Toro
Diamond Member
TM
http://www.usmessageboard.com/members/toro.html?tab=visitor_messaging#vmessage62541
Me
TM
http://www.usmessageboard.com/members/truthmatters.html#vmessage62542
http://www.usmessageboard.com/members/toro.html?tab=visitor_messaging#vmessage62545
First, I've talked about this on the board numerous times.
Next, yes the Financial Crisis still would have happened, though perhaps it wouldn't have gotten as big. Structures such as RMBS and SIVs increased demand, but the primary culprit in this is the Fed IMO for three reasons.
First, the Fed kept too much liquidity into the system. This created asset inflation as liquidity flooded into the mortgage and housing markets.
Second, because interest rates were so low, investors reached for yield and increased demand for the structures you mentioned. Had interest rates not fallen so low, institutions would not have demanded higher returns from more risky products. The Fed affects pricing across the interest rate curve by nailing down short-term rates, which drags down the long end of the curve if inflation expectations remain dormant. Lower mortgage rates mean cheaper mortgages which means more credit to pump up housing prices.
Third, because of Greenspan's repeated actions to bail out the financial system whenever it got into trouble, the market believed that he would do so in the future. This was known as The Greenspan Put. It led investors to increase the leverage on their investments, which contributed greatly to the forced liquidation that caused the implosion of the financial system.
I do think deregulation played a significant factor, but it was a minor one relative to the Fed. There is a long history around the world of financial deregulation and asset bubbles and collapses. This contributed to the crisis. But the reason why it almost certainly wasn't the primary factor was because there were housing bubbles around the world where structures and derivatives played a negligible roll.
Finally, there were many other factors, including the role of the GSEs, which is mainly at the feet of the Democrats. I think this is overblown by ideologues but it wasn't zero either. Other factors included excess savings in Asia which recycled back into the US mortgage market, fraud and people's own greed.
explain how it is NOT what I say it is?
The Gramm-Leach-Bliley Act was signed into law by President Bill Clinton on Nov. 12, 1999. The Act provided an 18-month deadline for the adoption of implementing rules, but from 1999 until 2005, the rule-writing effort stalled repeatedly. On Oct. 13, 2006, President Bush signed into law the Regulatory Relief Act, which added the requirement that the Commission and the Board issue the proposed rules jointly, and seek the concurrence of the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Deposit Insurance Corporation.
http://www.usmessageboard.com/members/toro.html?tab=visitor_messaging#vmessage62541
Me
The Republicans were not primarily responsible for the Financial Crisis though, like the Democrats, they share some culpability. The Republicans were responsible for the deregulation that contributed to the crisis, but the Democrats were the primary guardians of the GSEs, which also played a role. However, IMO, the biggest culprit was the Fed because they have significant influence over the pricing of credit.
TM
http://www.usmessageboard.com/members/truthmatters.html#vmessage62542
If the broker rules had BEEN IN PLACE this sub prime shit could not have reached the levels it did.
someday maybe you will; have the guts to talk about this right ion the board
http://www.usmessageboard.com/members/toro.html?tab=visitor_messaging#vmessage62545
First, I've talked about this on the board numerous times.
Next, yes the Financial Crisis still would have happened, though perhaps it wouldn't have gotten as big. Structures such as RMBS and SIVs increased demand, but the primary culprit in this is the Fed IMO for three reasons.
First, the Fed kept too much liquidity into the system. This created asset inflation as liquidity flooded into the mortgage and housing markets.
Second, because interest rates were so low, investors reached for yield and increased demand for the structures you mentioned. Had interest rates not fallen so low, institutions would not have demanded higher returns from more risky products. The Fed affects pricing across the interest rate curve by nailing down short-term rates, which drags down the long end of the curve if inflation expectations remain dormant. Lower mortgage rates mean cheaper mortgages which means more credit to pump up housing prices.
Third, because of Greenspan's repeated actions to bail out the financial system whenever it got into trouble, the market believed that he would do so in the future. This was known as The Greenspan Put. It led investors to increase the leverage on their investments, which contributed greatly to the forced liquidation that caused the implosion of the financial system.
I do think deregulation played a significant factor, but it was a minor one relative to the Fed. There is a long history around the world of financial deregulation and asset bubbles and collapses. This contributed to the crisis. But the reason why it almost certainly wasn't the primary factor was because there were housing bubbles around the world where structures and derivatives played a negligible roll.
Finally, there were many other factors, including the role of the GSEs, which is mainly at the feet of the Democrats. I think this is overblown by ideologues but it wasn't zero either. Other factors included excess savings in Asia which recycled back into the US mortgage market, fraud and people's own greed.
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