My guess is $85 BILLION won’t be enough. I commend the Feds for understanding the consequences of doing nothing for AIG. An AIG bankruptcy had the potential to bring down hundreds (maybe thousands) of small and medium sized business around the world. AIG Mis Management should be prosecuted, fined and jailed for this type of wreckless behavior. This whole story reminds me of “puting lipstick on a pig” if you know what I mean. wink wink.
Well, that’s no surprise. There is no doubt there is going to be lots of “gotcha’s” in the future of this deal.
I have read several posts about what a great deal the Government made. All very intelligently written. And, at a surface glancr z9and if you’re inclined to offer a bail as I am not) then it might seem better than other alternatives. That’s obvious.
But, as I said in another post, those asset figures are likely cooked to begin with. When you add in the current Fire Sale status, then the falling economies of the world, then the fraud and misuse that inevitably will follow a deal of this “enormity” (to borrow from another post), you’re left with a questionable “investment” at best.
Now, we can see the other shoe in the distant horizon …just waiting to step on us. What is it …This MAY not be enough!
Well, we’re already in for 85,000,000,000.00, we might as well thrown in the next 50 Billion. Well, now we’re in for 135 Bil, might as well kick in another 25 Bil to keep the dead whale afloat. Will that be all? After all, it’s “too big to fail”. So, if we need another 100 Bil, to add to the already “invested” 85, 50, 25 Bil, then that’s what we “must do”.
Where does it stop?
This isn’t the last bail on the horizon either.
The Federal Government was already broke from Social Security. This looks strikingly similar to the problems with the recent mortgage lending business. We’re loaning money and making obligations, when in fact, we are currently well beyond broke!
Just like the American public that couldn’t really afford the 3000 square foot homes, but bought them anyway, because they wanted them, and they didn’t need to prove adequate income because they “deserved” a nice home …our government (Repub’s and Democ’s) want a better economy – and, we’re going to buy one, whether we can afford it, or not.
Don’t let them tell you this economic meltdown is a complicated mess. It’s not. Our national financial crisis is readily understood by anyone who has seen greed and hypocrisy. But we are now witnessing them on a profound, monumental scale.
Conservative Republicans always want the government to stay out of business and avoid regulation as long as they are making lots of money. When their greed, however, gets them into a fix, they are the first to cry out for rules and laws and taxpayer money to bail out their businesses. Obviously, Republicans are socialists. The Bush administration has decided to socialize the debt of the big Wall Street Firms. Taxpayers didn’t get to enjoy any of the big money profits on the phony financial instruments like derivatives or bundled sub-prime paper, but we get the privilege of paying for their debt and failures.
Mikes been drinking the kool aid. This whole mess started with Fannie and Freddie,a quasi govenment agency controlled and run by Democrats and the very best friend of Barrack Obama.
Should absolutely prove once and for all that anything our government gets involved in is a disaster waiting to happen.
But, the apparently non-conservative Republican White House has some blame for walking us down this latest path.
We NEED real conservative leadership in the White House and Congress …but, the pack is thinning quickly as we fill the seats with elitists, internationalists, and even socialists that won’t claim the correct title.
I don’t know if more Federal regulations would help, or not. But, I will observe that the only apparently profitable, and significant arm of AIG is the Insurance business, which was regulated by States, and not the Federal Gov’t.
I think we need to take a hard look at our Treasury Secretary. Go to http://en.wikipedia.org/wiki/Henry_Paulson to see some bio on this man who’s leading us through the recent mega-deals/mega-saves.
Here’s a brief re-cap.
1. In addition to Treas Sect, he also serves on the International Monetary Fund Board of Gov’s – does that skew his view of what’s in the best interests of the US – I dunno.
2. He was born in Palm Beach – nothing wrong with that, but it tells us he’s never really had to worry tremendously about a budget.
3. He went to Dartmouth, where he was a frat-boy. While the University is not as liberal as some, it’s still left of center, and again, full of students that aren’t particularly worried about their spending habits.
4. He was an athelete. Well, that says something about an ability to personally persevere. I’ll give this a reserved point on the plus side.
5. He did not serve in Vietnam …well, neither did Dubbya.
6. He was CEO of Goldman Sachs, the world’s largest Investment Banks, where he surely befriended many people with huge stakes, and having the American Gov’t play safety in the field of big money is surely worth a LOT of personal gain for Mr. Paulson. Follow the money, folks.
7. His net worth is estimated at $700 million dollars. Why would a man with that much money, want to serve as Treasurey Secretary? It’s a thankless job at best. Now, I’m not saying we want a janitor in the post, but do we need somebody with more than a large interest in having the American taxpayers, send billions, and eventually, trillions, to cover the mistakes (or fraud) of their fellow ivy-league frat boys?
8. It says he personally built close relationships with China, and has “intimate relations with the Chinese elite”. Once again, follow the money. How is it possible to have a class of folks called “elite” in a communist society. Answer, because a communist government is only “equal” for the “little people” that can’t “grasp the enormity” of international economics and “know what’s best for the rest of the little people”.
9. He’s a believer in global warming and “advocates immediate action to decrease this effect”. Ok, if you’re inclined to buy into the theory that people are to blame, this will be a positive for you. I am skeptical at best. Having said that, I see no reason not reduce our effects in any way that does not grossly effect our way of life. I refuse to go back to huts and teepees, though. If you subscibe heavily to the global warming alarmists, though, one of the quickest way to effect immediate change is to destroy the systems that are believed to contribute. The American system is one of those “believed” to be a major evil in that belief system. Hmmm… What if you managed to get tremendous wealth into the hands of but a few friends, and let the rest of our society go back to riding bicycles and growing a few rows of vegetables in our yards to feed ourselves. What a contribution to the problem of global warming that would be. Just something to ponder.
10. He helped create the “Hope Now Alliance” to help struggling homeowners during the “2007 subprime mortgage financial crisis”. What? Why do people who can’t really afford a home, need an alliance to help them “establish a repayment plan to get them up to date” (well, duh, did somebody actually have to tell these homeowners that the answer was to pay their bills?), and to work on “loan modifications” (what? They already had zero down, no income verification, not even needing a SS card – what more modifications do they need except maybe for FEMA to step in and take over some of their interest rate). This is NOT conservative leadership, if I’m reading this correctly. This is a belief that everyone is entitled to a home …aka, socialism/communism.
Ok, there are 10 highpoints from his public bio. Many are troubling, some could go either way, and just as with all evil, there’s always a mix of a few admirable traits/items to point and brag about. Even an absolute evil like Hitler had a couple of redeeming bio marks that kept him from being seen by everyone for the true evil he was. Is Paulson a man in that same vein? Maybe not. History will tell.
You might also check some of his Federal Campaign contributions. Names like, Jay Rockefeller, George HW Bush, Arlen Spector, Alfonse D’Amato, John Sununu, Chambliss Saxby, for a list of elitists and internationalists.
Democrats such as, Chris Dodd, Lloyd Bentson, Charles Schumer, Bill Bradley, and Bill Clinton for President!
And, as a final note …mainly because it shouldn’t really matter that a Treasury Secretary came from Goldman Sachs …but after the recent bailouts, does it not concern anyone that the last three men to occupy that post, ALL came from that Investment Bank, dating back to the Clinton administration? Is there no Treasurey talent from another firm??? I find that incredibly indicting, in light of the recent unconstitutional moves by our government.
Thanks for the information, Peon. I agree people can interpret Paulson’s bio in different ways, but it certainly does give one many things to consider. You referenced an issue in your post that is extremely important. We should never assume that a Republican is a conservative. There is definitely a plethora of examples and you mentioned some in your post. I am a Republican AND a conservative. I was horrified when the Dems took control of congress in 2006. However, I was proud as hell that Republicans stepped up in 2006 and walked the talk. We understood that our party was governing too much like liberals and helped throw out the Republican bums.
Rodney, wow …you are certainly prolific and intelligent too.
I would like to disagree a little, though.
First, the AIG, and most of the recent moves by the Treasury Department are a fiasco in and of themselves. I think we agree on that, but I’m not sure.
Second, you are correct that Republicans have shown themselves to be just as corruptible with power as the Democrats. But, what you have witnessed since Ronald Reagan has been anything but a Conservative President. Neither HW, nor Dubbya can claim to be conservative. I was personally hopeful that Bush II would be different than his daddy. Live and learn, I suppose. He was conservative in name only …and, even the name, looking back now, should have been telling to us. I think it was called (but the exact name may be escaping me right now) a socially responsible Conservative.
Well, anyone that’s “Socially Responsible” should use the churches and other charitable organizations to act on those desires and beliefs …and, not the Federal Government! I suppose that would cause some to label me as a Libertarian. Whatever.
As to your list of things the Republican Party can not say anymore, don’t be foolish. You can still hear the term, “We’re from the Government, and we’re here to help”. So, anybody can say anything. When you throw in any political party, you better believe they can say ANYTHING.
Here’s your list of “can’t says” and where I believe you are wrong.
1. No Small Government. I certainly hope some party will continue to be effective at believing in small government. Small government does NOT mean NO government, nor should it. That would be anarchy. But, seriously, what can the Federal Government do efficiently or constitutionally? Answer, very little.
2. Support of Free Markets. Well, you cite the reason for this is because of actions taken by the SEC. Well, that’s not a Republican organization!!! There is no question that our current leadership has not succeeded in many areas. The current government take over and control of civilian companies is obscene, to say the least. But, if it’s the SEC you are talking about, I think you might find about as many Democrats as Republicans manning that ship. All-out Free Market theology, though. I’ll give you an inch here and agree that’s a problem. If America were an isolated island, I would aim for that. Since we are not …there seems to be call for some restrictions, though.
3. We are the party of Fiscal Responsibility. Well, I think we are nearly in the same camp on this one. It’s shameful the way the Republican Leadership has lost their way. Some of it was due to a mentality of trying to “get along” with the Democratic side of the aisle, but too much of it was the same greed and pandering as we’ve seen from Democrats for nearly a half-century of real rule. It’s true Conservative Republican hopes have been temporarily smashed, but it’s not true that we should not demand it no matter what side of the aisle you feel comfortable calling home. And, for the record, there are some conservative Democrats if you search hard enough. It would not displease me to see more of a return to the Truman/Kennedy type of conservative government. Take away some flaws, and I’ll exchange any day.
4. They can’t be the party of Personal Responsibility? Well, if they can’t, who can? God know the Democratic Leadership doesn’t think there is any such thing. Are you saying we shouldn’t want more people to be personally responsible? Again, don’t be fooled into the notion that any Party Leadership is perfect. Republican, or Democrat, these guys are first and foremost – Politicians! None of them know the intricacies of everything for which they will become (rightly or wrongly) responsible. Nobody is immune to the beguiling influences of outside forces that “understand the enormity” of such “complicated issues” and can whisper in the ear of the “Politician” a solution that “feels good”, and …most importantly they hope, will get them the next vote or glowing legacy. That’s the way it works.
As for the rest of your assessment of the situation, well, it’s lacking. Here are the things that are wrong as I see it:
The past 8 years has not seen a Conservative in the White House, with “a very conservative agenda”. Oh brother …maybe you’ve missed the wailing and gnashing of teeth by the conservatives? Maybe you only listen to NPR radio programs? First off, even if you allow that Dubya could be deemed a conservative, it hasn’t been 8 years. And if you recall, the first many months were filled with questions about whether he really occupied the position or not. Surely you remember the hanging chads. Even after the final legal word, the mandate was tiny slim. So, that’s not really a position of “power”. Then comes a terrorist attack, which would have gotten anybody, any political movement, off their track for a time. So, 8 years …not.
You get even worse marks on the GOP domination of congress. 1995 was the “Republican Revolution”, so 1996 was when they “took charge”? Then, when was it that John McCain was rumored to be considering a move the Democratic aisle, and that would have given the Dems a majority. Then, there was the goofy congressman that actually made the move, and negated the “domination”. My math shows a little over 6 years of true numerical majority. But remember, after 50 years of Democratic rule, existing staffs, organizations, legal challenges, pink pukers, a Democratic President that nullified any effects of a tiny majority in Congress, etc, waged all-out political war on the “change”. So, 16-18 years of rule …definitely not! And, don’t forget, there were several Liberal Republicans in that razor-thin majority mix for those 6 years as well. Usually enough to kill the “majority” theory before it had to be overcome by a Presidential Veto. So, had George Bush really been what he espoused, a Conservative, there were really less than 4 useful years, and that had a war thrown inside of it …and, no matter how some may want to paint the situation, we were the ones that were attacked, and we did what was needed to strike back in defense! Political posturing was not the number one goal …finally!
A Grand Experiment of Deregulation …oh, brother. Is that going to be the tile of your book? Let me know when the experiment actually starts. The only thing I can see is that the regulations were simply shifted to other Federal organizations. What’s been de-regulated in the past 12 years with Clinton/Bush?
You say there has been a demonstration of how hollow many of the Republican values are. Well, to some extent, I can see your point. But, just because men have failed, doesn’t mean the values are not worthy! Just because the preacher has illegitimate sex, doesn’t mean his sermons against such activities were incorrect. Just because a Judge lies about a business deal, doesn’t mean we should not expect truthfulness in a courtroom. Just because somebody encourages abstinence for their daughter in their home doesn’t mean when that daughter fails and shows up pregnant, that the value was wrong and they should kill the by-product! And, (to bring this post back to it’s roots …’cause I know that last comment is going to re-ignite the crazies) just because the Treasury Secretary spearheads a move to insert the Federal Government into areas where it doesn’t belong, doesn’t mean we should not hate the actions and work to make certain it never happens again. How? by electing true conservatives no matter what side of the aisle, or 3rd party with which they affiliate.
This whole, “too big to fail” is so flawed it screams with ignorance. What that’s literally saying is, be as illegal and unethical as you like, as long as you eat up enough of the economic sector, we will give you a hall pass. Wow! This must be ceased, or all hell is really going to break out in the “Free Market”. Why? Because it’s no longer free – its government backed …and, that means all tactics, and improper economic values are made valid. The Free Market WILL fail, because the government is “too big” to stop it. The government will fail because the bill will be “too big” to stop it. A fascist will succeed because their solution, for a problem that is “too big”, will be very small. That will sound oh-so-good to a population that is “too big” to be stopped by those that see the truth.
I was under the impression, Mike, that we were talking about something else. Since you brought it up, though, I will respond by saying “Put the talking points play book away and give it a rest.” Many of us believe that Iraq is of strategic importance in the Middle East….not to mention the fact that we took the fight to them and kept it off of our turf. Unfortunately, there are many like yourself who will never come to grips with this due to being blinded by political agendas and/or a very puzzling and intense hatred of President Bush. By the way, you must have missed the news flash that we are winning the war. This is probably disappointing to you since it could reduce the likelihood of a Barry Obama victory in November, but I feel compelled to inform you nonetheless.
Mike, certainly your talking points memo does not allow you to answer a question with one sentence. Until you can put the Iraq War in proper persepctive you will never be able to speak rationally in a group. Give it a rest.
Many people were senselessly killed in Iraq for no reason. We wasted money and lives, and its immoral to kill people for no good reason and then say its “justified.”
So maybe you should give it a rest and literally stop paying your government to commit murder and destroy our economy in the process.
Would Jesus have attacked Iraq? How about Buddha or the Dalai Lama? Or any normal intelligent person?
Mike, I tried to be respectful in my initial response. However, I am now forced to encourage you to stop whining and put on your big boy pants. There is, in fact, evidence that Iraq had WMDs. For goodness sake, man, he used them on his own people. As for the false pretenSE, we have been through this many times over the last several years. It might take some cognitive ability on your part, but enough of the old and tired talking points. We get it. We are fighting the good fight and winning the war…get over it and simply cast your vote for Barry.
Calm down, Mike, before you hurt yourself. You are now including Jesus, Buddha and the Dalai Lama to your painfully predictable responses. I think you might have gone from borderline to full blown delusional.
Your uninformed repetitive drivel gets old really quick. If you have nothing to offer then why bother to post. You are an uninitiated hack who parrots what ever the restumblican bureaucracy is blathering about.
I thought we were talking about AIG. You guys are using some really big words and you are confusing me, you both are so smart and angry and know so much. It is all about the money.. similar to a pyramid scheme or Vegas style gambling that works until it doesn’t. We can go on all day about Iraq, abortion rights, etc…. but let’s not.
The week that just ended revealed the myth of market fundamentalism: the notion associated with mainstream, Milton Freidman’esque economics, and amplified by anti-government conservatives that unfettered markets will provide society with the best outcomes. Such simplicity, such elegance…such nonsense.
For many of us, it didn’t take a market failure of the magnitude we’ve witnessed in recent weeks to belie this myth. We’ve been documenting the slow bleed of much subtler market failures for decades. Most recently, we’ve stressed that despite years of growth before the recent downturn, the real income of middle-class working-age families fell $2,000. Poverty rose. The share of the population without health coverage went up. For the first time in years, the rate of homeownership declined.
If that’s Bush’s ownership society, please don’t sign me up (in truth, it’s too late to refuse membership: as taxpayers, we’re now proud owners of a growing pile of toxic debt–thanks, George).
Last week was historic. It is a week that financial and economic people will study for generations. It also marked the end of certain elements of the Republican Party’s ideology. Below are statements the Republican party can no longer claim as part of their core ideology.
We are the party of small government
Actually, this week simply added to the the end of this claim. Under Bush II, discretionary spending has increased from $640 billion to $1.040 trillion dollars. Also remember that Bush had a Republican controlled congress for 6 of those years. However, Paulson will send a package to Congress which totals $800 billion. The Treasury will create a new agency to buy bad debt (which the WSJ’s Marketbeat blog has called the Treasury Garbage Machine). In short, when the Republicans control all branches of government they spend like drunken sailors.
We Support Free Markets
Last week the SEC banned short-selling in financial shares:
The Securities and Exchange Commission has announced a ban on short-selling financial stocks over the next two weeks. Short-selling is essentially betting that a stock’s price will go down. The SEC hopes the ban will reduce downward pressure on the market, but some think it will backfire. Wall Streeter Barry Ritholtz tells Madeleine Brand that the SEC action reverses 1,000 years of theory about how free markets should work.
In short, markets are supported when they are going up. But when they are going down, we’re going to do everything we can to prevent them from going down.
We Are the Party of Fiscal Responsibility.
No they aren’t. No Republican president has ever balanced a budget. While Republicans have argued that Reagan had to contend with Democrats, Bush II did not for 6 years. Under this scenario where the Republicans controlled all branches of government they never even came close to balancing a budget.
We are the Party of Personal Responsibility
No you’re not. When companies make really stupid decisions the Federal government bails them out. Just ask any shareholder of AIG. Or any taxpayer who will not help to finance the latest government bail-out.
Simply put, this week has demonstrated a key point: when the going gets tough, the Republicans become socialists:
If you are a fan of irony, consider this: The conservative movement has utterly hated FDR, and his New Deal programs like Medicaid, Social Security, FDIC, Fannie Mae (1938), and the SEC for nearly 80 years. And for the past 8 years, a conservative was in the White House, with a very conservative agenda. For something like 16 of the past 18 years, the conservative dominated GOP has controlled Congress. Those are the facts.
We now see that the grand experiment of deregulation has ended, and ended badly. The deregulation movement is now an historical footnote, just another interest group, and once in power they turned into socialists. Indeed, judging by the actions of the conservatives in power, and not the empty rhetoric that comes out of think tanks, the conservative movement has effectively turned the United States into a massive Socialist state, an appendage of Communist Russia, China and Venezuela.
Whenever a Republican talking head says they are for any of the above mentioned things they should be questioned to explain how that statement (I’m for free markets) jibes with banning short selling of an entire sector of the market. Whenever a Republican says he is for smaller government, have him explain the nearly doubling of discretionary spending when the Republicans controlled all branches of government.
Simply put, this week demonstrated how hollow many of the Republican values are. They sound great on paper, but aren’t put into practice when that result might cause financial harm to another Republican.
Well said, PA. An underlying theme of your post is a critical issue: never confuse a Republican for a conservative. Unfortunately, there are far too many Republicans who are not even remotely conservative.
I really think, Mike, that I could have a more meaningful discussion with my coffee mug. You just don’t seem to get it. We don’t need to have a love fest or be in 100% agreement with a candidate to vote for him / her. Voters have one of two choices: 1) vote for the best candidate on the ballot or 2) not vote at all. I am certainly not enthralled with George Bush, but he was leaps and bounds better in my view than Gore and Kerry. I decided to take advantage of my voting privilege in 2000 and 2004. Hence, the votes for Bush.
At least admit youve all got bad luck then. Since Bush has been around we’ve had 911, gave away all our personal freedom regardless of what the constitution says, and the economy has gone to hell.
Buckass, just put the coffee down and read a newspaper. People who dont follow the news should not be able to vote. Its people like you have have helped destroy this once great nation with your head in the sand approach. I vote that you be cockpunched.
Cockpunched? Buckass? You are really bringing the A game now, Mike. Just go back to your NY Times, NPR, MSNBC and proudly cast your vote for Barry. I’m comfortable with my reality and you are obviously comfortable with yours. In other words, let’s agree to disagree and move on.
Yea, Barry is a cool name, he should have kept it. Probably changed it to Barack because he is a Muslim who will ruin the country if elected. Why cant we just stick with another safe white person? Why arent there more black conservative republicans? They are so ungrateful.
Mike, I’m starting to think you are delusional, dude. In case you did not pick up on it, I’m trying to end this painful and boring thread. Have I mentioned that this thread has become boring and painful?
Bucky stop repeating yourself, its just the same restumblican talking points over and over with you, dont you ever get board of everyone laughing at you?
OK, Mike. I am putting you on official notice that this is my last post regardless of the innane response you will predictably post. I will no doubt read it, chuckle at your obvious lack of original or coherent thought and then cower back into my shameful and evil “restumblican” life. By the way, I get BORED rather than BOARD when I lose interest in something or someone. And, by the way, you definitely pegged the boring meter long ago.
Wow …leave the office for half a day, and I missed Mike’s emotional meltdown. Mike, have you calmed down? Does anyone need to be notified if we don’t hear from you any more?
Golly, name-calling and everything. It’s just hard to have a logical conversation with some folks.
Anyway, enough with this thread. Mike, I’m sure you too are an all right guy in most everyday life. But, once in a while, try to watch a news shows or read a blog that isn’t stark-raving mad. That goes for both sides. Once in a while it’s ok to watch MSNBC …just don’t do it on a heavy meal. Sometimes there are some valid news threads that come out on the “other sides” channnels.
I’m going out on a limb now, and guess that there is a different person for Buckeye and Buckey? This post doesn’t sound like the Buckey that’s been verbally duelling with Mike. Maybe I’m confused.
I still can’t get over CockPunched. I hope he meant sucker, instead of cock. Or, how race got interjected into the arguement. I didn’t see any spirits where there were none.
Commentary: Bailouts will lead to rough economic rideStory Highlights
Ron Paul: Too much government meddling in economy caused crisis
Paul says the bailouts are another case of excessive intervention in economy
The government isn’t letting the market adjust prices to lower levels, Paul says
Paul: Bailout will only increase financial instability in the long run
Next Article in Politics ยป
By Ron Paul
Special to CNN
Editor’s note: Ron Paul is a Republican congressman from Texas who ran for his party’s nomination for president this year. He is a doctor who specializes in obstetrics/gynecology and says he has delivered more than 4,000 babies. He served in Congress in the late 1970s and early 1980s and was elected again to Congress in 1996. Rep. Paul serves on the House Financial Services Committee.
Rep. Ron Paul says the government’s solution to the crisis is the same as the cause of it — too much government.
(CNN) — Many Americans today are asking themselves how the economy got to be in such a bad spot.
For years they thought the economy was booming, growth was up, job numbers and productivity were increasing. Yet now we find ourselves in what is shaping up to be one of the most severe economic downturns since the Great Depression.
Unfortunately, the government’s preferred solution to the crisis is the very thing that got us into this mess in the first place: government intervention.
Ever since the 1930s, the federal government has involved itself deeply in housing policy and developed numerous programs to encourage homebuilding and homeownership.
Government-sponsored enterprises Fannie Mae and Freddie Mac were able to obtain a monopoly position in the mortgage market, especially the mortgage-backed securities market, because of the advantages bestowed upon them by the federal government.
Laws passed by Congress such as the Community Reinvestment Act required banks to make loans to previously underserved segments of their communities, thus forcing banks to lend to people who normally would be rejected as bad credit risks.
These governmental measures, combined with the Federal Reserve’s loose monetary policy, led to an unsustainable housing boom. The key measure by which the Fed caused this boom was through the manipulation of interest rates, and the open market operations that accompany this lowering.
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When interest rates are lowered to below what the market rate would normally be, as the Federal Reserve has done numerous times throughout this decade, it becomes much cheaper to borrow money. Longer-term and more capital-intensive projects, projects that would be unprofitable at a high interest rate, suddenly become profitable.
Because the boom comes about from an increase in the supply of money and not from demand from consumers, the result is malinvestment, a misallocation of resources into sectors in which there is insufficient demand.
In this case, this manifested itself in overbuilding in real estate. When builders realize they have overbuilt and have too many houses to sell, too many apartments to rent, or too much commercial real estate to lease, they seek to recoup as much of their money as possible, even if it means lowering prices drastically.
This lowering of prices brings the economy back into balance, equalizing supply and demand. This economic adjustment means, however that there are some winners — in this case, those who can again find affordable housing without the need for creative mortgage products, and some losers — builders and other sectors connected to real estate that suffer setbacks.
The government doesn’t like this, however, and undertakes measures to keep prices artificially inflated. This was why the Great Depression was as long and drawn out in this country as it was.
I am afraid that policymakers today have not learned the lesson that prices must adjust to economic reality. The bailout of Fannie and Freddie, the purchase of AIG, and the latest multi-hundred billion dollar Treasury scheme all have one thing in common: They seek to prevent the liquidation of bad debt and worthless assets at market prices, and instead try to prop up those markets and keep those assets trading at prices far in excess of what any buyer would be willing to pay.
Additionally, the government’s actions encourage moral hazard of the worst sort. Now that the precedent has been set, the likelihood of financial institutions to engage in riskier investment schemes is increased, because they now know that an investment position so overextended as to threaten the stability of the financial system will result in a government bailout and purchase of worthless, illiquid assets.
Using trillions of dollars of taxpayer money to purchase illusory short-term security, the government is actually ensuring even greater instability in the financial system in the long term.
The solution to the problem is to end government meddling in the market. Government intervention leads to distortions in the market, and government reacts to each distortion by enacting new laws and regulations, which create their own distortions, and so on ad infinitum.
It is time this process is put to an end. But the government cannot just sit back idly and let the bust occur. It must actively roll back stifling laws and regulations that allowed the boom to form in the first place.
The government must divorce itself of the albatross of Fannie and Freddie, balance and drastically decrease the size of the federal budget, and reduce onerous regulations on banks and credit unions that lead to structural rigidity in the financial sector.
Until the big-government apologists realize the error of their ways, and until vocal free-market advocates act in a manner which buttresses their rhetoric, I am afraid we are headed for a rough ride.
The opinions expressed in this commentary are solely those of the writer.
Well, this link explains a lot …more than you would probably like.
At first glance, I thought …what a nut job site. Then I read the “About Anthony” section.
Holy Crap …it’s garbeldygoop like this, that caused the problem we are in today. Have you read this self-inflated vision of himself?
Ok, as I understand it, he was a spy for various competitor mortgage companies. He wined, dined, and since he’s from Oregon, probably toked, these executives, who then shared info that could be used by his competitors …all, with the full knowledge of those that were being “toked” that he would carry that info to the enemy.
Huh???
What a load of self-aggrandizement crap.
One of two things is happening here. Either, he’s a full of crud kid, or he’s definitely a part of the problem. His employers included Bank of America (America haters), Citigroup (Umbrella thieves), WAMU (if you’ve ever used them, you know what a joke that is), Fifth Third and IndyMac (these were the banks that were used when the mortgage broker knew the client couldn’t really afford the home they were purchasing …I’ve never seen a responsible client use these two banks).
Well, that’s nearly as impressive as a mafia hit man’s resume. He might as well say, “trust me” at the end of each paragraph.
He says even his client’s barred the use of their data, but “we always managed to get our hands on the best data”. He “developed relationships based on trust and discretion”. And, he says, “Effectively managing and further developing these resources required a great deal of diplomacy and finesse, as the contacts were well aware that my clients included their biggest competitors.”
Translated, he lied his *** off, and got info that was questionable since they “knew” what he was doing.
All this proves, is that the author of information, which you hold important to support your view, is worthless …just like the work product of these fine lending institutions that supposedly hired him …if you can believe that much of his story.
I think you and I agree that the bailouts are wrong. Honestly, I didn’t have time to read through the website or even view the entire video …I get it.
The problem I have, is they way this problem is being politicized, instead of truly analyzed. Remember, the Goldman Sachs infestation goes back to the Clinton administration.
But, so what? As I’ve indicated before, I don’t really think it’s been a Republican or Democrat born conspiracy. I think outside forces are at work. Three Treasury Secretaries in a row coming from the same financial giant – Goldman Sachs. Intelligent financial giants that aren’t constrained by political parties or needing to be elected. They don’t care which party takes the fall, as long as the pockets of the taxpayers are emptied!
I have a huge problem with “Hank”, as you might have guessed from my recent ramblings. I think he’s a major cog in the financial networks that have made a decision to attack the American taxpayer for their own personal profits. I think their accomplices have been on both sides of the aisle, and the sooner we come to grips with the fact that these people, who’ve managed to make really simple things (such as mortgages on a home) into enormously complicated, inter-twined, financial instruments, sold and re-packaged into even more complicated products that can only be analyzed by ivy-league frat-boys, because the simpletons of the world can’t possibly understand them anymore, is a fantastic ploy of a few to bilk the many.
We just wouldn’t understand. Remember, I never said that Ivy League education wasn’t good …it’s probably the best money can buy.
This problem has NOTHING to do with politics, and everything to do with greed and psychopathic preoccupations with personal grandeur. Unfortunately, one of the by-products is going to be a tremendous shift in the political arena, as the simpletons, who haven’t bothered to even TRY to figure out what has happened, will be left with only a choice that was previously impossible …a change from a Democratic Republic, to a government of either fascists, socialists, communists, or a dictatorship.
That’s how I see this fiasco ultimately ending.
It’s time for the simpletons to wake up! I didn’t finish my college education …that will probably dismiss any credibility that I’ve previously built, but I don’t really care. I say this, because following and understanding what is happening in the world, is truly much simpler than the egotists want to claim. Again, the idea that things are so very complicated, is simply a ploy to make “understanding the enormity” appear to be out of reach for all but a few. When only a few can understand, it only takes a few to control. Which brings us to the trouble we’re in today.
Paulson’s blank check plan is utterly appalling! One-man rule! He makes all the decisions.
In a free society, that’s just ludicrous. I don’t care how much he “understands”.
I don’t care if you’re a Republican, a Democrat, a Libertarian, or even an Anarchist, the current prospect of this 3rd generation, Goldman Sachs soldier, is just plain scary! Not because somebody from Goldman Sachs shouldn’t be able to become political and serve in office. But, when it happens over, and over again …and, then you see such completely un-American use of the power that’s gained, only an idiot would dismiss the possibility that there are more greedy considerations than serving the American public in any elected administration.
It’s time for real reform. It’s time for people to wake up.
Um, just because a nutball gets it right, though, doesn’t mean the nutball is any less nutty. I think lots of nutballs agree that breathing is a good thing. Yeah …and?
Ha!
I did not say anything against the video dude. Although, you can tell right off, which way he leans, and that’s his right. What I said was that I didn’t have time this morning to listen to any more than about 2-3 minutes. I didn’t hear anything that I disagreed with, however. I read through a few paragraphs on todays site …again, I didn’t see anything that was horribly wrong.
So?
Are you saying the dude in the video, was the Anthony that authored yesterday’s website …I don’t think so. Did I read the entire website, no. Just enought nutty article titles to go look to see if I could find any info on the author, which I did.
What I did say was that his website looked a little looney tunes. And, the author’s bio was disgusting. Either lies, or evil. And, probably both.
Who couldn’t see this coming from a mile away?
My guess is $85 BILLION won’t be enough. I commend the Feds for understanding the consequences of doing nothing for AIG. An AIG bankruptcy had the potential to bring down hundreds (maybe thousands) of small and medium sized business around the world. AIG Mis Management should be prosecuted, fined and jailed for this type of wreckless behavior. This whole story reminds me of “puting lipstick on a pig” if you know what I mean. wink wink.
Well, that’s no surprise. There is no doubt there is going to be lots of “gotcha’s” in the future of this deal.
I have read several posts about what a great deal the Government made. All very intelligently written. And, at a surface glancr z9and if you’re inclined to offer a bail as I am not) then it might seem better than other alternatives. That’s obvious.
But, as I said in another post, those asset figures are likely cooked to begin with. When you add in the current Fire Sale status, then the falling economies of the world, then the fraud and misuse that inevitably will follow a deal of this “enormity” (to borrow from another post), you’re left with a questionable “investment” at best.
Now, we can see the other shoe in the distant horizon …just waiting to step on us. What is it …This MAY not be enough!
Well, we’re already in for 85,000,000,000.00, we might as well thrown in the next 50 Billion. Well, now we’re in for 135 Bil, might as well kick in another 25 Bil to keep the dead whale afloat. Will that be all? After all, it’s “too big to fail”. So, if we need another 100 Bil, to add to the already “invested” 85, 50, 25 Bil, then that’s what we “must do”.
Where does it stop?
This isn’t the last bail on the horizon either.
The Federal Government was already broke from Social Security. This looks strikingly similar to the problems with the recent mortgage lending business. We’re loaning money and making obligations, when in fact, we are currently well beyond broke!
Just like the American public that couldn’t really afford the 3000 square foot homes, but bought them anyway, because they wanted them, and they didn’t need to prove adequate income because they “deserved” a nice home …our government (Repub’s and Democ’s) want a better economy – and, we’re going to buy one, whether we can afford it, or not.
What a mess!
Well, I knew I saw a light at the end of the tunnel. I just didn’t know it was the reality train heading my way.
Don’t let them tell you this economic meltdown is a complicated mess. It’s not. Our national financial crisis is readily understood by anyone who has seen greed and hypocrisy. But we are now witnessing them on a profound, monumental scale.
Conservative Republicans always want the government to stay out of business and avoid regulation as long as they are making lots of money. When their greed, however, gets them into a fix, they are the first to cry out for rules and laws and taxpayer money to bail out their businesses. Obviously, Republicans are socialists. The Bush administration has decided to socialize the debt of the big Wall Street Firms. Taxpayers didn’t get to enjoy any of the big money profits on the phony financial instruments like derivatives or bundled sub-prime paper, but we get the privilege of paying for their debt and failures.
Mikes been drinking the kool aid. This whole mess started with Fannie and Freddie,a quasi govenment agency controlled and run by Democrats and the very best friend of Barrack Obama.
Should absolutely prove once and for all that anything our government gets involved in is a disaster waiting to happen.
kp is correct!
But, the apparently non-conservative Republican White House has some blame for walking us down this latest path.
We NEED real conservative leadership in the White House and Congress …but, the pack is thinning quickly as we fill the seats with elitists, internationalists, and even socialists that won’t claim the correct title.
I don’t know if more Federal regulations would help, or not. But, I will observe that the only apparently profitable, and significant arm of AIG is the Insurance business, which was regulated by States, and not the Federal Gov’t.
I think we need to take a hard look at our Treasury Secretary. Go to http://en.wikipedia.org/wiki/Henry_Paulson to see some bio on this man who’s leading us through the recent mega-deals/mega-saves.
Here’s a brief re-cap.
1. In addition to Treas Sect, he also serves on the International Monetary Fund Board of Gov’s – does that skew his view of what’s in the best interests of the US – I dunno.
2. He was born in Palm Beach – nothing wrong with that, but it tells us he’s never really had to worry tremendously about a budget.
3. He went to Dartmouth, where he was a frat-boy. While the University is not as liberal as some, it’s still left of center, and again, full of students that aren’t particularly worried about their spending habits.
4. He was an athelete. Well, that says something about an ability to personally persevere. I’ll give this a reserved point on the plus side.
5. He did not serve in Vietnam …well, neither did Dubbya.
6. He was CEO of Goldman Sachs, the world’s largest Investment Banks, where he surely befriended many people with huge stakes, and having the American Gov’t play safety in the field of big money is surely worth a LOT of personal gain for Mr. Paulson. Follow the money, folks.
7. His net worth is estimated at $700 million dollars. Why would a man with that much money, want to serve as Treasurey Secretary? It’s a thankless job at best. Now, I’m not saying we want a janitor in the post, but do we need somebody with more than a large interest in having the American taxpayers, send billions, and eventually, trillions, to cover the mistakes (or fraud) of their fellow ivy-league frat boys?
8. It says he personally built close relationships with China, and has “intimate relations with the Chinese elite”. Once again, follow the money. How is it possible to have a class of folks called “elite” in a communist society. Answer, because a communist government is only “equal” for the “little people” that can’t “grasp the enormity” of international economics and “know what’s best for the rest of the little people”.
9. He’s a believer in global warming and “advocates immediate action to decrease this effect”. Ok, if you’re inclined to buy into the theory that people are to blame, this will be a positive for you. I am skeptical at best. Having said that, I see no reason not reduce our effects in any way that does not grossly effect our way of life. I refuse to go back to huts and teepees, though. If you subscibe heavily to the global warming alarmists, though, one of the quickest way to effect immediate change is to destroy the systems that are believed to contribute. The American system is one of those “believed” to be a major evil in that belief system. Hmmm… What if you managed to get tremendous wealth into the hands of but a few friends, and let the rest of our society go back to riding bicycles and growing a few rows of vegetables in our yards to feed ourselves. What a contribution to the problem of global warming that would be. Just something to ponder.
10. He helped create the “Hope Now Alliance” to help struggling homeowners during the “2007 subprime mortgage financial crisis”. What? Why do people who can’t really afford a home, need an alliance to help them “establish a repayment plan to get them up to date” (well, duh, did somebody actually have to tell these homeowners that the answer was to pay their bills?), and to work on “loan modifications” (what? They already had zero down, no income verification, not even needing a SS card – what more modifications do they need except maybe for FEMA to step in and take over some of their interest rate). This is NOT conservative leadership, if I’m reading this correctly. This is a belief that everyone is entitled to a home …aka, socialism/communism.
Ok, there are 10 highpoints from his public bio. Many are troubling, some could go either way, and just as with all evil, there’s always a mix of a few admirable traits/items to point and brag about. Even an absolute evil like Hitler had a couple of redeeming bio marks that kept him from being seen by everyone for the true evil he was. Is Paulson a man in that same vein? Maybe not. History will tell.
You might also check some of his Federal Campaign contributions. Names like, Jay Rockefeller, George HW Bush, Arlen Spector, Alfonse D’Amato, John Sununu, Chambliss Saxby, for a list of elitists and internationalists.
Democrats such as, Chris Dodd, Lloyd Bentson, Charles Schumer, Bill Bradley, and Bill Clinton for President!
And, as a final note …mainly because it shouldn’t really matter that a Treasury Secretary came from Goldman Sachs …but after the recent bailouts, does it not concern anyone that the last three men to occupy that post, ALL came from that Investment Bank, dating back to the Clinton administration? Is there no Treasurey talent from another firm??? I find that incredibly indicting, in light of the recent unconstitutional moves by our government.
But, that’s just me.
Wow, that’s a lot of keypunching, Peon.
Thanks for the information, Peon. I agree people can interpret Paulson’s bio in different ways, but it certainly does give one many things to consider. You referenced an issue in your post that is extremely important. We should never assume that a Republican is a conservative. There is definitely a plethora of examples and you mentioned some in your post. I am a Republican AND a conservative. I was horrified when the Dems took control of congress in 2006. However, I was proud as hell that Republicans stepped up in 2006 and walked the talk. We understood that our party was governing too much like liberals and helped throw out the Republican bums.
Rodney, wow …you are certainly prolific and intelligent too.
I would like to disagree a little, though.
First, the AIG, and most of the recent moves by the Treasury Department are a fiasco in and of themselves. I think we agree on that, but I’m not sure.
Second, you are correct that Republicans have shown themselves to be just as corruptible with power as the Democrats. But, what you have witnessed since Ronald Reagan has been anything but a Conservative President. Neither HW, nor Dubbya can claim to be conservative. I was personally hopeful that Bush II would be different than his daddy. Live and learn, I suppose. He was conservative in name only …and, even the name, looking back now, should have been telling to us. I think it was called (but the exact name may be escaping me right now) a socially responsible Conservative.
Well, anyone that’s “Socially Responsible” should use the churches and other charitable organizations to act on those desires and beliefs …and, not the Federal Government! I suppose that would cause some to label me as a Libertarian. Whatever.
As to your list of things the Republican Party can not say anymore, don’t be foolish. You can still hear the term, “We’re from the Government, and we’re here to help”. So, anybody can say anything. When you throw in any political party, you better believe they can say ANYTHING.
Here’s your list of “can’t says” and where I believe you are wrong.
1. No Small Government. I certainly hope some party will continue to be effective at believing in small government. Small government does NOT mean NO government, nor should it. That would be anarchy. But, seriously, what can the Federal Government do efficiently or constitutionally? Answer, very little.
2. Support of Free Markets. Well, you cite the reason for this is because of actions taken by the SEC. Well, that’s not a Republican organization!!! There is no question that our current leadership has not succeeded in many areas. The current government take over and control of civilian companies is obscene, to say the least. But, if it’s the SEC you are talking about, I think you might find about as many Democrats as Republicans manning that ship. All-out Free Market theology, though. I’ll give you an inch here and agree that’s a problem. If America were an isolated island, I would aim for that. Since we are not …there seems to be call for some restrictions, though.
3. We are the party of Fiscal Responsibility. Well, I think we are nearly in the same camp on this one. It’s shameful the way the Republican Leadership has lost their way. Some of it was due to a mentality of trying to “get along” with the Democratic side of the aisle, but too much of it was the same greed and pandering as we’ve seen from Democrats for nearly a half-century of real rule. It’s true Conservative Republican hopes have been temporarily smashed, but it’s not true that we should not demand it no matter what side of the aisle you feel comfortable calling home. And, for the record, there are some conservative Democrats if you search hard enough. It would not displease me to see more of a return to the Truman/Kennedy type of conservative government. Take away some flaws, and I’ll exchange any day.
4. They can’t be the party of Personal Responsibility? Well, if they can’t, who can? God know the Democratic Leadership doesn’t think there is any such thing. Are you saying we shouldn’t want more people to be personally responsible? Again, don’t be fooled into the notion that any Party Leadership is perfect. Republican, or Democrat, these guys are first and foremost – Politicians! None of them know the intricacies of everything for which they will become (rightly or wrongly) responsible. Nobody is immune to the beguiling influences of outside forces that “understand the enormity” of such “complicated issues” and can whisper in the ear of the “Politician” a solution that “feels good”, and …most importantly they hope, will get them the next vote or glowing legacy. That’s the way it works.
As for the rest of your assessment of the situation, well, it’s lacking. Here are the things that are wrong as I see it:
The past 8 years has not seen a Conservative in the White House, with “a very conservative agenda”. Oh brother …maybe you’ve missed the wailing and gnashing of teeth by the conservatives? Maybe you only listen to NPR radio programs? First off, even if you allow that Dubya could be deemed a conservative, it hasn’t been 8 years. And if you recall, the first many months were filled with questions about whether he really occupied the position or not. Surely you remember the hanging chads. Even after the final legal word, the mandate was tiny slim. So, that’s not really a position of “power”. Then comes a terrorist attack, which would have gotten anybody, any political movement, off their track for a time. So, 8 years …not.
You get even worse marks on the GOP domination of congress. 1995 was the “Republican Revolution”, so 1996 was when they “took charge”? Then, when was it that John McCain was rumored to be considering a move the Democratic aisle, and that would have given the Dems a majority. Then, there was the goofy congressman that actually made the move, and negated the “domination”. My math shows a little over 6 years of true numerical majority. But remember, after 50 years of Democratic rule, existing staffs, organizations, legal challenges, pink pukers, a Democratic President that nullified any effects of a tiny majority in Congress, etc, waged all-out political war on the “change”. So, 16-18 years of rule …definitely not! And, don’t forget, there were several Liberal Republicans in that razor-thin majority mix for those 6 years as well. Usually enough to kill the “majority” theory before it had to be overcome by a Presidential Veto. So, had George Bush really been what he espoused, a Conservative, there were really less than 4 useful years, and that had a war thrown inside of it …and, no matter how some may want to paint the situation, we were the ones that were attacked, and we did what was needed to strike back in defense! Political posturing was not the number one goal …finally!
A Grand Experiment of Deregulation …oh, brother. Is that going to be the tile of your book? Let me know when the experiment actually starts. The only thing I can see is that the regulations were simply shifted to other Federal organizations. What’s been de-regulated in the past 12 years with Clinton/Bush?
You say there has been a demonstration of how hollow many of the Republican values are. Well, to some extent, I can see your point. But, just because men have failed, doesn’t mean the values are not worthy! Just because the preacher has illegitimate sex, doesn’t mean his sermons against such activities were incorrect. Just because a Judge lies about a business deal, doesn’t mean we should not expect truthfulness in a courtroom. Just because somebody encourages abstinence for their daughter in their home doesn’t mean when that daughter fails and shows up pregnant, that the value was wrong and they should kill the by-product! And, (to bring this post back to it’s roots …’cause I know that last comment is going to re-ignite the crazies) just because the Treasury Secretary spearheads a move to insert the Federal Government into areas where it doesn’t belong, doesn’t mean we should not hate the actions and work to make certain it never happens again. How? by electing true conservatives no matter what side of the aisle, or 3rd party with which they affiliate.
This whole, “too big to fail” is so flawed it screams with ignorance. What that’s literally saying is, be as illegal and unethical as you like, as long as you eat up enough of the economic sector, we will give you a hall pass. Wow! This must be ceased, or all hell is really going to break out in the “Free Market”. Why? Because it’s no longer free – its government backed …and, that means all tactics, and improper economic values are made valid. The Free Market WILL fail, because the government is “too big” to stop it. The government will fail because the bill will be “too big” to stop it. A fascist will succeed because their solution, for a problem that is “too big”, will be very small. That will sound oh-so-good to a population that is “too big” to be stopped by those that see the truth.
The end!
Hey Buckey, was it conservative to needlessly attack Iraq and waste 10 billion a month of our money????????
I was under the impression, Mike, that we were talking about something else. Since you brought it up, though, I will respond by saying “Put the talking points play book away and give it a rest.” Many of us believe that Iraq is of strategic importance in the Middle East….not to mention the fact that we took the fight to them and kept it off of our turf. Unfortunately, there are many like yourself who will never come to grips with this due to being blinded by political agendas and/or a very puzzling and intense hatred of President Bush. By the way, you must have missed the news flash that we are winning the war. This is probably disappointing to you since it could reduce the likelihood of a Barry Obama victory in November, but I feel compelled to inform you nonetheless.
Iraq wasnt a threat and there was no WMD’s. And we went to war under false pretences.
None of these things would be done by a true conservative, which you are not.
Mike, certainly your talking points memo does not allow you to answer a question with one sentence. Until you can put the Iraq War in proper persepctive you will never be able to speak rationally in a group. Give it a rest.
Many people were senselessly killed in Iraq for no reason. We wasted money and lives, and its immoral to kill people for no good reason and then say its “justified.”
So maybe you should give it a rest and literally stop paying your government to commit murder and destroy our economy in the process.
Would Jesus have attacked Iraq? How about Buddha or the Dalai Lama? Or any normal intelligent person?
Mike, I tried to be respectful in my initial response. However, I am now forced to encourage you to stop whining and put on your big boy pants. There is, in fact, evidence that Iraq had WMDs. For goodness sake, man, he used them on his own people. As for the false pretenSE, we have been through this many times over the last several years. It might take some cognitive ability on your part, but enough of the old and tired talking points. We get it. We are fighting the good fight and winning the war…get over it and simply cast your vote for Barry.
Calm down, Mike, before you hurt yourself. You are now including Jesus, Buddha and the Dalai Lama to your painfully predictable responses. I think you might have gone from borderline to full blown delusional.
Your uninformed repetitive drivel gets old really quick. If you have nothing to offer then why bother to post. You are an uninitiated hack who parrots what ever the restumblican bureaucracy is blathering about.
Nice try, Pot. Regards, Kettle.
I thought we were talking about AIG. You guys are using some really big words and you are confusing me, you both are so smart and angry and know so much. It is all about the money.. similar to a pyramid scheme or Vegas style gambling that works until it doesn’t. We can go on all day about Iraq, abortion rights, etc…. but let’s not.
I’ve just enjoyed a few days without using my keyboard on this post. Whew…
I agree 100%, Rodney….which was my point to Mike several posts ago. He wanted to go off the board with Iraq and other tangents, so I humored him.
The week that just ended revealed the myth of market fundamentalism: the notion associated with mainstream, Milton Freidman’esque economics, and amplified by anti-government conservatives that unfettered markets will provide society with the best outcomes. Such simplicity, such elegance…such nonsense.
For many of us, it didn’t take a market failure of the magnitude we’ve witnessed in recent weeks to belie this myth. We’ve been documenting the slow bleed of much subtler market failures for decades. Most recently, we’ve stressed that despite years of growth before the recent downturn, the real income of middle-class working-age families fell $2,000. Poverty rose. The share of the population without health coverage went up. For the first time in years, the rate of homeownership declined.
If that’s Bush’s ownership society, please don’t sign me up (in truth, it’s too late to refuse membership: as taxpayers, we’re now proud owners of a growing pile of toxic debt–thanks, George).
Last week was historic. It is a week that financial and economic people will study for generations. It also marked the end of certain elements of the Republican Party’s ideology. Below are statements the Republican party can no longer claim as part of their core ideology.
We are the party of small government
Actually, this week simply added to the the end of this claim. Under Bush II, discretionary spending has increased from $640 billion to $1.040 trillion dollars. Also remember that Bush had a Republican controlled congress for 6 of those years. However, Paulson will send a package to Congress which totals $800 billion. The Treasury will create a new agency to buy bad debt (which the WSJ’s Marketbeat blog has called the Treasury Garbage Machine). In short, when the Republicans control all branches of government they spend like drunken sailors.
We Support Free Markets
Last week the SEC banned short-selling in financial shares:
The Securities and Exchange Commission has announced a ban on short-selling financial stocks over the next two weeks. Short-selling is essentially betting that a stock’s price will go down. The SEC hopes the ban will reduce downward pressure on the market, but some think it will backfire. Wall Streeter Barry Ritholtz tells Madeleine Brand that the SEC action reverses 1,000 years of theory about how free markets should work.
In short, markets are supported when they are going up. But when they are going down, we’re going to do everything we can to prevent them from going down.
We Are the Party of Fiscal Responsibility.
No they aren’t. No Republican president has ever balanced a budget. While Republicans have argued that Reagan had to contend with Democrats, Bush II did not for 6 years. Under this scenario where the Republicans controlled all branches of government they never even came close to balancing a budget.
We are the Party of Personal Responsibility
No you’re not. When companies make really stupid decisions the Federal government bails them out. Just ask any shareholder of AIG. Or any taxpayer who will not help to finance the latest government bail-out.
Simply put, this week has demonstrated a key point: when the going gets tough, the Republicans become socialists:
If you are a fan of irony, consider this: The conservative movement has utterly hated FDR, and his New Deal programs like Medicaid, Social Security, FDIC, Fannie Mae (1938), and the SEC for nearly 80 years. And for the past 8 years, a conservative was in the White House, with a very conservative agenda. For something like 16 of the past 18 years, the conservative dominated GOP has controlled Congress. Those are the facts.
We now see that the grand experiment of deregulation has ended, and ended badly. The deregulation movement is now an historical footnote, just another interest group, and once in power they turned into socialists. Indeed, judging by the actions of the conservatives in power, and not the empty rhetoric that comes out of think tanks, the conservative movement has effectively turned the United States into a massive Socialist state, an appendage of Communist Russia, China and Venezuela.
Whenever a Republican talking head says they are for any of the above mentioned things they should be questioned to explain how that statement (I’m for free markets) jibes with banning short selling of an entire sector of the market. Whenever a Republican says he is for smaller government, have him explain the nearly doubling of discretionary spending when the Republicans controlled all branches of government.
Simply put, this week demonstrated how hollow many of the Republican values are. They sound great on paper, but aren’t put into practice when that result might cause financial harm to another Republican.
Not sure who posted this, but it was not me. Sincerely, the real Buckey.
Well said, PA. An underlying theme of your post is a critical issue: never confuse a Republican for a conservative. Unfortunately, there are far too many Republicans who are not even remotely conservative.
Then why do you “conservatives” always vote for George Bush? – isn’t that a fair question? You helped put him in office!
I really think, Mike, that I could have a more meaningful discussion with my coffee mug. You just don’t seem to get it. We don’t need to have a love fest or be in 100% agreement with a candidate to vote for him / her. Voters have one of two choices: 1) vote for the best candidate on the ballot or 2) not vote at all. I am certainly not enthralled with George Bush, but he was leaps and bounds better in my view than Gore and Kerry. I decided to take advantage of my voting privilege in 2000 and 2004. Hence, the votes for Bush.
At least admit youve all got bad luck then. Since Bush has been around we’ve had 911, gave away all our personal freedom regardless of what the constitution says, and the economy has gone to hell.
Buckass, just put the coffee down and read a newspaper. People who dont follow the news should not be able to vote. Its people like you have have helped destroy this once great nation with your head in the sand approach. I vote that you be cockpunched.
Cockpunched? Buckass? You are really bringing the A game now, Mike. Just go back to your NY Times, NPR, MSNBC and proudly cast your vote for Barry. I’m comfortable with my reality and you are obviously comfortable with yours. In other words, let’s agree to disagree and move on.
Yea, Barry is a cool name, he should have kept it. Probably changed it to Barack because he is a Muslim who will ruin the country if elected. Why cant we just stick with another safe white person? Why arent there more black conservative republicans? They are so ungrateful.
Mike, Mike, Mike….calm down and let it go, man.
Its ok Bucky, a lot of you folks dont like foreigners and black people.
Mike, I’m starting to think you are delusional, dude. In case you did not pick up on it, I’m trying to end this painful and boring thread. Have I mentioned that this thread has become boring and painful?
Bucky stop repeating yourself, its just the same restumblican talking points over and over with you, dont you ever get board of everyone laughing at you?
OK, Mike. I am putting you on official notice that this is my last post regardless of the innane response you will predictably post. I will no doubt read it, chuckle at your obvious lack of original or coherent thought and then cower back into my shameful and evil “restumblican” life. By the way, I get BORED rather than BOARD when I lose interest in something or someone. And, by the way, you definitely pegged the boring meter long ago.
Wow …leave the office for half a day, and I missed Mike’s emotional meltdown. Mike, have you calmed down? Does anyone need to be notified if we don’t hear from you any more?
Golly, name-calling and everything. It’s just hard to have a logical conversation with some folks.
Anyway, enough with this thread. Mike, I’m sure you too are an all right guy in most everyday life. But, once in a while, try to watch a news shows or read a blog that isn’t stark-raving mad. That goes for both sides. Once in a while it’s ok to watch MSNBC …just don’t do it on a heavy meal. Sometimes there are some valid news threads that come out on the “other sides” channnels.
Later, guys.
I’m going out on a limb now, and guess that there is a different person for Buckeye and Buckey? This post doesn’t sound like the Buckey that’s been verbally duelling with Mike. Maybe I’m confused.
I still can’t get over CockPunched. I hope he meant sucker, instead of cock. Or, how race got interjected into the arguement. I didn’t see any spirits where there were none.
This just gets stranger, and stranger.
You are correct, PA. The profane post was not from me. This was indeed a strange thread. Regards, the real Buckey.
Commentary: Bailouts will lead to rough economic rideStory Highlights
Ron Paul: Too much government meddling in economy caused crisis
Paul says the bailouts are another case of excessive intervention in economy
The government isn’t letting the market adjust prices to lower levels, Paul says
Paul: Bailout will only increase financial instability in the long run
Next Article in Politics ยป
By Ron Paul
Special to CNN
Editor’s note: Ron Paul is a Republican congressman from Texas who ran for his party’s nomination for president this year. He is a doctor who specializes in obstetrics/gynecology and says he has delivered more than 4,000 babies. He served in Congress in the late 1970s and early 1980s and was elected again to Congress in 1996. Rep. Paul serves on the House Financial Services Committee.
Rep. Ron Paul says the government’s solution to the crisis is the same as the cause of it — too much government.
(CNN) — Many Americans today are asking themselves how the economy got to be in such a bad spot.
For years they thought the economy was booming, growth was up, job numbers and productivity were increasing. Yet now we find ourselves in what is shaping up to be one of the most severe economic downturns since the Great Depression.
Unfortunately, the government’s preferred solution to the crisis is the very thing that got us into this mess in the first place: government intervention.
Ever since the 1930s, the federal government has involved itself deeply in housing policy and developed numerous programs to encourage homebuilding and homeownership.
Government-sponsored enterprises Fannie Mae and Freddie Mac were able to obtain a monopoly position in the mortgage market, especially the mortgage-backed securities market, because of the advantages bestowed upon them by the federal government.
Laws passed by Congress such as the Community Reinvestment Act required banks to make loans to previously underserved segments of their communities, thus forcing banks to lend to people who normally would be rejected as bad credit risks.
These governmental measures, combined with the Federal Reserve’s loose monetary policy, led to an unsustainable housing boom. The key measure by which the Fed caused this boom was through the manipulation of interest rates, and the open market operations that accompany this lowering.
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When interest rates are lowered to below what the market rate would normally be, as the Federal Reserve has done numerous times throughout this decade, it becomes much cheaper to borrow money. Longer-term and more capital-intensive projects, projects that would be unprofitable at a high interest rate, suddenly become profitable.
Because the boom comes about from an increase in the supply of money and not from demand from consumers, the result is malinvestment, a misallocation of resources into sectors in which there is insufficient demand.
In this case, this manifested itself in overbuilding in real estate. When builders realize they have overbuilt and have too many houses to sell, too many apartments to rent, or too much commercial real estate to lease, they seek to recoup as much of their money as possible, even if it means lowering prices drastically.
This lowering of prices brings the economy back into balance, equalizing supply and demand. This economic adjustment means, however that there are some winners — in this case, those who can again find affordable housing without the need for creative mortgage products, and some losers — builders and other sectors connected to real estate that suffer setbacks.
The government doesn’t like this, however, and undertakes measures to keep prices artificially inflated. This was why the Great Depression was as long and drawn out in this country as it was.
I am afraid that policymakers today have not learned the lesson that prices must adjust to economic reality. The bailout of Fannie and Freddie, the purchase of AIG, and the latest multi-hundred billion dollar Treasury scheme all have one thing in common: They seek to prevent the liquidation of bad debt and worthless assets at market prices, and instead try to prop up those markets and keep those assets trading at prices far in excess of what any buyer would be willing to pay.
Additionally, the government’s actions encourage moral hazard of the worst sort. Now that the precedent has been set, the likelihood of financial institutions to engage in riskier investment schemes is increased, because they now know that an investment position so overextended as to threaten the stability of the financial system will result in a government bailout and purchase of worthless, illiquid assets.
Using trillions of dollars of taxpayer money to purchase illusory short-term security, the government is actually ensuring even greater instability in the financial system in the long term.
The solution to the problem is to end government meddling in the market. Government intervention leads to distortions in the market, and government reacts to each distortion by enacting new laws and regulations, which create their own distortions, and so on ad infinitum.
It is time this process is put to an end. But the government cannot just sit back idly and let the bust occur. It must actively roll back stifling laws and regulations that allowed the boom to form in the first place.
The government must divorce itself of the albatross of Fannie and Freddie, balance and drastically decrease the size of the federal budget, and reduce onerous regulations on banks and credit unions that lead to structural rigidity in the financial sector.
Until the big-government apologists realize the error of their ways, and until vocal free-market advocates act in a manner which buttresses their rhetoric, I am afraid we are headed for a rough ride.
The opinions expressed in this commentary are solely those of the writer.
Ron,
I think you left off an “s”. Your last line should read …The opinions expressed in this commentary are solely those of the writer…s.
Mike,
Well, this link explains a lot …more than you would probably like.
At first glance, I thought …what a nut job site. Then I read the “About Anthony” section.
Holy Crap …it’s garbeldygoop like this, that caused the problem we are in today. Have you read this self-inflated vision of himself?
Ok, as I understand it, he was a spy for various competitor mortgage companies. He wined, dined, and since he’s from Oregon, probably toked, these executives, who then shared info that could be used by his competitors …all, with the full knowledge of those that were being “toked” that he would carry that info to the enemy.
Huh???
What a load of self-aggrandizement crap.
One of two things is happening here. Either, he’s a full of crud kid, or he’s definitely a part of the problem. His employers included Bank of America (America haters), Citigroup (Umbrella thieves), WAMU (if you’ve ever used them, you know what a joke that is), Fifth Third and IndyMac (these were the banks that were used when the mortgage broker knew the client couldn’t really afford the home they were purchasing …I’ve never seen a responsible client use these two banks).
Well, that’s nearly as impressive as a mafia hit man’s resume. He might as well say, “trust me” at the end of each paragraph.
He says even his client’s barred the use of their data, but “we always managed to get our hands on the best data”. He “developed relationships based on trust and discretion”. And, he says, “Effectively managing and further developing these resources required a great deal of diplomacy and finesse, as the contacts were well aware that my clients included their biggest competitors.”
Translated, he lied his *** off, and got info that was questionable since they “knew” what he was doing.
All this proves, is that the author of information, which you hold important to support your view, is worthless …just like the work product of these fine lending institutions that supposedly hired him …if you can believe that much of his story.
Mike,
Oops …looks like your website link has been yanked by the censors. That’s ok, I didn’t need any more of that dribble, anyhow.
I hope you’ve calmed down after a few hours to rest.
http://oldpeoplesnews.com/2008/09/21/proposed-bailout-plan-is-a-giant-money-laundering-scheme/
Peon, watch this video and let me know what you think.
Mike,
I think you and I agree that the bailouts are wrong. Honestly, I didn’t have time to read through the website or even view the entire video …I get it.
The problem I have, is they way this problem is being politicized, instead of truly analyzed. Remember, the Goldman Sachs infestation goes back to the Clinton administration.
But, so what? As I’ve indicated before, I don’t really think it’s been a Republican or Democrat born conspiracy. I think outside forces are at work. Three Treasury Secretaries in a row coming from the same financial giant – Goldman Sachs. Intelligent financial giants that aren’t constrained by political parties or needing to be elected. They don’t care which party takes the fall, as long as the pockets of the taxpayers are emptied!
I have a huge problem with “Hank”, as you might have guessed from my recent ramblings. I think he’s a major cog in the financial networks that have made a decision to attack the American taxpayer for their own personal profits. I think their accomplices have been on both sides of the aisle, and the sooner we come to grips with the fact that these people, who’ve managed to make really simple things (such as mortgages on a home) into enormously complicated, inter-twined, financial instruments, sold and re-packaged into even more complicated products that can only be analyzed by ivy-league frat-boys, because the simpletons of the world can’t possibly understand them anymore, is a fantastic ploy of a few to bilk the many.
We just wouldn’t understand. Remember, I never said that Ivy League education wasn’t good …it’s probably the best money can buy.
This problem has NOTHING to do with politics, and everything to do with greed and psychopathic preoccupations with personal grandeur. Unfortunately, one of the by-products is going to be a tremendous shift in the political arena, as the simpletons, who haven’t bothered to even TRY to figure out what has happened, will be left with only a choice that was previously impossible …a change from a Democratic Republic, to a government of either fascists, socialists, communists, or a dictatorship.
That’s how I see this fiasco ultimately ending.
It’s time for the simpletons to wake up! I didn’t finish my college education …that will probably dismiss any credibility that I’ve previously built, but I don’t really care. I say this, because following and understanding what is happening in the world, is truly much simpler than the egotists want to claim. Again, the idea that things are so very complicated, is simply a ploy to make “understanding the enormity” appear to be out of reach for all but a few. When only a few can understand, it only takes a few to control. Which brings us to the trouble we’re in today.
Paulson’s blank check plan is utterly appalling! One-man rule! He makes all the decisions.
In a free society, that’s just ludicrous. I don’t care how much he “understands”.
I don’t care if you’re a Republican, a Democrat, a Libertarian, or even an Anarchist, the current prospect of this 3rd generation, Goldman Sachs soldier, is just plain scary! Not because somebody from Goldman Sachs shouldn’t be able to become political and serve in office. But, when it happens over, and over again …and, then you see such completely un-American use of the power that’s gained, only an idiot would dismiss the possibility that there are more greedy considerations than serving the American public in any elected administration.
It’s time for real reform. It’s time for people to wake up.
No offence, but basically everything you mentioned was said in that video that you “didnt watch.”
Also, that video, was found on the conspiracy page that you said was garbage. I wonder if you even read that either.
Mike,
No offence taken.
Um, just because a nutball gets it right, though, doesn’t mean the nutball is any less nutty. I think lots of nutballs agree that breathing is a good thing. Yeah …and?
Ha!
I did not say anything against the video dude. Although, you can tell right off, which way he leans, and that’s his right. What I said was that I didn’t have time this morning to listen to any more than about 2-3 minutes. I didn’t hear anything that I disagreed with, however. I read through a few paragraphs on todays site …again, I didn’t see anything that was horribly wrong.
So?
Are you saying the dude in the video, was the Anthony that authored yesterday’s website …I don’t think so. Did I read the entire website, no. Just enought nutty article titles to go look to see if I could find any info on the author, which I did.
What I did say was that his website looked a little looney tunes. And, the author’s bio was disgusting. Either lies, or evil. And, probably both.
Nothing’s changed.