The Economy - Government for Sale?

[Mulu]

Comedians speak!

''Any change is as good as a vacation at this point,'' says Colbert, who set his conservative TV pundit character aside for the chat. ''I don't know if you've paid much attention to the past eight years, but it has been a s---burger supreme. If somebody gives me an empty burger, it's better than eating s---.''

ENTERTAINMENT WEEKLY: Forget the two presidential candidates: The most prominent person in this election right now is Sarah Palin. With the attention she's getting, you'd think she was running for president.

JON STEWART: Everyone likes new and shiny. We're bored. What's great about that is [Democratic VP candidate Joe] Biden is an absolutely eccentric character. That's how powerful Palin's story is — it has cast the first African-American presidential nominee, the oldest [non-incumbent] presidential nominee, and a really wild cork vice presidential candidate completely out of the picture. The press is 6-year-olds playing soccer; nobody has a position, it's just ''Where's the ball? Where's the ball? Sarah Palin has the ball!'' [Mimes a mob running after her.] Because they can only cover one thing.

Why do you think some people embraced her as a folk hero?

STEWART: I keep hearing that she's ''like us.'' There's this idea that people who hunt and have ''good'' values are somehow this mythological American; I don't know who ''this'' person is, I've never met them. She is no more typical ''us'' than I am, than Obama is, than McCain is, than Mr. T is. If there is something quintessentially or authentically American about her, I sort of feel like, you know what? You ''good values people'' have had the country for eight years, and done an unbelievably s---ty job. Let's find some bad values people and give them a shot, maybe they'll have a better take on it.

There are a lot of issues in this election. The biggest one right now is the economy.

STEWART: We were in this huge credit crisis, out of money. Then the Fed goes, We'll give you a trillion dollars, and all of a sudden Wall Street is like, ''I can't believe we got away with it!'' Can you imagine if someone said, ''I shouldn't have bought that sports car because it means I can't have my house,'' and the bank just said, ''All right, you can have your house. And you know what? Keep the car.'' [He throws up his arms joyfully and shouts] ''Yeaaaaah, I get to keep the car! Wait, do I have to give the money back?'' ''No, it doesn't matter.'' ''Yeah, I'm gonna get another car! I'm gonna do the same thing the same way, except twice as f---ed up!''

COLBERT: The idea that Lehman Brothers doesn't get any money and AIG does reminds me very much of ''Iran is a mortal enemy because they have not achieved a nuclear weapon. But North Korea is a country we can work with, because they have a nuclear weapon.'' The idea is, Get big or go home. How big can you f--- up? Can you f--- up so bad that you would ruin the world economy? If it's just 15,000 who are out of jobs, no. You have to actually be a global f---up to get any help.

And some not so funny news, waiting for the other shoe to drop...

The simple truth is that Washington is petrified about this crisis and will pass something. There are dark fears floating through the city that foreign investors, particularly the Chinese, might begin to pull their billions out of our system.

Scarier than the bad mortgages are those unregulated credit default swaps that financier George Soros has been warning about. There are $45 trillion of those esoteric instruments sloshing around the global financial system. They were invented as a hedge against debt defaults, but even the financial smart guys don't fully understand their impact or how to price their real value.

McCain shows up, and the deal falls through.

Washington Mutual Inc. was seized by the Federal Deposit Insurance Corp. in the largest failure ever of a U.S. bank, after which JPMorgan Chase & Co. Inc. came to its rescue by buying the thrift's banking assets.

And the late-afternoon White House gathering of President Bush, presidential contenders John McCain and Barack Obama, and top congressional leaders turned into what one person in the room described as "a full-throated discussion" and McCain's campaign called "a contentious shouting match."

Conservatives were in revolt over the astonishing price tag of the proposal and the hand of government that it would place on private markets.

So much for the quick fix. Well, they'll get it worked out soon enough.

[davidcurtisjr]

What is George Bush telling us?

Today he made a speech where he stated, "There is something suspected...substantial that must be done." I find Bush's Freudian slips to be more revealing than his purveyed meaning. It's all about the New World Order baby!!

[Mulu]

Earlier, McCain had emerged from his office in the Russell Senate Office Building to a crush of reporters, saying nothing as he made his way to Boehner's office. In tow were a trio of his closest allies, Sens. Lindsey O. Graham (R-S.C.), Joseph I. Lieberman (I-Conn.) and Jon Kyl (R-Ariz.), as well as top campaign aides Rick Davis and Mark Salter.

Where's Sarah? I had heard she was qualified to run the country. Shouldn't she be advising McCain as well?

[ç i p h é r]

Then why didn't the Republican Dominated government change it? Bush took office in January of 2001. He had a Republican controlled Congress. He appointed the Agency Head at HUD. Do you really think he was bound to continue Clinton's bidding? What actually happened is he picked up that ball and bounced it even further into the hazard zone. Get a clue man.

Trust me, if Bush could pin this on Clinton, he would have done so already. He's in this deep.

Presumably because there was enough opposition to change from both parties at the time. That doesn't change the fact that some Republicans like McCain recognized the warning signs years before the crisis occurred and why they sponsored the Federal Housing Enterprise Regulatory Reform Act of 2005, which never made it into law.

Summary text of the bill:

1/26/2005--Introduced.
Federal Housing Enterprise Regulatory Reform Act of 2005 - Amends the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to establish: (1) in lieu of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development (HUD), an independent Federal Housing Enterprise Regulatory Agency which shall have authority over the Federal Home Loan Bank Finance Corporation, the Federal Home Loan Banks, the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac); and (2) the Federal Housing Enterprise Board.

Sets forth operating, administrative, and regulatory provisions of the Agency, including provisions respecting: (1) assessment authority; (2) authority to limit nonmission-related assets; (3) minimum and critical capital levels; (4) risk-based capital test; (5) capital classifications and undercapitalized enterprises; (6) enforcement actions and penalties; (7) golden parachutes; and (8) reporting.

Amends the Federal Home Loan Bank Act to establish the Federal Home Loan Bank Finance Corporation. Transfers the functions of the Office of Finance of the Federal Home Loan Banks to such Corporation.

Excludes the Federal Home Loan Banks from certain securities reporting requirements.

Abolishes the Federal Housing Finance Board.

http://www.govtrack.us/congress/bill.xpd?bill=s109-190

(Those pesky facts.)

[Mulu]

Do you really think that would have changed anything? The Bush Administration through HUD pushed Fannie and Freddie to buy more subprime loans. How would a different agency having oversight make any difference? Bush would have appointed that agency head too. Nothing in the Federal government is immune from the Whitehouse.

And you're still focused on the stubbed toe. Fannie and Freddie combined own $200 billion in shaky loans. Not all, or even most, will fail. They are a small component of a much larger problem, and their part has already been fixed by the government take over.

Show me the bill proposed to prevent subprime mortgage rebundling. Show me the bill that requires Investment Banks to declare their risks, or maintain adequate capitalization. Oh that's right, they don't exist. That's the real crisis here, that's the trillion dollar bail out that you keep ignoring, and that trillion dollar bail out is firmly in the lap of Republican deregulation.

[Nalo Jade]

http://www.fec.gov/DisclosureSearch/map ... =P80002801

McCain

http://www.fec.gov/DisclosureSearch/map ... chKeyword=

Obama


Yes it is for sale...

The "individual" donations are a riot if you have the time to explore the lists...for a small example search McCain's individual list by employer, and you will notice starting on page 1-2 a trend connection with Zurich...since there are 10's of thousands of entries it would take too long to really go through it all and "connect the dots" ...

but the point is ... with that much money invested, I think we can all be pretty sure that who so ever wins is going to have some obligations to their contributors and not to what is actually best for all of us.

[ç i p h é r]

Collateralizing mortgage debt into different types of financial instruments isn't a problem in and of itself, and from what I have read of Glass-Steagall, does not appear to be something that was explicitly prohibited. It just prohibited commercial and investment banking under one roof.

These investments only became a problem, and the resulting obfuscation of risk an issue, once investors realized that behind it all was [potentially] a heap of bad loans. Take away those loans, and where's the crisis? So long as borrowers make the payments on their loans, all is well, which speaks to how fundamentally important it was to ensure that borrowers were qualified to repay the loans that were being collateralized.

I don't know if another regulatory body would have solved the problem, but I would have expected this kind of solution to appeal to you.

The Federal Housing Enterprise Regulatory Reform Act of 2005 addressed minimal capital reserve requirements and a lot more, so arguably, that too could have helped avert the crisis if enacted. It was in direct response to the troubles that were brewing at Fannie Mae, after all. The warning signs were writ large to those paying attention.

[Mulu]

Yeah but by that time an awful lot of bad paper had already been written by private lenders and repackaged as securities. Bad loans are the underlying problem, but repackaging those loans magnified the problem significantly, as they were combined, then chopped up, then the securities were priced artificially high. This is just a more sophisticated version of the junk bond scam from the 80's, and it's source is the same: the private sector. Specifically investment banks this time, rather than S&L's.

I think at the end of the day everyone who had involvement or potential oversight is partly to blame, though I do still think that the deregulation drum was beaten loudest by Republicans. I also think that the only way to have prevented it was to both maintain Glass Steagal *and* have not lowered credit requirements for mortgages. I mean everybody knew the real estate bubble wasn't going to last forever and those houses would depreciate in value as a result. The idea that you can write a loan to anybody on ridiculous terms because the house will be worth more than the debt, forever, and therefore is secure was a simple fantasy born of greed. The only cure for destructive greed motivated behavior is strict regulation and oversight, or nationalization.

At the end of the day you simply can't trust markets, or more accurately the people profiting by manipulating them, to act rationally or in the best interests of all. The invisible hand too often ends up as a fist in our rear if it isn't cuffed.

[edit] And on blame, the real culprit was keeping the interest rate far too low for far too long. When the real estate market heated up into a bubble, the obvious solution was to increase the interest rate, a fact which was pointed out at the time. [/edit]

Meanwhile, Economists are all over the map on the bailout.