Why Wall St. Is Deserting Obama

[ScreamingEagle]

Hmm...Wall Street disagrees.

http://finance.yahoo.com/echarts?s=%5EDJI+Interactive#chart2:symbol=^dji;range=20090102,20100901;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=off

How much of that is inflation...?

with inflation hovering around 1%, it would be difficult to assign a 40% increase in 1.5 years to inflation.

and just how much is your dollar buying you these days...?

 

[ScreamingEagle]

The swaps were not just "insurance to cover risk". They were short-term funding streams of epic proportions for one party, and a naked bet for the other party. That short-term funding stream is part of what drove the downstream players to package up 125% LTV, interest-only loans in the private sector.

well yeah...what is "insurance" anyway....a bet when you get right down to it

The pressure wasn't being transferred up the chain by poor minorities getting CRA loans - it was being transferred from financial firms steeped in CDS revenues to mortgage originators and the people they "serve"

of course....without regulation of the GSEs lots of mayhem was bound to occur...

That's quite a convenient cover for Mr Rove...well into the collapse. He does a nice rewrite of history in order to assign blame. But again, it fails to explain the 5k credit for low income people, the halving of net capital etc...and it fails to get to the real problem, which was not risky loans to low-income folks.

what's so wrong with a 5k credit to help low income people... IF they can afford the pmt?

...so what was the "real problem"....?

 

[8537]

How much of that is inflation...?

with inflation hovering around 1%, it would be difficult to assign a 40% increase in 1.5 years to inflation.

and just how much is your dollar buying you these days...?

1% less than last year.

 

[8537]

Sometimes I think we're disagreeing just to disagree...

what's so wrong with a 5k credit to help low income people... IF they can afford the pmt?

...so what was the "real problem"....?

They couldn't afford the payment - it was 5K towards a down payment. One of the most basic credit criteria *used to be* a demonstrated ability to save, demonstrated by having saved enough for a significant downpayment.

In this case, the government waived that criteria by funding the down payment.

 

[MaggieMae]

"Those who helped cause the crisis are engaged in an ongoing effort to rewrite its history.

Their goal? Exonerate their own bad behavior, throw off any responsibility for the collapse, blame anything but their own ideology and horrific decision making. They want to keep pushing their tired political agendas, despite the damage they may have caused."
From this article, written by the author of "Bailout Nation."
Get Me ReWrite! | The Big Picture

Excellent quote. Very true. And the people who caused it have good marketing folks. They know they can create completely baseless memes and propagate them with the right language. Blame it on the poor even though subprimes were most prominent in wealthy communities? Check

Blame it on blacks, even though subprimes were most prominent in white communities? Check.

Blame it on the government, even though the vast majority of loans and upstream securities that exploded were created and sold in the private market? Check.

Exonerate corporations by claiming they were forced to do this by the big, bad hand of government, even though most leading firms were not under FDIC or CRA regulations? Check.

Blame Democrats and call them names likey Bawney Fwank, even though Mr Frank was in the minority party and had no power to prevent the majority from getting a bill out of committee? Check.

It's a perfect rightwing shitstorm of lies....and just look how many people they have convinced to repeat it over and over as gospel truth. The people who caused it and the people who support them have created an entire army of misinformed water carriers. Those water carriers and the people telling them what to think managed to water down the needed financial reforms to the point of milquetoast. Wash. Rinse. Repeat.

If it wasn't so serious, it would be funny.

The vehicle for sending out those messages, every single day, is The Wall Street Journal. As long as that publication continues to be viewed as the most honest, most reliable, when it comes to financial reporting, people will believe every word printed. Unfortunately, the WSJ tells only half the story.

 

[8537]

The vehicle for sending out those messages, every single day, is The Wall Street Journal. As long as that publication continues to be viewed as the most honest, most reliable, when it comes to financial reporting, people will believe every word printed. Unfortunately, the WSJ tells only half the story.

The WSJ certainly lends credibility to a lot of the memes. However, I think most of these memes are most effectively propagated through rightwing sites, radio shows etc...that later find credence and support in the editorial pages (and the news pages) of the WSJ.

 

[CrusaderFrank]

Yes, by all means let's continue to ignore the 900 pound gorillas in the room of FNMA and Freddie who at that time controlled 50% of the mortgage market and continued to ratchet down their lending criteria. They were the black hole at the center of the meltdown and Wall Street did what it could to mimic their standards.

We need to get government out of the mortgage business.

 

[8537]

Yes, by all means let's continue to ignore the 900 pound gorillas in the room of FNMA and Freddie who at that time controlled 50% of the mortgage market and continued to ratchet down their lending criteria.

They controlled an ever-shrinking portion of the subprime market, and they never set criteria low enough to compete with private sector loans to homeless people with no job, no income and no assets.

Do you ever wonder WHY they controlled and ever-shrinking portion of the subprime market from 2000 to 2007? Let me give you a hint: It's because the private sector had even worse lending criteria.

 

[ScreamingEagle]

Yes, by all means let's continue to ignore the 900 pound gorillas in the room of FNMA and Freddie who at that time controlled 50% of the mortgage market and continued to ratchet down their lending criteria.

They controlled an ever-shrinking portion of the subprime market, and they never set criteria low enough to compete with private sector loans to homeless people with no job, no income and no assets.

Do you ever wonder WHY they controlled and ever-shrinking portion of the subprime market from 2000 to 2007? Let me give you a hint: It's because the private sector had even worse lending criteria.

Nobody's disputing the boom of the subprime market in the private sector.....the real question is WHY did it boom like it did?

I believe it was due to...well, greed of course and chasing after better rates of return during a time of easy money.....but also due to the broadly understood implicit federal guarantee...you know....the "too big to fail" syndrome...

 

[8537]

Nobody's disputing the boom of the subprime market in the private sector.....the real question is WHY did it boom like it did?

To be fair, many people DO dispute that. But that's neither here nor there b/c it doesn't describe either of us.

I believe it was due to...well, greed of course and chasing after better rates of return during a time of easy money.....but also due to the broadly understood implicit federal guarantee...you know....the "too big to fail" syndrome...

I think it was due to several things, but I certainly agree with both of those. The TBTF system was an important factor.

 

[Toro]

Yes, by all means let's continue to ignore the 900 pound gorillas in the room of FNMA and Freddie who at that time controlled 50% of the mortgage market and continued to ratchet down their lending criteria.

They controlled an ever-shrinking portion of the subprime market, and they never set criteria low enough to compete with private sector loans to homeless people with no job, no income and no assets.

Do you ever wonder WHY they controlled and ever-shrinking portion of the subprime market from 2000 to 2007? Let me give you a hint: It's because the private sector had even worse lending criteria.

Nobody's disputing the boom of the subprime market in the private sector.....the real question is WHY did it boom like it did?

I believe it was due to...well, greed of course and chasing after better rates of return during a time of easy money.....but also due to the broadly understood implicit federal guarantee...you know....the "too big to fail" syndrome...

It probably had some affect, but the problems at the GSEs had more to do with incentives that were rampant on Wall Street. The GSEs leveraged up 50:1, meaning that a 2% decline in housing prices would render them effectively insolvent. There was an implied guarantee, but it wasn't uniformly believed. GSE debt usually traded at 20-70 bps above Treasuries but 20-50 bps below highly rated financials. So there was some but not total belief. That belief allowed the GSEs to expand the supply of credit into the mortgage market.

More importantly, however, was that the top executives were incentivized to gun the stock price. Frank Raines made $12 million one year exercising stock options. He had a vested interest in getting the near-term stock price as high as possible so he could cash out. To do that, he had to show higher and higher profit growth. So he and other executives resorted to accounting chicanery and increasing debt.

However, this is no different than what happened on Wall Street. All the companies that went under or were bailed out by the government experienced the exact same thing. So the GSEs were no more culpable than the private sector.

 

[NYcarbineer]

You really have to ask why they are abandoning him? Because his polices fucking suck for wall street, He lied like hell and is not governing like they thought he would.


There are consequences when you run as one thing and govern as another.

Please, idiots...

...stop.

Since January of 2009 the SP500 has gone from 840 to 1105.

That would be a 32% gain.

In Bush's 8 years the SP500 went from 1342 to 805.

That would be a 40% loss.

 

[Toro]

You really have to ask why they are abandoning him? Because his polices fucking suck for wall street, He lied like hell and is not governing like they thought he would.


There are consequences when you run as one thing and govern as another.

Please, idiots...

...stop.

Since January of 2009 the SP500 has gone from 840 to 1105.

That would be a 32% gain.

In Bush's 8 years the SP500 went from 1342 to 805.

That would be a 40% loss.

That's true.

But Bush came to power at the end of a tech bubble when stocks were near record high valuations whereas Obama came to power as the financial system was collapsing and stocks were multi-generational low valuations.

I wish people would stop trying to politicize the stock market. Politics and policy does affect the market but not as much as most politicized people think. For example, there may not be a more anti-capitalist leader outside of Havana in this hemisphere than Hugo Chavez but the Venezuelan stock market blew away the US market from 2001 through 2008. Can anyone with a straight face tell me that Chavez is more pro-business than Bush? No, of course not. So obviously, something else is going on.