What caused the eonomic meltdown?

[EdwardBaiamonte]

but for anyone to solely point the finger at the Dems or the GOP only is denying real life.

too perfectly stupid!! If you have half a brain you point the finger at liberalism or the Republican free market whether it exists in the GOP or Democrat party!! What other option is their given liberals and Republicans are opposites

I know thats way way over your head!!!

 

[Paulie]

The poll gives no possible way an honest and knowledgeable person person can answer. Bush is responsible in that he did not work hard enough to mitigate the the Clinton era policies that inflated the housing bubble. Those policies had wide bipartisan support, so blaming them on Democrats is as stupid as blaming the lack of regulation when the financial sector is so tightly regulated that it is impossible to fart without requesting permission three weeks in advance. The excessive regulation prohibited people from responding to the market risk when government backed junk bonds were rated higher than they should have been. On top of that there were other factors, like the fact that the government stepped in and bailed out the people who made the mistakes. That one is squarely on Bush by the way.

Why did you leave out interest rates too low for too long?

 

[EdwardBaiamonte]

The poll gives no possible way an honest and knowledgeable person person can answer. Bush is responsible in that he did not work hard enough to mitigate the the Clinton era policies that inflated the housing bubble. Those policies had wide bipartisan support, so blaming them on Democrats is as stupid as blaming the lack of regulation when the financial sector is so tightly regulated that it is impossible to fart without requesting permission three weeks in advance. The excessive regulation prohibited people from responding to the market risk when government backed junk bonds were rated higher than they should have been. On top of that there were other factors, like the fact that the government stepped in and bailed out the people who made the mistakes. That one is squarely on Bush by the way.

Why did you leave out interest rates too low for too long?

this is so true!! Liberal Fed policy ( low interest) was the foundation
of the economy. The Fed's policy was to inflate the housing market to stimulate the economy! They surely succeeded!!

Who can say with a straight face that this was not the essential ingredient??

Most people though don't like to blame the Fed because they can't understand what the Fed does. Therefore they prefer easier scapegoats that suit their level of knowledge or political bias.

 

[KissMy]

I agree. So you have to wonder why all the big hitters who took no loans or guarantees were drilling in the first place.

GSE's got the boom started & "Mark to Market accounting" made all those wells more valuable every month so non GSE backed lenders thought they would get all their money back by selling them at the foreclosure/bankruptsy auction. Also tax credits, low rates, derivatives leverage & easy access to pools of FDIC government backed cash sitting in commercial banks.

There's a Chaos Theory element to this argument, and it is interesting. The problem is that this contradicts the dogmatic adherence to free market ideology. If the programs were small, they should have been recognized as such and thusly priced away. Small incentives shouldn't cause all the drillers to assume that oil is going to go $200 and never fall. A rationale free market would account for small incentives and adjust accordingly, not punch holes in the ground every 50 yards and assume each will produce 5k bbls/d right across the basin.

If after the GSE's got the boom started most people thought the same as the drillers, they start hording oil thus increasing demand. The same way people bought second homes & condos. Thus demand keeps rising, so suppliers keep increasing production.

It was a heard mentality stimulated by government. Low capital gains tax subsidizing the top 1%'s hot money interference with rational markets, excessive leverage, mortgage interest deductions, GSE's will buy anything. Complex opaque secretive sausage making CDO derivative MBS. We can pay for a rating, stamp AAA on any mortgage bundle & investors will buy them so we must find more borrowers. It was like a perfect storm. The people who created this scam/storm knew it would implode & how to capitalize.

Free markets can be irrational in the short term, just like the dot.com bubble. But complex opaque deceptive markets can't be rational in the short term. Most investors are driving blind because key facts are hidden. Professionals were no longer required to act as fiduciaries to their clients but instead claimed to be market makers. This allows any form of deception to be employed to sell packaged junk. Stamping junk AAA is a perfect way to raid pension funds, city treasuries, investors. There is no market without trust. That is why banks quit lending to each other. They did not trust each other. Dark pools, shadow banking, complex opaque packaging is the opposite of rationale free & fair market.

Like I said before Mitt Romney's father George Romney created this same storm on a smaller scale using GSE's & MBS back in 1972. Mitt Romney Wants a False Prosperity Using His Dad's Failed Policy

The problem, of course, is that it becomes difficult for the average person to price stocks and houses because of all the hot money interference that is swooping down on these assets. These assets become commodities in and of themselves, and massive buying creates scarcity, even though demand from all but the 1 percent is down.

Gambling in the housing market by the 1 percent, not as Rick Santelli says, the average buyer, is just wrong. Shelter should not be subject to this game. Mitt Romney is a predator just like his dad, who had to terminate subprime programs because of predatory lending and flipping. Sound familiar?

Just remember, George Romney punished job creators, small business, when he helped to allow big business and mortgage originators access to global capital markets (hot money), but not small business. Small business owners should be under no false illusion. Mitt Romney will be his dad, and will not be in the camp of small business owners.

The difference between George Romney's time and Mitt Romney's time, of course, is that back then, the US was a sovereign nation able to put a quick stop to easy money shenanigans. That is no longer the case, as the capital markets are now sovereign, or nearly sovereign. Nothing will stop the easy money once the bankers determine the time for another financial attack.

 

[EdwardBaiamonte]

QW -

I agree that all of the factors listed share some responsibility, but it is so clearly established that the lack of regulation over 30 years sparked the rush of greed and fraud that I don't know why anyone would suggest otherwise.

Bush was on watch at the time, and holds massive responsibility for ignoring the warnings that were being made by experts. Martin Wolffe in the Financial Times outlined the crisis in great detail three months before it happened - Bush ignored that information.

too stupid and perfectly liberal!! Bush was not an economist!! Even, the entire economics profession had no idea whatsoever about what was about to happen! The blame then is liberalism simply because a Republican free market is self-correcting while a liberal central government monopoly is most certainly not.