Fox, how can you say that this 'rebuts' the AIG point I made? It does nothing of the sort! It isn't even tangentially related to the conversation we're having!
Please explain exactly how it rebuts the mistakes AIG made.
from your other post -
Quote:
I have already posted my step by step opinion along with links to support it and I have rested my case. Rebut it if you can rather than continuing to ask me to keep restating it.
Oh really? Please link to this. Because I sure didn't see it.
Cycloptichorn
Cycloptichorn wrote:
Fox, how can you say that this 'rebuts' the AIG point I made? It does nothing of the sort! It isn't even tangentially related to the conversation we're having!
Please explain exactly how it rebuts the mistakes AIG made.
from your other post -
Quote:
I have already posted my step by step opinion along with links to support it and I have rested my case. Rebut it if you can rather than continuing to ask me to keep restating it.
Oh really? Please link to this. Because I sure didn't see it.
Cycloptichorn
I can say it because it does.
And as you didn't see it before, even though you commented on some of it, I so seriously doubt that you would see it when i post it for a second--in some cases third--time, I will decline.
I will repeat that government meddling with the free market system and the government's using of the CRA to put pressure on lending institutions to make risky mortgages, sometimes highly risky mortgages, was the catalyst for the housing bubble and subsequent collapse.
Every other poster? Will you please link to your posts that rebut my opinion with anything other than your own opinion? Will you please point to your explanation of those terms you threw out there and how they relate to the current economic crisis that I asked you to do? Please link every argument you've made on the economic crisis. You should certainly be willing to do that since you suggest that it is pathetic that I won't.
I provided links to the most recent sites I've used to support my argument just this morning--each a repeat. And you're upset because I won't do that again?
In addition, unemployment rates remained quite high throughout the decade: 5.2% at the boom's end in 1989, well above the 3.5% and 4.1% rates achieved at the end of the 1960s and 1990s booms. The 1980s economy did more to improve the purchasing power of the median family than the 1990s boom. But again, those gains were extremely modest compared to what the 1960s boom did for that representative family.
None of this speaks to the lopsided distribution of the benefits of Reagan era economic growth. Investors made out during the 1980s, while workers lost out. After seeing their investments lose value during the 1970s, shareholders enjoyed real returns (i.e., adjusted for inflation) in the 1980s that rivaled those of the next decade's stock market bubble and far outdistanced the returns of the 1960s. Real weekly wages for nonsupervisory workers, on the other hand, took a beating, declining even more quickly than they had during the 1970s. Today, the average real earnings of nonsupervisory workers remain far below those of 30 years ago, despite healthy wage gains in the second half of the 1990s expansion, when unemployment rates dropped toward 4%.
Nor did Reagan era growth do much to alleviate poverty. The poverty rate in 1989 at the end of Reagan's two terms was still 12.8%. That was just one percentage point lower than at beginning of his administration. In contrast, the 1990s boom knocked three percentage points off the nation's poverty rate, while the 1960s boom nearly cut it in half.
Reagan administration economic policies did not result in a 1960s-style prosperity, when workers' real wages went up in tandem with the value of stock holdings-just the opposite. Since 1980, the gains from U.S. economic growth have gone overwhelmingly to the well-to-do, and economic inequality has steadily worsened. By 2000, the ratio of the family income of the top 5% to that of the bottom 20% stood at 19.1, a dramatic rise over the 1979 ratio of 11.4. Reagan's economic policies ushered in the return of levels of inequality unseen since the eve of the Great Depression.
But what about the particulars of Reaganomics (or supply-side economics), which in practice meant large tax cuts targeted at the rich, a military buildup, and slashing social spending? That too is a disturbing story.
My note: Sounds to me like GW Bush all over again.
The tax cuts came in 1981, Reagan's first year in office. The administration's plan slashed corporate and individual income tax rates, with the biggest cut in the top rate. The Reagan team promised that their tax cuts would jolt the economy back to life because, as the Wall Street Journal's editors put it, "high taxes interfere with natural human creativity and drive." And the true believers went so far as to suggest that the economy would grow fast enough that tax revenues would actually rise, making the tax cuts painless.
The results never came close to measuring up to the supply-side rhetoric. For starters, the tax cuts busted the federal budget. The federal deficit ballooned from 2.7% of GDP in 1980 to 6% of GDP in 1983, the largest peacetime deficit in history, and was still 5% of GDP in 1986. Tax revenues did pick up, especially after the 1983 payroll tax increase kicked in, reducing the deficit somewhat. Still, tax revenues grew far more slowly over than the 1980s business cycle (2.5% from 1979 to 1989) than they did in the 1990s business cycle (4.1% from 1989 to 2000).
Nor did the claim that tax cuts would encourage work effort, savings, and investment, the central premise of Reaganomics, hold up. When mainstream economists, such as Barry Bosworth and Gary Burtless of the Brookings Institution, checked out the effects of the 1981 tax cut, they found that something quite different had happened. After the tax cut, men didn't work much more at all; although women did work longer hours, their earnings failed to improve. And relative to the size of the economy, net investment declined and savings plummeted. The Economic Policy Institute, a labor-funded think tank, reports that the annual increase in real investment in the 1980s business cycle (2.5% per year) was less than half of that during the 1990s business cycle (5.9% per year).
Worse yet, most low-income taxpayers missed out on the Reagan tax cuts. The bottom 40% of households paid out more of their income in federal taxes in 1988 than they had in 1980. Increases in the payroll taxes that finance Social Security and Medicare, which made up a far higher portion of their federal tax bill than income taxes, swamped what little benefit these taxpayers received from lower income tax rates. For the richest 1%, on the other hand, the Reagan tax cuts were pure elixir. This group saw their effective federal tax rate drop from 34.6% to 29.7%, according to a recent study conducted by the Congressional Budget Office. As these numbers suggest, Reagan left a far less progressive federal tax code than he found.
While the Reagan military buildup kept overall government spending from shrinking, Reagan's budgets slashed social spending. Domestic discretionary spending, which includes just about all non-defense spending outside of Social Security, Medicare, and Medicaid, was the special target of Reagan's budget cutting. Relative to the size of the economy, one-third of domestic discretionary spending disappeared: it fell from 4.7% of GDP in 1980 to 3.1% in 1988. Hardest hit were programs for low-income Americans, which in real terms suffered a withering 54% cut in federal spending from 1981 to 1988. After correcting for inflation, subsidized housing lost 80.7% of its support, training and employment services 68.3%, and housing assistance for the elderly 47.1%. These programs have never returned to their pre-Reagan spending levels. In fact, under the Clinton administration spending on domestic discretionary programs continued to decline relative to the size of the economy.
Reagan's economic legacy endures. Government continues to turn its back on social spending for the poor in favor of ineffectual tax giveaways for the rich, at same time that it finds unlimited monies for military adventures.
That has almost nothing to do with our current financial crisis. You've had this patiently explained to you many times, Fox, yet remain stubborn in your desire to blame poor folks and minorities for the financial collapse; nary a word from you holding those responsible for investing others' money to the fire for their poor choices.
Cycloptichorn
None of that explains how the financial crisis happened, Fox. How did the problems in the housing market transmit themselves to ALL our banks and trading houses, and even insurance agencies such as AIG? Specifically.
Cycloptichorn
you really don't understand this at all, do you? This is factually incorrect. Completely.
Do you even understand a CDO is? What a Tranche is? What the credit-default swap market is? How do you think these financial trading houses got their hands into mortgages, something they traditionally didn't do? You think the government forced them to do that?
Unbelievable!
Cycloptichorn
Myth: Greedy investment bankers, who securitized and sold subprime mortgages, drove us to the credit crisis, not government.
Fact: Clinton's regulatory policies led to the creation of this new risk on Wall Street. His CRA amendments created the subprime market, and only after he pressured Fannie and Freddie to socialize the risk and guarantee the profit from the subprime loans did Wall Street get involved in a big way.
I will repeat that government meddling with the free market system and the government's using of the CRA to put pressure on lending institutions to make risky mortgages, sometimes highly risky mortgages, was the catalyst for the housing bubble and subsequent collapse.
