The Big Lie of the Crisis, Called Out By the Press

[CrusaderFrank]

"ultra-low interest rates" are not a government regulation.

The government, i.e. the Fed, does not set short term interest rates? Really?

No, actually. They don't. They DO participate in the open market in an attempt to influence short-term interest rates. Sometimes it works, sometimes it doesn't.

But whatever you call that activity, it's most certainly not regulation.

F/F put their AAA credit on junk paper; that was the core of the problem.

 

[The Rabbi]

"ultra-low interest rates" are not a government regulation.

The government, i.e. the Fed, does not set short term interest rates? Really?

No, actually. They don't. They DO participate in the open market in an attempt to influence short-term interest rates. Sometimes it works, sometimes it doesn't.

But whatever you call that activity, it's most certainly not regulation.

Yes, actually they do. The Fed sets short term rates. Usually it will influence long term ones as well but not always. The Fed dictates lending reserve requirements and sets the Discount Rate.
The more you argue for your point the more idiotic and ignorance you are going to appear. So give it up.

 

[Sallow]

The Big Lie of the Crisis, Called Out By the Press



At CNBC’s GOP debate last night, Mitt Romney showed that he, like Michael Bloomberg, buys into the Big Lie of the financial crisis, one that’s unfortunately become conventional wisdom on the right: That the private sector only made hundreds of billions of dollars worth of toxic loans (and then made more than a hundred billion dollars worth of fake toxic loans because it couldn’t get enough toxic product) because the government made it.




Here’s Romney:

And the reason we have the housing crises we have is that the federal government played too heavy a role in our markets. The federal government came in with Fannie Mae and Freddie Mac, and Barney Frank and Chris Dodd told banks they had to give loans to people who couldn’t afford to pay them back.​

This is flat false, as anyone who’s taken a cursory and intellectually half-honest look at the crisis knows. So how did the press cover it?
Pretty darn good, actually.

The Wall Street Journal quotes Romney in its piece and then all but says he’s empirically wrong (emphasis mine):

“Markets work. When you have government play its heavy hand, markets blow up and people get hurt,” Mr. Romney said, blaming Democrats for rules that he said force banks to make ill-advised loans.

Some conservative academics have said that Fannie Mae and Freddie Mac fueled the financial crisis because they had to meet federal quotas to finance low- and moderate-income homeowners.

But academic research has shown that those mandates didn’t spur the types of exotic lending at the heart of the subprime-loan crisis. Many of the worst mortgage lenders weren’t banks and weren’t subject to federal regulation.
​

The New York Times is even better, running a fact-check sidebar along with its main debate story, and it gives readers five full paragraphs on why these assertions are false. Here are three of them:

Several candidates made the argument at the debate that the government forced mortgage lenders to make bad loans. But in reality, most subprime loans were made by companies that were not subject to any kind of federal regulation.

Furthermore, there was no need to force anyone to make the loans. Financial companies jumped into the market. The major investment banks lined up to purchase subprime lenders, the major retail banks created subprime lending divisions, and a generation of upstart subprime lenders like Ameriquest and Countrywide were briefly celebrated as rising stars of American business.


No executive of a major mortgage company said at the time that the government was forcing them to make subprime loans. They said they did it because they thought they would make money. And even now, after the crash of the housing market, with all the temptation to point fingers, it is awfully hard to find a mortgage executive who echoes the argument of the Republican candidates.
​

And the Times debunks the “Fannie and Freddie Did It” meme to boot.

What actually happened was Freddie and Fannie were taken out of the mix completely when they were brought up on corruption charges by the Bush administration. So gone was the due diligence that these organizations did on ALL loans. Private lending corporations actually LIED to customers to get them to sign up. Financial institutions were looking for volume. When things melted down, Freddie and Fannie were then MADE to shoulder some of these loans. That's AFTER they went south.

 

[Sallow]

The government, i.e. the Fed, does not set short term interest rates? Really?

No, actually. They don't. They DO participate in the open market in an attempt to influence short-term interest rates. Sometimes it works, sometimes it doesn't.

But whatever you call that activity, it's most certainly not regulation.

Yes, actually they do. The Fed sets short term rates. Usually it will influence long term ones as well but not always. The Fed dictates lending reserve requirements and sets the Discount Rate.
The more you argue for your point the more idiotic and ignorance you are going to appear. So give it up.

It's not regulation. And in any case..they were kept at near zero for almost all of the Bush administration.

Which destroys your argument.

 

[Sallow]

Geez are you fucking clueless, or what?

What does that have to do with Greenspan and Burns? Greenspan ran the Fed during the two Bush tax cuts for the rich, and for the Medicare D.

And that has what to do with the economic crisis? Oh yeah. Nothing.
Tool and a half.

Ah..so now unfunded government programs are okay?

 

[Chris]

Wall Street ran a $516 trillion dollar derivatives Ponzi scheme that destroyed the world economy.

Not for nothing did US billionaire Warren Buffett call them the real ‘weapons of mass destruction’

By Margareta Pagano and Simon Evans
12 October 12 2008

The market is worth more than $516 trillion, (£303 trillion), roughly 10 times the value of the entire world’s output: it’s been called the “ticking time-bomb”.

It’s a market in which the lead protagonists – typically aggressive, highly educated, and now wealthy young men – have flourished in the derivatives boom. But it’s a market that is set to come to a crashing halt – the Great Unwind has begun.

Last week the beginning of the end started for many hedge funds with the combination of diving market values and worried investors pulling out their cash for safer climes.

Some of the world’s biggest hedge funds – SAC Capital, Lone Pine and Tiger Global – all revealed they were sitting on double-digit losses this year. September’s falls wiped out any profits made in the rest of the year. Polygon, once a darling of the London hedge fund circuit, last week said it was capping the basic salaries of its managers to £100,000 each. Not bad for the average punter but some way off the tens of millions plundered by these hotshots during the good times. But few will be shedding any tears.

The complex and opaque derivatives markets in which these hedge funds played has been dubbed the world’s biggest black hole because they operate outside of the grasp of governments, tax inspectors and regulators. They operate in a parallel, shadow world to the rest of the banking system. They are private contracts between two companies or institutions which can’t be controlled or properly assessed. In themselves derivative contracts are not dangerous, but if one of them should go wrong – the bad 2 per cent as it’s been called – then it is the domino effect which could be so enormous and scary.

A £516 trillion derivatives ‘time-bomb’ « Did You Know

 

[The Rabbi]

No, actually. They don't. They DO participate in the open market in an attempt to influence short-term interest rates. Sometimes it works, sometimes it doesn't.

But whatever you call that activity, it's most certainly not regulation.

Yes, actually they do. The Fed sets short term rates. Usually it will influence long term ones as well but not always. The Fed dictates lending reserve requirements and sets the Discount Rate.
The more you argue for your point the more idiotic and ignorance you are going to appear. So give it up.

It's not regulation. And in any case..they were kept at near zero for almost all of the Bush administration.

Which destroys your argument.

No, actually it doesn't, dolt. My argument is that the financial crisis, especially the mortgage meltdown, occurred because the Fed kept rates too low too long. That started as a response to Y2K and continued until today. It actually occurred regardless of who controlled Congress and the White House.
The present lack of recovery though is directly due to who controlls the Congress and White House.

 

[Synthaholic]

Geez are you fucking clueless, or what?

What does that have to do with Greenspan and Burns? Greenspan ran the Fed during the two Bush tax cuts for the rich, and for the Medicare D.

And that has what to do with the economic crisis? Oh yeah. Nothing.
Tool and a half.

You remain a total fucking idiot.

But the super-low interest rates Greenspan brought in the early 2000s and his long-standing disdain for regulation are now held up as leading causes of the mortgage crisis. The maestro admitted in an October congressional hearing that he had "made a mistake in presuming" that financial firms could regulate themselves.



​

and:

Greenspan, 82, acknowledged under questioning that he had made a “mistake” in believing that banks, operating in their own self-interest, would do what was necessary to protect their shareholders and institutions. Greenspan called that “a flaw in the model ... that defines how the world works.”


He acknowledged that he had also been wrong in rejecting fears that the five-year housing boom was turning into an unsustainable speculative bubble that could harm the economy when it burst. Greenspan maintained during that period that home prices were unlikely to post a significant decline nationally because housing was a local market.


He said Thursday that he held to that belief because until the current housing slump there had never been such a significant decline in prices nationwide. He said the current financial crisis had “turned out to be much broader than anything that I could have imagined.”
​

​

 

[Synthaholic]

Yes, actually they do. The Fed sets short term rates. Usually it will influence long term ones as well but not always. The Fed dictates lending reserve requirements and sets the Discount Rate.
The more you argue for your point the more idiotic and ignorance you are going to appear. So give it up.

It's not regulation. And in any case..they were kept at near zero for almost all of the Bush administration.

Which destroys your argument.

No, actually it doesn't, dolt. My argument is that the financial crisis, especially the mortgage meltdown, occurred because the Fed kept rates too low too long. That started as a response to Y2K and continued until today. It actually occurred regardless of who controlled Congress and the White House.
The present lack of recovery though is directly due to who controlls the Congress and White House.

Who did that, dope? Greenspan!

Thanks for contradicting yourself.

 

[The Rabbi]

It's not regulation. And in any case..they were kept at near zero for almost all of the Bush administration.

Which destroys your argument.

No, actually it doesn't, dolt. My argument is that the financial crisis, especially the mortgage meltdown, occurred because the Fed kept rates too low too long. That started as a response to Y2K and continued until today. It actually occurred regardless of who controlled Congress and the White House.
The present lack of recovery though is directly due to who controlls the Congress and White House.

Who did that, dope? Greenspan!

Thanks for contradicting yourself.

Geezus are you fucking stupid or what? Greenspan was out in 2006. Bernanke took over. He continued the same policies, causing what happened 2 years later.
What is difficult to understand here?

 

[kiwiman127]

The Housing Bubble was warned about long before 2008. Actually the housing prices peaked in 2006.

Ron Paul on the Housing Bubble – July 2002
http://www.ronpaul.com/2008-09-26/ron-paul-on-the-housing-bubble-july-2002/

 

[paulitician]

The Government always uses "Crisis" to screw the Taxpayers. And it's not just a one-party tactic. They all do it. I remember this current President screeching about how all the bridges in America were going to collapse tomorrow if he didn't get his $Trillion Stimulus. It's all about the "Crisis" fear mongering. Wait till the next Terrorist attack happens. Americans can kiss what few rights they have left goodbye forever. Think Patriot Act times a 1000. If there isn't a crisis,you can bet they'll create one. Bank on that.

 

[jgarden]

I'm waiting for our conservative friends to accuse the OWS movement of creating the financial crisis - they've accused them of just about everything else!

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14 Year Old Sexually Assaulted At OWS - US Message Board ...
Oct 24, 2011 ... Looks like Biden was right: Police Investigating Possible Sexual Assault Of Teen At Occupy Dallas « CBS Dallas / Fort Worth.
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David Duke: 'The Real Enemy Is Not OWS But The Zionist Banksters ...
Oct 29, 2011 ... He's right and anyone that disagrees is either ignorant or they are on the side of the Zionist bankers who have ruined this economy with the ...
http://www.usmessageboard.com/polit..../191789-david-duke-the-real-enemy-is-not-ows -but-the-zionist-banksters.html

OWS Organizers In Scramble Mode. Shredding Docs. Ties To ...
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Beck challenges the anti-semite OWS protester - US Message Board ...
Oct 6, 2011 ... http://www.glennbeck.com/2011/10/05/...n-wall-street/ I think he made a good point. Why didn't anyone around them stop this guy from his ...
www.usmessageboard.com/.../188195-beck-challenges-the-anti-semite-ows- protester.html

American Nazi Party endorses OWS - US Message Board - Political ...
Oct 16, 2011 ... American Nazi Party Endorses Occupy Wall Street's 'Courage,' Tells Members to Support Protests and Fight 'Judeo-Capitalist Banksters' ...
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"Wall Street: Money Never Sleeps"; OWS, liberals never work!!! - US ...
Oct 8, 2011 ... These arrogant, spoiled, entitled pot smoking leftist 12th year college kids clogging NYC roads do realize "money never sleeps". And, they ...
www.usmessageboard.com/.../188522-wall-street-money-never-sleeps-ows- liberals-never-work.html

The Republican/Tea Party subscribe to the ABBU theory when assigning blame in politics "ANY-BODY- BUT-US!"

 

[CrusaderFrank]

No, actually. They don't. They DO participate in the open market in an attempt to influence short-term interest rates. Sometimes it works, sometimes it doesn't.

But whatever you call that activity, it's most certainly not regulation.

Yes, actually they do. The Fed sets short term rates. Usually it will influence long term ones as well but not always. The Fed dictates lending reserve requirements and sets the Discount Rate.
The more you argue for your point the more idiotic and ignorance you are going to appear. So give it up.

It's not regulation. And in any case..they were kept at near zero for almost all of the Bush administration.

Which destroys your argument.

zero regulations

 

[Toro]

No, actually it doesn't, dolt. My argument is that the financial crisis, especially the mortgage meltdown, occurred because the Fed kept rates too low too long. That started as a response to Y2K and continued until today. It actually occurred regardless of who controlled Congress and the White House.
The present lack of recovery though is directly due to who controlls the Congress and White House.

Who did that, dope? Greenspan!

Thanks for contradicting yourself.

Geezus are you fucking stupid or what? Greenspan was out in 2006. Bernanke took over. He continued the same policies, causing what happened 2 years later.
What is difficult to understand here?

I agree with you. The primary culprit in the Housing Bubble (but not the only one) was the Fed.

FTR, the Fed sets interest rate policy independent of the government and the White House. So its somewhat pointless to blame Bush for the actions of the Fed. Bush - like other politicians - shares some blame in the housing crisis, but politics and the federal government were minor players in the housing bubble.

De-regulation often causes financial bubbles. This has occurred many times around the world as excess credit arising from de-regulation feeds into asset markets. However, the Federal Reserve sets the price for credit. The Fed - acting as an agent of the government - kept interest rates too low, distorting credit markets and feeding the Housing Bubble. Conservative criticisms of government policies are misguided because they focus on Freddie and Fannie, who played a part but not the primary role in the creation of the Bubble. Instead, the proper target is the Fed.

 

[The Rabbi]

Who did that, dope? Greenspan!

Thanks for contradicting yourself.

Geezus are you fucking stupid or what? Greenspan was out in 2006. Bernanke took over. He continued the same policies, causing what happened 2 years later.
What is difficult to understand here?

I agree with you. The primary culprit in the Housing Bubble (but not the only one) was the Fed.

FTR, the Fed sets interest rate policy independent of the government and the White House. So its somewhat pointless to blame Bush for the actions of the Fed. Bush - like other politicians - shares some blame in the housing crisis, but politics and the federal government were minor players in the housing bubble.

De-regulation often causes financial bubbles. This has occurred many times around the world as excess credit arising from de-regulation feeds into asset markets. However, the Federal Reserve sets the price for credit. The Fed - acting as an agent of the government - kept interest rates too low, distorting credit markets and feeding the Housing Bubble. Conservative criticisms of government policies are misguided because they focus on Freddie and Fannie, who played a part but not the primary role in the creation of the Bubble. Instead, the proper target is the Fed.

Bush was culpable only in appointing Helicopter Ben Bernanke, who continued rates that were way too low. This created perverse incentives to lend on real estate, even when the loans by traditional standards sucked. About 18 months after a bad loan is made is when it goes south. That's what happened here.