals in charge of the henhouse - greedy corrupt private institutions taking over the real estate market from Fannie and Freddie. F+F did get into it late, but it was only 20% them.

Boosh and Co couldn't shoot straight, period.

 

[g5000]

.

The Great Recession? A team effort.

There you go.

 

[Toro]

Let's see if this group can actually do this. I want us to get to the root of problems and weed out the truth. Not the truth according to the left or the right, but the truth.

I am conservative but not an idealogue. If we can get to the truth here, I can accept it.

First issue on the table:

What caused the recession?

The recession was caused by the collapse of the housing bubble.

 

[Toro]

I'll offer my view first:

It was a combination of greed (banks, investors, consumers), and political posturing.

It all stemmed from the housing market. The fault lies in many areas, the CRA, deregulation, a sense from the common man that there was no limit, and politics.

Not any one person or any one political party is to blame, except that there is plenty of balme to be assigned if we just have to assign blame.

I am no economist, I am no housing specialist, nor am I a political science major. These opinions that I have laid out are borrowed from another smarter person who also said it more eloquently. I am starting this thread to hear something lie that again. To get to the bottom of the issue.

I welcome input from all sides.

The housing market inflated for the following reasons;

- The Federal Reserve held down interest rates too low for to long.

- However, the Federal Reserve was reacting to the collapse of the Technology Bubble.

- However, the Technology Bubble was fueled, in part, by easy money after the collapse of Long Term Capital Management, a belief by Greenspan of a productivity miracle caused by the Internet, the Greenspan Put, and a general belief in conventional economics that bubbles cannot happen. However, the Fed was tangential in the Technology Bubble.

- A general belief in the economics community that bubbles cannot happen, ideology, flawed models, and a basic misunderstanding of financial markets.

- Wall Street and investors reacting to low interest rates by reaching for yield, which occurred because the Fed kept rates too low. Wall Street created derivatives to meet this demand.

- Deregulation

- Flawed incentives in the financial system which spurred short-term risk taking at the expense of long-term incentives. Traders could make $10 million, $20 million, $50 million or more in a year, creating enormous incentives to take risk at the expense of the system.

- Increased leverage in the financial system

- Freddie and Fannie, particularly concerning the amount of leverage on their balance sheet. The GSEs were more leveraged than Wall Street.

- The transition of Wall Street banks from partnerships to limited liability companies.

- Predatory lending.

- People taking bad loans.

- Banks lowering their standards.

- Regulators who looked the other way or encouraged lax lending standards.

- People believing that home prices could only go up and using their house as an ATM.

- People being ignorant of bubbles.

- Increased savings from Asia, which was re-cycled back into our financial markets.

- The Chinese dollar peg.

 

[Toro]

The REAL truth, is what we had under Clinton created the most booming economy we have ever seen. Everyone pays their fair share, we support those that are the real job creators, small business, and support those that make american great, the middle class.

From Clinton's strong progressive view the economy skyrocketed, we had the biggest surplus in US history, employers were nearly begging people to work for them, 10$ an hour to start signs in McDonald's windows,...it was great times.

From there W came into office and decided to throw Clinton's game plan to have the nation debt free into the trash and decided to go back to the proven failed GOP "trickle down" economics. Once enacted things began to plunge.

Now that W slashed revenues, he decided to go on a spending spree by enacting medicare part D, and going to war with afganistan, and the big one, the false war in Iraq.

To insert the cliffs notes, Bush also allowed the big banks to run wild with predatory loans, destroyed the housing market, enacted TARP giving trillions to bail them out, and so the frat boy party is over, leaving the nation in shambles because of the republican way of doing things.

Simply put, the economic crisis was caused from the GOP slashing revenues, while at the same time spending like lunatics.

That's not the real truth.

Sorry.

 

[Black_Label]

The REAL truth, is what we had under Clinton created the most booming economy we have ever seen. Everyone pays their fair share, we support those that are the real job creators, small business, and support those that make american great, the middle class.

From Clinton's strong progressive view the economy skyrocketed, we had the biggest surplus in US history, employers were nearly begging people to work for them, 10$ an hour to start signs in McDonald's windows,...it was great times.

From there W came into office and decided to throw Clinton's game plan to have the nation debt free into the trash and decided to go back to the proven failed GOP "trickle down" economics. Once enacted things began to plunge.

Now that W slashed revenues, he decided to go on a spending spree by enacting medicare part D, and going to war with afganistan, and the big one, the false war in Iraq.

To insert the cliffs notes, Bush also allowed the big banks to run wild with predatory loans, destroyed the housing market, enacted TARP giving trillions to bail them out, and so the frat boy party is over, leaving the nation in shambles because of the republican way of doing things.

Simply put, the economic crisis was caused from the GOP slashing revenues, while at the same time spending like lunatics.

That's not the real truth.

Sorry.

That is the real truth. Just because you can't handle it, doesn't make it otherwise.

 

[Sallow]

Bullshit... the AOL's, UUNETs, Qwests, Compuserves, etc had influxes of capital from venture capitalists, larger existing firms etc... Coming from someone IN the business (as I have been since 94), there was not 'help' from the government on this

Nonsense.

You're talking about indivdual companies taking advantage of the infrastructure upgrades.

UNIX was INVENTED in government/academic labs.

I've been working with financial IT since 1997.

You are talking out of your ass.. (and by 97 I was already dealing with multi million dollar departmental budgets and expanding infrastructure exponentially each year)

Unix... why not mention COBOL, SS7, and everything else??

The expansions in infrastructure did not come at the hands of the government.. perhaps you should actually learn how companies such as Qwest evolved and how they came about laying the largest amount of dark fiber in the late 90's and early 00's...

This was not a government driven boom... this would have happened with Clinton, Perot, Dole or whomever else

You have no idea what you are talking about.

When you start saying things like UNIX is antiquated..and compare it to COBOL..you really show how ignorant you are of technology.

UNIX is still used today. HPUX and Solaris are still major players.

And Linux is basically UNIX you can run on x86 chips.

COBOL..what a laugh.

UNIX is written in C.

 

[Sallow]

The REAL truth, is what we had under Clinton created the most booming economy we have ever seen. Everyone pays their fair share, we support those that are the real job creators, small business, and support those that make american great, the middle class.

From Clinton's strong progressive view the economy skyrocketed, we had the biggest surplus in US history, employers were nearly begging people to work for them, 10$ an hour to start signs in McDonald's windows,...it was great times.

From there W came into office and decided to throw Clinton's game plan to have the nation debt free into the trash and decided to go back to the proven failed GOP "trickle down" economics. Once enacted things began to plunge.

Now that W slashed revenues, he decided to go on a spending spree by enacting medicare part D, and going to war with afganistan, and the big one, the false war in Iraq.

To insert the cliffs notes, Bush also allowed the big banks to run wild with predatory loans, destroyed the housing market, enacted TARP giving trillions to bail them out, and so the frat boy party is over, leaving the nation in shambles because of the republican way of doing things.

Simply put, the economic crisis was caused from the GOP slashing revenues, while at the same time spending like lunatics.

That's not the real truth.

Sorry.

Sure it is..at a high level.

Bush cut taxes..and increased government spending.

How did the private sector react to tax cuts? Executives gave themselves bigger pay checks while they offshored American Jobs.

We lost something like thousands of factories and jobs along with it.

 

[Toro]

The REAL truth, is what we had under Clinton created the most booming economy we have ever seen. Everyone pays their fair share, we support those that are the real job creators, small business, and support those that make american great, the middle class.

From Clinton's strong progressive view the economy skyrocketed, we had the biggest surplus in US history, employers were nearly begging people to work for them, 10$ an hour to start signs in McDonald's windows,...it was great times.

From there W came into office and decided to throw Clinton's game plan to have the nation debt free into the trash and decided to go back to the proven failed GOP "trickle down" economics. Once enacted things began to plunge.

Now that W slashed revenues, he decided to go on a spending spree by enacting medicare part D, and going to war with afganistan, and the big one, the false war in Iraq.

To insert the cliffs notes, Bush also allowed the big banks to run wild with predatory loans, destroyed the housing market, enacted TARP giving trillions to bail them out, and so the frat boy party is over, leaving the nation in shambles because of the republican way of doing things.

Simply put, the economic crisis was caused from the GOP slashing revenues, while at the same time spending like lunatics.

That's not the real truth.

Sorry.

That is the real truth. Just because you can't handle it, doesn't make it otherwise.

What is the knowledge of your "real truth" based upon?

 

[Vidi]

Let's see if this group can actually do this. I want us to get to the root of problems and weed out the truth. Not the truth according to the left or the right, but the truth.

I am conservative but not an idealogue. If we can get to the truth here, I can accept it.

First issue on the table:

What caused the recession?

I think youll take my honest answer as partisan propaganda but here it is:

The Depression ( its not a recession ) was caused by financial institutions taking on far too much risk and when they lost their bets they didnt have the wallets deep enough to get them out of it.

There once were laws in place to prevent those institutions from taking on that much risk but those laws were either relaxed or repealed entirely. One could point to the repeal of Glass - Steagal ( Republican Congress, Democrat president, Bill Clinton, who PRAISED the repeal ) as the most obvious cause.

There you go. though I laid blame on a Republican Congress AND a Democrat President, Im sure many on this board will jump up and label me a lefty for not defending the finacial institutions.

 

[DiamondDave]

Nonsense.

You're talking about indivdual companies taking advantage of the infrastructure upgrades.

UNIX was INVENTED in government/academic labs.

I've been working with financial IT since 1997.

You are talking out of your ass.. (and by 97 I was already dealing with multi million dollar departmental budgets and expanding infrastructure exponentially each year)

Unix... why not mention COBOL, SS7, and everything else??

The expansions in infrastructure did not come at the hands of the government.. perhaps you should actually learn how companies such as Qwest evolved and how they came about laying the largest amount of dark fiber in the late 90's and early 00's...

This was not a government driven boom... this would have happened with Clinton, Perot, Dole or whomever else

You have no idea what you are talking about.

When you start saying things like UNIX is antiquated..and compare it to COBOL..you really show how ignorant you are of technology.

UNIX is still used today. HPUX and Solaris are still major players.

And Linux is basically UNIX you can run on x86 chips.

COBOL..what a laugh.

UNIX is written in C.

Did I say unix was antiquated?? Nope... nice try putting words in my mouth because you know your argument is lost... As I type this on my Ubuntu 11.2 laptop VPN'd in to my home network

You don't know SHIT about the rise of the tech companies, internet or anything else... I lived it, breathed it, ate it, and slept it buddy boy.... and you are WAYYYY off base

 

[DiamondDave]

That's not the real truth.

Sorry.

That is the real truth. Just because you can't handle it, doesn't make it otherwise.

What is the knowledge of your "real truth" based upon?

His knowledge of the shit in his ass.. which he is not pulling out

 

[g5000]

The REAL truth, is what we had under Clinton created the most booming economy we have ever seen. Everyone pays their fair share, we support those that are the real job creators, small business, and support those that make american great, the middle class.

From Clinton's strong progressive view the economy skyrocketed, we had the biggest surplus in US history, employers were nearly begging people to work for them, 10$ an hour to start signs in McDonald's windows,...it was great times.

From there W came into office and decided to throw Clinton's game plan to have the nation debt free into the trash and decided to go back to the proven failed GOP "trickle down" economics. Once enacted things began to plunge.

Now that W slashed revenues, he decided to go on a spending spree by enacting medicare part D, and going to war with afganistan, and the big one, the false war in Iraq.

To insert the cliffs notes, Bush also allowed the big banks to run wild with predatory loans, destroyed the housing market, enacted TARP giving trillions to bail them out, and so the frat boy party is over, leaving the nation in shambles because of the republican way of doing things.

Simply put, the economic crisis was caused from the GOP slashing revenues, while at the same time spending like lunatics.

I would put this at "Half True" on the meter.

The deregulation of the derivatives which made the derivatives bubble possible was achieved by Clinton and the GOP Congress in 1999 and 2000. The FSMA of 1999 and the CFMA of 2000.

After the bubble popped, Clinton himself said he screwed up by deregulating derivatives, and by making sure derivatives that had never been regulated remained that way, and that led to the recession.

I like to point out section 117 of the CFMA to point out how blatantly the goverment converted Wall Street into a casino. And not a clean and fair casino, but a rigged mob casino where the rubes were allowed to be fleeced with no interference allowed by the government.

This Act shall supersede and preempt the application of any State or local law that prohibits or regulates gaming or the operation of bucket shops

When you have the time, look up what a bucket shop is. Then ask yourself why our federal government legalized this kind of fraud and completely overrode the rights of the states and their attorneys general to stop it in the banking industry.

Why did the federal government repeal gaming laws for banks?

That is a gigantic red flag you are looking at right there.


And not one Republican whined about the violation of states rights. Not one. In fact, it was Republicans who wrote that. Actually, it was probably ghost written for them by the banking lobby.

And Clinton signed it, at the urging of Larry Summers.

KA-BOOM!


Now about Bush...

Since the government inevitably ramps up spending during a recession, then one can see how Bush digging a gigantic debt hole during the good times left no buffer for the necessary increased spending when times went bad.

It's the ant and the grasshopper story in Aesop's fables, with Bush and the GOP Congress playing the part of the grasshopper who didn't save up for the months of privation.


So...yeah. It's a real shit sandwich, and everybody has to take a bite.

 

[PredFan]

The REAL truth, is what we had under Clinton created the most booming economy we have ever seen. Everyone pays their fair share, we support those that are the real job creators, small business, and support those that make american great, the middle class.

From Clinton's strong progressive view the economy skyrocketed, we had the biggest surplus in US history, employers were nearly begging people to work for them, 10$ an hour to start signs in McDonald's windows,...it was great times.

From there W came into office and decided to throw Clinton's game plan to have the nation debt free into the trash and decided to go back to the proven failed GOP "trickle down" economics. Once enacted things began to plunge.

Now that W slashed revenues, he decided to go on a spending spree by enacting medicare part D, and going to war with afganistan, and the big one, the false war in Iraq.

To insert the cliffs notes, Bush allowed the big banks to run wild with predatory loans, destroyed the housing market, enacted TARP giving trillions to bail them out, and so the frat boy party is over, leaving the nation in shambles because of the republican way of doing things.
Spend like maniacs, but don't have a way to pay for it.

I don't agree that this caused the recession. For one thing, Clinton enjoyed then benefit of luck. He was potus during the Dot Com boom which had absolutely nothing to do with him or his policies. I am pretty sure that it was the housing situation that caused this mess. I am sure because people smarter than me have stated such. I won't totally discount your theory, but I'll have to hear more than that to convince me, and your avie kind of detracts from your credibility.

That's incorrect. Clinton/Gore funded massive telecommunications upgrades and expanded access to the internet. That along with providing funding for re-training of people displaced by NAFTA. Most wound up training for Information Technology.

There was also a huge paradigm shift in the financial markets...in that they went from an analog way of doing business to a digital one.

Because they were there and had the authority to do so. But, it is true that that was a policy of his and it makes my statement incorrect. That said, I have no doubt that a Republican administration would have done the same.

 

[PredFan]

Let's see if this group can actually do this. I want us to get to the root of problems and weed out the truth. Not the truth according to the left or the right, but the truth.

I am conservative but not an idealogue. If we can get to the truth here, I can accept it.

First issue on the table:

What caused the recession?

Recessions are inevitable. I think you mean, what caused prolonged unemployment. The answer is simple. Corruption. And you can blame government but that let's the constituents off the hook. Frankly, government is just a reflection of the people. People have lost their morals and we can't pretend that doesn't affect everything. If you do, then you're naive.

What I aim to do is stop the bull shit. Not so much to get to the EXACT cause of the recession, but to stop the blame game by both sides. However, I am learning a lot.

 

[PredFan]

Let's see if this group can actually do this. I want us to get to the root of problems and weed out the truth. Not the truth according to the left or the right, but the truth.

I am conservative but not an idealogue. If we can get to the truth here, I can accept it.

First issue on the table:

What caused the recession?

This is the political forum. If you want to talk about the economy there is a place for that discussion and if you are looking for history history go to the history forum.

1. It is about politics, the politics of using the economy to attack your opponent.
2. The mods will move it if they agree with you.
3. Go fuck yourself.

 

[PredFan]

The question shuld be "How do we get out?"

That will be asked in another thread.